Story Stocks^®

Autodesk (ADSK) is surging in the wake of its Q2 earnings report, as the leading provider of design and engineering software comfortably exceeded consensus expectations for both EPS and revenue, with the latter expanding by over 17% yr/yr to $1.76 bln -- the company's strongest yr/yr growth in more than three years. Management further bolstered investor confidence by issuing upside guidance for Q3, projecting revenue of $1.80-$1.81 bln and EPS of $2.48-$2.51, while raising its FY26 outlook across all key metrics.

These revisions reflect accelerating end-market demand, with particular strength in data center construction, infrastructure, and manufacturing, where customers are increasingly adopting ADSK's cloud-enabled platforms to drive efficiency and innovation in complex projects.

• A critical forward-looking indicator for ADSK's subscription-heavy model, billings surged to $1.678 bln in Q2, marking a 36% yr/yr increase and an acceleration from Q1's 29% growth, signaling robust pipeline health and customer commitment. This outperformance stems from several tailwinds, including the ongoing shift to annual billing for multi-year contracts, which contributed approximately $129 mln to the quarter's billings, and favorable foreign exchange dynamics.
• More fundamentally, the acceleration highlights accelerating adoption of ADSK's cloud-based offerings, such as Fusion for collaborative product design and Construction Cloud for streamlined project management, which are gaining traction among enterprises seeking scalable, data-integrated workflows. Additionally, rising integration of AI enhancements -- ranging from generative design tools in Fusion to automated constraint-solving features -- has boosted productivity and user retention, with management noting high acceptance rates for these capabilities.
• The Architecture, Engineering, Construction, and Operations (AECO) segment emerged as a clear standout in Q2, with revenue leaping 24% in constant currency to $878 mln, outpacing the company's overall growth and underscoring its role as a high-margin growth engine. This performance is largely attributable to sustained capital investments in data centers, driven by AI and cloud infrastructure buildouts, as well as infrastructure projects tied to government spending and industrial expansion, which have more than offset persistent softness in commercial real estate.
• ADSK's AutoCAD and AutoCAD LT suite, along with its Manufacturing (MFG) business, both posted healthy revenue growth of 14% yr/yr in Q2, reflecting steady demand for core design tools amid broader industrial resilience.
• For AutoCAD and AutoCAD LT, which generated $440 mln in revenue, the expansion is fueled by persistent adoption among small-to-medium enterprises and freelancers for 2D/3D drafting needs, bolstered by seamless integration with cloud extensions and AI-assisted automation features that streamline workflows and reduce errors. In the MFG segment, revenue reached $334 mln, driven by manufacturers' focus on digital twins and supply chain optimization in the face of geopolitical volatility; tools like Inventor and Fusion are enabling faster prototyping and simulation, particularly in automotive and aerospace subsectors where efficiency gains are paramount.

ADSK's Q2 results exemplify a company firing on all cylinders, with accelerating billings growth serving as a compelling proxy for future revenue durability in its subscription ecosystem. This momentum is partly propelled by robust data center construction activity, where surging AI infrastructure investments are amplifying demand for ADSK's specialized tools, alongside broader tailwinds in infrastructure and manufacturing.