Autodesk (ADSK)

By both methods, the value today (DCF $321 · Multiples $325) exceeds the market price ($234).

Today — fairly valued: at $234 trades ~28.1% below its value discounted to today (~$325); the discount is positive but does not reach the margin of safety we require (≥38%).

At 5 years — Infravalorado: the target price ($405) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$201.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($234) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (0.8%/year) than we project (8.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~$2.2 bn of owner earnings in year 5 (vs ~$3.1 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). Cash accumulates the retained surplus —what is not returned as dividend or buyback—, so that EV falls and multiples compress going forward. The valuation is done on Utilidad neta (P/E). In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Autodesk is valued on P/E over GAAP net income (direct equity): P/E expenses stock-based compensation —US$706M in the window, 9.1% of revenue and 24.9% of free cash flow— by construction, with no need to net the cash margin. Year-0 is the TTM through 31-Jul-2026 (US$7.790bn of revenue) and is taken raw: the quarter carries no non-recurring items to normalize, and what moves against the prior window is a real improvement — the US$216M of restructuring charges from the two fiscal 2026 plans have fallen off and the GAAP operating margin rose from 25.13% to 26.20%. Year 1 is anchored on the raised guidance from the 27-Aug-2026 release, read by its anchors and projected onto the rolling window. Fiscal 2027 revenue of US$8,295 to US$8,345M —raised from US$8,155-8,215M— with the first half already realized at US$3,980M imply a second half of US$4,340M; the window ending in July 2027 combines that half with the first half of the following fiscal year and gives +12.4%. Part of that rate is the anniversary of the MaintainX acquisition, which the company itself separates from underlying growth when explaining the raise, so it is not extrapolated: the path decelerates toward the durable +7.0% of year 5. The other guidance anchor pulls in the opposite direction and that's why it must be read: despite higher revenue, the midpoint of fiscal 2027 GAAP earnings per share (US$7.89 to US$8.72) sits slightly below the prior range, and the free cash flow guidance (US$2,725 to US$2,750M) narrowed. The company attributes this to MaintainX's margin dilution plus approximately US$45M of transaction expenses and the deal's financing cost. That's why the year 1 operating cash margin falls to 34.5% before recovering toward 37.0% by year 5, and the net margin starts at 21.50%. The metric to watch is not in the income statement but in contracted revenue: in the second quarter the current portion of remaining performance obligations grew 12% to US$5,245 billion, but the total only 2% to US$7,433 billion. The company discloses the cause —its multi-year discount reduction program, which improves price realization while weighing on unbilled deferred revenue— and the explanation is coherent, but it is the method's leading indicator and is worth tracking quarter by quarter. No explicit buyback is modeled: the surplus is credited as cash accumulation, which is equivalent in value. The company bought back US$1.591 billion in the window and the diluted count fell from 215M to 211M. The base case exit multiple stays at 27 times earnings, within the quality software band, supported by a return on invested capital of ~52.6% and a terminal growth rate of 7.0%. The adverse case assumes generative artificial intelligence erodes willingness to pay per seat and gives back the margin recovery; the favorable case, that the commercial reorganization and artificial intelligence monetization scale faster.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (EV falls as cash increases). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $405 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $234, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $405 in 5 years and a required return of 4.5% annually, the maximum to pay today is $325. Against the current market price ($234), the margin of safety is 28.1% (trades below the maximum → there is margin) and the total return at that price would be 11.6% annually.

• Multiple vs quality. P/E 30× — a discount reflecting AI disruption risk and the weight of shareholder litigation on the stock, more than a deteriorating business.
• Reverse-DCF. The reverse approach shows what growth today's price discounts against the base case and the adverse/favorable scenarios — see the reverse approach tab.
• Margin of safety. Total return of +12% against the method's three required-return thresholds (4/10/15%). It trades at a real discount to value, though short of the required margin of safety.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✓ ROIC exceeds the cost of capital (~10%)
• ✓ CFROIC backs up the ROIC (140%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Return on capital vs the 10% bar. Return on capital well above the 10% bar, on low invested capital (capital-light business).
• Margin and stability. TTM operating margin 25.1%, recovering after the fiscal 2026 restructuring. 97% recurring revenue gives high stability.
• Cash quality. TTM FCF net of stock-based compensation $2,016M (26.9% of revenue), already normalized after fiscal 2024 was depressed by the same period covered by the audit committee investigation. Real capex is well below reported depreciation and amortization.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

