Steve Matt's avatar
$1.2m follower assets
$SNOW $ADSK $ZS Earnings: What I'm Looking For
Snowflake Inc. ($SNOW) - Reporting earnings Wednesday (5/25) afternoon

Here's what I'm looking for:

  • Continue improving gross and operating margins.
  • Keep the free cash flow coming.
  • Can total revenue and product revenue continue to grow >100% YoY?
  • International revenue has gone from 7% of total revenue in fiscal year 2019 (ending 1/31/2019) to 20% in this recent fiscal year. It's been over 20% for 3 consecutive quarters. Can they speed up the growth outside the US?
  • NRR, customer count, and customers generating >$1M in revenue.
  • My favorite metric: RPOs. Show me the demand for business is growing faster than your revenue.

Current position:
Total cost basis: 12th highest in my portfolio
Time since first buy: 1.63 years
Number of purchases since initial position: 4
Annualized return: (45.5%)
Annualized $SPY return: 5.2%
Annualized $QQQ return: (-3.9%)
Autodesk, Inc. ($ADSK) - Reporting earnings Wednesday (5/26) afternoon
Here's what I'm looking for:
  • Gross margins >90% consecutively for 3 years (11 quarters). Maintain that, please.
  • Operating margin dipped a smidge in fiscal year 2022 (ending 1/31/2022). Blip or a trend?
  • Recurring revenue percent >96.5%.

  • Just like Snowflake, show me a really strong RPO.
  • As this market requires, copious amounts of free cash flow.

Current position:
Total cost basis: 34th highest in my portfolio
Time since first buy: 0.36 years
Number of purchases since initial position: 1
Annualized return: (59.1%)
Annualized $SPY return: (34.5%)
Annualized $QQQ return: (50.0%)
Zscaler, Inc. ($ZS) - Reporting earnings Wednesday (5/26) afternoon
Here's what I'm looking for:
  • They dropped full year guidance after Q2 by 2.3%. It's too much to ask for a guidance raise but maintaining 1,047.5MM at the midpoint would be nice.
  • Again, the market demands FCF and ZS has been providing that. I will be watching to see what they produce this Q and on a TTM basis.
  • Calculated billings.
  • I don't remember if Zscaler updates customer information and DBNRR quarterly or annually. I'll be looking to see those metrics if they do quarterly.

Current position:
Total cost basis: 39th highest in my portfolio
Time since first buy: 1.46 years
Number of purchases since initial position: 4
Annualized return: (55.2%)
Annualized $SPY return: (3.4%)
Annualized $QQQ return: (14.2%)
StockOpine's avatar
$21.7m follower assets
$ADSK drops ahead of earnings report
  • Deutsche Bank analyst Bhavin Shah cut his rating to hold from buy. Price target to $225 from $275.
  • Stifel Nicolaus analyst Adam Borg kept his rating at buy. Price target to $230 from $285.
  • Both cited "mixed" results from conversations with "platinum-level" partners.

Samuel Meciar's avatar
$7.7m follower assets
Portfolio changes - update 6
I decided to sell $DASH and $ADSK. No specific reasons, I just find better opportunities elsewhere within the themes. Both are strong companies with lots to like, but I have to follow the process of adding to highest conviction, and I simply just see better R/R at these levels elsewhere.

As $ADSK replacement, I added to my $U position (cost average $57,08) - for those who care lol. By doing so, $U is back to I believe my top 10 when it comes to weighting, even as I'm down roughly 33% on my position. I'm happy to have it higher as I believe I'm looking at lucrative R/R here and Unity has tons of optionality, too!

So that concludes my portfolio changes for the week, I wish everybody a great weekend!
Samuel Meciar's avatar
$7.7m follower assets
Portfolio changes - update 3
As you well know by now, I'm a huge proponent of transparency. And despite me sharing my portfolio publicly here which gets updated like every 1-2 days, I want to make sure I can tell you what I'm doing as close to real-time as I can. So here we go, shall we?


I put my money where my mouth is, which are my high conviction bets.

There's a few companies I'm still thinking about for various reasons, such as $ETSY $ADSK $TWLO and $PINS. I'll let you know about them when done with my thinking.

Stay strong! Have a great day!
StockOpine's avatar
$21.7m follower assets
$ADSK Deep Dive
Analysts are expecting Autodesk to grow revenues to $7.29 billion by fiscal 2026, CAGR of 13.5%. Expectations seem reasonable given that management targets double digit revenue growth up to FY’26. Management guidance for non-GAAP operating margin in FY’23 is 37% with its mid-term goal (FY’24 to FY’26) in the range of 38%-40%. Assuming that non-GAAP operating margin for FY’26 is 40% and deducting the share-based compensation of 11.4% (three-year average), the EBITDA margin for fiscal 2026 is 28.6%. The resulting EBITDA margin of 28.6% appears reasonable taking into consideration the current EBITDA margin of its peers (Dassault, Nemetschek and PTC).
Assigning an EV/EBITDA multiple of 25 to the resulting EBITDA of $2.08 billion implies an Enterprise Value of $52.1 billion in FY’2026 and an IRR of 4.7% based on the current share price, ignoring any buyback yield.
Conclusion:
There is a lot to like about Autodesk, however in our opinion the current share price does not provide potential for outsized returns. We will not be buyers here, but we will follow the business closely and we might initiate a position if there is further drawdown from current levels. We understand that the share price might go higher from here and we might miss a potential compounder, however we believe that the current price does not provide sufficient margin of safety.
If you want to read more about $ADSK , refer to the link below. Please subscribe to our substack for more deep dives, earnings previews and company snapshots.
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The Devastation Continues
Here are a ton of stocks at lows and appear to be headed lower:

