Autodesk Q1 FY26 Earnings: Strong Revenue, Non-GAAP Margin Expansion, and Strategic Initiatives Amidst Macro Caution

Design software company Autodesk (NASDAQ:ADSK) fell short of the market’s revenue expectations in Q1 CY2025, but sales rose 15.2% year on year to $1.63 billion. Its non-GAAP EPS of $2.29 per share was 6.7% above analysts’ consensus estimates.

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StockStory’s Take

Autodesk's latest quarter (Q1 FY26) saw sales increase year over year, with management attributing growth to ongoing adoption across its design, engineering, and construction software portfolio. CEO Andrew Anagnost emphasized that demand was driven by customer transitions to cloud-based solutions and an uptick in enterprise agreements, particularly within architecture, engineering, and construction (AEC). Upfront revenue from large enterprise deals and improved performance in the company’s direct sales channel also contributed, as friction from the transition to a new transaction model began to recede. CFO Janesh Moorjani noted continued cost discipline and highlighted that cost optimization and restructuring efforts supported operating margins, with non-GAAP operating margins increasing three percentage points year over year, even as one-time charges impacted GAAP results.

Looking forward, Autodesk management raised its full-year non-GAAP earnings guidance. While citing continued momentum in core markets, they also acknowledged rising macroeconomic uncertainty. CFO Janesh Moorjani clarified that the increases in dollar guidance ranges for billings, revenue, and free cash flow reflect favorable foreign exchange movements, partly offset by more cautious underlying growth assumptions due to this uncertainty. The non-GAAP earnings per share guidance was increased reflecting a higher non-GAAP operating margin outlook. CEO Andrew Anagnost pointed to increased investment in AI-driven productivity features and the acceleration of product roadmaps, especially for cloud-based design and data management tools. Moorjani reiterated that the company’s outlook now embeds more conservative assumptions for the remainder of the year, reflecting potential headwinds from global trade policy and economic volatility. Nevertheless, the leadership team expects ongoing platform enhancements and sales optimization initiatives to help sustain growth while further rebuilding free cash flow.

Key Insights from Management’s Remarks

Management highlighted that new transaction and sales models, the rebuilding of the free cash flow stack, and targeted investments in AI and cloud platforms were central to performance, operating leverage, and future certainty this quarter.

• Enterprise agreements drive revenue: Increased adoption of Autodesk’s enterprise agreements, particularly in the AEC sector, contributed to upfront revenue growth amid easing friction from recent sales model changes.
• Transition model progress: The shift to annual billings and a new transaction model is nearing completion, reducing sales cycle friction and enabling more predictable free cash flow. Management indicated that channel partners are adjusting, with productivity expected to improve as the year progresses.
• AI-powered product enhancements: Autodesk rolled out new AI features in its Fusion platform, automating complex design tasks and reporting rising usage and acceptance among customers. These targeted AI tools are driving strong ACV growth with Fusion, where extension attach rates are also boosting average sales prices, and are broadly expected to enhance customer satisfaction and create future pricing opportunities.
• Channel consolidation efforts: The company is intentionally consolidating its partner ecosystem, favoring solution-focused partners to improve customer engagement and price realization in the direct channel. This consolidation is viewed as beneficial for capturing down-market business.
• Restructuring and executive additions: A significant restructuring, including new board appointments and the hire of a Chief Revenue Officer from Microsoft, is aimed at supporting long-term sales and marketing optimization while managing acknowledged, yet controlled, operational disruption.

Drivers of Future Performance

Autodesk’s guidance for the rest of the year incorporates favorable foreign exchange movements while also being shaped by more cautious macroeconomic assumptions, alongside a continued focus on AI and platform investments to drive growth and margin improvement.

• AI and product innovation: Management is prioritizing the rollout of AI-driven features in its Fusion and Forma platforms, aiming to automate repetitive tasks and streamline workflows. These enhancements are expected to improve customer productivity and open up new cross-sell and upsell opportunities, with management stating its intention for Fusion to become the most AI-powered tool in its segment.
• Sales and channel optimization: The ongoing transition to a more direct, solutions-based sales model is expected to boost channel partner productivity and support further margin expansion, building on Q1's non-GAAP margin strength which benefited from revenue outperformance and cost discipline. Leadership highlighted continued restructuring and cost optimization efforts, with plans to reinvest some savings into go-to-market initiatives and future sales capabilities.
• Macroeconomic caution: Although business momentum remains steady, the company’s outlook now includes more conservative growth assumptions due to increased global economic and trade policy uncertainty. Management emphasized that no material impact has been seen yet, but prudence is guiding their guidance adjustments.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the pace of AI and cloud integration across Autodesk’s core products, particularly value delivery from new AI features, (2) improvements in channel partner productivity and customer onboarding as the new transaction model matures, (3) margin performance as restructuring and sales optimization efforts progress, and (4) the rebuilding of the free cash flow stack. The ability to sustain enterprise agreement momentum and expand cross-sell opportunities will also be key signposts to watch.

Autodesk currently trades at a forward price-to-sales ratio of 9.1×. At this valuation, is it a buy or sell post earnings? Find out in our full research report (it’s free).

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