Design software company Autodesk (NASDAQ:ADSK) reported results ahead of analysts' expectations in Q3 FY2024, with revenue up 10.5% year on year to $1.41 billion. Revenue guidance for the full year also exceeded analysts' estimates but next quarter's guidance of $1.43 billion was in line with expectations. Turning to EPS, Autodesk made a non-GAAP profit of $2.07 per share, improving from its profit of $1.70 per share in the same quarter last year.
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Autodesk (ADSK) Q3 FY2024 Highlights:
- Revenue: $1.41 billion vs analyst estimates of $1.39 billion (1.9% beat)
- EPS (non-GAAP): $2.07 vs analyst estimates of $1.99 (4% beat)
- Revenue Guidance for Q4 2024 is $1.43 billion at the midpoint, roughly in line with what analysts were expecting
- Free Cash Flow of $13 million, down 89.8% from the previous quarter
- Gross Margin (GAAP): 91%, in line with the same quarter last year
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.
Design SoftwareThe demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse might still be more of a buzzword than a real thing, what is real is the demand for the tools to create these experiences, whether they are games, 3D tours or interactive movies.
Sales GrowthAs you can see below, Autodesk's revenue growth has been unremarkable over the last two years, growing from $1.13 billion in Q3 FY2022 to $1.41 billion this quarter.
This quarter, Autodesk's quarterly revenue was once again up 10.5% year on year. Looking at the last two quarters, we can see that Autodesk's revenue increased by $69 million in Q3 while it grew $76 million in Q2 2024. This steady quarter-on-quarter growth shows that the company can more or less maintain its growth trajectory.
Next quarter's guidance suggests that Autodesk is expecting revenue to grow 8.5% year on year to $1.43 billion, in line with the 8.8% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 9.7% over the next 12 months before the earnings results announcement.
Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Autodesk's free cash flow came in at $13 million in Q3, down 97.2% year on year.
Autodesk has generated $1.76 billion in free cash flow over the last 12 months, an eye-popping 33.8% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.
Key Takeaways from Autodesk's Q3 Results Sporting a market capitalization of $46.96 billion, more than $1.95 billion in cash on hand, and positive free cash flow over the last 12 months, we believe that Autodesk is attractively positioned to invest in growth.
It was encouraging to see Autodesk top analysts' revenue and EPS estimates this quarter, driven by better-than-expected billings and outperformance in its Architecture, Engineering, and Construction ("AEC") division. That stood out as a positive in these results. On the other hand, its free cash flow and revenue guidance for next quarter fell short of Wall Street's projections. Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track. The stock is up 3.2% after reporting and currently trades at $224.5 per share.
The author has no position in any of the stocks mentioned in this report.