Autodesk's Q2 2026: Contradictions Emerge on M&A Strategy, Macroeconomic Guidance, and Margin Targets

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: Not disclosed; total revenue grew 17% YOY (18% in constant currency). Excluding the new transaction model, revenue grew 11% in constant currency.
• EPS: Not disclosed; non-GAAP EPS exceeded the high end of guidance.
• Operating Margin: 39% non-GAAP, up 140 bps YOY; GAAP 25%, up 240 bps YOY.

Guidance:

• FY26 billings guidance raised to $7.355–$7.445B.
• FY26 revenue guidance raised to $7.025–$7.075B; FX a modest tailwind.
• FY26 non-GAAP operating margin ~37% (~40% underlying ex-transaction model).
• FY26 free cash flow $2.20–$2.275B; little U.S. federal cash tax; no incremental benefit from the OBBB Act.
• FY26 share repurchases: ~$1.2–$1.3B.
• H2: large EBA renewals; tougher comps from prior-year acquisitions and the transaction model; macro bottom-end assumptions unchanged.
• Long term: FY2029 reported non-GAAP operating margin target 41% (~45% underlying).

Business Commentary:

• Revenue and Billings Growth:
• Autodesk reported total revenue growth of 17% as reported and 18% in constant currency for Q2 fiscal 2026.
• Billings increased 36% as reported and 34% at constant currency, reflecting a shift to annual billings and the transition to the new transaction model.

• The growth was driven by strength in the AECO (Architecture, Engineering, Construction Operations) segment and increased adoption of the new transaction model.

• Margin Expansion and Efficiency Gains:

• Second quarter GAAP and non-GAAP operating margins were 25% and 29% respectively, reflecting year-over-year increases.
• Autodesk raised its full year operating margin guidance to approximately 37% or approximately 40% on an underlying basis.

• This was achieved through ongoing cost discipline, operating leverage, and progress in the sales and marketing optimization plan, despite margin drag from the new transaction model.

• Construction and Industry Cloud Momentum:

• Autodesk's construction business performed well, with similar momentum to past quarters, driven by wins in both the U.S. and international markets.
• The company saw growth in its Autodesk Construction Cloud, which was supported by modern and comprehensive end-to-end industry cloud solutions.

• Converged people, processes, and data across project lifecycles were seen as key drivers for increased efficiency and sustainability.

• AI and Productivity Initiatives:

• Autodesk's AI-powered tools, such as Sketch Auto Constraints, showed strong adoption and productivity gains, with acceptance rates over 60%.
• The company is focused on integrating AI into its products to streamline workflows and enhance productivity, with plans to integrate more capabilities into its platform.
• These initiatives are aimed at further disrupting long-standing technology paradigms and creating new sources of value for customers.

Sentiment Analysis:

• Revenue and non-GAAP EPS topped the high end of guidance. Full-year billings, revenue, operating margin, free cash flow, and buyback targets were raised. Q2 billings rose 36% and non-GAAP operating margin was 39% (+140 bps YOY). AECO strength (data centers, industrial, infrastructure) and construction momentum persisted; Autodesk Store and EBAs were strong. Management highlighted sales/marketing efficiencies and set a FY2029 non-GAAP operating margin target of 41%.

Q&A:

• Question from Saket Kalia (Barclays): What is your appetite for transformative M&A given recent headlines?
  Response: Prioritize organic investment; pursue tuck-ins/targeted deals (hundreds of millions to low billions), not tens of billions; deploy excess capital to share buybacks.

• Question from Saket Kalia (Barclays): What assumptions underpin the FY2029 41% non-GAAP operating margin target?
  Response: Largest lift from sales/marketing efficiency; inherent operating leverage; path will be non-linear due to transaction-model headwinds in FY27.

• Question from Adam Borg (Stifel): What’s driving sustained momentum in construction and ACC runway?
  Response: Momentum unchanged and broad-based (U.S., mid-market, international); payments strong; AU to showcase enhancements in preconstruction and field.

• Question from Jay Vleeschhouwer (Griffin Securities): What drove the higher billings guide (mix, usage, retention)?
  Response: Continued strength in AECO and Make; strong NRR; product innovation and go-to-market execution sustaining momentum.

• Question from Jay Vleeschhouwer (Griffin Securities): How do you view adoption of new data models/APIs (APS) over time?
  Response: API usage is rising across large and mid-market customers; adoption will grow as AI features (e.g., Fusion auto-constraint, ~60% acceptance) deliver clear productivity.

• Question from Jason Celino (KeyBanc Capital Markets): What drove growth acceleration despite similar selling environment?
  Response: AEC outperformed (data centers, industrial, infrastructure); strong EBAs and Autodesk Store (benefit from transaction model); Middle East/India notable.

• Question from Elizabeth Porter (Morgan Stanley): How are tariff-related risks reflected in H2 guidance and customer conversations?
  Response: Autodesk not directly impacted; customers coping without new red flags; low-end guidance remains cautious; H2 comps tougher due to prior-year acquisitions/transaction model.

• Question from Joe Vronk (Baird): What role will Autodesk play in AI for manufacturing and build/buy/partner decisions?
  Response: Building proprietary industry foundation models and Autodesk Assistant; partner selectively with startups; Fusion is the core manufacturing AI surface; AEC AI coming.

• Question from Ken Wong (Oppenheimer): Is the low end of guidance insulated against severe downside (e.g., COVID-like conditions)?
  Response: Yes—assumptions unchanged from prior quarter; downside scenario still embedded at the low end.

• Question from Josh Tilton (Wolfe Research): If macro uncertainty doesn’t materialize, how should we think about the year’s trajectory?
  Response: Expect results above the low end if conditions hold; mid/high assume status quo; execution remains the lever.

• Question from Siti Panigrahi (Mizuho): What impact has the new transaction model had on channel productivity and renewals?
  Response: Transactional low-tier partner business is moving direct (efficiency gain); partners are normalizing renewals; partner new business is rising; EMEA first renewals in September.

• Question from Tyler Radke (Citi): What drove strength in the online store and PLG motions?
  Response: Focused investments in the Store and PLG (Fusion, Construction) to capture formerly partner-transacted customers; building self-serve/monetization, which will take time.

• Question from Koji Akita (Bank of America): What can unlock more budgets for large global GCs beyond just more projects?
  Response: Backlogs and capacity constraints persist; productivity gains matter; regulatory simplification helps; push toward industrialized construction/prefab to boost throughput.

• Question from Michael Turrin (Wells Fargo Securities): Is AEC strength macro-driven or diversification-driven?
  Response: Diversification across the built/rebuilt world underpins stability; current strength in data centers, industrial, and infrastructure; demand to build remains broad.