Soft guidance sends Autodesk's stock down in extended trading

Soft guidance sends Autodesk’s stock down in extended trading

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Shares of the design software firm Autodesk Inc. headed down in extended trading today after the company warned of lower-than-expected sales in the coming quarter and fiscal year.

The warning followed solid fourth-quarter financial results. Autodesk reported earnings before certain costs such as stock compensation of $1.86 per share, beating Wall Street’s target of $1.81 per share. Revenue for the period came to $1.32 billion, up 9% from a year earlier and just ahead of the $1.31 billion analyst estimate. The company’s net profit for the quarter came to $293 million, up from a total income of just $89 million a year before.

Autodesk also reported full-year fiscal 2022 revenue of $5.01 billion, up 14% from a year earlier, with a net profit of $823 million, up from $497 million a year ago.

The results were decent, but whatever optimism they generated evaporated fast as the company offered somewhat cautious guidance for the next three months and year ahead. For the first quarter, Autodesk said, it sees earnings of $1.50 to $1.56 per share on revenue of $1.26 billion to $1.275 billion. Wall Street is targeting higher earnings of $1.66 per share on revenue of $1.27 billion.

For fiscal 2023, Autodesk said, it sees revenue of between $5.35 billion and $5.45 billion, the midpoint of which falls below Wall Street’s target of $5.46 billion. Autodesk’s stock, which had gained 2% during the regular trading session, dropped by almost 5% after-hours as investors balked at its forecasts.

Despite issuing soft guidance, Autodesk Chief Executive Andrew Anagnost (pictured) appeared to be full of optimism. “As we deliver next-generation technology and services to our customers, the pace of transformation within and between the industries we serve will accelerate, generating large new growth opportunities for Autodesk,” he said in a statement. “We started seeing the shift toward connected digital workflows in the cloud in product design and manufacturing, then in architecture, followed by building engineering, and more recently construction.”

Autodesk sells computer-aided design software to customers in a wide range of industries, including the manufacturing, architecture, building, construction, media and entertainment sectors. One of the pioneers of CAD, the company has played a key role in the development of new technologies such as robotics, augmented and virtual reality, and 3D printing. Customers use Autodesk’s software to design everything from movies to skyscrapers to high-performance sports cars.

Autodesk’s revenue is derived from two main sources, the most important of which is its Design segment, which saw sales increase 9% from a year earlier, to $1.11 billion. Meanwhile, revenue from the smaller Make segment came to $119 million, up 20% from a year ago.

The company also reported total billings of $2.12 billion, up 28% from the same period one year before. Billings is a key metric for investors that refers to the invoice amount billed to customers, so it’s a strong indicator of a company’s future revenue. Finally, Autodesk reported a net revenue retention rate of between 100% and 120%. NNR is another important metric that measures a company’s ability to squeeze revenue from its existing customer base.

Holger Mueller of Constellation Research Inc. said Autodesk delivered good results, and notably broke the $5 billion annual revenue barrier for the first time, a key milestone for any company.

“With revenue up 20% for the full year, it’s clear that Autodesk is right in the middle of the drive to digital design in industries like engineering and construction, and it’s enjoying the benefits of that,” the analyst said. “However, investors will have taken notice that Autodesk was only able to deliver single-digit growth in the last quarter. So fiscal 2023 looks to be a key year for Andrew Anagnost and team, with investors watching to see if they can keep a lid on costs and maintain double-digit growth.”

Photo: Autodesk/YouTube

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