Image Credit: Ahmed AbdulMoniem
Despite a year of exceptional challenges, the industry generally performed well in 2020, and the industry's tech sector produced a fresh bumper crop of billion and multi-billion dollar exits across a variety of solution areas from robotics and smart glass to project collaboration to facilities management and beyond. (We'll catalogue those exits in our Top Deals of 2020 List next month, or members can reference the Venture Dashboard for a full breakdown.) So, with more tech companies fetching ever higher valuations, could the Buildings and Infrastructure Tech sector soon see a $100 billion market cap company?
One Tech Company May Already Be On Its Way: A Closer Look at Autodesk.
It may seem completely far-fetched for an industry that only seven years ago witnessed its first pure-play IPO at a then eyebrow raising figure of more than $500 million, but consider the trajectory since then of Autodesk. As we reported then, in 2017, when he first became co-CEO of Autodesk in February of 2017, Andrew Anagnost was stepping into a company in transition. Transitioning to a cloud-based, subscription model, the company then had a market capitalization of about $18 billion. According to the firm's 2017 annual report, AEC was one of four divisions in the company and achieved revenue in the range of $880 million. Flash forward today, and Autodesk's market cap is now a whopping $66 billion. For the year ending January 31, 2020, Autodesk reported revenues in its AEC segment of $1,337 billion, 42% of total revenues and the fastest growing of the companies business segments. If growth rates are maintained in 2020, revenue for AEC software would seem likely to be in the range of $2 billion for the year ending in January of 2021.
Flash forward today, and Autodesk's market cap is now a whopping $66 billion.
"Betting Its Future on Construction"
In November of 2018, Anagnost appeared in an article in Forbes entitled "Blueprint For Remodel: Why Design Software Pioneer Autodesk Is Betting Its Future On Construction Tech." For a company that was still mostly known in the industry for its design software, the statement seemed pretty bold. Major entrenched players like ORACLE with its PRIMAVERA software and Trimble as well as scrappy mobile cloud-based upstarts like Plangrid and PROCORE were already dominating the construction market. However, Autodesk has been one of the most aggressive buyers in the sector (picking up Assemble, Plangrid and BuildingConnected in just that year) and has steadily carved out an increasingly strong position in construction as well as design, in accordance with what the Forbes article reported was Anagnost's strategy of winning by becoming a "design and make" company. In a June 2020 investors presentation, Jim Lynch, Vice President and General Manager, Autodesk Construction Solutions posted impressive stats around Autodesk's growth in its construction segment as it picked up owner and subcontractor users, and expanded internationally as well as into infrastructure.
Autodesk's Market Cap Climb (In Millions of Dollars)
And Now, Adding Operations to Complete the Full Life Cycle of Buildings and Infrastructure
If the strategy outline in 2017 focused on design and "make," there was little reference to buildings or infrastructure operations back then. Lynch's June presentation, however, outlined operations as a clear pillar of the Autodesk Construction offering. The recent $10.2 billion exit of rental apartment facilities management platform, RealPage, offers a taste of the value potential of the operations phase of buildings or infrastructure lifecycles. So, if a solution that manages just one class of real estate is valued at more than $10 billion, what would be the value of an operations platform company that offers solutions across multiple classes of buildings and infrastructure, as Autodesk already does in the design and build phases? Given Autodesk's strengthening position in the managing all of the data associated with buildings and infrastructure in earlier phases of the asset lifecycles, one would think Autodesk would have some considerable levers to help penetrate more deeply into the operations phase of solutions offerings.
All the Pieces Put Together Would Seem to Make a $100 Billion Business
So, whether it is Autodesk (which is a member of the BuiltWorlds Network) or another competitor, using Autodesk's progress as a yardstick, it would seem that any company that could successfully unite all of the once disparate, fragmented "worlds" involved in planning, designing, creating, and operating the full spectrum of buildings and infrastructure assets, globally (yes, "the Built Worlds"), would almost certainly create a $100 billion enterprise. It is a heavy lift, and we don't expect to see the $100 billion built worlds tech company next year. However, the increasing conviction that the valuation is within the realm of possibility will have significant implications for the whole industry in the years to come.
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