ADSK

Autodesk is a high-quality, subscription-driven software franchise and the FY2026 numbers show it firing on the metrics that matter for durable compounding. Revenue grew 17.5% to $7.21B — the continuation of a clean five-year ramp ($4.39B → $5.00B → $5.50B → $6.13B → $7.21B) — at a 91.0% gross margin, with operating income up 16.5% to $1.58B (21.9% operating margin) and return on equity of 36.9%. The standout is cash generation: operating cash flow jumped 52.6% to $2.45B against just $43M of capex, leaving roughly $2.4B of free cash flow. That ~$2.4B FCF against a $40.9B market cap is a ~5.9% FCF yield, which reframes the optically rich 37x P/E — for a subscription business where deferred revenue inflates cash flow above GAAP net income, FCF (~17x) is the truer lens, and on that basis a 91%-margin business compounding mid-teens is not expensive.

The MD&A confirms the engine is the subscription/cloud transition and the 'Design and Make' platform — AutoCAD/Industry Collections plus the Fusion, Forma and Flow cloud offerings — supported by $1.64B of R&D (+10.6%) and a balance sheet carrying $2.25B cash (+40.7%) against $2.50B long-term debt. Management is returning capital aggressively: buybacks rose 64.6% to $1.40B and shares shrank 0.9%, which is what has driven retained earnings to -$1.43B and kept equity thin at $3.04B (a buyback artifact, not distress). The MD&A's emphasis on inorganic AECO/manufacturing M&A (Payapps, simulation tech) is consistent with a company willing to buy growth, with the attendant integration and margin caveats it flags itself.