Autodesk

Autodesk Q3 2024 $ADSK (+0.25%)

RevenueAutodesk generated revenue from subscription plans of USD 1.46 billion, an increase of 11% compared to the previous year (12% at constant exchange rates).

Net revenue retention rate: Remained in the range of 100% to 110% at constant exchange rates, demonstrating stable customer retention.

GAAP operating incomeIncreased to USD 346 million, compared to USD 334 million in the previous year.

Non-GAAP operating incomeImproved to USD 573 million compared to USD 547 million in the previous year.

Balance sheet overview

• Total assetsUSD 10,133 million as at October 31, 2024.
• Total liabilitiesUSD 7.517 million.
• Shareholders' equityUSD 2.616 million, which represents a solid financial basis.

Details of the profit and loss account

• GAAP operating marginWas 22%, a decrease of 2 percentage points compared to the previous year.
• Non-GAAP operating marginWas 36%, a decrease of 3 percentage points.
• GAAP earnings per share (diluted)1.27 USD, compared to 1.12 USD in the prior year.
• Non-GAAP earnings per share (diluted)USD 2.17, compared to USD 2.07.

Cash flow overview

• Cash flow from operating activitiesStrong increase to USD 209 million, an increase of USD 191 million compared to the previous year.
• Free cash flowIncreased to USD 199 million, an increase of USD 186 million.

Key figures and profitability metrics

• GAAP operating margin: 22%, reflecting slightly higher investments.
• Non-GAAP operating margin36 %, which shows continued high profitability despite the decline.

Segment information

• Sales by product family:
• AEC751 million USD (+11 % YoY).
• MFG307 million USD (+14 % YoY).
• AutoCAD and AutoCAD LT: USD 285 million (+10 % YoY).
• Sales by region:
• APAC398 million USD (+7 % YoY).
• EMEA580 million USD (+12 % YoY).
• Americas705 million USD (+10 % YoY).

Competitive position

Autodesk remains a leading player in industries with strong structural growth. The focus on digital transformation in architecture, engineering and construction (AEC) and the transition to cloud solutions in the manufacturing and media sectors strengthen the company's competitiveness.

Forecasts and comments from management

• Forecast for Q4 FY25 revenueExpected between USD 1.623 million and USD 1.638 million.
• Forecast for FY25 salesExpected between USD 5,900 million and USD 5,980 million, representing growth of 14% to 15% YoY.
• Non-GAAP operating margin for FY25Expected at 35.5% to 36%.

Risks and opportunities

• Risks: The company faces uncertainties due to global economic conditions, geopolitical tensions and possible challenges with strategic acquisitions.
• OpportunitiesAutodesk has the potential to expand its addressable market through comprehensive end-to-end solutions and the promotion of digital and cloud-based transformations.

Positive aspects

Double-digit growth in annual revenue.

Significant increase in subscription revenue.

Non-GAAP operating margins increased by approximately 300 basis points since FY23.

Substantial increase in free cash flow.

Successful strategic initiatives in the areas of digital transformation and cloud adaptation.

Negative aspects

GAAP operating margin down by 2 percentage points.

Non-GAAP operating margin down by 3 percentage points.

Deferred revenue down 9%.

Uncertainty in forecasting subscription renewals.

High exposure to international regulatory and economic risks that could impact long-term stability.

Earnings next week

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Mensch und Maschine Software SE

Company presentation

Mensch und Maschine Software SE ($MUM (-1.1%) ) is a leading provider of CAD/CAM software headquartered in Weßling, Germany. Founded in 1984, the company has developed into a major player in the field of digitization solutions for industry, construction and infrastructure. M+M employs over 1,000 people at around 75 international locations.

M+M's core business is divided into two main segments:

M+M SoftwareThis segment develops and distributes standard software solutions for CAM, BIM and CAE.

M+M Digitization This segment offers customized digitization solutions, training and consulting services.

M+M's mission is to support companies in their digital transformation and provide innovative software solutions for complex technical challenges. The company's vision is to remain the leading provider of CAD/CAM solutions in Europe and to continuously expand into new technologies and markets.

Historical development

Since its foundation, M+M has reached several important milestones:

• 1997: Stock market debut on the Neuer Markt as the eighth company.
• 2002Acquisition of the CAM specialist Open Mind AG, which expanded the expertise in the field of manufacturing software. In the same year, M+M acquired a majority stake in Dataflor AG, a developer of software for gardening and landscaping.
• 2019Acquisition of the software manufacturer Sofistik, which specializes in the calculation, dimensioning and design of construction projects.

These strategic acquisitions have helped M+M to diversify its portfolio and strengthen its market position in various industries.

Business model & core competencies

M+M's core competencies lie in its deep technical expertise in CAD/CAM software and its ability to translate complex customer needs into individual digitization solutions. The company benefits from long-standing customer relationships and a strong partner network.

Future prospects & strategic initiatives

M+M is committed to continuous innovation and expansion into new technology areas. Current growth initiatives include:

• Increased investment in BIM technologies for the construction industry.
• Expanding the range of CAM solutions for advanced manufacturing.
• Developing solutions for the digital factory and Industry 4.0.

In the medium term, M+M aims to further strengthen its market position in Europe and expand into new geographic markets.