$JPM - JPMorgan Chase & Co. - Banks - Diversified - $386.69B

$BAC - Bank of America Corporation - Banks - Diversified - $317.55B

$ASML - ASML Holding N.V. - Semiconductor Equipment & Materials - $257.15B

$VZ - Verizon Communications Inc. - Telecom Services - $221.35B

$NKE - NIKE, Inc. - Footwear & Accessories - $211.96B

$ADBE - Adobe Inc. - Software - Infrastructure - $204.90B

$CRM - Salesforce, Inc. - Software - Application - $187.74B

$PYPL - PayPal Holdings, Inc. - Credit Services - $112.45B

$BLK - BlackRock, Inc. - Asset Management - $106.91B

$WBD - Warner Bros. Discovery, Inc. - - Entertainment - $58.36B

$ILMN - Illumina, Inc. - Diagnostics & Research - $53.47B

$ADSK - Autodesk, Inc. - Software - Application - $44.78B

$A - Agilent Technologies, Inc. - Diagnostics & Research - $38.87B

$ALGN - Align Technology, Inc. - Medical Devices - $33.79B

$COIN - Coinbase Global, Inc. - Software - Application - $33.18B

$STT - State Street Corporation - Asset Management - $27.92B

$TWLO - Twilio Inc. - Internet Content & Information - $24.68B

$HUBS - HubSpot, Inc. - Software - Application - $20.53B

$SWKS - Skyworks Solutions, Inc. - Semiconductors - $20.04B

$PAYC - Paycom Software, Inc. - Software - Application - $19.25B

$KMX - CarMax, Inc. - Auto & Truck Dealerships - $14.95B

$DPZ - Domino's Pizza, Inc. - Restaurants - $14.26B

$PINS - Pinterest, Inc. - Internet Content & Information - $14.23B

$ETSY - Etsy, Inc. - Internet Retail - $14.15B
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THIS is what i’m talking about, very aesthetically pleasing post, thanks for putting this together 💪🏼
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Portfolio Update
Fully out of $TWTR as of this evening. A somewhat disappointing final chapter in the thesis for me. Even 3/4 months ago, when product velocity was noticeably hot, I felt confident of the large stake that the blue bird held in my PA. Admittedly, the last month or two has been disappointing with little noticeable updates or beta testing.

However, things will likely be exciting under Elon and deploying my 13% allocation elsewhere is nice. So far I’ve added to $MITK, $GOOG, $ADSK and $PENN.

Really like Mitek here, see it as undervalued and recession proof with attractive top and bottom line growth. Currently 17% of my pa and plan to let this run over the coming years
Samuel Meciar's avatar
$7.7m follower assets
Brief news 13/4/22
$AFRM announced yesterday an expansion of their partnership with $POSH.

$ADBE introduced frame.io, their cloud-based video collaboration software used by well-known names such as $NFLX, $GOOGL, $FOX, Vice, BuzzFeed, and many more to Creative Cloud subscription. Adobe has also made an improvements to Premiere Pro and After Effects - notably added native M1 support.

$ADSK announced Evans General Contractors - an international design-build contracting firm has adopted Autodesk's Construction Cloud to enhance project delivery and maximize team coordination.

$GOOGL's CEO Sundar Pichai today announced their plans to invest over $9B in America this year, mainly consisting of offices and datacenter investments. By the end of this year, they expect to create an additional 12k full-time jobs at Google.

$MDB announced the launch of a pay-as-you-go MongoDB Atlas offering on Google Cloud.

$PYPL announced departure of their CFO John Rainey, he's leaving the company to work for Walmart as their CFO. He'll remain at PayPal until late May.

$QCOM announced a quarterly cash dividend of $0,75 payable on June 23rd to stockholders who own the stock at the close of June 2nd.

$SHOP joined Stripe, $GOOGL, $FB and McKinsey Sustainability to launch $925M advance market commitment - Frontier is a 9 year commitment to accelerate the development of permanent carbon removal tech by guaranteeing future demand. They've even released a short video with an explanation of what Frontier is:


$TDOC a telemedicine center based solely on Teladoc's technology was open in Madurai, India

$ZM introduced Zoom IQ for Sales - a conversation intelligence add-on for Zoom Meetings that turns customer interactions into meaningful and actionable insights, helping teams across marketing, sales, and competitive intelligence improve crucial interactions with customers. They also made some improvements to Events & Webinars in order to better presenter's experience.
StockOpine's avatar
$21.7m follower assets
Who could be the designers of the metaverse?
3D Modelling software is expected to play a key role in the design of objects and characters in the metaverse. Despite not being pure metaverse players, $ADSK , $ADBE and $U are likely to benefit from the use of this type of software.

