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Autodesk (ADSK) to Report Q3 Earnings: What's in the Cards?

Autodesk ADSK is set to report third-quarter fiscal 2020 results on Nov 26.

For the quarter, the company expects revenues between million and million. Non-GAAP earnings are anticipated to be 70-74 cents per share.

The Zacks Consensus Estimate for third-quarter earnings is pegged at 73 cents, unchanged over the past 30 days. Further, the consensus mark for revenues is pegged at 3.9 million, up 24.7% from the year-ago quarter’s reported figure.

The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 5.8%.

In the last reported quarter, Autodesk’s non-GAAP earnings of 65 cents per share beat the Zacks Consensus Estimate by 6.6%. Revenues of 7 million comfortably surpassed the consensus mark of 7 million.

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

Autodesk, Inc. Price and EPS Surprise

Factors Likely to Influence Q3 Results

Autodesk’s fiscal third-quarter results are expected to have benefited from robust growth in subscription revenues, rapid adoption of BIM 360 products and success of the maintenance to subscription (M2S) program.

Additionally, strength in new customer billings and strong renewals, with continued momentum in core products, is expected to have driven top-line growth in the quarter.

In construction, organic growth in cloud is expected to have been driven by BIM 360, led by BIM 360 Design & Build.

Strong annual recurring revenues (ARR), which were up 31% year over year in the last reported quarter, reflect the success of the company’s business model transition and solid overall growth. The same is likely to have continued in the third quarter driven by portfolio strength.

Further, solid net revenue retention rate highlighting a healthy renewal rate in the last quarter is expected to have continued in the quarter under review.

During the to-be-reported quarter, Autodesk unveiled its collaboration with ANSYS ANSS, which helps the company offer integrated workflow by merging physics-based simulated optical ray files with complex and dynamic lighting scenarios directly into VRED. The collaboration also enables Autodesk to provide automakers with more flexibility and opportunities for designing the next generation of vehicles.

Further, the acquisitions of Assemble Systems, PlanGrid and BuildingConnected have strengthened the company’s expertise in preconstruction capabilities, 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.

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

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Autodesk has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Stocks With Favourable Combinations

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

Hewlett Packard Enterprise Company HPE has an Earnings ESP of +8.70% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Momo MOMO has an Earnings ESP of +3.94% and carries a Zacks Rank #3.

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