Autodesk hits 30-month stock price high as investors bullish on subscription-based model
Autodesk, Inc. said Wednesday it signed a deal to acquire certain assets of France-based Graitec, a CAD and structural engineering design software provider for the reinforced concrete and steel construction industries.
The San Rafael, Calif-based 3D engineering and architecture software maker did not disclose terms of the pending deal, which includes acquiring Graitec’s Advance Steel and Advance Concrete software products, and associated employees. The transaction is expected to close in November, Graitec said on its website.
Autodesk said the purchase will strengthen its Building Information Modeling software portfolio for structural fabrication and detailing applications. Second quarter revenue from its AEC business segment increased 9 percent, the company reported in August, compared to slightly lower quarterly sales for the quarter companywide.
Separately, Autodesk laid out plans Wednesday for expanding its market opportunity and transitioning to a more “ratable and recurring business model.” The company reiterated its third-quarter outlook for revenue in the range of $540 million-$555 million, and adjusted earnings of $0.36-$0.40 per share. GAAP earnings per share are expected to be in the $0.17-$0.21 range. Analysts reportedly expect Autodesk to report earnings of $0.39 per share, on revenues of $548.86 million.
The company also said it expects fiscal 2014 fourth quarter revenue of $560 million-$580 million after the impact of $50 million from business model transition and EPS of $0.29-$0.36, below Wall Street’s expectations of $596.6 million and EPS of $0.49. For the full fiscal year, Autodesk projects revenue to reach nearly $2.4 billion, up about 3 percent.
Despite the not-so-good guidance, investors are still bullish on Autodesk thanks to its stated transition to a more cloud-based, subscription-based business model. Shares of Autodesk Wednesday hit a 52-week high of $42.82, their highest level in nearly 30 months. The company’s market cap is $9.4 billion and P/E ratio is 43.75.
Autodesk reported Monday it was restructuring its business, cutting staff, and consolidating “certain leased facilities.” The company did not disclose how many jobs will be affected, but said it expects to record pre-tax, restructuring charges of $15 million to $20 million, about 80 percent of which is for one-time employee termination benefits.
The moves comes on the heels of weaker-than-expected second quarter results, which Autodesk reported in August. The job cuts could impact Autodesk’s Media & Entertainment and Platform Solutions and Emerging Business segments after they posted quarterly sales declines of 11 percent and 9 percent, respectively. Sales of its flagship AutoCAD software used by designers, engineers and architects, suffered an 11 percent drop in the quarter.
“The challenging dynamics within some of the end-markets that we serve has led us to adjust our growth assumptions,” Autodesk CFO Mark Hawkins said of the second quarter results.