Autodesk (NYSE:ADSK) Reports Q2 In Line With Expectations, Share Price Drops

Adam Hejl /
2021/08/25 4:10 pm EDT

Design software company Autodesk (NASDAQ: ADSK) reported results in line with analyst expectations in Q2 FY2022 quarter, with revenue up 16% year on year to $1.05 billion. Autodesk made a GAAP profit of $115.6 million, improving on its profit of $98.2 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) Q2 FY2022 Highlights:

  • Revenue: $1.05 billion vs analyst estimates of $1.05 billion (small beat)
  • EPS (non-GAAP): $1.21 vs analyst estimates of $1.12 (8.09% beat)
  • Revenue guidance for Q3 2022 is $1.11 billion at the midpoint, above analyst estimates of $1.1 billion
  • The company reconfirmed revenue guidance for the full year, at $4.36 billion at the midpoint
  • Free cash flow of $186.2 million, down 41% from previous quarter
  • Gross Margin (GAAP): 90%, in line with previous quarter

"Sustained and purposeful innovation to enable digital transformation in the industries we serve is changing our relationship with our customers from software vendor to strategic partner," said Andrew Anagnost, Autodesk president and CEO.

Founded in 1982, Autodesk 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 solid over the last year, growing from quarterly revenue of $913.1 million, to $1.05 billion.

Autodesk Total Revenue

This quarter, Autodesk's quarterly revenue was once again up 16% year on year. On top of that, revenue increased $70.4 million quarter on quarter, a strong improvement on the $49.9 million decrease in Q1 2022, and a sign of acceleration of growth, which is very nice to see indeed.

Analysts covering the company are expecting the revenues to grow 17.2% over the next twelve months, although we would expect them to review their estimates once they get to read these results.

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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, licences, technical support and other necessary running expenses was at 90% in Q2.

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 Q2 Results

Sporting a market capitalization of $75 billion, more than $924.9 million 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.

It was good to see Autodesk provide next quarter revenue outlook exceeding analysts’ expectations. That feature of these results really stood out as a positive. On the other hand, revenue growth is overall a bit slower these days and the company just barely exceeded analyst estimates for this quarter. Zooming out, we think this was still a decent, albeit mixed, quarter, showing the company is staying on target. The company is down -4.42% on the results and currently trades at $327 per share.

Should you invest in Autodesk 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.

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