Q4 Report on Tap
The cloud-based software company’s stock ended 2023 on a strong note and maintained the momentum so far this year. It has gained 28% in the past three months alone and outperformed the market during that period. The valuation is reasonable, which makes the stock a good investment option for the long term. The company’s aggressive AI push — including the recent launch of Autodesk AI, a technology that enhances productivity and boosts innovation — should drive revenue growth going forward.
Cautious Outlook
Last year, new business trends for the company were consistent, and renewal rates remained stable despite macroeconomic uncertainties and geopolitical headwinds, thanks to effective customer diversification and the subscription business model. However, overall growth slowed during that period as the company reduced spending and signed shorter-term contracts. The management expects the slowdown to continue and sees slower revenue growth in the next fiscal year.
From Autodesk’s Q3 2024 earnings call:
“We intend to transition our indirect business to the new transaction model in all our major markets globally. In the new transaction model, partners provide a quote to customers, but the actual transaction happens directly between Autodesk and the customer. The new transaction model is an important step on our path to integrate more closely with our customers’ workflows enabled by, among other things, Autodesk Platform Services and our industry cloud, Fusion, Forma, and Flow. Autodesk, its customers, and partners will be able to build more valuable, data-driven, and connected products and services in our industry cloud and on our platform.”
Key Numbers
The company has a good track record of delivering bigger-than-expected quarterly earnings and revenues, and the trend continued in the most recent quarter. In the third quarter of 2024, adjusted earnings jumped 22% annually to $2.07 per share. The growth was driven by a 10% increase in revenues to $1.41 billion. A 25% fall in Maintenance revenues, which accounts for about 93% of the total, was more than offset by growth in Subscription and Other revenues. Meanwhile, there was an 11% decrease in total billings.
Shares of Autodesk traded slightly higher on Monday afternoon and continued to stay above the 52-week average. The stock has gained 19% in the past six months.