Autodesk (NASDAQ:ADSK) Posts Better-Than-Expected Sales In Q4, Guides For 15% Growth Next Year

Jabin Bastian /
2022/02/24 4:07 pm EST
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Design software company Autodesk (NASDAQ:ADSK) reported Q4 FY2022 results beating Wall St's expectations, with revenue up 16.5% year on year to $1.21 billion. However, guidance for the next quarter was less impressive, coming in at $1.15 billion at the midpoint, being 0.43% below analyst estimates. Autodesk made a GAAP profit of $89.1 million, down on its profit of $911.3 million, in the same quarter last year.

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Autodesk (ADSK) Q4 FY2022 Highlights:

  • Revenue: $1.21 billion vs analyst estimates of $1.19 billion (1.31% beat)
  • EPS (non-GAAP): $1.50 vs analyst estimates of $1.44 (4.06% beat)
  • Revenue guidance for Q1 2023 is $1.15 billion at the midpoint, below analyst estimates of $1.15 billion
  • Management's revenue guidance for upcoming financial year 2023 is $5.07 billion at the midpoint, missing analyst estimates by 1.3% and predicting 15.5% growth (vs 15.6% in FY2022)
  • Free cash flow of $716.3 million, up 178% from previous quarter
  • Gross Margin (GAAP): 90.6%, down from 92.1% same quarter last year

"By delivering greater value to our customers through the cloud and leading them to new ways of working, we are building enduring partnerships and shared growth," said Andrew Anagnost, Autodesk president and CEO.

Founded 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.

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Sales Growth

As you can see below, Autodesk's revenue growth has been mediocre over the last year, growing from quarterly revenue of $1.03 billion, to $1.21 billion.

Autodesk Total Revenue

This quarter, Autodesk's quarterly revenue was once again up 16.5% year on year. We can see that the company increased revenue by $85.8 million quarter on quarter. That's a solid improvement on the $66.1 million increase in Q3 2022, so shareholders should appreciate the acceleration of growth.

Guidance for the next quarter indicates Autodesk is expecting revenue to grow 16.4% year on year to $1.15 billion, improving on the 11.6% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $5.07 billion at the midpoint, growing 15.5% compared to 15.6% increase in FY2022.

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What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Autodesk's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 90.6% in Q4.

Autodesk Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.90 left to spend on developing new products, marketing & sales and the general administrative overhead. This is a great gross margin, that allows companies like Autodesk to fund large investments in product and sales during periods of rapid growth and be profitable when they reach maturity. It is good to see that the gross margin is staying stable which indicates that Autodesk is doing a good job controlling costs and is not under pressure from competition to lower prices.

Key Takeaways from Autodesk's Q4 Results

With a market capitalization of $45.9 billion, more than $1.76 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

We liked to see that Autodesk guided for revenue growth next year to continue. And we were also happy to see it topped analysts’ revenue expectations this quarter, even if just narrowly. On the other hand, it was unfortunate to see that Autodesk's revenue guidance for the full year miss analyst's expectations and the revenue guidance for the next quarter also missed analysts' expectations. Overall, this quarter's results could have been better. The company is up 1.77% on the results and currently trades at $222 per share.

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The author has no position in any of the stocks mentioned.