Autodesk (ADSK) looks set to report higher Q2 revenue and profit

Autodesk, Inc. (NASDAQ: ADSK), maker of the popular drafting and design application AutoCAD, is scheduled to report second-quarter earnings on Thursday, at 4:00 pm ET. The recent upswing in industrial activity is good news for the company, which has been working on AI-powered design tools for some time. In general, the near-term outlook on the tech firm is positive, thanks to the management’s initiatives to improve margins amid growing pressure from activist investors.

Autodesk’s stock price has remained relatively stable since late February though it experienced significant volatility during that period. Meanwhile, the shares have gained about 20% in the past three months and are currently trading above the 52-week average. The stock has been on the recovery path since a probe into the company’s accounting practices concluded in June.

Q2 Report on Tap

When the design software maker reports second-quarter earnings on August 29, after the closing bell, the market will be looking for earnings of $2.00 per share. The company earned $1.91 per share in the corresponding period last year. Wall Street’s consensus revenue estimate for the July quarter is $1.48 billion. In the first quarter of 2025, both revenue and profit topped expectations, as they did in the trailing three quarters.

“Our disciplined and focused approach in executing our strategy and deploying capital throughout the economic cycle empowers Autodesk to realize the significant benefits of its strategy while mitigating the risk of expensive catch-up investments in the future. As our customers migrate to our industry clouds and utilize our high-value AI products and services, our investments in the cloud will continue to grow,” said Autodesk’s CEO Andrew Anagnost during his post-earnings interaction with market watchers a few months ago.

Investor Activism

Recently, the Autodesk leadership came under pressure from activist investor Starboard Value, which took a $500-million stake in the company, demanding measures to improve margin performance and changes to the board of directors. Earlier, the hedge fund had raised concerns about the company’s operations, corporate governance, and the way it handled an accounting investigation that triggered a stock selloff.

Meanwhile, recent data shows that margins are improving, after slowing down in the past year due to issues like sales underperformance and ineffective use of capital. It is estimated that Autodesk can do a lot better if it streamlines operations with focus on cost management and takes the necessary steps to drive long-term shareholder value.

Good Start to FY25

The company entered fiscal 2025 on a positive note, delivering double-digit revenue and earnings growth in the first three months of the year. The top-line growth was driven by an 11% increase in Subscription revenue, which accounts for more than 90% of the total. The company ended the quarter with an impressive $3.36 billion in deferred revenue, a measure of advance payments received for products and services not yet delivered.

Shares of Autodesk traded higher in the early hours of Tuesday, after opening the session slightly above $255. ADSK has gained around 20% in the past twelve months.