Autodesk's Strong Quarter Validates Analyst Optimism As Infrastructure, AI Drive Gains
Autodesk, Inc (NASDAQ:ADSK) posted a strong third quarter with double-digit revenue and billings growth, expanded profitability, and a higher full-year outlook as demand for its Architecture, Engineering, and Construction (AEC) and cloud-based design tools continues to surge.
The company reported strong third-quarter fiscal 2026 results, with revenue rising 18% year-over-year to $1.85 billion, surpassing the $1.81 billion estimate.
The company posted adjusted earnings of $2.67 per share, beating expectations of $2.50.
Also Read: Autodesk Reveals Bold Plans To Boost Profits
CEO Andrew Anagnost highlighted Autodesk's artificial intelligence-driven tools and automation as key drivers of growth.
For the fourth quarter, Autodesk expects revenue of $1.90 billion-$1.92 billion and adjusted EPS of $2.59–$2.67.
The company raised full-year guidance, forecasting $7.15 billion–$7.17 billion in revenue and $10.18–$10.25 in adjusted earnings, above prior estimates of $9.95 per share.
Analyst Takes Following Earnings
- Rosenblatt analyst Blair Abernethy maintained Autodesk with a Buy and raised the price forecast from $355 to $375.
- RBC Capital Markets analyst Matthew Hedberg reiterated a rating of Outperform and a price target of $380 for Autodesk.
Rosenblatt: Abernethy said Autodesk delivered a strong third-quarter, with revenue rising 18% year over year and beating expectations by about 2%. Total billings grew 21%, slightly ahead of consensus.
The analyst highlighted ongoing strength in Autodesk's AEC business, driven by global civil infrastructure and data center demand, as well as robust large-enterprise renewals.
Despite a turbulent macro environment and billing model changes, Autodesk executed well and expanded profitability.
Cost discipline and higher revenue pushed operating margin to 38%, above expectations, while adjusted EPS of $2.67 beat both Abernethy and Street estimates.
Following third-quarter, Autodesk raised its fiscal 2026 revenue outlook to ~17% growth (about 11% excluding the billing transition) and slightly increased expected operating margins to ~37.5%.
Abernethy said he is making modest upward revisions to his forecasts and has initiated fiscal 2028 estimates.
Breaking down the quarter, AEC revenue came in above the analyst's forecast, AutoCAD/LT grew solidly, and Manufacturing performance also exceeded expectations.
He noted that the Fusion 360 platform continues to gain momentum with strong adoption of new AI features like AutoConstrain. The Media & Entertainment segment remained relatively soft.
Abernethy also pointed to cash flow improvement as the shift from multi-year to annual billing nears completion.
Autodesk generated $430 million in free cash flow and continued shareholder returns, repurchasing 1.2 million shares. Remaining performance obligations grew 20%, supporting future revenue visibility.
Geographically, the U.S. and Europe grew double digits in constant currency, while Asia showed mid-teens growth. Direct sales now account for 66% of revenue as the new transaction model rolls out globally.
Abernethy projected fourth-quarter revenue of $1.91 billion (up from previous guidance of $1.85 billion) and EPS of $2.61 (up from prior forecast of $2.52).
RBC Capital Markets: Hedberg said Autodesk delivered strong third-quarter results and raised its fiscal 2026 outlook, demonstrating broad-based momentum across the business.
The analyst emphasized that Autodesk continues to outperform through its transition to a transaction model and operational efficiency initiatives.
Execution remains strong. He noted continued confidence in the company's 41% operating margin target for fiscal 2029.
Hedberg highlighted that Autodesk beat expectations across key financial metrics and once again increased fiscal 2026 guidance.
AECO strength, higher up-front revenue, and accelerating traction in the Autodesk Store stood out.
The analyst believes the store model is proving more effective in moving up-market.
He continues to view the transaction model shift favorably, noting that it enables deeper customer relationships, more automation, and a modernized channel strategy.
Hedberg said cost discipline and earlier restructuring efforts are translating into better-than-expected profitability, with operating margins more than 100 basis points above his forecasts.
The analyst also pointed to Autodesk's AI positioning, noting that the company holds a strategic advantage through its customer base, data depth, and product breadth.
He said management's commentary on licensing dynamics was important: customers still face capacity constraints, workloads will vary between high- and low-labor intensity, and Autodesk aims to reduce the number of workers needed per project while increasing the number of projects — driving higher consumption-based monetization over time.
While fiscal 2026 guidance moved higher, investors' focus now shifts to fiscal 2027.
The analyst forecasts 9% fiscal 2027 revenue growth, below consensus at 11%, and expects flat operating margins, versus consensus calling for margin expansion.
He believes upside to early fiscal 2027 guidance remains likely.
Hedberg projected fourth-quarter revenue of $1.91 billion (up from previous guidance of $1.86 billion) and EPS of $2.63 (up from prior forecast of $2.52).
ADSK Price Action: Autodesk shares were up 3.34% at $304.25 at the time of publication on Wednesday, according to Benzinga Pro data.
Read Next:
Photo: Piotr Swat from Shutterstock