Investor Day Confirms Our Confidence in Autodesk’s Long-Term Growth

On March 22, Autodesk ADSK hosted its investor day, spelling out how its market has plenty of drivers for future growth—from adoption of building information modeling to leveraging machine learning. Since we have been a firm believer in these growth avenues for Autodesk and its ability to monetize them, our model remains unchanged. However, we think this is still an opportune time to remind investors that the stock is trading in attractive 4-star territory given our $230 fair value estimate. We think this is a rare opportunity for long-term investors, as we think the stock boasts a wide moat and more often than not trades at a premium valuation because of its quality.

Of note in the investor day was that Autodesk maintained its fiscal 2024 guidance despite increasing uncertainty arising from potential instability within the banking system. As a reminder, Autodesk expects fiscal 2024 revenue to be between $5.36 billion and $5.46 billion with a non-GAAP operating margin of near 36%. However, we do not find the reiteration of guidance surprising, as we think Autodesk’s wide moat comes from switching costs stemming from the essential nature of the company’s solutions—making it difficult for users to switch off of the software. In fact, Autodesk highlighted healthy revenue trends across its businesses, including 115%-120% retention within its construction cloud, which we believe is an indicator of such strong switching costs.

Beyond a firm reiteration of guidance was news of impressive progress in newer revenue streams helping drive Autodesk’s eventual $100 billion total addressable market. For instance, Autodesk is only weeks away from receiving FedRamp approval on its construction cloud offerings, which will give the company the ability to sell cloud offerings to the government—not just on-premise ones. This is a big step because we believe it will make It easier for Autodesk to take more of the $382 billion U.S. construction market.