Autodesk Inc. (NASDAQ:ADSK)

Net operating profit after taxes (NOPAT)

The net operating profit after taxes exhibits significant fluctuations over the analyzed period. There was a notable increase from 41 million USD in early 2019 to a peak of 1197 million USD in early 2020, followed by a decrease to 833 million USD in early 2021. Subsequently, NOPAT showed recovery to 970 million USD in early 2022 and further increased to 1402 million USD in early 2023, before declining sharply to 493 million USD in early 2024.

Cost of capital

The cost of capital remained relatively stable throughout the periods analyzed, fluctuating narrowly between 18.15% and 18.76%. This consistency suggests stable expectations regarding the return required by investors over the years.

Invested capital

Invested capital increased steadily over the years. Starting at 4412 million USD in early 2019, it rose to 5535 million USD in early 2020, then continued upward to 5723 million USD in early 2021, 6835 million USD in early 2022, reaching a peak of 7372 million USD in early 2023 before slightly declining to 7325 million USD in early 2024. This trend indicates ongoing investment in the company’s capital base, with a minor contraction in the latest period.

Economic profit

The economic profit displays volatility and generally negative results in the majority of the periods. It was strongly negative at -775 million USD in early 2019, turned positive to 192 million USD in early 2020, then reverted to negative values of -241 million USD in early 2021 and -274 million USD in early 2022. There was a modest positive recovery to 40 million USD in early 2023, followed by a significant decline to -867 million USD in early 2024. These fluctuations suggest challenges in consistently generating returns above the cost of capital.

Summary of trends

The company experienced considerable variability in profitability metrics, with NOPAT and economic profit showing fluctuation rather than stable growth. Despite stable cost of capital rates, invested capital steadily increased, indicating an expansion in asset base, but not consistently matched by economic profit generation. The pronounced negative economic profit in the latest period may warrant further analysis to identify underlying causes and to assess the sustainability of returns relative to capital costs.

Net Income (Loss)

The net income demonstrates significant fluctuations over the observed periods. Starting from a loss of US$81 million in January 2019, the company experienced a substantial turnaround, achieving a positive net income of US$215 million in January 2020. This upward trend accelerated noticeably in January 2021, reaching a peak of US$1,208 million. Subsequently, net income declined to US$497 million in January 2022 but rebounded to US$823 million in January 2023 and further increased to US$906 million by January 2024. The data suggests a period of recovery and growth following an initial loss, followed by some volatility, with the most recent figures indicating a strengthening profit position.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows a rising trend from January 2019 through January 2023, starting at US$41 million and climbing consistently to a peak of US$1,402 million in January 2023. After a low base in 2019, there was a rapid increase to US$1,197 million in 2020, followed by a decrease to US$833 million in January 2021. NOPAT then resumed growth with US$970 million in January 2022 and peaked notably in January 2023. However, in January 2024, NOPAT declined sharply to US$493 million. This pattern indicates periods of strong operational profitability, especially between 2020 and 2023, though the most recent year shows a significant reduction.

The financial data indicates notable fluctuations in both the income tax provision (benefit) and cash operating taxes over the analyzed periods.

Income Tax Provision (Benefit)

The income tax provision demonstrates considerable volatility throughout the periods. Initially, it increased from 38 million USD in 2019 to 80 million USD in 2020, indicating a rising tax expense. However, in 2021, there is a significant benefit recorded, reflected by a negative provision of -662 million USD, which represents a tax benefit rather than an expense. This sharp reversal may suggest extraordinary tax adjustments or recognition of deferred tax assets during that period. Subsequent years show a return to positive provisions, rising from 68 million USD in 2022 to 123 million USD in 2023, and reaching 230 million USD in 2024, indicating increased tax expenses once again. Overall, the income tax provision reflects uneven tax charges with an exceptional benefit in 2021 followed by increasing tax liabilities.

Cash Operating Taxes

Cash operating taxes display a generally upward trend across the years, with some variation in magnitude. Starting at 64 million USD in 2019, cash taxes increased slightly to 82 million USD in 2020. A more substantial rise is seen in 2021 with 130 million USD, despite the negative income tax provision in the same year, suggesting a divergence between cash taxes paid and accounting tax charges. Cash taxes decreased to 100 million USD in 2022 but then surged significantly to 415 million USD in 2023 before declining to 310 million USD in 2024. This pattern indicates increasing cash tax outflows, peaking in 2023, which might reflect higher taxable income or changes in tax payment schedules.

In summary, the data reveal inconsistencies between accounting tax provisions and cash tax payments, particularly highlighted by the negative income tax provision in 2021 juxtaposed with rising cash operating taxes. The overall trend suggests increasing tax-related cash outflows in recent years, and significant fluctuations in tax accounting entries, which could be attributable to changes in tax regulations, one-time adjustments, or differences in timing between tax accruals and payments.

The financial data presents a mixed set of trends over the six-year period ending in January 2024. The following analysis focuses on the reported debt and leases, stockholders’ equity, and invested capital, highlighting significant movements and potential implications.

