Autodesk's New Transaction Model May Pressurize Relationship With Resellers: Analyst Sees More Challenging Operating Environment

Mizuho analyst Matthew Broome reiterated a Neutral rating on Autodesk, Inc. ADSK, lowering the price target to $200 from $220.

The company unveiled plans to roll out a new transaction model for its channel partners, which typically address the mid-market. 

The new model will require all "indirect" customers to transact directly with ADSK, although channel partners will still provide quotes and value-added integration services.

The plan was launched in Australia two weeks ago and is expected to be rolled out globally over the next two years, the analyst notes. 

The transition also results in an accounting change that has the effect of shifting a contra-revenue item to operating costs, which will optically increase revenue growth while being neutral from an economic perspective, the analyst adds.

It is clearly desirable for ADSK to establish a closer relationship with its customers. However, this shift does risk straining ADSK's relationships with many of its resellers, Broome cautions.

Meanwhile, ADSK reported solid Q3 results, beating analyst expectations on both the top and bottom lines. 

However, this was overshadowed by initial FY25 revenue guidance, which calls for only 9%+ growth, below consensus forecasts, and the company's long-term target of 10%-15%.

While strong EBA activity in FY24 created more difficult comps, this subdued guide is largely reflective of a more challenging operating environment, the analyst flags.

Given there are currently few signs of an improvement in fundamentals, the analyst views the stock as fairly valued.

Price Action: ADSK shares are trading lower by 5.59% to $205.51 on the last check Wednesday.

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