Market position & competition

M+M has established itself as one of the leading providers of CAD/CAM solutions in Europe. The company competes with large international software companies as well as specialized niche suppliers. The main competitors include:

• $ADSK (+0.25%) (USA)
• $DSY (-0.35%) Systèmes (France)
• Siemens Digital Industries Software (Germany)

M+M differentiates itself through its strong local presence in Europe, customized solutions and comprehensive consulting and training services.

Total Addressable Market (TAM)

The global market for CAD/CAM software is expected to reach a volume of over 25 billion US dollars by 2028, with an annual growth rate of around 7%. Important growth drivers are:

• Increasing digitalization in the manufacturing industry.
• The increasing demand for BIM solutions in the construction sector.
• The growing importance of Industry 4.0 and IoT.

M+M is well positioned to benefit from these trends and further expand its market share in Europe.

Development

Sales have grown at an annual growth rate of 6%, which is acceptable. In contrast, however, net profit has grown at a 14 % CAGR, which is very positive.

In terms of turnover, the digitalization sector is significantly larger than the software sector, but contributes less to gross profit. Nevertheless, despite the lower absolute amount, the digitization sector has a better margin than software.

The gross margin is just under 54%, while the operating margin is 15% and net profit is approaching the 10% mark with an annual growth rate of 7%.

The shareholder yield is 2.6%, while the ratio of enterprise value to EBITDA is average. In addition, the ratio of net debt to EBITDA is negative.

The payout ratio is very high and could remain at around 90% for the time being, or possibly even lower. The dividend per share is rising continuously and should maintain this trend.

The capital efficiency is very good and a larger part of the distributions could be retained in order to invest in the business to gain even more market share.

Conclusion

The picture speaks for itself: with an insider share of 48% and a promising history, I am convinced that the company can achieve its goals. Earnings per share (EPS) should double in the next 4 to 5 years. The share is performing well, but is still undervalued. There is also an attractive dividend, which has been rising steadily for some time. The business case is convincing and the company's name is simply cool. The only thing that could really hinder the company is Germany, as most of its sales come from this market and the tax burden here is very high.

They could work on the presentation, as it seems a bit strange for a digital company, but ultimately it's going well.

Tomorrow is a big day.

With NVIDIA $NVDA (-1.69%) Salesforce $CRM (+0.59%) CD Projekt $CDR (-4.57%) and Okta $OKTA (+1.05%) report 15.72% of my portfolio in one day, almost simultaneously at around 10 p.m. CEST. In addition, with Crowdstrike $CRWD (-0.23%) another interesting watchlist stock.

I'm not used to so much palpitations outside the reporting season. And even then, there are rarely days when so much can happen in both directions as tomorrow.

On Thursday there will be more figures from Autodesk $ADSK (+0.25%) before we start a boring September that will probably drag on like chewing gum.

Still no figures at $ADSK (+0.25%) ? what is going on

What's wrong with autodesk autocad ! $ADSK (+0.25%) !

Share falls because they are late with their payments? So weird, maybe a good time to buy or are there other details? Who knows more ?

Subsequent purchase & company presentation of $ADSK (+0.25%).

Today I would like to use my latest buy to bring you a little closer to Autodesk. An exciting growth company that is currently available at a 20% discount.

What does Autodesk do?

Autodesk is a US software company. They write about themselves: "Autodesk is changing how the world is designed and made". Their software is used to design construction projects, production lines, products, etc., and optimize them for efficiency.

The whole thing is divided into three segments:

• AEC (Architecture, Engineering, Construction)
• Product Design & Manufacturing
• Media/Entertainment

Why might Autodesk be interesting?

With Autodesk solutions, you can play the progressive digitalization in a wide range of industries. Whether car manufacturers, construction projects, infrastructure - the spectrum of customers is broad.

While the AI hype has already hyped up some companies, Autodesk could be or become a second-tier winner.

According to the Gartner Hype Cycle (if not known, just google it), 3D technologies have slowly reached the so-called "Slope of Enlightenment", i.e. more and more practical use cases are materializing.

I don't like investing in hypes myself. I invest in (mega) trends - and this one falls squarely within my investment horizon.

What do the figures say?

Sales are growing steadily. In the last 5 years on average 15% p.a., currently at approx. 9%. This is probably due to the current macro situation. When interest rates fall, I see potential for acceleration again, as customers should then realize more projects - and benefit from Autodesk's products.

The gross margin is a strong 90% (usual for a software company). The operating margin is 20%. As you can see, a lot of money is being earned.

With almost 2-digit growth, even in difficult times, I see a good starting point for potentially achieving a return of >10% p.a.

What does the valuation say?

The share has fallen by around 20% in recent weeks. The P/E ratio is therefore approx. 8.3, the historical average is approx. 9.8. This may initially be high for some investors - but it is not unusual for such profitable growth stocks.

You have to be aware that you are buying absolute quality here, which is reflected in profitability + sales and profit stability. This always entails a premium.

Conclusion

In my view, the share is currently available at a good price. The fundamental figures look good. The share is benefiting from trends such as AI, digitalization, resource conservation and pressure to increase efficiency.

What are your thoughts on the share?

In your opinion, is now the right time to invest in $ADSK (+0.25%) or is it risky right now because of the class action lawsuit?