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Factors Setting the Tone for Autodesk's (ADSK) Q4 Earnings

Zacks Equity Research

Autodesk, Inc. ADSK is slated to release fourth-quarter fiscal 2020 results on Feb 27.

The company anticipates to report revenues between $880 million and $895 million in the fiscal fourth quarter, indicating year-over-year growth in the range of 19.4% to 21.4%. It projects non-GAAP earnings to be up 87-98% to 86-91 cents, year on year.

The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at 90 cents, revised a penny upward over the past 30 days. Further, the consensus mark for revenues is pinned at $890.2 million, suggesting an increase of 20.7% from the year-ago quarter’s reported figure.

Over the trailing four quarters, Autodesk’s earnings beat the Zacks Consensus Estimate on three occasions and missed in the other, the average positive beat being 4.7%.

 

Autodesk, Inc. Price and EPS Surprise

Autodesk, Inc. Price and EPS Surprise
Autodesk, Inc. Price and EPS Surprise

Autodesk, Inc. price-eps-surprise | Autodesk, Inc. Quote

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In the last reported quarter, Autodesk’s non-GAAP earnings of 78 cents per share beat the Zacks Consensus Estimate by 6.9%. Revenues of $842.7 million comfortably surpassed the consensus mark of $824 million.

Let’s see how things are shaping up for the upcoming announcement.

Key Factors to be Noted

Autodesk’s fiscal fourth-quarter performance is anticipated expected to have benefited from robust growth in subscription revenues and rapid adoption of maintenance-to-subscription (M2S) program. Additionally, strong renewals and strength in new customer billings is expected to have driven top-line growth in the quarter.

Stellar double-digit growth in annual recurring revenues (ARR) for the last three quarters reflects the success of Autodesk’s business-model transition and solid overall growth. This trend is likely to have continued in the fiscal fourth quarter as well on portfolio strength.

Additionally, the acquisitions of PlanGrid and BuildingConnected have strengthened the company’s expertise in document-centric workloads & field execution, and bidding & risk management, respectively. These are likely to have helped Autodesk fortify its construction business, in turn, bolstering the top line.

Further, solid net revenue retention rate highlighting a healthy renewal rate in the fiscal third quarter is likely to have continued in the quarter under review. Net revenue retention rate at the end of the fiscal third quarter was within the fiscal 2019 range of 110-120%.

Nonetheless, sluggish growth in Maintenance revenues due to the continued migration of maintenance plan subscriptions to subscription plan might have negatively impacted the top-line performance.

What Our Model Says

Our proven model does not predict an earnings beat for Autodesk this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Autodesk carries a Zacks Rank #3 and has an Earnings ESP of -0.56%.

Stocks With Favourable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

ANSYS, Inc. ANSS has an Earnings ESP of +2.01% and carries a Zacks Rank of 3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Square, Inc. SQ has an Earnings ESP of +3.59% and carries a Zacks Rank of 3.

Baidu, Inc. BIDU has an Earnings ESP of +38.8% and carries a Zacks Rank of 3, at present.

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