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Autodesk (ADSK) Q3 Earnings Top Estimates, Revenues Rise Y/Y

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Autodesk (ADSK - Free Report) reported third-quarter fiscal 2021 non-GAAP earnings of $1.04 per share that beat the Zacks Consensus Estimate by 9.5%.

Moreover, the earnings figure increased 33.3% year over year driven by growth in subscription plan revenues, led by product subscription revenues.

Revenues of $952.4 million beat the consensus mark by 1.3% and grew 13% year over year. At constant currency (cc), revenues were up 14%. The growth was driven by higher subscription revenues.

Notably, this Zacks Rank #4 (Sell) company’s third-quarter results reflected resilience against coronavirus outbreak similar to that of its Zacks Computer Software industry peers like Microsoft (MSFT - Free Report) , Cadence Design Systems (CDNS - Free Report) and Citrix Systems (CTXS - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Microsoft's recently concluded fiscal first-quarter results benefited from momentum in Azure, impressive Teams user growth triggered by the coronavirus crisis-led digital transformation, work from home, online learning wave and tele healthcare trends.

While strength in Cadence’s digital & signoff solutions as well as Cadence Verification Suite drove top-line growth in third-quarter 2020, solid adoption of its unified workspace solutions drove Citrix Systems’ third-quarter 2020 results.

Similar to Microsoft, Autodesk benefited from the ongoing transition to cloud. The company witnessed increased usage of its cloud collaboration products due to the remote working wave throughout the quarter.

Notably, Autodesk has underperformed Cadence while outperforming Microsoft, Citrix Systems and the industry on a year-to-date basis.

Year to Date Performance

Top-Line Details

Subscription revenues (92.9% of revenues) increased 23.7% year over year to $884.4 million.

However, maintenance revenues (4.2% of revenues) slumped 56.4% to $39.8 million. Moreover, other revenues (3% of revenues) decreased 22.7% to $28.2 million in the reported quarter.

Recurring revenues represented 97% of Autodesk’s third-quarter fiscal 2021 revenues. Net revenue retention rate was within 100% to 110%.

Geographically, revenues from the Americas (41.3% of revenues) increased 12.5% from the year-ago quarter to $392.9 million. Europe, Middle East and Africa (EMEA) revenues (38.3% of revenues) increased 10.5% to $364.3 million. Revenues from Asia-Pacific (20.5% of revenues) grew 19.2% to $195.2 million.

Meanwhile, billings of $1.01 billion decreased 1% 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 (44% of revenues) revenues increased 17.2% year over year to $419.4 million. AutoCAD and AutoCAD LT (29.3% of revenues) revenues rose 13.6% to $278.8 million. MFG (20.4% of revenues) revenues increased 6.5% to $194.1 million.

M&E (5.7% of revenues) increased 6.7% to $54 million while other revenues (0.6% of revenues) declined 6.2% to $6.1 million.

Autodesk witnessed steady renewal rates during the reported quarter. Partial renewal rates remained relatively steady as well.

Operating Results

Non-GAAP gross margin expanded 50 basis points (bps) from the year-ago quarter to 92.7%.

Research & development, marketing & sales, and general & administrative expenses as a percentage of revenues declined 70 bps, 180 bps and 40 bps year over year, respectively.

As a result, non-GAAP operating expenses, as a percentage of revenues, contracted 290 bps from the year-ago quarter to 62.5%.

The lower operating expenses reflected disciplined cost management in the reported quarter. The company reduced travel and entertainment expense and monitored hiring rate and marketing spend amid the coronavirus lockdown.

Autodesk reported non-GAAP operating income of $287.1 million compared with the year-ago quarter’s figure of $225.3 million.

Key Q3 Details

During the quarter, Autodesk announced the international expansion of BuildingConnected, a construction management solution that centralizes and streamlines the bidding process, as well as encompasses the Autodesk Construction Cloud builder network. With this international expansion, the BuildingConnected solution is now available in the United Kingdom, Ireland, Australia and New Zealand.

Additionally, Autodesk launched a model coordination workflow between two of its flagship products, Navisworks and BIM 360 Model Coordination. The new integration further strengthened Autodesk Construction Cloud by enabling construction teams to manage the entire model coordination workflow including clash detection and issues management in a common data environment through a single solution.

Moreover, Autodesk completed the acquisition of Pype, a provider of cloud-based solutions for automating construction project management workflows. This acquisition will provide additional value to Autodesk Construction Cloud users, allowing general contractors, subcontractors, and owners to automate workflows such as submittals and project closeout to increase overall productivity, and reduce risk throughout the project lifecycle.

Balance Sheet & Cash Flow

As of Oct 31, 2020, Autodesk had cash and cash equivalents (including marketable securities) of $1.61 billion compared with $1.51 billion as of Jul 31, 2020.

Deferred revenues increased 21% to $2.93 billion. Unbilled deferred revenues at the end of the third quarter were $650 million.

Remaining performance obligations (RPO) totaled $3.6 billion, up 21% year over year. Current RPO totaled $2.4 billion, up 16%.

The company repurchased shares worth $196.1 million. Cash flow from operating activities was $361.1 million, compared with $91.2 million posted in the previous quarter. Free cash flow was $340.2 million, compared with the previous quarter’s figure of $64.4 million.

Guidance

For fourth-quarter fiscal 2021, Autodesk expects revenues between $999 million and $1.01 billion. Non-GAAP earnings are anticipated to be in the range of $1.04 and $1.10 per share.

For fiscal 2021, Autodesk expects revenues between $3.75 billion and $3.76 billion, indicating growth of 15% year over year. Non-GAAP earnings are expected between $3.91 and $3.97 per share.

Billings are projected to be $4.07-$4.13 billion, implying a decline 1%-3% year over year.

Free cash flow is expected between $1.30 billion and $1.36 billion.

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