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Earnings Preview: Autodesk

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Autodesk Inc. (ADSK - Free Report) is scheduled to release its fiscal third quarter 2013 results after the closing bell on November 15, 2012.

Prior Quarter Highlights

Autodesk Inc. reported mixed second quarter 2013 results. The company reported non-GAAP earnings of 48 cents per share, which were ahead of the Zacks Consensus Estimate of 40 cents per share. However, including stock based compensation and its related tax effects, earnings came at 35 cents.

Revenue increased 4.1% from the year-ago quarter to $568.7 million, but was way behind the Zacks Consensus Estimate of $594.0 million. Revenue growth slowed considerably as certain organizational realignments hampered sales executions. Sluggishness in the macroeconomic environment also led to the weaker-than-expected top-line growth.

For third quarter 2013, Autodesk expects revenues in the range of $550 million to $570 million.  The Zacks Consensus Estimate for the quarter is pegged at $562 million. Non-GAAP EPS is expected in the range of 40 cents to 45 cents.

For further details please read: Autodesk’s Outlook Disappoints

Estimate Revision Trend

In the last 30 days, only one out of the five analysts covering the stock revised the third quarter estimate downward, while none revised their estimates upward. Thus, the Zacks Consensus Estimate fell by a penny to 31 cents for the same period of time.

Analysts covering the stock prefer to remain cautious about the third quarter results as they expect issues related to the sales execution, which hampered the second quarter performance, to continue. Moreover, analysts expect a tepid demand scenario in the U.S. to weigh on the company’s top line.

However, the company’s initiatives to shift toward cloud and mobile computing are expected to be long-term positives.


We note that Autodesk has a negative average earnings surprise of 4.25% over the past four quarters. The ongoing sluggishness in the macroeconomic environment, Autodesk’s high exposure to Europe and its customer concentration are the near-term headwinds. Moreover, Autodesk expects the pre-tax charge to range $40 million to $45 million in the third quarter, which would weigh on the stock.

However, Autodesk maintains a dominant position in the computer-aided designing market. We believe that Autodesk’s expanding product portfolio, broadening industry applications and geographic reach will help it sustain longer-term growth. We believe that the new cloud-based products will boost Autodesk’s subscriber base in the near term. The company is also increasing its penetration in the mobile market by developing software for smartphones and Apple Inc.’s (AAPL - Free Report) iPad, which will boost Autodesk’s top-line growth in the long term.

We have a Neutral recommendation on Autodesk’s shares in the long term. Currently, Autodesk has a Zacks #4 Rank, which translates into a short-term (1-3 months) ‘Sell’ rating.

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