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# Autodesk, Inc. (ADSK) — Business, Risks and Management Discussion Autodesk's fiscal year ends on January 31. Fiscal 2026 is the year ended January 31, 2026; fiscal 2027 is the year ending January 31, 2027, and its second quarter ended July 31, 2026. All amounts are in US dollars. ## Business *From the Form 10-K for fiscal 2026 (fiscal year ended January 31, 2026), accession 0000769397-26-000015, with updates from the Form 10-Q for the quarter ended July 31, 2026, accession 0000769397-26-000061.* Autodesk sells design, engineering and production software, almost entirely by subscription, to architects, engineers, construction firms, building owners, manufacturers, and film, television and game studios. Customers use its tools to draft, model, simulate and coordinate buildings, infrastructure, products and visual content before anything is built or shot. In fiscal 2026 net revenue was $7.21 billion, up 18%, and recurring revenue (subscriptions plus certain other revenue) was 97% of the total. Revenue is recognized mostly ratably over contracts that typically run one to three years. Autodesk reports a single operating segment. Autodesk groups its revenue into four product families. Fiscal 2026 figures: - **Architecture, Engineering, Construction and Operations (AECO), $3.58 billion, up 22%.** This is the largest family. It includes the AEC Collection, Revit (building information modeling), AutoCAD Civil 3D, BIM Collaborate Pro, the construction-management suite formerly called Autodesk Construction Cloud and now Forma for Construction (Autodesk Build, BuildingConnected), and Tandem (digital twins). - **AutoCAD and AutoCAD LT, $1.79 billion, up 14%.** The company's original 2D/3D drafting franchise. The standalone AutoCAD and AutoCAD LT family products, not counting collections that include them, were 25% of fiscal 2026 revenue. - **Manufacturing (MFG), $1.38 billion, up 16%.** Fusion (cloud CAD/CAM/CAE), Inventor, Vault and the Product Design & Manufacturing Collection. - **Media and Entertainment (M&E), $332 million, up 5%.** Maya, 3ds Max, Flow Production Tracking and the M&E Collection. Autodesk also splits revenue by product type. "Design" (desktop-centric subscriptions and enterprise business agreements, or EBAs) brought in $5.98 billion in fiscal 2026, up 17%. "Make" (cloud-native subscriptions such as Forma for Construction, Fusion and Flow Production Tracking) brought in $796 million, up 22%. Geographically, international revenue was 64% of the total. Americas revenue was $3.18 billion, EMEA $2.79 billion and APAC $1.23 billion, and the company names the U.S., Germany, the U.K., Japan and Canada as its largest markets. **How it sells.** Over the past several years Autodesk has moved from selling mainly through distributors and resellers to transacting directly with end customers. Its online store, its own sales force and a "new transaction model" all contribute: under that model, channel partners (Solution Providers) quote the customer, but the contract is signed with Autodesk. Direct sales rose to about 63% of revenue in fiscal 2026 from 42% in fiscal 2025. The largest distributor, TD Synnex, fell to 14% of revenue from 33%, and to 8% in the first half of fiscal 2027. The change also moves partner commissions out of contra-revenue and into marketing and sales expense. This lifts reported revenue growth, is roughly neutral to operating profit dollars and free cash flow, and lowers the operating margin percentage. Autodesk also offers Flex, a pay-as-you-go token option, and EBAs that give large customers token-based access to its whole portfolio. **Strategy.** Management describes the strategy as "convergence" of design, make and operate workflows on three AI-enabled industry clouds: Forma (AECO), Fusion (manufacturing) and Flow (media). These sit on Autodesk Platform Services, an API layer to which the company is adding Model Context Protocol servers for AI-driven integrations. In May 2026 Autodesk announced Autodesk Operations Solutions, which groups Tandem, Flexsim, Fusion Operations and Factory Design Utilities, to extend into asset operations and maintenance (Form 8-K, accession 0001213900-26-062125). The August 2026 acquisition of MaintainX (see Subsequent events) is the anchor of that push. **Competition and workforce.** The 10-K names Adobe, Bentley Systems, Dassault Systèmes (including SolidWorks), Hexagon's Intergraph, MSC Software, Nemetschek, Oracle, Procore, PTC, 3D Systems, Siemens PLM and Trimble as primary competitors. It also notes that AI and machine learning could reshape the market unpredictably. Autodesk had about 14,300 employees at January 31, 2026, down from about 15,300 a year earlier. Most research and development is done in the U.S., Canada and India. ## Risk factors *From the Form 10-K for fiscal 2026, accession 0000769397-26-000015, as updated in the Form 10-Q for the quarter ended July 31, 2026, accession 0000769397-26-000061.