Total Reported Debt & Leases

The debt and lease obligations experienced fluctuations over the period. Starting at 2,445 million USD in early 2019, the total increased slightly to 2,545 million USD by 2020, followed by a noticeable reduction to 2,105 million USD in 2021. However, debt levels surged again in 2022, reaching 3,060 million USD, which is the highest in the provided timeframe. Subsequently, it declined to 2,666 million USD in 2023 and further to 2,626 million USD in early 2024. The pattern suggests an overall cyclical adjustment in financing strategy, with a peak possibly reflecting increased borrowing or lease arrangements in 2022, and partial deleveraging thereafter.

Stockholders’ Equity (Deficit)

The stockholders’ equity profile shows a significant transformation from a deficit position to a positive equity base. At the start of 2019, equity was negative at -211 million USD, indicating liabilities exceeded assets. This deficit narrowed to -139 million USD in 2020 before turning positive at 966 million USD in 2021. Although there was a slight decrease to 849 million USD in 2022, the trend reversed with equity rising substantially to 1,145 million USD in 2023 and 1,855 million USD in 2024. This improvement demonstrates strengthening financial health, reflecting either retained earnings growth, capital injections, or asset revaluation effectively reducing the deficit and building shareholder value.

Invested Capital

Invested capital steadily increased over the analyzed periods. Commencing at 4,412 million USD in 2019, it rose to 5,535 million USD in 2020, and 5,723 million USD in 2021. Growth accelerated in the following years, reaching 6,835 million USD in 2022, peaking at 7,372 million USD in 2023, and slightly declining to 7,325 million USD in 2024. The general upward movement of invested capital suggests ongoing investments in operations, fixed assets, or other long-term assets, supporting expansion or optimization strategies. The marginal drop in 2024 may reflect asset disposals or adjustments but does not significantly reverse the growth trend.

In summary, the company's financial structure demonstrates evolving leverage with a notable peak in debt in 2022, followed by partial reduction. Simultaneously, a transition from equity deficit to a positive and growing equity base indicates improving solvency and capital adequacy. Continuous increases in invested capital highlight sustained investment activity, supporting business growth and operational capacity enhancement.

Economic Profit

The economic profit exhibits a highly volatile trend over the observed periods. It started with a significant negative value of -775 million USD in early 2019, improved sharply to a positive 192 million USD in early 2020, then declined again to negative figures in the following years, with -241 million USD in 2021, -274 million USD in 2022, a slight recovery to a positive 40 million USD in 2023, and a substantial decline back to -867 million USD in 2024. This inconsistency suggests challenges in generating sustainable profit beyond capital costs.

Invested Capital

Invested capital shows a steady upward trajectory from 4,412 million USD in early 2019 to 7,372 million USD in early 2023, followed by a slight decrease to 7,325 million USD in early 2024. This consistent increase indicates ongoing investments and expansion of capital employed in business operations, although the minor decline at the end might imply a partial divestment or depreciation effect.

Economic Spread Ratio

The economic spread ratio, representing the difference between the return on invested capital and the cost of capital, reflects fluctuating profitability relative to invested capital. It starts deeply negative at -17.58% in 2019, improves to a positive 3.47% in 2020, then falls back into negative territory in 2021 and 2022 with values around -4%, slightly recovers to a modest positive 0.54% in 2023, but significantly declines again to -11.84% in 2024. This pattern aligns with the variations in economic profit and indicates challenges in maintaining returns above the cost of capital consistently.

Overall Insights

Despite increasing invested capital over the six-year horizon, the company experiences considerable fluctuations in economic profit and economic spread ratio, with profitability metrics frequently turning negative. The inability to sustain positive economic profit and spread ratio may point to periods of operational inefficiency, increased capital costs, or adverse market conditions affecting the company's value creation. The large swings in these measures merit further examination of underlying operational and financial drivers to pinpoint the causes and develop stabilizing strategies.

Adjusted Net Revenue

The adjusted net revenue has demonstrated a general upward trend from January 31, 2019 to January 31, 2024. It increased substantially from 2,706 million USD in 2019 to a peak of 5,795 million USD in 2023. However, there was a decline in 2024, when the revenue decreased to 5,181 million USD.

Economic Profit

The economic profit exhibits volatility over the years with no consistent upward or downward trend. It started at a significant negative value of -775 million USD in 2019, improved sharply to a positive 192 million USD in 2020, but then declined again with negative values for most subsequent years except for 2023, where it returned to a positive figure of 40 million USD. In 2024, it dropped sharply again to -867 million USD.

Economic Profit Margin

This margin reflects fluctuations similar to those of the economic profit. It moved from a negative margin of -28.65% in 2019 to a positive 4.58% in 2020, then reverted to negative values between 2021 and 2022. There was a slight positive margin of 0.68% in 2023 followed by a significant decrease to -16.73% in 2024. These fluctuations indicate instability in profitability relative to revenue over the period analyzed.

Overall Insights

Despite steady growth in adjusted net revenue up to 2023, the company has struggled to maintain consistent economic profitability. The brief positive periods in economic profit and margin suggest episodes of improved cost management or operational efficiency, but these gains were not sustained. The sharp declines in 2024 in both economic profit and margin, despite relatively high revenue, may indicate increased costs or other challenges affecting profitability.