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Autodesk, Inc. (NASDAQ:ADSK) Baird Global Consumer, Technology & Services Conference Call June 4, 2025 12:15 PM ET Company Participants Simon Mays-Smith - Vice President of Investor Relations Steven M. Blum - Executive VP & COO Conference Call Participants Joseph D. Vruwink - Robert W. Baird & Co. Incorporated, Research Division Joseph D. Vruwink Hi, everyone. I'm Joe Vruwink. I cover vertical software at Baird. Our next presentation comes from Autodesk, a leader in design software used by architects, manuf ...

Revenue Performance - Total net revenue for the three months ended April 30, 2025, was $1,633 million, a 15.2% increase from $1,417 million in the same period of 2024[25]. - Revenue recognized during the three months ended April 30, 2025, from deferred revenue balances was $1.35 billion, compared to $1.19 billion in the same period of 2024[29]. - The Americas contributed $725 million to total net revenue in Q1 2025, up from $619 million in Q1 2024, representing a 17.1% increase[25]. - Net revenue from the Architecture, Engineering, Construction and Operations segment was $809 million, up from $674 million, reflecting a 20% increase year-over-year[25]. - For the three months ended April 30, 2025, Autodesk reported total net revenue of $1.633 billion, an increase of 15.3% compared to $1.417 billion for the same period in 2024[114]. Financial Position - Autodesk's cash equivalents and marketable securities totaled $1,569 million as of April 30, 2025[33]. - As of April 30, 2025, Autodesk's total fair value of marketable debt securities was $485 million, with $194 million due within 1 year and $261 million due in 1 to 5 years[38]. - Autodesk had no material unrealized losses for marketable debt securities as of April 30, 2025, and January 31, 2025, and total unrealized gains were not material for the three months ended April 30, 2025[38]. - The total fair value of financial instruments measured at fair value on a recurring basis was $1,541 million as of April 30, 2025, compared to $1,442 million as of January 31, 2025[46]. - Long-lived assets totaled $258 million as of April 30, 2025, down from $286 million as of January 31, 2025[117]. Stock-Based Compensation - Autodesk recorded stock-based compensation expense related to restricted stock units of $140 million for the three months ended April 30, 2025, compared to $127 million for the same period in 2024, reflecting an increase of approximately 10.2%[55]. - The fair value of shares vested during the three months ended April 30, 2025, was $428 million, up from $396 million in the same period in 2024[54]. - Autodesk granted 2 million restricted stock units during the three months ended April 30, 2025, with a weighted average grant date fair value of $260.61 per share[53]. - Stock-based compensation expense for the three months ended April 30, 2025, totaled $230 million, up from $149 million in 2024, with significant increases in marketing and sales (from $53 million to $97 million) and research and development (from $66 million to $89 million)[62]. - Autodesk recorded stock-based compensation expense related to performance stock units of $21 million for the three months ended April 30, 2025, compared to $6 million for the same period in 2024, indicating a significant increase[59]. Income and Expenses - The consolidated net income for the three months ended April 30, 2025, was $152 million, a decrease of 39.7% from $252 million in the prior year[114]. - Basic net income per share for the three months ended April 30, 2025, was $0.71, down from $1.17 in the same period of 2024[111]. - Autodesk recorded an income tax expense of $82 million on a pre-tax income of $234 million for the three months ended April 30, 2025, compared to $57 million on a pre-tax income of $309 million in 2024[68]. - Autodesk's marketing and sales expenses for the three months ended April 30, 2025, were $398 million, slightly down from $408 million in the same period of 2024[114]. Cash Flow - Net cash provided by operating activities for the three months ended April 30, 2025, was $564 million, an increase from $494 million in the same period of 2024, primarily driven by a $152 million net income and $489 million in non-cash items[209]. - Net cash used in investing activities was $58 million for the three months ended April 30, 2025, compared to a significant outflow of $638 million in the same period of 2024, mainly due to business combinations and marketable securities purchases[211]. - Net cash used in financing activities was $415 million for the three months ended April 30, 2025, primarily due to stock repurchases, compared to $61 million in the same period of 2024[212]. Debt and Financing - The company has entered into a 2025 Credit Agreement providing for an unsecured revolving loan facility of $1.5 billion, with an option to increase to $2 billion[118]. - The 2025 Credit Agreement requires Autodesk to maintain a maximum leverage ratio of Consolidated Covenant Debt to Consolidated EBITDA no greater than 3.50:1.00[119]. - As of April 30, 2025, the total principal outstanding for borrowings is $2.3 billion, with expected future principal payments of $300 million in 2026, $500 million in 2028, and $1 billion thereafter[87]. - Autodesk issued $1.0 billion in 2.4% notes due December 15, 2031, with net proceeds of $988 million used for environmentally and socially responsible projects[80]. - Autodesk issued $300 million of 4.375% notes due June 15, 2025, receiving net proceeds of $296 million after discounts and issuance costs[83]. Strategic Investments and Restructuring - Autodesk's strategic investments in equity securities amounted to $168 million as of April 30, 2025, with no readily determined fair values[43]. - The net unrealized adjustments for strategic investment equity securities were $(93) million as of April 30, 2025, with cumulative negative adjustments totaling $(122) million[44]. - The company initiated a restructuring plan in fiscal 2026 to optimize its go-to-market organization and reallocate resources towards cloud, platform, and artificial intelligence investments[97]. - The restructuring and other exit costs liability as of April 30, 2025, totaled $29 million, with employee termination costs accounting for $28 million of this amount[98]. Market and Customer Insights - The net revenue retention rate (NR3) measures the year-over-year change in recurring revenue for base customers, reflecting the company's ability to maintain and grow its existing customer base[225]. - Recurring revenue consists of revenue from maintenance plans, subscription offerings, and certain other revenue, excluding third-party subscription revenue[227]. - Remaining performance obligations (RPO) represent the total short-term, long-term, and unbilled deferred revenue, indicating future revenue expectations[228]. - The design business includes key products such as AutoCAD, Revit, and Maya, contributing significantly to the company's overall revenue[218].

