Lone Pine Capital Raises Its Stake in Autodesk



Lone Pine raises stake in Autodesk

Lone Pine Capital upped its position in Autodesk (ADSK) in the fourth quarter of 2014. This position accounts for 3.64% of the fund’s total fourth quarter portfolio. The fund owns 14,463,336 shares, up from 4,401,445 shares in the previous quarter.

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Overview of Autodesk

Autodesk offers design software and services, and it is a leading provider of 3D design, engineering, and entertainment software. The company has customers across the manufacturing, architecture, building, construction, and media and entertainment industries.

Autodesk operates in four reportable segments:

  1. Platform Solutions and Emerging Business (or PSEB) accounted for 32% of net revenue in fiscal 2015.
  2. Architecture, Engineering, and Construction (or AEC) accounted for 35% of net revenue in fiscal 2015.
  3. Manufacturing (or MFG) accounted for 27% of net revenue in fiscal 2015.
  4. Media and Entertainment (or M&E) accounted for 6% of net revenue in fiscal 2015.

Autodesk’s 2013 10-K filing noted its flagship products are its “core standalone horizontal, vertical and model-based design products including AutoCAD, AutoCAD LT, AutoCAD Mechanical, AutoCAD Civil 3D, AutoCAD Map, AutoCAD Architecture, Maya and 3ds Max.” These products generated around 48% of total net revenue in fiscal 2015.

Autodesk’s transition aimed at growing subscription base

Autodesk noted that it is currently undergoing a transition in technology and its business model, as customers move to cloud- and mobile-based platforms. Like many of its peers in the software space, it is moving to subscription-based offerings for its products. Autodesk is providing flexible term-based licenses, including term-based desktop subscriptions, for some of its products.

Autodesk also discontinued upgrades and on February 1, 2015, it announced that “new commercial seats of most standalone desktop software products will be available only by Desktop Subscription beginning February 1, 2016.” The company expects to grow its subscription base and customer value over the next three years.

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You can gain exposure to Autodesk by investing in the Technology Select Sector SPDR Fund (XLK) and the iShares North American Tech-Software ETF (IGV). Autodesk accounts for 0.37% and ~3.12% of XLK and IGV, respectively. It also has a 0.36% exposure to the iShares US Technology ETF (IYW). IGV also includes Autodesk application software peers such as Adobe Systems (ADBE) and Workday (WDAY), which make up 8.13% and 1.83% of the fund, respectively.

Autodesk is also aiming for growth from emerging markets. It noted that it saw revenues up 14% from emerging markets in fiscal 2015. The emerging markets accounted for 15% of net revenue for both fiscal 2014 and fiscal 2015.

Fiscal 4Q15 profits fall on higher costs

For the fiscal fourth quarter of 2015, Autodesk’s revenues totaled $665 million, up 13% on a YoY (or year-over-year) basis. Revenues grew 15% on a constant currency basis. GAAP (or generally accepted accounting principles) earnings per share were $0.05 in 4Q15, compared with $0.23 in 4Q14. This decline in profit was due to the company’s higher costs and operating expenses. Total billings increased by 13% YoY and by 20% on a constant currency basis.

The next part of this series will discuss the fund’s position increase in MasterCard.


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