* These are the risks most specific to Autodesk's economics, condensed from the filings: - **Concentration in AutoCAD.** Standalone AutoCAD and AutoCAD LT products were 25% of fiscal 2026 revenue and 24% in the first half of fiscal 2027. Part of the growth strategy is moving these users into Industry Collections and cloud offerings. The company says AutoCAD sales have at times fallen without a matching gain in those products, which would hurt results if it continued. - **Business-model transitions.** Autodesk keeps changing how it sells: named-user plans, annual billing of multi-year contracts (which affected billings and cash collection timing in fiscal 2024–2026 and is expected to continue into fiscal 2027), the new transaction model, and Flex. Each move rests on assumptions about pricing, demand and revenue recognition that may prove wrong. Customers are not obliged to renew, and because revenue is recognized over the contract term, a drop in renewals shows up in revenue only in later quarters. - **Competition and AI disruption.** Barriers to entry in software are low, and the move to cloud lowers them further. Competitors or new entrants with AI may get to market faster, and the market may react to disruptive AI "in unpredictable ways." Autodesk's own AI features carry development cost, possible liability for inaccurate or biased output, related cyber exposure, and growing regulation, including the EU AI Act and U.S. state laws. - **International exposure, trade policy and currency.** International revenue was 64% of the fiscal 2026 total and 65% in the first half of fiscal 2027. The 10-Q describes a fluid U.S. tariff regime: IEEPA tariffs invalidated by the Supreme Court and rescinded on February 24, 2026, followed by a temporary Section 122 surcharge, then Section 301 tariffs on 60 trading partners from July 24, 2026. It warns of possible retaliation, including digital services taxes. Hedges reduce currency swings but do not remove them. - **Acquisitions and integration.** The MaintainX acquisition closed on August 3, 2026. The filings cite risks of losing customers or key staff, integration costs, gaps in compliance controls at acquired companies, and acquisition-driven volatility in results. - **Higher debt and the covenants that come with it.** At July 31, 2026, Autodesk had $2.5 billion of senior notes (due June 2027 to June 2035) and $1 billion of commercial paper outstanding. It then drew a $1 billion term loan on August 3, 2026. The revolving credit facility and the term loan each cap consolidated debt at 3.50 times EBITDA, which can step up to 4.00 times for up to four quarters after a material acquisition. A short-term ratings downgrade could restrict access to commercial paper and force the company onto floating-rate bank borrowing. - **Security and third-party infrastructure.** Autodesk says it has been subject to security breaches and incidents and expects attacks to continue, including AI-assisted ones. Its cloud products rely heavily on Amazon Web Services and other providers. A breach could put its FedRAMP authorization for U.S. federal customers at risk. - **Restructuring execution.** Autodesk ran two restructuring plans in fiscal 2026. The January 2026 plan, which completes the multi-year sales and marketing overhaul, eliminates about 7% of the workforce (about 1,000 roles), mostly in customer-facing sales. The company warns this could cause more attrition than planned, lower morale and save less than expected. - **Securities litigation from the 2024 internal investigation.** In 2024 the Audit Committee investigated the company's free cash flow and non-GAAP operating margin practices, and a federal securities class action followed. The SEC and the U.S. Attorney's Office for the Northern District of California told Autodesk in August 2025 that they were closing their matters. The court dismissed the class action with prejudice on January 26, 2026, but the plaintiffs appealed in March 2026. Related stockholder derivative suits in the Northern District of California were consolidated and stayed in October 2024. Autodesk says it cannot estimate any possible loss. - **Tax.** Several items could move the effective tax rate: the One Big Beautiful Bill Act, OECD Pillar Two (eased for U.S.-parented groups by a January 2026 safe harbor), and a pending IRS accounting-method change on foreign R&D that the company expects to lower its tax provision once approved. Separately, California will apply sales tax to certain digital software and cloud services from January 1, 2027, which may raise costs for California customers. ## Management's discussion — fiscal 2026 *From the Form 10-K for fiscal 2026, accession 0000769397-26-000015.