I took a look at Autodesk (ADSK) due to current low valuation of EV/FCF of only 20. The slump in the share price came from the sharply reduced FCF forecast for fiscal year 2024 (Autodesk is currently in Q1/24). In the completed fiscal year, FCF of 2Bn was achieved, but only 1.2Bn is expected for this year.
The slump comes from a change in customer contracts. Previously, many multi-year deals were signed with immediate payment and corresponding discounts. Starting this year, multi-year deals will be paid in annual installments. This does not change the billings, the revenue remains the same, but the cash flow is stretched over several years. The background of the whole thing is on the one hand the customer's wish not to pay the whole contract amount at once and on the other hand Autodesk's plan to give less discounts.
This one-time effect is like switching from a classic software license purchase model to a SaaS model. Painful in the short term, profitable in the long term.
What I really like about Autodesk is the CAPEX which is close to 0. So operating cash flow is almost equal to free cash flow.
On the Rule of 40, Autodesk came in at a score of 60 in the fiscal year just ended, with a score of 45 expected for this fiscal year (due to lower FCF).
In summary, I can say: a very exciting company, however the current valuation of an EV/FCF of 20 is out of date. With the new FCF forecast, the EV/FCF rises to about 33. Before I open a position, I need to do more research.