Autodesk ADSK shares gained 5.5% during Wednesday’s extended trading session after the company reported better-than-expected results for the second quarter and raised guidance for the full fiscal 2024.
Autodesk reported second-quarter fiscal 2024 non-GAAP earnings of $1.91 per share, way higher than the Zacks Consensus Estimate of $1.72 per share. The bottom line improved 15.8% year over year.
The company reported revenues of $1.35 billion, which also surpassed the consensus mark of $1.32 billion. The figure grew 9% year over year on a reported basis and 12% on a constant-currency basis. The upside was driven by resilient subscription renewal rates, new business growth and a strong competitive performance.
Autodesk, Inc. Price, Consensus and EPS Surprise 
Autodesk, Inc. price-consensus-eps-surprise-chart | Autodesk, Inc. Quote
Top-Line Details
Autodesk’s subscription revenues (94.4% of the total revenues) increased 9% year over year (up 13% on a constant-currency basis) to $1.27 billion. Maintenance revenues (1.1% of the total revenues) declined to $14 million compared with $17 million in the year-ago quarter. Other revenues (4.5% of the total revenues) increased slightly to $61 million from $60 million in the year-ago quarter.
Our estimate for subscription, maintenance and other revenues were pegged at $1.23 billion, $15.7 million and $74 million, respectively.
Recurring revenues contributed 98% to Autodesk’s second-quarter fiscal 2024 revenues. The net revenue retention rate was within the company’s 100-110% targeted range.
Region-wise, revenues from the Americas (43.8% of revenues) increased 14% from the year-ago quarter’s levels to $589 million. Revenues from the EMEA, which accounted for 37.6% of revenues, climbed 7% to $506 million. Revenues from the Asia-Pacific (18.6% of revenues) remained flat at $250 million.
Billings of $1.1 billion declined 8% year over year in the reported quarter.
Product 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 (46.6% of revenues) revenues increased 11% year over year to $627 million. AutoCAD and AutoCAD LT (27.1% of revenues) revenues rose 6% to $364 million. MFG (19 % of revenues) revenues increased 6% to $256 million. M&E (7.3% of revenues) revenues climbed 13% to $98 million.
Our model estimate for AEC, AutoCAD and AutoCAD, MFG and M&E second-quarter revenues were pegged at $587.7 million, $369.7 million, $264.4 million and $77.8 million, respectively.
Operating Results
The company’s gross profit increased to $1.22 billion from $1.12 billion in the year-ago quarter. The gross profit margin expanded 20 basis points to 90.6%.
Autodesk reported a non-GAAP operating income of $489 million, up 10.1% year over year. The non-GAAP operating margin remained flat at 36%.
Balance Sheet & Cash Flow
As of Jul 31, 2023, Autodesk had cash and cash equivalents (including marketable securities) of $2.07 billion compared with $2.13 billion as of Apr 30, 2023.
Deferred revenues increased 14% year over year to $4.23 billion. Unbilled deferred revenues at the end of the fiscal second quarter were $991 million, up from $904 million in the previous quarter.
The total remaining performance obligation (RPO) of $5.22 billion and the current RPO of $3.51 billion increased 11% and 12%, respectively. Our estimate for total RPO was pegged at $4.95 billion.
Cash flow from operating activities was $135 million, while free cash flow was $128 million in the reported quarter. In the first half of fiscal 2024, the company generated operating and free cash flows of $858 million and 842 million, respectively.
Raised Fiscal 2024 Guidance
Buoyed by the stronger-than-expected second-quarter performance, Autodesk raised its guidance for fiscal 2024. The company now projects fiscal 2024 revenues between $5,405 million and $5,455 million, up from the previous guidance range of $5,355-5,455 million, indicating 8-9% growth. Billings are now estimated in the $5,075-$5,175 million range instead of the $5,025-$5,175 million band projected earlier.
Non-GAAP earnings per share are now expected between $7.30 and $7.49, up from the earlier guidance range of $7.07-$7.41. Free cash flow is now anticipated in the $1,170-$1,250 million range instead of the $1,150-$1,250 billion band forecast previously. However, ADSK still expects the non-GAAP operating margin to be flat year over year.
For the third quarter of fiscal 2024, Autodesk expects revenues between $1,380 million and $1,395 million. Non-GAAP earnings are anticipated in the range of $1.97-$2.03 per share.
Zacks Rank & Stocks to Consider
Currently, Autodesk carries a Zacks Rank #3 (Hold). Shares of ADSK have risen 9.4% year to date (YTD).
Some better-ranked stocks from the broader technology sector are Palo Alto Networks PANW, Manhattan Associates MANH and Salesforce CRM. Palo Alto Networks and Manhattan Associates each sport a Zacks Rank #1 (Strong Buy), while Salesforce carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Palo Alto Networks' first-quarter fiscal 2024 earnings has been revised upward by a penny to $1.11 per share in the past seven days. For fiscal 2024, earnings estimates have increased by a couple of cents to $4.97 per share in the past seven days.
Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 22.2%. Shares of PANW have surged 69.7% YTD.
The Zacks Consensus Estimate for Manhattan Associates’ third-quarter 2023 earnings has been revised 5 cents northward to 77 cents per share in the past 30 days. For 2023, earnings estimates have moved 22 cents upward to $3.09 per share in the past 30 days.
Manhattan Associates’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 31.6%. Shares of MANH have rallied 60.1% YTD.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has remained unchanged at $1.90 per share in the past 60 days. For fiscal 2024, earnings estimates have remained unchanged at $7.44 per share in the past 60 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have surged 59.2% YTD.
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