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While Encouraging, Autodesk, Inc. (ADSK) Earnings Have Negatives; Oppenheimer Weighs In


Autodesk, Inc. (NASDAQ:ADSK) investors certainly liked what they saw from the company’s earnings report on Tuesday, sending shares higher by more than 10%.

Autodesk reported solid F4Q results, posting non-GAAP EPS loss of ($0.09) and revenue of $554 million, beating consensus estimates of ($0.11) and $545 million, respectively.

However, the earnings report also revealed that Autodesk still has issues to tackle. Oppenheimer analyst Koji Ikeda listed the positives and negatives:

Positives:

  • Total ARR grew 25% y/y to ~$2.1B, accelerating from +24% in F3Q.
  • FCF of $68M (+1,350% y/y) was ~$91M above the consensus.
  • Triple-digit-growth in subscriptions plan: ARR, subscribers, and revenue (+106%, +109%, +105%, respectively).
  • “More than 1/3” of eligible M2S migrations upgraded to collections, up from ~25% in F3Q.

Negatives:

  • FY2018 net-new-subscriptions of ~611K was below guidance, and FY2019 net-new-subscriptions guidance of 500-550K is below the ~730K consensus estimate. This also implies sub-20% subscriber growth in FY2019, which is below the FY2020 growth target that will likely be revised at the upcoming investor day.
  • FY2019 revenue and profitability guidance implies back-end loaded revenue growth and margin expansion trends.

Overall, Ikeda remains bullish on ADSK, with a Buy rating and price target of $145 ($135 previously), which represents a potential upside of 21% from Tuesday’s closing price. (To watch Ikeda’s track record, click here)

The analyst concluded, “The key takeaway from the F4Q results is that we believe the business remains on track to achieve the bullish FY2020 financial targets, and the construction opportunity continues to be overlooked.”

Autodesk has one of the best ratings by the Street. TipRanks reveals that ADSK has a Strong Buy analyst consensus rating with 10 back-to-back buy ratings in the past three months. Meanwhile the average analyst price target of $148 suggests the stock still has upside potential of just over 11% from the current share price.