RPO (remaining performance obligations) is Autodesk's forward revenue indicator: it grew 20% year over year to $8.30bn as of January 2026, faster than reported revenue (+17.5% in the same fiscal year), anchoring the base case's smooth deceleration trajectory with revenue already contracted, not merely extrapolated (§5). Net retention (NR3) above the 100-110% range at constant currency confirms that the installed base is expanding its spend. The 97% recurring revenue provides additional visibility into the quality of the projected trajectory.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (31-jul-2026): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Real, not nominal. TTM growth (+18.3%) is mostly organic, with no reliance on acquisitions (no business combinations closed in fiscal 2026).
• Growth driver. Net retention (NR3) above the 100-110% range and RPO growing (+20%) faster than revenue — the driver is expansion within the installed base, not just new customers.
• Deceleration and cycle. Guided year 1 (+9.0% at the midpoint) decelerates sharply from TTM (+18.3%); the base trajectory continues decelerating smoothly toward +7.0% by year 5.

• Relevant in 10 years (recurrence). 97% recurring revenue, de facto standard in computer-aided design — high probability of remaining relevant, though generative AI is a new structural risk.
• Pricing power. The subscription and EBA model allows gradual price adjustments, backed by high switching costs; there is no evidence of significant elasticity in the filing.
• Moat and its direction. Wide moat from switching costs and recurrence, but the 10-K itself discloses low barriers to entry and the risk of artificial intelligence disruption. Direction: gradual erosion.
• Capital cycle. The software sector overall has low barriers to entry (explicitly disclosed); Autodesk's protection comes from ecosystem lock-in, not from scarce capital entering the sector.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• ✓Leverage (net debt / EBITDA)Net cash $0 bn
• –Interest coverage (EBIT / interest)no data
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 140% of ROIC
• ✓Value creation (ROIC − 10% bar)+43pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 0.3x — no over-investment
• ✓Float / working capitalFrees up cash $0.4 bn (float / negative WC)
• !Dilution (SBC % of revenue + shares)SBC 9.1% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Leverage. Positive net cash (\$2,924M of cash and liquid equivalents against \$2,500M of debt) — conservative balance sheet.
• Coverage and cash. Positive net interest (more interest income than expense, given net cash). Solid and growing FCF net of stock-based compensation.
• Remaining litigation. The SEC and federal prosecutors closed their cases in August 2025 with no charges; remaining civil shareholder litigation over the same free cash flow practices persists.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Skin in the game. Insiders <5% as a group; the largest shareholders are passive institutions (Vanguard 10.1%, BlackRock 9.1%), with no controlling shareholder.
• Capital allocation. No dividend; material buybacks (~$1.4-1.5bn/year) mostly offset by stock-based compensation issuance — the net share reduction was modest (-0.46%/year).
• Integrity / normalization. The audit committee investigation (2024-2025) into free cash flow and adjusted operating margin practices, closed by the SEC and federal prosecutors with no charges in August 2025, but with remaining shareholder litigation.

• Motivated selling: the stock was punished by the guided growth deceleration and the noise from the two fiscal 2026 restructuring plans ($216M of charges that depressed reported GAAP earnings).
• The weight on the stock from the audit committee investigation (2024-2025) into free cash flow practices, though closed by regulators in August 2025, left remaining shareholder litigation and eroded market confidence in the quality of financial reporting.
• Fear of generative artificial intelligence disruption to design software — a risk the 10-K itself acknowledges, and one the market appears to be discounting more severely than current net retention (above the 100-110% range) suggests is warranted.

Identifiable missing buyers and motivated sellers (restructuring + litigation + AI fear), but the moat — though gradually eroding — remains supported by net retention and RPO growing faster than revenue. Total return (+12%) reflects that tension between business quality and genuine structural risk.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at +2%/year (+10% total): the margin of safety protects the downside. The bull (+17%/year, +115% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Generative artificial intelligence disruption. The structural disconfirmer: the 10-K itself warns it could alter the market for its products unpredictably.
• Low barriers to entry in software. Explicitly disclosed in the filing; Autodesk's protection depends on ecosystem lock-in, not on structural barriers within the sector.
• Concentration in AutoCAD. 25% of total revenue in a single product/collection — any adverse factor hits disproportionately.
• Remaining shareholder litigation. Over free cash flow and adjusted operating margin practices; closed by regulators, but with pending legal and management costs.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: wide moat, eroding.

• Peter Lynch Growth at a reasonable price (GARP)

  A fast grower growing 8% at a PEG of 3.8 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 4% (EBIT/EV) + ROIC 53% → falls outside the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts 1% vs our 8%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor +2%/yr, bull-scenario ceiling +17%/yr over 5y → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A wide moat, eroding; sources: switching costs, intangibles, network effects, efficient scale → partially passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting 1%, within what we project (8%) — the story squares with the numbers.