Maintaining Buy On Autodesk

Autodesk (ADSK) has been doing well for a few quarters. I had recommended Buy on the stock when it announced Q4 results last year, maintained this recommendation after the Q108 announcement, and again reiterate my view following the Q2 results announced at the end of last week.

With revenues of $620 million, Autodesk beat the market’s expectations of $606 million and reported an 18% increase over the year. EPS grew 27% to $0.56, also beating the Street’s view of $0.52.

By segment, License revenue grew 12% to $440 million and Maintenance revenue from subscriptions grew 27%.

By division, Platform Solutions and Emerging Business grew 12% to $270 million, Manufacturing Solutions grew 32% to $131 million, AEC Solutions grew 21% to $144 million and Media and Entertainment grew 12% to $69 million.

Revenue from 2D vertical products grew 16% over the year. 3D solutions grew an impressive 31% and contributed 27% to overall revenue.

Autodesk’s strength continues to remain emerging markets. Four percent growth in the Americas was primarily driven by strong growth in Canada and Latin America, with a relatively stable US market. EMEA revenue of $267 million was a 31% increase over the year, and Asia-Pacific brought in the balance of $115 million, an increase of 18% over the year.

The company credited this strong growth in emerging markets to the infrastructure build-out in China and the Middle East, along with the “increased awareness around digital prototyping.”

They gave a revenue outlook of $625-$635 million for Q3 with EPS of $0.54-$0.56. For Q4, they expect revenues to be $660-$680 million with EPS of $0.64-$0.68. That will take annual revenues to $2.5-$2.53 billion, a 15-16% increase over the year, with EPS of $2.24-$2.30.

Last quarter Autodesk announced their intention to acquire Moldflow, a developer of simulation software for the plastics injection molding industry, and they completed that acquisition this quarter. Moldflow’s contribution of over $7 million in revenues for the quarter was higher than the Street’s expectations.

There were four smaller acquisitions during the quarter: REALVIZ, which specializes in image-based content creation software; Kynogon, which supplies of IA technology to the gaming industry; Square One Research, which creates environmental design tools; and Green Building Studio, a web-based energy analysis service for designers and architects.  Autodesk expects these companies’ technologies to help advance their base of “current solutions for visualization, simulation, and analysis, as well as technology used to create energy-efficient buildings.”

The market was happy with the performance and the stock rose 12% to $38.37 after the results announcement.