Autodesk Inc. (NASDAQ:ADSK)'s core business is growing at a healthy pace, profitability is improving, and management is confident about the long-term outlook. These are some of the factors that prompted Berenberg to reiterate a Buy rating on the stock on September 1, even as it trimmed its price target to $333 from $335.
The positive stance signals the research firm's confidence in the company's outlook following an impressive second quarter. Revenues increased 16% year over year to $2.05 billion, while billings increased 10% to $1.85 billion. Revenue exceeded the high end of guidance, powered by strong gains in key areas of Architecture, Engineering, Construction & Operations (AECO).
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Profitability is increasingly becoming one of Autodesk's major strengths. The company's non-GAAP operating margin increased to 41%, while non-GAAP earnings per share came in at $3.30, comfortably above Wall Street expectations of $3.12.
Autodesk is also generating substantial free cash flow. Free cash flow increased 24% year over year to $561 million, illustrating the company's ability to convert its recurring revenue base into significant cash generation.

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