Autodesk Shares Slide After Mixed Q2 Results

Shares of Autodesk, Inc. (ADSK) have tumbled more than 6% on Thursday's extended-hours after ending the regular session up 1.77% and after reporting better-than-expected earnings for the second quarter of fiscal 2016

The company reported a loss of $235.5 million or $1.04 on a per share basis, compared to $31.3 million or $0.13 per share obtained in the same quarter a year ago. Excluding one-time items, EPS was of $0.19 per share below the $0.35 of a year ago, but higher than estimates by $0.02. Further, revenue declined by 4% and reached $609.5 billion but was lower than analyst's estimates of $613 million.

Total subscriptions increased by 61,000 from the first quarter to 2.39 million.

"We are pleased with the progress of our business model transition," said Carl Bass, Autodesk president and CEO. "Strong billings and deferred revenue growth led the quarter, and we continue to see customers adopt our new model subscription offerings, which are showing strong year-over-year and sequential growth. For the past two years, we've been preparing for this transition and we're now ready to accelerate the process."

For the third quarter, Autodesk expects earnings between $0.05 to $0.10 per share, on sales ranging from $580 million to $600 million. For the full year fiscal 2016, the company expects adjusted earnings of $0.60 to $0.70 per share on sales of $2.465 billion to $2.505 billion. The outlook for both periods is well below consensus. The Billings and subscriptions outlook were maintained but expects more sales to shift from perpetual licenses to new subscription types.

Moreover, Autodesk signed an agreement to acquire SeeControl, a developer of an enterprise Internet of Things cloud service platform. Other acquisitions like Socialcam, Instructables, and Pixlr were part of an aggressive plan to move into the mobile and social markets. Further, it has moved into the cloud market with its Autodesk 360 platform.

The company's growth depends on creating value and attracting new subscribers to its platforms. These are vital things to make expectations attainable.

The firm is selling at a premium. The P/E ratio as of 8/27/15 is 161.81, which is very high when compared to the S&P of about 21x and the industry median of 24.44x.

The stock reached its 52-week high at the end of February, and since then it cannot reverse the downward trend. The stock plummeted 16.75% in a year-to-date basis and 6.47% in the past 12 months.

Published on Aug 29, 2015
By Omar Venerio
Capital Markets, Derivatives and Financial Management Professor, Master in Finance and CFA candidate. I am an independent trader of stocks and options and passionate about the stock market.

Copyrighted 2016. Content published with author's permission.

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