Shares in Autodesk Inc. fell in late trading today after the computer-aided design software company reported strong quarterly earnings but fell short in its outlook.

For its fiscal third quarter, Autodesk reported adjusted earnings per share of $2.07, up from $1.70 in the same quarter of last year, on revenue of $1.414 billion, up 10% year-over-year. Both were beats, as analysts had expected $1.99 per share on revenue of $1.39 billion.

By sector, Autodesk reported Design revenue of $1.192 billion, up 10% year-over-year and 3% from the previous quarter. Make revenue came in at $134 million, up 15% year-over-year and 3% sequentially. Subscription revenue rose 11%, to $1.314 million.

The company’s net revenue retention rate remained within the range of 100% to 110% in the quarter. Any figure above 100% is considered a positive because it indicates an increase in retention. However, the amount Autodesk billed in the quarter fell 11%, to $1.204 billion. The quarter’s billing decrease is countered by future incoming revenue, with deferred revenue up 6%, to $4.02 billion, and remaining performance obligations up 12%, to $5.24 billion.

One surprising takeaway in the figures is Autodesk reporting cash flow from operating activity of only $18 million in the quarter, down $451 million from the same quarter of last year. Likewise, free cash flow was $13 million, down $447 million. That was the result of a transition from up-front to annual billings for multiyear contracts.

“Autodesk AI and Platform Services will enable Autodesk, our customers and partners to build more valuable, data-driven and connected products and services in our industry clouds and on our platform,” Andrew Anagnost, president and chief executive officer of Autodesk, said in the company’s earnings release. “Our customers remain committed to transformation and to Autodesk, evidenced by our largest-ever EBA signed during the quarter and record contributions from our construction and water verticals to our overall EBA performance.”

For its fiscal 2024 fourth quarter, Autodesk expects adjusted earnings per share of $1.91 to $1.97 on revenue of $1.422 billion to $1.437 billion. At the midpoint, the revenue outlook aligned with analysts’ expectations of $1.43 billion, but the earnings per share outlook was below an expected $2.01. For its full fiscal year 2024, Autodesk expects adjusted earnings per share of $7.43 to $7.49 on revenue of $5.075 billion to $5.175 billion.

In open set remarks for its investor call, Autodesk Chief Financial Officer Debbie Clifford addressed the outlook, saying that “the overall headline is that our end markets and competitive performance are at the better end of the range of possible outcomes we modeled at the beginning of the year. This means the business is generally trending toward the higher end of our expectations.”

Image: Autodesk