Autodesk (ADSK US): Issues to consider
Background
Autodesk produces Computer Aided Design (CAD) software for architects and industrial designers. Unfortunately, it was a little complacent and slow to move to the cloud and revenue stagnated. However, following intervention by an activist, management changed and the market has bought into a turnaround story. The stock is often compared to Adobe and is currently trading on 13x EV/Sales. This is despite being both loss making and cashflow negative.
The company came to our attention following our recent thematic report on employment as a guide to revenue growth. It also has one on the highest (ie worst) Bucephalus Governance, Accounting and Performance (GAP) scores in North America. Unfortunately, the report is only for our clients who are regulated professional investors.
Issues to consider
Without making any recommendation about the company’s securities, we suggest that anyone interested in Autodesk might want to ask the following questions:
Please contact us, if you would like to become a client and get a full copy of the report.
Autodesk produces Computer Aided Design (CAD) software for architects and industrial designers. Unfortunately, it was a little complacent and slow to move to the cloud and revenue stagnated. However, following intervention by an activist, management changed and the market has bought into a turnaround story. The stock is often compared to Adobe and is currently trading on 13x EV/Sales. This is despite being both loss making and cashflow negative.
The company came to our attention following our recent thematic report on employment as a guide to revenue growth. It also has one on the highest (ie worst) Bucephalus Governance, Accounting and Performance (GAP) scores in North America. Unfortunately, the report is only for our clients who are regulated professional investors.
Issues to consider
Without making any recommendation about the company’s securities, we suggest that anyone interested in Autodesk might want to ask the following questions:
- Why does Management get US250m+ in equity compensation every year given that the company is loss making and cashflow negative?
- Why do they buy back stock? The company has negative cashflow and gearing is rising.
- Management talks about a return to growth but they have under-performed Dassault Systeme for years, why is this?
- Will they breach their debt covenants this year? They are supposed to have a positive minimum interest cover, is this possible with the new debt?
- How quickly does management expect Maintenance revenue to shrink?
- Why do they put so little detail in their presentations?
- If the company is doing so well, why do management liquidate their equity grants as soon as they can.
- Why are payable days so long?
- Why are sales and marketing costs still so much higher than subscription revenues, isn't this a mature market?
- Why are R&D expenses being cut but admin costs rising?
Please contact us, if you would like to become a client and get a full copy of the report.
Important
This note is written with the sole purpose of highlighting some issues we think are important.
It is not a recommendation to BUY or SELL any of the securities mentioned and should not be taken as such.
Readers should form their own opinions about the company and seek appropriate advice.
Please read the Bucephalus disclaimer.
This note is written with the sole purpose of highlighting some issues we think are important.
It is not a recommendation to BUY or SELL any of the securities mentioned and should not be taken as such.
Readers should form their own opinions about the company and seek appropriate advice.
Please read the Bucephalus disclaimer.