Autodesk, Inc. (NASDAQ: ADSK) Q2 2026 Earnings Call | 08/29/2025

Financial Performance (Q2 2026)

• Revenue: Grew 17% YoY to $1.67 billion (18% in constant currency), with $105 million from the new transaction model. Excluding this, revenue grew 11% in constant currency. Strength in AECO (Architecture, Engineering, Construction, Operations) driven by investments in data centers, infrastructure, and industrial buildings offset commercial softness.

• Billings: Increased 36% to $1.76 billion (34% in constant currency), with $129 million from the new transaction model. Excluding this, billings grew 26% in constant currency, reflecting annual billing shifts for multi-year contracts.

• RPO: Total RPO reached $7.3 billion (+24%), current RPO at $4.7 billion (+20%), boosted by the new transaction model.

• Operating Margins: GAAP operating margin at 25% (+240 bps YoY), non-GAAP at 39% (+140 bps YoY), driven by operating leverage, cost discipline, and restructuring timing, partly offset by transaction model margin drag.

• Free Cash Flow: $451 million, aided by earlier billing timing.

• Share Repurchases: Bought back 1.2 million shares for $356 million (average $298/share). Year-to-date repurchased 2.5 million shares for $709 million.

• Balance Sheet: Strong financial position with no significant debt; cash flow supports organic investments, acquisitions, and buybacks.

Fiscal 2026 Guidance (Updated)

• Revenue: Raised to $7.025–$7.075 billion (from prior range), reflecting H1 strength and FX tailwinds. Excluding transaction model, ~11–12% growth in constant currency.

• Billings: Raised to $7.355–$7.445 billion, reflecting new transaction model and H1 momentum.

• Non-GAAP Operating Margin: Raised to ~37% (~40% excluding transaction model), with long-term target of 41% reported (45% underlying) by FY29, driven by sales/marketing optimization and inherent leverage.

• Free Cash Flow: Raised by $88 million to $2.2–$2.275 billion, with minimal U.S. federal cash tax due to deferred tax asset utilization.

• Share Buybacks: Increased to $1.2–$1.3 billion (+40–50% vs. FY25).

• Assumptions: Maintains cautious macro outlook at low end, with tougher Q4 comps due to transaction model and prior-year acquisitions. Large EBA and subscription renewals expected in H2.

Strategic and Operational Highlights

• Business Momentum: Strong H1 performance with consistent underlying momentum. AECO led growth, driven by secular demand in data centers, infrastructure, and industrial buildings. Autodesk store and upfront revenue outperformed, with new transaction model driving efficiency.

• New Transaction Model: Contributed $105 million to revenue and $129 million to billings. Shifted lower-tier partner business to direct Autodesk sales, improving customer engagement and pricing. Partner productivity improved with increasing new business and smoother renewals (Americas in June, EMEA in September).

• Industry Cloud and AI:

  • Construction (Autodesk Construction Cloud): Sustained momentum with wins in large and mid-market segments, both domestically and internationally. Displaced competitors (e.g., Dynamic Energy adopted ACC for ERP integration, mobile workflows). Enhanced pre-construction and field features expected to drive further adoption.

  • Manufacturing (Fusion): Strong growth with higher extension attach rates and rising average sales prices. AI-powered auto-constraint feature in Fusion achieved 60% acceptance rate, delivering 1.2 million dimensions and 90% fully constrained sketches, boosting productivity.

  • AI Strategy: Developing industry-specific foundation models (e.g., Project Bernini for 3D generative AI) to enhance design-to-make workflows. Focus on task automation, workflow optimization, and system-level automation, with customer-trained AI models for competitive advantage. Autodesk Assistant and AI-driven CAD engines to reduce repetitive work.

• Customer Wins:

  • Atkins Realis: Signed sixth EBA, leveraging ACC, AI-enabled design, and digital twins for workflow efficiency and quality assurance.

  • Kimley Horn: Expanded BIM and ACC adoption for collaboration and productivity gains by end of 2025.

  • Dynamic Energy: Adopted ACC for integrated workflows, replacing a competitor.

  • European Research Institution: Adopted Autodesk’s product design and manufacturing collection for sustainability and efficiency.

  • Motor Scrubber: Switched to Fusion for connected design-to-manufacturing workflows.

  • Biopharmaceutical Company: Used Fusion for resilient supply chain and spare parts design.

  • Anna University Chennai: Partnered for a design/make innovation center to train students in digital manufacturing and BIM.

  • Automotive Manufacturer: Adopted hybrid subscription/flex model for scalable digital transformation.

• Go-to-Market Optimization: On track with sales/marketing efficiency plan initiated in February, reducing operational friction and driving margin expansion. Increased partner-driven new business and self-serve capabilities via Autodesk store.

• Capital Allocation: Prioritizes organic investments in cloud, platform, and AI, followed by tuck-in acquisitions and share repurchases. Raised FY26 buyback target to reduce share count further.

Market and Competitive Dynamics

• Macro Environment: Stable but uncertain, with no new tariff-related concerns from customers. Guidance assumes similar H2 macro conditions as prior outlook, with conservatism at the low end.

• AECO Strength: Driven by data centers, infrastructure, and industrial buildings, offsetting commercial softness. Middle East and India stood out for infrastructure investments.

• Competitive Displacement: ACC’s modern, connected stack drives wins against legacy solutions, with strong adoption in pre-construction and field workflows.

• AI Adoption: High customer appetite for productivity-enhancing AI, with early success in Fusion’s auto-constraint feature. API usage growing, indicating adoption of granular data for process integration.