* In fiscal 2026, revenue grew 18% both as reported and in constant currency, to $7.21 billion. Most of the growth came from subscriptions sold to existing customers. It was also flattered by the new transaction model, which recognizes partner commissions as expense instead of deducting them from revenue. Every product family grew: AECO 22%, AutoCAD/LT 14%, MFG 16% and M&E 5%. By region, EMEA grew 21%, the Americas 17% and APAC 11% (14% in constant currency). Net revenue retention stayed above the 100%–110% range in constant currency, partly because of the new transaction model. Costs grew about as fast as revenue. Total operating expenses rose 19% to $4.98 billion: - **Marketing and sales** rose 19% to $2.37 billion, mainly because Solution Provider commissions now sit in this line. - **Research and development** rose 11% to $1.64 billion. - **Restructuring charges** jumped to $216 million from $15 million. Income from operations was $1.58 billion, up from $1.35 billion, and the GAAP operating margin held at 22%. The non-GAAP operating margin, which excludes stock-based compensation ($788 million), amortization, restructuring and acquisition costs, rose to 38% from 36%. Net income barely moved, at $1.12 billion versus $1.11 billion, because income tax expense rose to $479 million from $272 million. Autodesk attributes the higher tax mainly to a U.S. election on when revenue is taxed and to the change to full expensing of U.S. R&D under the One Big Beautiful Bill Act. Diluted EPS was $5.23 versus $5.12; non-GAAP diluted EPS was $10.43 versus $8.47. Forward indicators were strong at year-end. Deferred revenue was $4.69 billion (up 14%), remaining performance obligations (RPO) were $8.30 billion (up 20%), and current RPO was $5.48 billion (up 23%). Operating cash flow rose to $2.45 billion from $1.61 billion. Autodesk spent $1.40 billion to buy back 5 million shares. During the year it repaid notes due June 2025, issued $500 million of 5.30% notes due 2035, and replaced its revolving credit facility. It ended the year with $2.97 billion of cash and marketable securities and $2.50 billion of notes outstanding. It completed no business combinations in fiscal 2026. For fiscal 2027, management said in the 10-K that it expected the new transaction model to keep lifting reported revenue growth while being broadly neutral to operating profit dollars and free cash flow and lowering the operating margin percentage. It also expected the shift to annual billing of multi-year contracts to keep affecting the timing of billings and collections. ## Current quarter — second quarter of fiscal 2027 (ended July 31, 2026) *From the Form 10-Q for the quarter ended July 31, 2026, accession 0000769397-26-000061, and the second-quarter earnings release furnished on Form 8-K, accession 0000769397-26-000059. Prior first-quarter guidance is from the Form 8-K, accession 0000769397-26-000041.* **Results.** Revenue rose 16% (14% in constant currency) to $2.05 billion. Subscription revenue grew 17% to $1.95 billion; Autodesk now reports maintenance revenue within subscription revenue. All four product families grew by double digits: - AECO rose 17% to $1.03 billion, led by AEC Collections, Autodesk Forma and Revit. - AutoCAD and AutoCAD LT rose 14% to $500 million. - MFG rose 15% to $385 million, on MFG Collections, Fusion and EBAs. - M&E rose 15% to $92 million. Make revenue grew fastest, up 26% to $244 million on Forma and Fusion. EMEA grew 19% as reported but 13% in constant currency, so the weaker dollar helped this quarter. **Margins and earnings.** Operating expenses grew 10%, slower than revenue. Marketing and sales rose 10% on Solution Provider commissions and advertising. R&D rose 12% on headcount and cloud hosting. G&A rose 7% on acquisition-related costs. Income from operations rose to $599 million from $444 million, a GAAP operating margin of 29%; the non-GAAP operating margin was 41%, up 2 points. Interest and other income turned to a $6 million loss from a $12 million gain, mainly because of a $13 million loss on strategic investments. Income tax expense fell to $101 million from $143 million; the prior-year quarter had carried the cost of the U.S. revenue-timing election. Net income was $492 million versus $313 million, and diluted EPS was $2.33 versus $1.46 (non-GAAP $3.30). **Billings, backlog and retention.