Rattibha

Mostly Borrowed Ideas

10 Tweets 2 reads Jan 29, 2023

$ADSK had bit of a mixed quarter.
While they typically beat the high end of their guidance, Q3 topline was near the low end of the guidance.
Moreover, guidance appears to be weak too as Q4 implied topline growth is HSD i.e. ~7-9%.

Q3 had 1-pt FX headwind and Q4 is assumed to have 3-pt headwind. On FXN basis, topline growth may continue to be DD.
However, Autodesk did see modest deceleration in our new business, particularly in Europe during Q3, that does have a slight follow-on impact to revenue in Q4

Net revenue retention continues to be ~100-110% range.
However, Autodesk is seeing less demand for multiyear upfront billings and more demand for annual contracts than they expected.
Customers are likely being more conscious about their cashflows in a soft macro environment.

Fusion 360 subscriber number continues to chug along but at a slower pace which is expected given the macro environment.
Labor shortage continues to be primary concern.

GAAP EBIT margin expanded from ~17% in 3Q'FY22 to ~20% in 3Q'FY23.
Management reiterated non-GAAP margin guidance to ~38-40% sometime in FY'23-26 window.
It is disappointing to see management focusing on such meaningless number. cc @andrew_anagnost

you can always congratulate yourself just by issuing more SBC to hit your non-GAAP operating margin guidance. More on this later.

Autodesk so far bought back 4.4 mn shares this year with avg. cost of $200/share. Diluted shares outstanding decreased by 2.2% YoY.
Frustratingly, they keep mentioning buying back stock primarily to offset dilution from SBC and don't think it as capital return strategy.