Autodesk exceeds analyst expectations with 13 percent revenue growth during Q3 2021

3D design software developer Autodesk has outperformed the predictions of financial analysts by posting a 13 percent year-on-year increase in its revenue during Q3 2021. 

The company generated $952 million in revenue over the course of Q3 2021, a rise of 13 percent on the $842.7 million reported in Q3 2020. This figure also represents a $9.85 million improvement on the firm’s revenue expectations, which in turn, has yielded a greater return for shareholders of $1.04 per share instead of $0.96. 

Despite this, Autodesk’s revenue growth has slowed during the 2021 financial year (that runs across calendar years), with annual rises of 20 percent in Q1 2020 and 15 percent in Q2 2020, now reduced to 13 percent. The firm’s Q3 revenue increase was largely driven by a 24 percent upturn in its Subscription revenue, which mitigated the revenue decline seen within its Maintenance segment. 

On an earnings call with analysts and investors, Andrew Anagnost, President, and CEO of Autodesk, expressed confidence that the firm’s revenue growth would continue into Q4 and beyond. “Our strong third quarter results reflect the growing customer value of our cloud-based platform and the resilience of our subscription business model,” said Anagnost. 

“We are confident in our fiscal 2023 targets, and expect to see continued double-digit growth thereafter,” he added. 

Autodesk has reported 13 percent revenue growth during Q3 2021, although its revenue growth has slowed throughout the year. Photo via Autodesk.
Autodesk reported 13 percent revenue growth during Q3 2021, although its revenue increases have slowed throughout the year. Photo via Autodesk.

Autodesk’s Q3 2021 financial results

Autodesk’s financial results are reported across two main segments: Subscription revenue and Maintenance Plan revenue. Subscription revenue includes the company’s income from product subscriptions, cloud service offerings, and EBAs, essentially representing a hybrid of its desktop and cloud-based software revenue. 

Maintenance revenue, meanwhile, comprises the firm’s income generated from plans provided to customers, that includes an option to upgrade to Autodesk’s new releases once they’re launched. 

Subscription-based income continued to account for the majority of Autodesk’s revenue during Q3 2021, generating $884 million compared to the $715 million reported in Q3 2020. By contrast, the firm’s Maintenance revenue continued to decline due to the impact of the pandemic, falling 56 percent from $91.2 million in Q3 2020 to $39.8 million in Q3 2021. 

Geographically, the U.S. remained Autodesk’s most profitable market during Q3, raising $328.5 million in revenue, constituting an annual increase of 14 percent. The company’s APAC-based business, meanwhile, showed the largest sequential improvement, reporting a 19 percent yearly revenue rise during Q3 2021, while its EMEA income grew by 11 percent. 

In terms of individual product families, Autodesk’s proprietary AutoCAD 3D printing software was its best-performing package, generating $278.8 million during Q3 2021. This figure represents a 33 percent improvement on the $245.4 million reported in Q3 2020.

Revenue (millions $) Q3 2021 Q3 2020 Variance (%)
Subscription 884.4m 715m +24
Maintenance 39.8m 91.2m -56
Other 28.2m 36.5m -22
Total net revenue 952m 842.7m +13

Autodesk’s recurring revenue booms in Q3 2021 

During the company’s Q2 2021 earnings call, Anagnost explained that software usage levels in Europe and many of its Asian markets have risen to pre-pandemic levels. Although the same level of recovery hasn’t been seen in Autodesk’s U.S. and U.K. markets, Anagnost emphasized that the diversity of its revenue streams has boosted its revenue performance. 

With regards to 3D printing software, the company announced that it has now reached 30 million users worldwide, with educators as well as designers adopting the technology. Fusion 360 in particular, was identified by the firm as being popular at a university level, replacing entry-level, browser-based CAD software with a more professional solution. 

Similarly, Anagnost cited the example of a Chinese client that left Autodesk’s services for a lower-cost competitor. Having found that Autodesk’s offering provided enhanced functionality, the unnamed customer returned and purchased collections for the first time in an attempt to grow their business. 

Autodesk’s client retention rate of 100-110 percent has also enabled it to grow its revenue, and reinvest in acquisitions that expand on its existing offering. During Q3, the firm acquired post-processing provider CAMplete, and agreed to partner with Sandvik Coromant and Rockwell Automation to enhance its Fusion 360 software.  

While the former will allow Autodesk clients to simulate the machine code that drives their production equipment before running it, the latter is set to yield enhanced automation during printing. Through making these “sustained investments,” the company aims to drive home its “competitive advantage” for the foreseeable future. 

A 3D model designed in Fusion 360. Image via Autodesk.
Autodesk’s Fusion 360 software (pictured) has now reached 160,000 subscribers. Photo via Autodesk.

Continued growth ahead for Q4 2021?

Although Autodesk’s CFO Scott Herren urged caution ahead of an “uncertain” Q4 during the earnings call, he also said that he expects subscription rates to remain healthy in future. The company signed several “nine-figure” multi-year contracts during Q3, which has provided it with $2.93 billion worth of deferred revenue for it to fall back on if the pandemic worsens. 

As a result of its strong revenue performance during Q3, the company opted to buy back $196 million worth of shares, taking its annual total to $393 million of repurchased stock. Herren also said that despite the current economic headwinds, he expects the firm to report 15 percent revenue growth during Q4 2021, setting full-year guidance of $3.75 billion to $3.765 billion.

Herren concluded that the company’s strategy has positioned it well to continue growing its Subscription revenue into the fourth quarter. “Third-quarter revenue, earnings, and free cash flow were above expectations, driven by the strength of our healthy subscription renewal rates,” said Herren. 

“We are executing with strength, with current remaining performance obligations growing 16 percent year over year despite uncertain macro-economic conditions,” he added. “The business model transition we have made leaves us well-positioned as the secular-industry shift to the cloud accelerates.”

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Featured image shows Autodesk’s Maya 3D graphics application. Photo via Autodesk.