** Billings were $1.85 billion, up 10%, a slowdown from 18% growth in the first quarter. At July 31, 2026, deferred revenue was $4.26 billion, up 11% year over year. RPO was $7.43 billion, up only 2% year over year and down 10% from January. Current RPO was $5.24 billion, up 12% year over year. Autodesk attributes the weak RPO and unbilled deferred revenue growth to its program of reducing multi-year discounts, including winding down multi-year Maintenance-to-Subscription renewals. It says this improves price realization over time but weighs on RPO for now. Net revenue retention was at about the top of the 100%–110% range in constant currency, versus slightly above the range a year earlier. **Cash and capital.** Second-quarter operating cash flow was $575 million and free cash flow $561 million, each up roughly a quarter. For the first six months, operating cash flow was $1.47 billion versus $1.02 billion, and Autodesk spent $901 million to repurchase 4 million shares. It had $6.58 billion of repurchase authority left at quarter-end. Ahead of the MaintainX closing, Autodesk did three things: - It raised its revolving credit facility to $2 billion from $1.5 billion on June 15, 2026. - It signed a $1 billion 364-day delayed-draw term loan the same day. - It set up a $2 billion commercial paper program on July 13, 2026. At quarter-end, $1 billion of commercial paper was outstanding at a 4.17% weighted-average rate. Cash, cash equivalents and marketable securities were $4.36 billion at July 31, 2026, before the acquisition was paid for. **Guidance.** With second-quarter results, Autodesk raised its fiscal 2027 outlook and for the first time included MaintainX. The prior outlook, given in May, excluded MaintainX. | Fiscal 2027 metric | May 2026 outlook (excl. MaintainX) | August 2026 outlook (incl. MaintainX) | |---|---|---| | Billings | $8.505–8.580 billion | $8.575–8.650 billion | | Revenue | $8.155–8.215 billion | $8.295–8.345 billion | | GAAP operating margin | 26%–28% | 25%–27% | | Non-GAAP operating margin | about 39% | about 39% | | GAAP EPS | $8.07–8.63 | $7.89–8.72 | | Non-GAAP EPS | $12.40–12.65 | $12.52–12.60 | | Free cash flow | $2.725–2.800 billion | $2.725–2.750 billion | For the third quarter, Autodesk guided to revenue of $2.125–2.140 billion, GAAP EPS of $1.57–1.87 and non-GAAP EPS of $3.04–3.09. The CFO said the unchanged non-GAAP margin reflects better underlying margins from operating leverage and the go-to-market overhaul, offset by dilution from MaintainX. The narrower free cash flow range includes about $45 million of MaintainX transaction expenses plus its operating and net financing costs. For the third quarter, management expects cost of revenue, marketing and sales, R&D and intangible amortization all to rise in dollars, partly because of the acquisition. It expects G&A to grow more slowly than revenue and restructuring charges to stay flat. The January 2026 plan is expected to be complete by the end of fiscal 2027. ## Subsequent events *From Note 19 (Subsequent Events), Note 11 (Borrowing Arrangements) and the liquidity discussion of the Form 10-Q for the quarter ended July 31, 2026, accession 0000769397-26-000061, and Forms 8-K accession 0001213900-26-062125 (merger agreement, May 28, 2026), 0001213900-26-084276 (closing, August 3, 2026) and 0001193125-26-387877 (notes offering, September 10, 2026).* - **Acquisition of MaintainX, Inc., completed August 3, 2026.** MaintainX sells mobile-first software for maintenance and asset operations, covering work orders, inspections, asset tracking and frontline workflows. The 10-Q puts preliminary purchase consideration at approximately $3.53 billion, net of cash acquired; its liquidity discussion rounds this to approximately $3.6 billion. The merger agreement of May 28, 2026 had set aggregate consideration at approximately $3.575 billion, subject to customary adjustments. Autodesk also agreed to grant $150 million of restricted stock units to MaintainX's continuing employees. When the deal was announced, MaintainX expected more than $135 million of annualized recurring revenue for calendar 2026, growing more than 50%. Autodesk paid for it with cash on hand, commercial paper and the full $1 billion term loan, drawn on August 3, 2026 at a 4.58% weighted-average rate. The purchase price allocation had not been completed when the 10-Q was filed. - **$1.0 billion senior notes offering, September 2026.** On September 8, 2026, Autodesk agreed to sell $500 million of 5.050% notes due 2029 and $500 million of 5.650% notes due 2033; the supplemental indenture was dated September 10, 2026. Interest is paid semi-annually from March 15, 2027. Autodesk said it would use the net proceeds, together with cash on hand, to repay the $1.0 billion term loan drawn for MaintainX. If applied as stated, this would replace 364-day bank debt with fixed-rate notes. - **Revolver unused.** As of August 28, 2026, nothing was drawn under the $2 billion revolving credit facility.