Autodesk (ADSK) Q4 Earnings Top Estimates, Revenues Rise Y/Y

Autodesk ADSK reported fourth-quarter fiscal 2020 non-GAAP earnings of 92 cents per share that beat the Zacks Consensus Estimate by 2.2%.

Moreover, the earnings figure doubled year over year driven by growth in subscription plan revenues, led by product subscription revenues.

The earnings figure also came in higher than non-GAAP earnings guidance of 86-91 cents per share.

Revenues of $899.3 million beat the consensus mark by 1% and grew 22% year over year. At constant currency (cc), revenues were up 28%. Acquisitions contributed 3% to revenue growth.

The figure came ahead of the guided range of $880-$895 million.

Recurring revenues represented 95% of Autodesk’s fourth-quarter fiscal 2020 revenues, flat year over year.

Autodesk, Inc. Price, Consensus and EPS Surprise

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

Top-Line Details

Subscription revenues (86.4% of revenues) soared 41.3% year over year to $777.4 million.

However, maintenance revenues (8.9% of revenues) slumped 41.8% to $79.9 million. Moreover, other revenues (4.7% of revenues) decreased 15.8% to $42 million in the reported quarter.

Geographically, revenues from the Americas (40.6% of revenues) increased 21.4% from the year-ago quarter to $364.8 million. Europe, Middle East and Africa (EMEA) revenues (40.1% of revenues) increased 20.7% to $360.5 million. Revenues from Asia-Pacific (19.3% of revenues) grew 25.8% to $174 million.

Billings of $1.49 billion surged 43% year over year in the reported quarter.

Product-wise Top-line Details

Autodesk offers primarily four product families, Architecture, Engineering and Construction (AEC), AutoCAD and AutoCAD LT, Manufacturing (MFG), and Media and Entertainment (M&E).

AEC (42.3% of revenues) revenues increased 29.9% year over year to $380.6 million. AutoCAD and AutoCAD LT (28.7% of revenues) revenues rose 23.6% to $258.3 million. MFG (22.4% of revenues) revenues increased 14.5% to $201.8 million. Moreover, other revenues (0.7% of revenues) jumped 46.5% to $6.3 million.

However, M&E (5.8% of revenues) declined 4.7% to $52.3 million.

Annualized Recurring Revenues in Detail

Annualized recurring revenues (ARR) were $3.43 billion, up 25% (26% at cc) year over year. Acquisitions (completed over the trailing 12 months) contributed $126 million to ARR. Notably, BIM 360 ARR growth accelerated in the reported quarter.

Subscription plan ARR of $3.11 billion surged 41% (43% at cc) driven by growth in all subscription plan types, led by product subscriptions. The figure includes $639 million related to the maintenance-to-subscription (M2S) program.

However, maintenance plan ARR of $320 million declined 42% (42% at cc) from the year-ago quarter, reflecting migration of maintenance plan subscriptions to product subscriptions

Core ARR rose 21% year over year to $3.17 billion. Cloud ARR skyrocketed 102% to $255 million, driven by strong performance of BIM 360 Design.

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

Autodesk also signed 62 license compliance deals worth more than $500K. Fourteen of these deals were worth more than $1 million. This reflects that the company is successfully monetizing its non-paying user base.

Operating Results

Non-GAAP gross margin expanded 130 basis points (bps) from the year-ago quarter to 92.3%.

Research & development, marketing & sales and general & administrative expenses as a percentage of revenues declined 200 bps, 510 bps and 150 bps year over year, respectively.

As a result, non-GAAP operating expenses, as a percentage of revenues, declined to 63.5% from 72% 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 $258.9 million compared with the year-ago quarter’s figure of $139.2 million.

Key Q4 Details

During the quarter, the company unveiled Autodesk Construction Cloud which combines three core elements — advanced technology, a unique builders’ network and predictive insights to connect people and data across the building lifecycle, from design through operations.

Moreover, Autodesk announced an alliance with Virgin Hyperloop One to explore new opportunities in extending the value of BIM for transportation route optimization and digital engineering and construction workflows.

The company announced that new electronics capabilities are coming to Fusion 360 in 2020 including printed circuit board (PCB) design, schematics editing, SPICE simulation and library management among others.

Balance Sheet & Cash Flow

As of Jan 31, 2020, Autodesk had cash and cash equivalents (including marketable securities) of $1.77 billion compared with $1.02 billion as of Oct 31, 2019.

Deferred revenues increased 44% to $3.01 billion. Unbilled deferred revenues at the end of the fourth quarter were $550 million.

Remaining performance obligations (RPO) totaled $3.56 billion, up 33%. Current RPO totaled $2.37 billion, up 23%.

The company repurchased over 1 million shares worth $191 million. In full year 2019, Autodesk has repurchased 2.7 million shares for $456 million.

Cash flow from operating activities was $698 million, compared with $276 million posted in the previous quarter. Free cash flow was $684 million, compared with the previous quarter’s figure of $267 million.

Guidance

For first-quarter fiscal 2020, Autodesk expects revenues between $880 million and $895 million. The Zacks Consensus Estimate for revenues is pegged at $910.5 million, indicating growth of 23.8% from the figure reported in the year-ago quarter.

Non-GAAP earnings are anticipated to be in the range of 80-86 cents per share. The consensus mark for earnings is pegged at 92 cents, indicating 104.4% growth from the figure reported in the year-ago quarter.

For fiscal 2021, Autodesk expects revenues between $3.93 billion and $3.99 billion, indicating growth in the range of 20-22% year over year. The Zacks Consensus Estimate for revenues is pegged at $3.98 billion.

Billings are projected to be $4.63-$4.71 billion, implying growth of 11-13% year over year.

Non-GAAP earnings are expected between $4.21 and $4.44 per share. The consensus mark for earnings is pegged at $4.41 per share.

Free cash flow is expected between $1.63 billion and $1.69 billion.

For fiscal 2021, Autodesk expects revenues and free cash flow growth in the low 20% range.

Zacks Rank & Stocks to Consider

Autodesk currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector include Dropbox, Inc. DBX, Stamps.com Inc. STMP and ManTech International Corporation MANT, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Dropbox, Stamps.com and ManTech is currently projected to be 22.2%, 15% and 8%, respectively.

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