Autodesk (NASDAQ:ADSK) Reports Q3 In Line With Expectations But Stock Drops

Radek Strnad /
2021/11/23 4:07 pm EST

Design software company Autodesk (NASDAQ:ADSK) reported results in line with analyst expectations in Q3 FY2022 quarter, with revenue up 18.2% year on year to $1.12 billion. On the other hand, guidance for the next quarter missed analyst expectations with revenues guided to $1.19 billion at the midpoint, or 0.86% below analyst estimates. Autodesk made a GAAP profit of $136.7 million, improving on its profit of $132.2 million, in the same quarter last year.

Is now the time to buy Autodesk? Access our full analysis of the earnings results here, it's free.

Autodesk (ADSK) Q3 FY2022 Highlights:

  • Revenue: $1.12 billion vs analyst estimates of $1.11 billion (small beat)
  • EPS (non-GAAP): $1.33 vs analyst estimates of $1.26 (5.82% beat)
  • Revenue guidance for Q4 2022 is $1.19 billion at the midpoint, below analyst estimates of $1.2 billion
  • Free cash flow of $257 million, up 38% from previous quarter
  • Gross Margin (GAAP): 90.4%, down from 92% same quarter last year

"Our customers continue to embrace and prioritize digital transformation to drive growth, efficiency and sustainability, generating strong demand for Autodesk's platform," 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.

In recent years, Autodesk has shifted its offerings to the cloud to offer its customers a central platform to manage their work and collaborate efficiently. Given the opportunity to improve design tools that arise from technologies like artificial intelligence and virtual reality, we can expect demand for computer-aided design applications to remain strong in the near future.

Sales Growth

As you can see below, Autodesk's revenue growth has been measured over the last year, growing from quarterly revenue of $952.4 million, to $1.12 billion.

Autodesk Total Revenue

This quarter, Autodesk's quarterly revenue was once again up 18.2% year on year. Looking at the last couple of quarters, we can see that revenue increased by $66.1 million in Q3, which was a bit less than the $70.4 million revenue add in Q2 2022. This steady quarter-on-quarter growth shows the company is able to more or less maintain its paced growth trajectory.

Analysts covering the company are expecting the revenues to grow 18% over the next twelve months, although estimates are likely to change post earnings.

There are others doing even better than Autodesk. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.


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 90.4% in Q3.

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 a pressure from competition to lower prices.

Key Takeaways from Autodesk's Q3 Results

Sporting a market capitalization of $68.2 billion, more than $1.79 billion in cash and with positive free cash flow over the last twelve months, we're confident that Autodesk has the resources it needs to pursue a high growth business strategy.

We struggled to find many strong positives in these results. On the other hand, it was unfortunate to see that the revenue guidance for the next quarter missed analysts' expectations. Overall, this quarter's results were not the best we've seen from Autodesk. The company is down 8.39% on the results and currently trades at $278.48 per share.

Autodesk may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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