$36.91
$105.04
bear $36.91
base $73.66
bull $105.04
margin of safety $40.00
market price* $239.90
Autodesk sells subscription design software to architects, engineers, builders and manufacturers. Revenue for the year to January 31, 2026 was $7.2 billion, 97% of it recurring, and net revenue retention was above 100%. In the six months to July 2026, products for architecture, engineering and construction brought in about $2.0 billion of $4.0 billion of revenue, and AutoCAD and AutoCAD LT $974 million. The company pays no dividend; it spent $1.4 billion on buybacks last year. What changed: on August 3, 2026 Autodesk closed its purchase of MaintainX, a maintenance and operations software company, for about $3.5 billion in cash (a preliminary $3.53 billion net of cash acquired), paid from cash, a $1.0 billion commercial paper program and a $1.0 billion 364-day term loan. Borrowings are now $4.5 billion, up from $2.5 billion. We give MaintainX no value in any case: Autodesk has said it expects MaintainX recurring revenue above $135 million for calendar 2026, but we have no record of its profit or cash flow, so the roughly $16.70 per share paid is treated as spent. Cash generation at the core business has also strengthened: owner earnings per share rose from $4.07 to $5.39 in fiscal 2026, and operating cash flow in the first half of fiscal 2027 was $1,468 million against $1,024 million a year earlier. Our earlier figures were built on a different basis and are not comparable. How we measure earnings. Owner earnings are operating cash flow, excluding swings in receivables, payables, deferred revenue and taxes, less stock compensation and maintenance capital spending. Per diluted share they were $3.21 (fiscal 2022), $3.18, $3.80, $4.07 and $5.39 (fiscal 2026), after losses in fiscal 2017 and 2018 and a roughly breakeven 2019 while the company converted from selling licences to subscriptions. Three judgements matter. First, stock compensation ($788 million last year, 70% of net income of $1,124 million) is charged in full; the diluted share count fell only from 217 million to 215 million despite the buybacks. Second, Autodesk now pays partners and staff sales commissions that it records as an asset and expenses over one to three years. That asset grew from $467 million to $913 million; by our calculation about $982 million was capitalized last year against $536 million expensed. We count the cash paid as the cost, which lowers fiscal 2026 owner earnings from $7.46 to $5.39 per share. Third, fiscal 2026 includes a $301 million deferred-tax add-back; book tax expense of $479 million less that amount implies about $178 million of current tax against $258 million of cash taxes paid, so last year may be flattered by roughly $80 million, or $0.37 a share. We value the business before its lenders, so cash interest paid ($76 million last year) is added back and debt is subtracted afterwards. That stream was $4.39 per share in fiscal 2025 and $5.74 in fiscal 2026. We use their average, $5.06, as today's earning level because these are the two years under the current model of billing customers directly (the largest distributor, TD Synnex, fell from 39% of revenue in fiscal 2024 and 33% in fiscal 2025 to 14% in fiscal 2026). Earlier years describe a smaller business sold mainly through distributors. The stream grew 31% last year; the base case starts at 5%, below that. The first half of fiscal 2027 is running ahead of our level (operating cash flow up 43%, revenue up 17%), but we did not raise the level because first-half stock compensation fell to $339 million from $421 million for a reason we could not find in the parts of the quarterly report we reviewed. Growth credited and left out. We credit only what is already in hand: a base that is 97% recurring with retention above 100%, revenue that has grown every year from fiscal 2019 through 2026 (9.8% to 17.5% in each of the last four years), and a cash-flow stream that has risen every year over the same stretch. Base assumes 5% a year for five years then 3% for five, holds flat through year 20 and fades to zero by year 30. We left out margin expansion, new products and AI features, any value from MaintainX, and any further reduction in share count. The bull case starts at the $5.74 already earned in fiscal 2026, grows 8% for five years then 5% (below recent revenue growth), and follows the same flat-then-fade tail. The bear case gives no growth and models a full downturn beginning in year 2, sized on Autodesk's own fiscal 2009 to 2012 record: revenue fell 26% (from $2,315.2 million to $1,713.7 million) and operating cash flow fell 58% (from $593.9 million to $246.8 million), then recovered to $540.8 million (91%) in fiscal 2011 and $573.5 million (97%) in fiscal 2012, per Autodesk's results releases. Applying those percentages to today's cash flow before stock compensation ($8.47 per share) while holding stock compensation at $3.41, the bear owner flow is $0.11 in year 2, $4.31 in year 3 and $4.77 from year 4, flat to year 15 and fading to zero by year 25. Today's mix is far more recurring than in 2009, so this may be harsh; that is intended for a downside case. Business value, debt and result. Net debt is $4.5 billion of borrowings (senior notes of $2.5 billion, commercial paper $1.0 billion, term loan $1.0 billion) less about $1.6 billion of cash and short-term investments left after paying for MaintainX, or $2.9 billion, reduced by $0.24 billion because the notes carry fixed rates of 2.40% to 5.30% that are lower than current borrowing costs. That is $2.6 billion, or $12.49 per share on 211 million diluted shares.
Base: business worth $86.15 per share ($18.2 billion), owes $12.49, leaving $73.66.
Bear: $49.40 ($10.4 billion), owes $12.49, leaving $36.91.
Bull: $117.52 ($24.8 billion), owes $12.49, leaving $105.04. Debt terms that matter: $2.5 billion falls due within about a year (notes of $500 million due June 15, 2027, plus the commercial paper and the term loan, which matures 364 days after closing), the other notes are due January 2030, December 2031 and June 2035, and the credit agreement allows a maximum leverage ratio of 3.50 to 1 (up to 4.00 to 1 for up to four quarters after an acquisition), with the company in compliance at July 31, 2026; we have not tested how much headroom remains. Annual interest on the $4.5 billion is roughly $170 million. In the bear case the year-2 flow of about $24 million is below that interest for one year, which the roughly $1.6 billion of cash covers. Tests of the case. If the tax timing above is real and fiscal 2026 is cut by $80 million, the base value falls from $73.66 to $70.50. The SEC and the U.S. Attorney's Office closed their matters tied to the Audit Committee's internal investigation on August 19 and 21, 2025, but purported shareholder litigation arising from it remains pending and no amount is given; we have not modeled it. Why the margin-of-safety price is $40. We are fairly sure of the earnings level: owner earnings rose from $1.35 in fiscal 2020 to $5.39 in fiscal 2026 with one flat year (fiscal 2023, $3.21 to $3.18), and the revenue is recurring. We are least sure of how long the cash flows last and whether seat-based design software is displaced by new tools, which no case models. The worst plausible combination is a 2009-style downturn arriving while MaintainX earns nothing; the structure would survive it because the business produced about $1.23 billion before interest last year and there is cash and a $2 billion credit facility (which also backs the commercial paper), but shareholders would own a business worth about the bear value. If we are wrong on the two things most likely to be wrong: with no growth beyond today's level the shares are worth $51.39; with base growth but cash flows ending after year 15, $51.93; with both, $36.70. The price assumes a holding period of about four years, with no dividends over that period; value builds as the company keeps its cash. Projecting each value forward four years at the same 6% yearly rate used above, from $40 the base case implies about 23% a year, no growth 13%, and about 4% in the bear case or if both worries come true (those two are worth $36.91 and $36.70 today, slightly under $40). At $45 the base case would only just reach 20% (19.9%) and leave nothing for error, so the margin-of-safety price is no higher than $40.