Autodesk (ADSK) Q2 Earnings Beat Estimates, Revenues Up Y/Y

Autodesk ADSK reported second-quarter fiscal 2020 non-GAAP earnings of 65 cents per share that beat the Zacks Consensus Estimate by 4 cents. Moreover, the figure was much better than earnings of 19 cents posted in the year-ago quarter.

Revenues of $797 million comfortably surpassed the consensus mark of $787 million and grew 30.3% year over year. At constant currency (cc), revenues were up 30%.

Recurring revenues represented 96% of Autodesk’s second-quarter fiscal 2020 revenues, flat year over year.

Top-Line Details

Subscription revenues (83.3% of revenues) soared 57.8% year over year to $663.7 million. However, maintenance revenues (13% of revenues) slumped 37.8% to $103.5 million.

Revenues were also positively impacted by a 19.8% year-over-year increase in other revenues (3.7% of revenues), which totaled $29.6 million in the reported quarter.

Direct revenues rose 38% year over year and accounted for 30% of revenues.

Autodesk, Inc. Price, Consensus and EPS Surprise

 

Autodesk, Inc. Price, Consensus and EPS Surprise

Autodesk, Inc. price-consensus-eps-surprise-chart | Autodesk, Inc. Quote

Geographically, revenues from the Americas (40.9% of revenues) increased 31.7% from the year-ago quarter to $325.9 million. Europe, Middle East and Africa (EMEA) revenues (39.7% of revenues) increased 27.3% to $316.2 million. Revenues from Asia-Pacific (19.4% of revenues) grew 33.5% to $154.7 million.

Product-wise, AEC (41.9% of revenues) revenues surged 37.5% year over year to $334.2 million. AutoCAD and AutoCAD LT (29% of revenues) revenues rose 31% to $231.3 million. MFG (21.9% of revenues) revenues increased 19.5% to $174.6 million. M&E (6.4% of revenues) grew 21.8% to $50.8 million. Moreover, other revenues (0.7% of revenues) jumped 40.5% to $5.9 million.

Manufacturing revenues were up 20% year over year. Adoption of Fusion 360 picked up, while Autodesk gained market share.

Billings of $893 million surged 48% year over year in the reported quarter.

Annualized Recurring Revenues in Detail

Annualized Recurring Revenues (ARR) were $3.07 billion, up 31% year over year. Latest acquisitions contributed $98 million to ARR. Notably, BIM 360 ARR growth accelerated in the reported quarter.

Subscription plan ARR of $2.65 billion surged 58% (59% at cc). The figure includes $566 million related to the maintenance-to-subscription (M2S) program.

However, maintenance plan ARR of $414 million declined 38% (39% at cc) from the year-ago quarter.

Core ARR rose 26% to $2.86 billion. Cloud ARR skyrocketed 175% to $207 million, driven by strong performance in construction. Organic Cloud ARR, which primarily comprises BIM 360 and Fusion 360, soared 43%.

Net revenue retention rate was within the fiscal 2019 range of 110-120%.

Operating Results

Non-GAAP gross margin expanded 190 basis points (bps) from the year-ago quarter to 91.7%.

Research & development, sales & marketing and general & administrative expenses as a percentage of revenues declined 340 bps, 780 bps and 120 bps year over year, respectively.

As a result, non-GAAP operating expenses, as a percentage of revenues, declined to 68.3% from 80.7% reported in the year-ago quarter.

The lower operating expenses reflected disciplined cost management in the reported quarter.

Autodesk reported non-GAAP operating income of $186.5 million compared with the year-ago quarter’s income of $55.6 million.

Balance Sheet & Cash Flow

As of Jul 31, 2019, Autodesk had cash and cash equivalents (including marketable securities) of $991.3 million compared with $972.1 million as of Apr 30, 2019.

Deferred revenues increased 25% to $2.25 billion. Unbilled deferred revenues at the end of the second quarter were $563 million.

Remaining performance obligations (RPO) totaled $2.81 billion, up 28%. Current RPO totaled $2.01 billion, up 23%.

Cash flow from operating activities was $219 million, increasing $176 million year over year. Free cash flow was $205 million, rising $181 million from the year-ago quarter.

Guidance

For third-quarter fiscal 2020, Autodesk expects revenues between $820 million and $830 million. The Zacks Consensus Estimate for revenues is pegged at $836.47 million, indicating growth of 26.6% from the figure reported in the year-ago quarter.

Non-GAAP earnings are anticipated to be 70-74 cents per share. The consensus mark for earnings is pegged at 76 cents, much better than 29 cents reported in the year-ago quarter.

For fiscal 2020, Autodesk expects revenues between $3.24 billion and $3.27 billion, indicating growth of 26-27% year over year. The Zacks Consensus Estimate for revenues is pegged at $3.28 billion.

Billings are projected to be $4.02-$4.08 billion, implying growth of 49-51% year over year.

Total ARR is expected between $3.425 billion and $3.485 billion, indicating year-over-year growth of 25-27%.

Non-GAAP spend is expected to increase roughly 9%.

Non-GAAP earnings are expected between $2.69 and $2.81 per share. The consensus mark for earnings is pegged at $2.80.

Free cash flow is expected to be almost $1.30 billion.

Zacks Rank & Stocks to Consider
 
Autodesk currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same industry include Cadence Design System CDNS, Intuit INTU and Rosetta Stone RST. All three stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Cadence, Intuit and Rosetta Stone is projected to be 10%, 16.3% and 12.50%, respectively.

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