Earnings preview: Autodesk aims to navigate challenges in Q4 report

As Autodesk, Inc. (ADSK) gears up to unveil its Q4 (Jan) earnings, this preview delves into what investors can anticipate. Scheduled to release results after market close, followed by a 5:00 pm ET call, analysts forecast a 5% year-over-year increase in adjusted earnings to $1.95, with revenue expected to rise 8% to $1.43 billion. Autodesk's own projections range from $1.91 to $1.97 for EPS and $1.422 to $1.437 billion in revenue.

After a dip due to last quarter's subdued guidance, ADSK shares have rebounded, soaring over 25% to reach one-year highs. This rally sets the stage for high expectations in Q4, with investors eyeing potential improvements in construction demand for FY25. Last quarter highlighted a momentum shift towards construction, which helped balance out the slower pace in media and entertainment sectors. Autodesk is also navigating variances in demand between enterprise and smaller customers.

The recent positive earnings from Procore Technologies (PCOR) have added optimism, hinting at a potential economic recovery that Autodesk could benefit from. However, Autodesk's shift in its business model, moving from up-front to annual billing for multi-year contracts, has initially dampened billings growth, evidenced by an 11% year-over-year decrease in Q3.

Foreign exchange rates continue to pose challenges, with management acknowledging a greater-than-expected impact on billings. Consequently, Autodesk's previous quarter guidance was cautious, setting earnings and revenue forecasts below consensus expectations.

The key for ADSK in Q4 will be to address these obstacles effectively and offer guidance that reflects a positive outlook, especially important after last quarter's cautious stance on macroeconomic uncertainties, geopolitical tensions, and inflationary pressures.

Investors are poised to scrutinize Autodesk's Q4 earnings and subsequent discussion for indications of the company's growth trajectory and strategy to overcome recent hurdles. Successful navigation of these challenges and a forward-looking guidance could further fuel the stock's upward trend, offering insights into Autodesk's resilience and adaptability in a fluctuating market landscape.