Autodesk (NASDAQ:ADSK) Q1 Sales Beat Estimates

Radek Strnad /
2022/05/26 4:12 pm EDT
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Design software company Autodesk (NASDAQ:ADSK) reported Q1 FY2023 results topping analyst expectations, with revenue up 18.2% year on year to $1.17 billion. On the other hand, guidance for the full year slightly missed analyst expectations with revenues guided to $5.01 billion at the midpoint, or 0.58% below analyst estimates. Autodesk made a GAAP profit of $146 million, down on its profit of $155.6 million, in the same quarter last year.

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Autodesk (ADSK) Q1 FY2023 Highlights:

  • Revenue: $1.17 billion (2.09% beat)
  • EPS (non-GAAP): $1.43 vs analyst estimates of $1.34 (7% beat)
  • Revenue guidance for Q2 2023 is $1.22 billion at the midpoint, in line with analyst estimates
  • The company dropped revenue guidance for the full year, from $5.07 billion to $5.01 billion at the midpoint, a 1.18% decrease
  • Free cash flow of $422 million, down 41% from previous quarter
  • Gross Margin (GAAP): 90%, in line with same quarter last year

"Autodesk's strong Q1 results reflect the company's steady execution, industry leading products and platforms, and resilience through elevated times of uncertainty," 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 steady over the last year, growing from quarterly revenue of $989.3 million, to $1.17 billion.

Autodesk Total Revenue

This quarter, Autodesk's quarterly revenue was once again up 18.2% year on year. But the revenue actually decreased by $41.6 million in Q1, compared to $85.8 million increase in Q4 2022. However, Autodesk's sales do seem to have a seasonal pattern to them, and since management is guiding for revenue to rebound in the coming quarter we wouldn't be too concerned.

Guidance for the next quarter indicates Autodesk is expecting revenue to grow 15.8% year on year to $1.22 billion, in line with the 16% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 14% over the next twelve months.

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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% in Q1.

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 Q1 Results

With a market capitalization of $40.5 billion, more than $1.58 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.

It was good to see Autodesk outperform Wall St’s revenue expectations this quarter and the strong free cash flow. On the other hand, it was unfortunate to see that Autodesk's revenue guidance for the full year missed analyst's expectations. Overall, these results were ok, showing the company is mostly staying on target. The company is up 1.39% on the results and currently trades at $194.3 per share.

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