Currently, 3D Modelling software is used amongst others, for Animations, Gaming, Product design & Architecture design.
With a new platform like this, I always assume there will be some unknown start-up, currently in a basement, that will eventually be a bigger player, but seems like MSFT and FB are working on taking those designers in house with in-house tools as well. FB put up $10M to support designers in Horizon Worlds, as an example.
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StockOpine's avatar
$21.7m follower assets
What do you think of Autodesk $ADSK as an investment idea?
We have initiated our research on Autodesk $ADSK and we thought of sharing some information before our deep dive release.

Company profile and performance

  • Autodesk offers business software solutions in architecture, engineering and construction (AEC), product design, manufacturing, media and entertainment (M&E).
  • Its solutions focus amongst others on Computer Aided Design (CAD), Building Information Modelling (BIM) and 3D Modelling.
  • AutoCAD and Revit solutions are the industry standards in Building Design and Building information modelling.

The stock

  • At $218 (market capitalization is $48 billion) the stock price is trading 37% off its 52-week high.
  • The stock returned 152% to shareholders over the past five years.

Business overview and financial highlights

  • The Company transformed its business model from selling perpetual licenses to subscription model (SaaS model) over the past years, discontinuing the sale of new perpetual licenses in 2016.
  • Revenue for the fiscal year 2022 was $4.4 billion, up 16% from prior year. Revenue grew at a CAGR of 16.6% over the past 5 years and is expected to grow 14-17% in fiscal 2023.

  • The Company’s segments are AEC, AutoCAD, Manufacturing, Media & Entertainment and Other. AEC and AutoCAD make 73% of revenue for fiscal year 2022, similar to 2021 (72%).
  • For the fiscal year 2022, the Company generated free cash flow of $1.48 billion (34% of revenue) and expects free cash flow to increase to $2.17 billion (43% of revenue) in fiscal 2023 taking the mid-point of management’s guidance.
  • GAAP operating margin adjusting for non-recurring items was 17% in fiscal 2022 while non-GAAP operating margin was 32%. For fiscal 2023, management guided for GAAP operating margin of 21% and non-GAAP operating margin of 37%.

Balance sheet and capital allocation

  • At January 31, 2022, the Company had $1.81 billion in cash, cash equivalents, and marketable securities and $2.63 billions of debt outstanding.
  • Most of the Capital in Fiscal 2022, was deployed on acquisitions and share repurchases to offset dilution from the SBC.

TAM and industry expectations

  • The industry is generally fragmented due to its low barrier of entry and is characterized by vigorous competition in each of the vertical markets that CAD software is deployed.
  • The key players in the industry focus on different vertical markets, with Autodesk being a clear leader in the AEC industry.
  • Management claims that its total addressable market is $62B in 2022 and is expected to grow to $78B in 2026 (CAGR of 5.9%) of which $43B comes from Design and $35B from Make business. Autodesk’s revenue from design in fiscal 2022 was $3,869 millions while revenue from make was $364 millions.
  • The Global 3D CAD software market size was valued at $9.5 billion in 2020 and is expected to grow at a CAGR of 6.4% from 2021 to 2028.

  • The Global Building Information Modeling market size is projected to grow from $5.7 billion in 2020 to $12 billion in 2027 at a CAGR of 11.1%.

Opportunities

  • Management claims to have 15 million non-compliant users which use the product actively and have the potential to be monetized. Monetizing 20% of those users could be a significant revenue growth driver.
  • BIM penetration is at early stages of adoption and government mandates for BIM usage will be a tailwind for Autodesk.
  • High operating leverage – Autodesk current cost structure and asset light business will allow it to increase margins as revenue increases.
  • $1 trillion Infrastructure bill passed in 2021 will be another tailwind for Autodesk – Increase of construction and infrastructure projects in US, suggest a relative increase in demand of AEC business solutions.

Valuation metrics
  • The Company trades at a current EV/Sales of 11.3 and forward EV/Sales of 9.8. The 5-year average EV/Sales is 13.9.
  • The Company also trades at a current EV/EBITDA of 60.1 and forward EV/EBITDA of 25.
  • Comparing the above forward multiples to peers (Average forward EV/Sales of 11.5 and Average forward EV/EBITDA of 32.7) such as Dassault Systemes, Bentley Systems, Nemetschek SE and PTC Inc, Autodesk is trading in the lower range.

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Disclaimer: The team does not guarantee the accuracy or completeness of the information provided. All statements express personal opinions based on own financial and business analysis. Any estimates or forward-looking statements made are inherently unreliable. This is not a trading or investment advice and we do not provide any personal investment advice tailored to the needs of any recipient.
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