Story Stocks^®

AutoDesk (ADSK -4%) gets knocked down today despite registering a wide earnings beat on in-line revenue growth in Q4 (Jan). The 3D computer-aided design (CAD) software developer used extensively across the construction industry also projected Q1 (Apr) and FY26 numbers mostly above consensus. Also, as reported before Q4 results yesterday after the close, ADSK announced a workforce reduction, aiming to trim its headcount by 9%. CEO Andrew Anagnost mentioned that the company will be reallocating the savings toward its strategic priorities, including the cloud, its platform, and AI.

These investments underscore ADSK's updated long-term game plan. CFO Janesh Moorjani commented that the right actions are in place to pull the company above its steady growth rate near the bottom end of its previously reported +10-15% clip. Even though ADSK's FY26 revenue guidance of $6.895-6.965 bln was largely ahead of analyst expectations, it still translated to another year of growth within the +10-15% range. Mr. Moorjani believes that with its step-up in strategic investments alongside its go-to-market optimization, this pace of growth is no longer appropriate, eyeing a more robust pace of growth alongside higher margins over the longer term, although no specifics were provided.

• In the interim, ADSK is putting the right framework into place. Over the past year, ADSK has shifted from a licensing, multi-year billings model to an annual, subscription-based model. While this initially disrupted upfront payments, it has ultimately resulted in improved revenue growth. In Q4, billings increased 23% yry/r to $2.11 bln, nicely ahead of the company's guidance.
• Management noted that the broader economic environment and underlying momentum of its business during Q4 mirrored the past several quarters, supporting strong renewal rates but generating headwinds to new business growth. During economic uncertainty, organizations can be hesitant to sign new contracts; this is out of ADSK's control. However, within its control is its ability to enhance the productivity of its sales teams, allowing them to focus more on new business growth going forward.
• Despite economic volatility, ADSK still projected decent figures, expecting Q1 adjusted EPS of $2.14-2.17, a potential lift from its $2.14 posted in Q4 and revs of $1.60-1.61 bln, a minor step lower from its $1.64 bln in Q4. For the year, ADSK expects adjusted EPS of $9.34-9.67 and revs of $6.895-6.965 bln. ADSK also expects billings of $7.06-7.21 bln, a 19% jump yr/yr at the midpoint. The company cautioned that due to its headcount reduction and potential tariff impacts, there could be some disruption. However, it incorporated this into its guidance.

Even though ADSK's Q4 performance was solid, its shares are still under moderate selling pressure today. Comments surrounding potential disruption injected some unease into the stock. While ADSK noted that it built this into its forecasts, there are too many variables producing discomfort today, from economic uncertainty surrounding tariffs to the company's decision to trim its workforce and reallocate the funds into strategic investments, including AI. As such, investors are likely waiting for further clarity, which could keep a lid on shares over the near term.