Autodesk (NASDAQ:ADSK) Reports Q3 In Line With Expectations, Quarterly Revenue Guidance Slightly Exceeds Expectations

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Design software company Autodesk (NASDAQ:ADSK) met Wall Street’s revenue expectations in Q3 CY2024, with sales up 11% year on year to $1.57 billion. The company expects next quarter’s revenue to be around $1.63 billion, coming in 0.6% above analysts’ estimates. Its non-GAAP profit of $2.17 per share was 2.4% above analysts’ consensus estimates.

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Autodesk (ADSK) Q3 CY2024 Highlights:

• Revenue: $1.57 billion vs analyst estimates of $1.56 billion (11% year-on-year growth, in line)
• Adjusted EPS: $2.17 vs analyst estimates of $2.12 (2.4% beat)
• Adjusted Operating Income: $573 million vs analyst estimates of $565 million (36.5% margin, 1.4% beat)
• Revenue Guidance for Q4 CY2024 is $1.63 billion at the midpoint, roughly in line with what analysts were expecting
• Management slightly raised its full-year Adjusted EPS guidance to $8.32 at the midpoint
• Operating Margin: 22%, down from 23.6% in the same quarter last year
• Free Cash Flow Margin: 12.7%, similar to the previous quarter
• Billings: $1.54 billion at quarter end, up 27.9% year on year
• Market Capitalization: $68.68 billion

"Autodesk is leading the industry in modernizing its go-to-market motion. These initiatives enable us to build larger and more durable direct relationships with our customers and to serve them more efficiently. We have already seen significant benefits from these optimization initiatives and there's more to come in the next phase," said Andrew Anagnost, Autodesk president and CEO.

Company OverviewFounded in 1982 by John Walker and growing into one of the industry's behemoths, Autodesk (NASDAQ:ADSK) makes computer-aided design (CAD) software for engineering, construction, and architecture companies.

Design Software (ETR:SOWGn)

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Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, Autodesk grew its sales at a 12.3% compounded annual growth rate. Although this growth is solid on an absolute basis, it fell short of our benchmark for the software sector.

This quarter, Autodesk’s year-on-year revenue growth was 11%, and its $1.57 billion of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 11% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow by 11.7% over the next 12 months, similar to its three-year rate. This projection is above the sector average and implies its newer products and services will help support its historical top-line performance.

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Billings

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Autodesk’s billings came in at $1.54 billion in Q3, and over the last four quarters, its growth was underwhelming as it averaged 4.2% year-on-year increases. This alternate topline metric grew slower than total sales, meaning the company recognizes revenue faster than it collects cash - a headwind for its liquidity that could also signal a slowdown in future revenue growth.

Customer Acquisition Efficiency

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

Autodesk is extremely efficient at acquiring new customers, and its CAC payback period checked in at 9.2 months this quarter. The company’s performance gives it the freedom to invest its resources into new product initiatives while maintaining optionality.

Key Takeaways from Autodesk’s Q3 Results

We enjoyed seeing Autodesk exceed analysts’ billings expectations this quarter. We were also glad its full-year EPS guidance came in slightly higher than Wall Street’s estimates. Revenue in the quarter was just in line. Overall, this quarter was solid, but judging by the market reaction, it seems like stronger beats and/or guidance was perhaps expected. Shares traded down 2.2% to $311 immediately after reporting.