Autodesk Q2 Earnings and Sales Surpass Estimates, Improve Y/Y

Autodesk ADSK reported second-quarter fiscal 2025 non-GAAP earnings of $2.15 per share, which beat the Zacks Consensus Estimate by 7.5% and improved 12.6% year over year.

The company reported revenues of $1.5 billion, which beat the consensus mark by 1.54%. The figure grew 11.9% year over year. The company generated broad-based growth across products and regions in AEC and manufacturing, which was partly offset by softness in media and entertainment, primarily due to the lingering effects of the Hollywood strike.

Top-Line Details of ADSK

Autodesk's subscription revenues (93.6% of total revenues) increased 10.9% year over year to $1.4 billion. Maintenance revenues (0.7% of total revenues) declined 21.4% from the year-ago quarter to $11 million. Other revenues (5.7% of total revenues) increased 41% to $86 million in the reported quarter.

Recurring revenues contributed 97% to Autodesk's second-quarter fiscal 2025 revenues. The net revenue retention rate was within the company's 100-110% targeted range, on a constant currency basis.

Region-wise, revenues from the Americas (44% of revenues) increased 12.4% from the year-ago quarter's levels to $662 million. Revenues from the EMEA, which accounted for 37.9% of revenues, climbed 12.6% to $570 million. Revenues from the Asia-Pacific (18.1% of revenues) increased 9.2% to $273 million.

Billings of $1.24 billion increased 13% year over year in the reported quarter.

Product Top-Line Details

Autodesk offers primarily four product families — Architecture, Engineering and Construction, AutoCAD and AutoCAD LT, Manufacturing and Media and Entertainment (M&E).

AEC (47.4% of revenues) revenues increased 13.7% year over year to $713 million. AutoCAD and AutoCAD LT (25.8% of revenues) revenues rose 6.9% to $389 million. MFG (19.7% of revenues) revenues increased 15.6% to $296 million. M&E (5.1% of revenues) revenues increased 4.1% to $77 million.

Operating Results

Autodesk reported a non-GAAP operating income of $560 million, up 14.5% year over year.

The non-GAAP operating margin was 37%, up 1 percentage point.

Balance Sheet & Cash Flow

As of July 31, 2024, Autodesk had cash and cash equivalents (including marketable securities) of $1.87 billion compared with $1.99 billion as of April 30, 2024.

Deferred revenues decreased 13% to $3.69 billion. Unbilled deferred revenues were $2.17 billion, representing an increase of $1.18 billion compared with the year-ago quarter. Remaining performance obligations (RPO) increased 12% to $5.86 billion. Current RPO increased 11% to $3.9 billion.

Cash flow from operating activities was $212 million, representing an increase of $77 million compared with the year-ago quarter. Free cash flow was $203 million, reflecting an increase of $75 million compared with the second quarter of fiscal 2024.

Fiscal 2025 Guidance

Autodesk projects fiscal 2025 revenues between $6.08 billion and $6.13 billion, indicating approximately 11% growth. Billings are estimated in the $5.88-$5.98 billion band, suggesting an increase of 13-15% year over year.

Non-GAAP earnings per share are expected between $8.18 and $8.31. ADSK expects a non-GAAP operating margin between 35% and 36% year over year.

Free cash flow is anticipated in the $1.45-$1.5 billion band.

For the third quarter of fiscal 2025, Autodesk expects revenues between $1.555 billion and $1.57 billion. Non-GAAP earnings are anticipated in the range of $2.08-$2.14 per share.

Zacks Rank & Key Picks

Autodesk carries a Zacks Rank #3 (Hold) at present. Shares of ADSK have returned 6.1% year to date.

Some better-ranked stocks from the broader Computer and Technology sector are Arista Networks ANET, Badger Meter BMI and Audioeye AEYE, each sporting a Zacks Rank #1 (Strong Buy) at present.

Arista Networks' shares have rallied 46.8% in the year-to-date period. The long-term earnings growth rate for ANET is anticipated to be 17.2%.

Badger Meter's shares have gained 32.5% in the year-to-date period. The long-term earnings growth rate for BMI is projected at 17.91%.

Shares of Audioeye have surged 342.6% in the year-to-date period. The long-term earnings growth rate for AEYE is expected to be 25%.

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