Autodesk Under Fire: Activist Investor Demands Changes

Autodesk, Inc. ADSK shares are trading higher after activist investor Starboard issued a presentation urging improvements at the company.

The presentation underscores seven years of unmet financial targets, subpar profitability, and continued share price decline under CEO Andrew Anagnost.

According to Starboard’s presentation, the Board has not held management accountable for these outcomes. Starboard has urged the Board to prioritize value-enhancing opportunities.

Starboard urges the Board to immediately reassess CEO Andrew Anagnost’s performance to determine if he remains the best choice for Autodesk.

They also pointed out that the company should focus on boosting operating margins by at least 1,000 basis points and improving budgeting practices to ensure rigorous financial planning and significant operating leverage.

Additionally, Starboard demanded that Autodesk revise its compensation practices to align executive pay with shareholder value and discontinue setting annual targets for long-term compensation.

Related: Autodesk Stock Jumps As Activist Investor Pushes For Margin Improvement, Board Changes: The Details

They believe Autodesk should aim for approximately 55% incremental margins, similar to its design software peers.

With such practices, Starboard projects that Autodesk can reach over 45% adjusted operating margins and $3.4 billion in adjusted EBITDA by FY2027, as well as $6+ billion of share repurchases through FY2027.

In June, Autodesk reported first-quarter EPS of $1.87, which beat the analyst consensus estimate of $1.77, and sales came in at $1.42 billion, exceeding the analyst consensus estimate.

Investors can gain exposure to the stock via Pacer BlueStar Engineering the Future ETF BULD and ProShares S&P Kensho Smart Factories ETF MAKX.

Price Action: ADSK shares are up 3.62% at $233.88 at the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image: courtesy of Autodesk