Core Viewpoint - Mensch und Maschine Software SE (OTC:MSHHF) is highlighted as a significant stock within a diversified retirement portfolio, despite its market capitalization being under $1 billion, indicating it may not be widely recognized by investors [1]. Company Summary - The company is characterized as one of the largest stocks in a broadly diversified retirement portfolio, suggesting a strong position within its sector [1]. - The market cap of Mensch und Maschine Software SE is noted to be less than $1 billion, which may contribute to its lower visibility among investors [1]. Investor Perspective - The article reflects a long-term investment strategy, emphasizing the importance of conducting thorough research and due diligence before making investment decisions [1]. - The author expresses a personal beneficial long position in the shares of MSHHF, indicating confidence in the company's future performance [1].

Group 1 - Autodesk's growth is currently accelerating due to a shift in its business model, although underlying growth remains modest as recent tailwinds are fading [1] - Narweena, an asset manager, focuses on identifying market dislocations resulting from a poor understanding of long-term business prospects, aiming for excess risk-adjusted returns through secular growth opportunities [1] - The investment strategy is influenced by an aging population, low population growth, and stagnating productivity, which may create new investment opportunities distinct from past trends [1] Group 2 - Many industries are expected to face stagnation or secular decline, which could paradoxically enhance business performance due to reduced competition [1] - Conversely, some businesses may encounter rising costs and diseconomies of scale, impacting their performance negatively [1] - The economy is increasingly characterized by asset-light businesses, leading to a declining need for infrastructure investments over time [1] Group 3 - A large pool of capital is pursuing a limited set of investment opportunities, resulting in rising asset prices and compressed risk premia [1] - Richard Durant, the leader of Narweena, has a strong educational background in engineering and finance, along with an MBA, and has passed the CFA exams [1]

