Autodesk Gears Up to Report Q4 Earnings: What's in the Offing?

Core Viewpoint - Autodesk is set to report its fourth-quarter fiscal 2025 results on February 27, with expectations of revenue growth and potential margin pressures due to a new transaction model [1][6]. Revenue Expectations - Autodesk anticipates revenues between $1.62 billion and$1.64 billion for the fiscal fourth quarter, with the Zacks Consensus Estimate at $1.63 billion, indicating an 11.01$2.10 to $2.16 per share, with the Zacks Consensus Estimate at$2.13 per share, reflecting a 1.91% year-over-year increase [3]. Recent Performance - In the last reported quarter, Autodesk achieved an earnings surprise of 2.84%, consistently beating the Zacks Consensus Estimate over the past four quarters, with an average surprise of 5.65% [3]. Strategic Changes - Autodesk has shifted from a reseller-based sales model to a direct customer billing system in Western Europe and Japan, aiming to enhance customer relationships and create a predictable financial model [5]. - The new transaction model may lead to higher operating expenses and lower operating margins in the fourth quarter, potentially impacting profitability [6]. Subscription Revenue Growth - The company reported strong year-over-year growth in subscription revenues in the third quarter, with a net revenue retention rate between 100-110%, indicating robust customer renewals [7]. - This momentum is expected to continue into the fourth quarter, positively affecting revenue [7]. Market Challenges - Despite anticipated revenue growth, macroeconomic, policy, and geopolitical challenges may slow customer acquisition, although strong renewal rates are expected to mitigate this impact [8]. Segment Performance - Autodesk is experiencing favorable momentum in its AutoCAD, AEC, and Manufacturing segments, driven by customers consolidating solutions to optimize workflows via the cloud [9]. - The manufacturing sector shows strong demand for Autodesk Fusion, contributing to higher attach rates and average sales prices, which is likely to benefit the top line in the fourth quarter [9]. Earnings Outlook - According to the Zacks model, Autodesk currently has an Earnings ESP of 0.00% and a Zacks Rank of 4 (Sell), indicating lower odds of an earnings beat [10].