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$ADSK Earnings Review - Q2’24
Results

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Source: Koyfin (affiliate link with a 15% discount for StockOpine readers)

Revenues of $1.34B, a 9% increase YoY and 6.0% QoQ, exceeding management’s guidance of $1.32B (mid-point) mainly due to early billings for EBAs (Enterprise Business Agreements).

Subscription revenue accounts for 94.4% of revenues and increased 9.5% YoY and 6.5% QoQ.

Billings of $1.1B down by 8% reflecting the transition from up-front billings to annual billings for multi-year contracts.

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Source: Autodesk Q2’24 earnings presentation

GAAP Operating Margin of $262M up by 8.3% YoY while margin declined by 100bps to 19%.

Non-GAAP Operating Margin of $489M up by 10% YoY while margin remained flat at ~36%. In Q1 margin was 32% and it’s currently behind the mid-term goal of 38%-40%.

Net Income increased to $222M (up by 19.4%) compared to $186M in Q2’23. Net margin of 16.5% Vs 15% in Q2’23.

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Balance sheet

Cash flow from operating activities of $135M (Vs $257M in Q2’23) – Margin of 10% (20.8% in Q2’23).
Free cash flow of $128M (Vs $246M in Q2’23) – Margin of 9.5% (19.9%).

Free cash flow of $128M was slightly higher than management expectations whereas the material drop is vastly affected by the transition of upfront to annual billings for multi-year contracts. Headwind is expected to be significant in FY24 and decline in FY25.

Strong balance sheet with Cash, Cash equivalents and marketable securities of $2.1B compared to debt and lease liabilities of $2.6B.

Outlook

Management expects FY24 revenue to be between $5.405B and $5.455B (up 8%-9% YoY), increasing the lower end of estimates by $50M. Q3’FY24 Revenue estimate assumes a growth of 8%-9%.

Management expects FY24 billings to be between $5.075B and $5.175B (down by 12%-11%).

FY24 Non-GAAP operating margin is expected to remain flat at ~36%.

FY24 Free Cash Flow is expected to be between $1.17B and $1.25B.

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Source: Autodesk Q2’24 earnings presentation

Other highlights

Net revenue retention rate remained within the range of 100 to 110 percent.

Direct sales accounted for 37% of sales, the highest in the last 6 quarters.

Remaining performance obligations comprised of $4.23B deferred revenue and $991M unbilled revenue, increased by 11% to $5.22B.

In Q2’24, 400,000 shares were purchased for $87 million at an average price per share of $199.7, partly offsetting stock based compensation (“SBC”) dilution. SBC remains high at 15% of revenue, with yearly estimates standing at ~13%.

“We will continue to offset dilution from our stock-based compensation program and to opportunistically accelerate repurchases when it makes sense to do so.” Debbie Clifford, CFO

Andrew Anagnost, CEO explained how Autodesk Construction Cloud is gaining traction (reporting a +100% increase in MAU in the quarter) as customers aim to streamline their workflows by having an end-to end solution.

Seen some improvements in dealing with non-compliant users.

Final thoughts

Pros:

Strong performance across all sectors and products.

Forecasts revised upwards.

Transition to annual billings goes well and the number of customers reverting back to annual contracts was within expectations.

Cons:

We want to see more on the profitability front but as long as the company grows we are pleased.

Disclaimer__: _Not_ a financial advice__. _The_ pos__t contains affiliate _links._

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