Core Viewpoint - Autodesk reported strong first-quarter results, exceeding analyst expectations in earnings and revenue, which has led to positive re-ratings from Wall Street analysts [1][8]. Financial Performance - Quarterly earnings were $2.29 per share, surpassing the consensus estimate of $2.15 [1]. - Quarterly revenue reached $1.63 billion, beating the Street estimate of $1.61 billion and showing a year-over-year increase from $1.42 billion [1][4]. - The company raised its fiscal 2026 adjusted EPS guidance to a range of $9.50-$9.73, compared to the previous range of $9.34-$9.67 and the estimate of $9.52 [3]. Future Guidance - For the second quarter, Autodesk expects adjusted EPS of $2.44-$2.48, exceeding the analyst estimate of $2.34, and revenue of $1.72 billion-$1.73 billion, above the $1.7 billion estimate [2]. - The fiscal 2026 revenue guidance was raised to $6.92 billion-$7 billion from $6.89 billion-$6.96 billion, compared to the estimate of $6.93 billion [3]. Operational Metrics - The operating margin for the first quarter was reported at 37%, with an adjusted margin of 39%, both ahead of the Street's expectation of 35.6% [4]. - Full-year normalized constant currency revenue growth guidance remains at 8%-9%, despite a slight reduction in the normalized constant currency billings growth outlook to 16%-18% [5][6]. Analyst Sentiment - Analysts from Keybanc and Stifel have maintained positive ratings on Autodesk, with price targets raised to $350 from $323 and $310, respectively [11]. - Analysts noted that despite macroeconomic uncertainties, Autodesk's fundamentals remain strong, with solid linearity and significant deal closures [9][10].

Core Viewpoint - Autodesk, Inc. (NASDAQ: ADSK) is assigned a Buy rating due to its strong billing growth and focus on cloud, platform, and AI technologies, with a fair value estimate of $336 per share [1] Company Summary - The company has demonstrated significant billing growth, which is a positive indicator for its financial health and future performance [1] - Autodesk's strategic emphasis on cloud services, platform development, and artificial intelligence positions it well for future growth in the technology sector [1]

Core Insights - Autodesk Inc. reported better-than-expected first-quarter financial results, with earnings of $2.29 per share and revenue of $1.63 billion, surpassing analyst estimates [1][2] - The company issued strong guidance for the second quarter, expecting adjusted EPS between $2.44 and $2.48 and revenue between $1.72 billion and $1.73 billion, both above analyst estimates [2] - Autodesk raised its fiscal 2026 adjusted EPS guidance to a range of $9.50 to $9.73 and revenue guidance to between $6.92 billion and $7 billion, also exceeding estimates [3] Analyst Ratings and Price Targets - Rosenblatt analyst maintained a Buy rating and raised the price target from $340 to $345 [8] - DA Davidson maintained a Neutral rating and increased the price target from $265 to $305 [8] - Morgan Stanley maintained an Overweight rating and raised the price target from $330 to $370 [8] - Keybanc maintained an Overweight rating and increased the price target from $323 to $350 [8] - Barclays maintained an Overweight rating and raised the price target from $325 to $355 [8] - Stifel maintained a Buy rating and increased the price target from $310 to $350 [8] - BMO Capital maintained a Market Perform rating and raised the price target from $324 to $333 [8] - Goldman Sachs maintained a Neutral rating and boosted the price target from $270 to $300 [8] - B of A Securities maintained a Neutral rating and raised the price target from $290 to $330 [8]

Group 1: Autodesk Inc (ADSK) - Autodesk reported a first-quarter earnings and revenue beat, along with a raised full-year guidance [2] - Following the earnings report, 11 brokerage firms increased their price targets, with Morgan Stanley raising its target from $330 to $370 [2] - Despite a slight decline of 0.3% to $294.03, Autodesk's stock is up 37% year-over-year [2] - Options volume for Autodesk is significantly high, running at 12 times the average daily pace, with notable activity in the 300-strike and 315-strike calls [3] Group 2: Workday Inc (WDAY) - Workday also reported a first-quarter earnings and revenue beat, but faced pressure due to a disappointing subscription revenue outlook [4] - The stock was down 10.8% to $242.48, with J.P. Morgan Securities maintaining an "overweight" rating, while six analysts cut their price targets [4] - Workday is experiencing its worst single-session drop since May 2024, with a decline of 6.4% in 2025 [4] - Options trading for Workday is exceptionally high, with 10,000 calls and 13,000 puts traded, which is 20 times the average daily volume [5]

Core Insights - Autodesk, Inc. will be participating in the Baird 2025 Global Consumer, Technology & Services Conference on June 4, 2025, where executives will present [1] - A live webcast and replay of the presentations will be accessible through Autodesk's Investor Relations Website [1] Company Overview - Autodesk is a trusted partner for designers, engineers, builders, and creators, providing tools to design and create various structures and products [2] - The company's Design and Make Platform leverages data to enhance insights and automate processes, enabling customers to improve their business outcomes and contribute positively to the planet [2] - Autodesk utilizes its investor relations website to disclose material non-public information and announce upcoming investor conferences, complying with Regulation FD [2]