State of The Built World: Autodesk’s Forward-Guidance Suggests Sluggish 2023 Adoption

The publicly traded built world tech space has been painting an increasingly conservative picture of AEC adoption in 2023. Forward-looking guidance from leadership at Autodesk (ADSK) suggests a slow year for industry tech players, however, could this be a signal that the nascent startup ecosystem is beginning to widely adopt early-stage winners?

Autodesk’s lackluster annual report last Thursday evening (2/23) hit the market like a ton of bricks as investors grappled with the implications of the -41% free-cash-flow guidance management offered for FY24 (Feb ‘23 - Jan ‘24). ADSK’s -13% post-earnings price action last Friday (2/24) marked its worst daily performance since it fell from grace in November 2021 on price-confirming daily volumes (high-volume daily moves are considered to be price-confirming) that these shares have only seen one other time in the past 15+ months.

Autodesk is getting a valuation rerating as a result of its flimsy 2023 guidance (FY24), with revenue growth projected in the mid-single digits on flat YoY margins, while near-term interest rates (represented by the US 2-Year Treasury Note) soar to levels not seen since before the 2008 financial crisis – a double whammy of valuation compressing model inputs for ADSK’s new growth-drained market multiple. Autodesk is now trading at its lowest P/S valuation multiple in over 6 years.

That being said, Autodesk’s AEC division continues to be the most significant topline growth driver for the 5th consecutive year. The acquisition of PlanGrid in 2018 catalyzed this now $2.3B segment’s revenue leadership. Autodesk grew its total revenue by 14% in 2022 (FY23 for Autodesk), with its AEC-focused products managing to show a marginally outsized 16% YoY expansion in FY23 (concluding 1/31/23), and now accounts for 46% of total revenue compared to the 38% topline allocation it held at the beginning of 2018.

While ADSK dives deeper into bear market territory, PCOR touches fresh 52-week highs as public investors deem Procore's forward guidance of +25% topline growth in 2023 as a signal of continued market share leadership.

The vast majority of the construction industry remains unadopted, with leading AEC solution providers like Autodesk, Procore, Trimble, and Bentley Systems, far from safe as fresh early-stage innovators continue to fill the innovative gaps that these transient sector captains haven't had the bandwidth to address.

Watch for Bentley System's (BSY) forward-looking guidance in its annual earnings release this morning, though the resulting price action should sum up the story for us.