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01/10 16:58
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A indicate strong financial performance, increased guidance, and positive business momentum. Raised revenue, billings, and share buyback targets signal confidence. The Q&A highlighted management's strategic focus on AI, automation, and margin expansion, although some uncertainties remain. Overall, the sentiment is positive, with potential for stock price growth.
Total Revenue Total revenue in the third quarter grew 18% as reported and in constant currency. The contribution from the new transaction model to revenue was approximately $124 million in the third quarter. Total revenue grew 12% in constant currency and excluding the impact of the new transaction model.
Billings Billings increased 21% as reported and 20% in constant currency. The contribution from the new transaction model to billings was approximately $135 million in the third quarter. Billings grew 16% in constant currency and excluding the impact of the new transaction model.
RPO (Remaining Performance Obligations) RPO of $7.4 million and current RPO of $4.8 million, both grew 20%, benefiting from tailwinds from the new transaction model.
Operating Margins Third quarter GAAP and non-GAAP operating margins were 25% and 38%, respectively, reflecting year-over-year increases of approximately 330 and 120 basis points, respectively. This reflected operating leverage and ongoing cost discipline and was partly offset by the margin drag from the new transaction model.
Free Cash Flow Third quarter free cash flow was $430 million, which benefited from the earlier timing of billings in the quarter and lower cash tax payments.
Share Repurchase We purchased approximately 1.2 million shares for $361 million at an average price of approximately $306 per share. Year-to-date, we have repurchased 3.7 million shares for approximately $1.07 million.
Cloud-based platforms and AI integration: Autodesk is enhancing its products with cloud-based platforms and AI capabilities to connect design and make workflows, enabling task, workflow, and systems automation.
Autodesk Construction Cloud: Gaining momentum with owners, designers, and contractors to converge design and construction workflows, improving project coordination and efficiency.
Fusion platform: Driving strong growth in manufacturing with AI-powered features like Sketch AutoConstrain, delivering productivity gains and higher attach rates for extensions.
Infrastructure and construction: Strong revenue and new customer momentum in infrastructure and construction, with clients like South Carolina Department of Transportation adopting Autodesk solutions.
Manufacturing: Adoption of Fusion platform by companies like Micro Matic and a French automobile manufacturer to improve efficiency and speed to market.
Revenue and financial performance: Q3 revenue grew 18%, billings increased 21%, and free cash flow reached $430 million, exceeding expectations.
Operational efficiency: Improved operating margins (GAAP: 25%, non-GAAP: 38%) due to cost discipline and operating leverage.
AI and platform strategy: Investing in AI and cloud platforms to redefine business models and expand addressable market opportunities.
Go-to-market optimization: Plan remains on track, reducing operational friction and improving transaction model implementation.
Geopolitical and macroeconomic uncertainty: The company acknowledges operating in an uncertain geopolitical and macroeconomic environment, which could impact its business performance and strategic objectives.
New transaction model implementation: Operational friction from the new transaction model implementation is still easing, which could pose challenges to smooth operations and financial reporting.
Macroeconomic risks in Q4: The company has built some risk into its guidance for the final quarter of fiscal '26 due to elevated macroeconomic uncertainty, which could disrupt sales and marketing optimization plans.
Diminishing tailwinds from billing transitions: The transition to annual billings for multiyear contracts and the new transaction model has provided tailwinds this year, but these are expected to significantly diminish next year, potentially impacting revenue and free cash flow growth.
Incremental headwinds to reported margins in fiscal '27: The new transaction model is expected to create incremental headwinds to reported margins in fiscal '27, which could affect profitability.
Potential disruption in sales and marketing optimization: The company remains mindful of potential disruptions as it continues to execute its sales and marketing optimization plan, which could impact operational efficiency and revenue generation.
Full Year Guidance: Autodesk raised its full-year guidance across the board, reflecting strong business momentum and execution.
Revenue Guidance: Revenue guidance range increased to between $7.15 million and $7.165 million, reflecting current business momentum and macroeconomic risks for the final quarter.
Billings Guidance: Billings guidance range raised to between $7.465 million and $7.525 million.
Non-GAAP Operating Margin: Guidance raised to approximately 37.5% or approximately 40.5% on an underlying basis, excluding the impact of the new transaction model.
Free Cash Flow Guidance: Guidance raised to between $2.26 million and $2.29 million.
Stock Buyback: Autodesk expects to repurchase approximately $1.3 billion of stock, a 50% increase compared to fiscal '25.
Fiscal '27 Outlook: Guidance will reflect macroeconomic risks and the diminishing tailwinds from the new transaction model and annual billings transition.
AI and Cloud Integration: Autodesk is deeply integrating AI into its products and leveraging cloud-based platforms to drive convergence in design and make workflows, enhancing efficiency and creating new monetization opportunities.
Construction and Infrastructure Growth: Sustained strong revenue and new customer momentum in infrastructure and construction, driven by the adoption of Autodesk Construction Cloud and other solutions.
Manufacturing Sector Growth: Strong growth in manufacturing, with customers adopting Fusion for unified design and make workflows, driving efficiency and innovation.
Share Repurchase: We purchased approximately 1.2 million shares for $361 million at an average price of approximately $306 per share. Year-to-date, we have repurchased 3.7 million shares for approximately $1.07 million. Further, we now expect to buy back approximately $1.3 billion of stock, which is at the high end of our previous guidance and a 50% increase compared to fiscal '25.
The earnings call summary and Q&A indicate strong financial performance, increased guidance, and positive business momentum. Raised revenue, billings, and share buyback targets signal confidence. The Q&A highlighted management's strategic focus on AI, automation, and margin expansion, although some uncertainties remain. Overall, the sentiment is positive, with potential for stock price growth.
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