A month has gone by since the last earnings report for Autodesk (ADSK Quick QuoteADSK - Free Report) . Shares have lost about 5.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Autodesk due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Autodesk Q2 Earnings Top Estimates, Revenues Rise Y/Y

Autodesk reported second-quarter fiscal 2022 non-GAAP earnings of $1.21 per share that beat the Zacks Consensus Estimate by 9% and increased 23.5% year over year.

Revenues of $1.06 billion beat the consensus mark by 0.7% and grew 16% year over year. At constant currency (cc), revenues were up 14%. The upside was driven by increases in new product subscriptions and higher renewal rates along with improving digital sales.

Top-Line Details

Subscription revenues (95.9% of revenues) increased 20.9% year over year to $1.017 billion. Other revenues (2.5% of revenues) increased 26.1% to $26.1 million in the reported quarter.

However, maintenance revenues (1.6% of revenues) slumped 67% to $16.9 million.

Recurring revenues contributed 98% to Autodesk’s second-quarter fiscal 2022 revenues. Net revenue retention rate was within 100% to 110%.

Geographically, revenues from the Americas (39.9% of revenues) increased 14% from the year-ago quarter’s levels to $422.8 million. Europe, Middle East and Africa (EMEA) revenues (38.7% of revenues) increased 16% to $410.2 million. Revenues from Asia-Pacific (21.4% of revenues) rallied 21% to $226.7 million.

Meanwhile, billings of $1.015 billion increased 29% 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) as well as Media and Entertainment (M&E).

AEC (45.2% of revenues) revenues increased 21% year over year to $478.7 million. AutoCAD and AutoCAD LT (28.7% of revenues) revenues rose 12% to $304.4 million. MFG (19.6% of revenues) revenues increased 12% to $207.7 million.

M&E (5.5% of revenues) increased 10% to $58.5 million, while other revenues (1% of revenues) increased 93% to $10.4 million.

Operating Results

Non-GAAP gross margin contracted 30 basis points (bps) from the year-ago quarter’s figures to 92.3%.

Non-GAAP operating expenses, as a percentage of revenues, contracted 280 bps from the year-ago quarter’s levels to 61.1%. The lower operating expenses reflected disciplined cost management in the reported quarter.

Autodesk reported non-GAAP operating income of $330.8 million, up 26.1% year over year. Operating margin expanded 200 bps from the year-ago quarter’s levels to 31%.

Balance Sheet & Cash Flow

As of Jul 31, 2021, Autodesk had cash and cash equivalents (including marketable securities) of $924.9 million compared with $923.2 billion as of Apr 30, 2021.

Deferred revenues increased 15% to $3.3 billion. Unbilled deferred revenues at the end of the fiscal second quarter were $843 million, up 124.8% year over year.

Total RPO of $4.14 billion and current RPO of $2.85 billion both increased 24%. Current RPO growth was primarily driven by the higher sales of new products as well as increase in strong growth in enterprise business agreements (EBA).

The company repurchased 164,000 shares for $46 million at an average price of approximately $283 per share. Cash flow from operating activities was $202 million compared with $336.1 million posted in the previous quarter. Free cash flow was $186 million compared with the previous quarter’s figure of $315.8 million.

Guidance

For third-quarter fiscal 2022, Autodesk expects revenues between $1.11 billion and $1.125 billion. Non-GAAP earnings are anticipated in the range of $1.22-$1.28 per share.

Driven by strong second-quarter results and increased migration of EBA clients to annual billings from multi-year paid up front, Autodesk raised fiscal 2022 revenue outlook.

For fiscal 2022, Autodesk expects revenues between $4.345 billion and $4.385 billion, indicating growth of 15-16% year over year. Earlier, Autodesk projected revenues between $4.305 billion and $4.385 billion, indicating growth of 14-16% year over year.

Non-GAAP earnings are now expected between $4.91 and $5.06 per share compared with $4.67-$4.97 per share projected earlier.

The migration of EBA clients to annual billings will have a “modest impact” on the billings and free cash flow metrics for fiscal 2022, noted management.

Billings are now projected to be $4.875-$4.975 billion, suggesting an increase of 18-20% year over year. Previously, billings were projected to be $4.93-$5.055 billion, implying an increase of 19-22% year over year.

Free cash flow is expected between $1.5 billion and $1.575 billion compared with the earlier guidance of $1.575-$1.65 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Autodesk has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Autodesk has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.