ADSK Autodesk
Superb design-software moat, but $218 prices in flawless execution the cash flows don't yet support.
The story
Autodesk is the dominant franchise in design and engineering software (AutoCAD, Revit, Fusion), with deep file-format lock-in, high switching costs, and a completed subscription transition that has lifted margins toward 30%. Growth has decelerated to ~8% as the business matures in AEC and manufacturing, and the moat is durable but the reinvestment runway is ordinary. This is a mature cash-compounding franchise, not a hyper-growth story.
Kept the prior framework with minor factual calibration: TTM growth of ~8% on 7.79B revenue trims y1 growth from 9% to 8.5%, and TTM operating margin already at 27.9% justifies nudging the target to 31% over 4 years (convergence is nearer than I assumed, since the margin story is mostly delivered). Sales-to-capital moved to the observed 1.41. Terminal growth stays at 3.5%, below the 4.78% risk-free rate, consistent with a mature franchise growing with GDP-ish design activity.
Value drivers
| Revenue growth (Y1) | 8.5% |
| Terminal growth | 3.5% |
| Forecast horizon | 7y |
| Target operating margin | 31.0% |
| Years to target margin | 4 |
| Sales-to-capital | 1.41 |
| Beta | 1.15 |
| Failure probability | 1.0% |
| Cost of capital (WACC) | 9.7% |
| Terminal WACC | 9.0% |
Valuation bridge
| PV of explicit FCFF | 8.45B |
| PV of terminal value | 19.13B |
| Equity value | 27.07B |
| ÷ shares → per share | $129.54 |
News
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Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 8.45B | 8.5% | 28.7% | 1.70B | 469.61M | 1.23B | 1.12B |
| 2 | 9.10B | 7.7% | 29.5% | 1.88B | 459.57M | 1.42B | 1.18B |
| 3 | 9.72B | 6.8% | 30.2% | 2.06B | 441.02M | 1.62B | 1.23B |
| 4 | 10.31B | 6.0% | 31.0% | 2.24B | 413.70M | 1.83B | 1.26B |
| 5 | 10.84B | 5.2% | 31.0% | 2.36B | 377.62M | 1.98B | 1.25B |
| 6 | 11.31B | 4.3% | 31.0% | 2.46B | 333.08M | 2.12B | 1.22B |
| 7 | 11.70B | 3.5% | 31.0% | 2.54B | 280.68M | 2.26B | 1.19B |
Key risks
- AEC/construction cyclicality dampening seat expansion and new business
- AI-native design tools eroding the AutoCAD/Revit lock-in over time
- Competition from cheaper cloud tools (Trimble, Bricsys, PTI ecosystem) compressing pricing power
Catalysts
- Continued GAAP margin expansion toward and beyond 30% as subscription model fully matures
- Usage-based and Flex pricing unlocking monetization from casual users