Autodesk provides software solutions for the architecture, engineering, construction, product design, manufacturing, media, and entertainment industries. The Company’s solutions focus amongst others on Computer Aided Design (CAD), Building Information Modelling (BIM) and 3D Modelling.
The level of share based compensation is outrageous. This company is run for the benefit of employees (who are ongoing sellers of shares ) not shareholders who pay via dilution.
Usually such levels of SBC are indicative of high tech stocks and we agree that they are high. Autodesk uses share repurchases to offset dilution which effectively shows that SBC are 'wages' with direct cash impact. Not sure though that the company is run for the benefit of employees rather than shareholders.
For example, in the last 5 years Autodesk generated 77.49% return (of 12.15% CAGR) whereas S&P returns were 43.97% (CAGR 7.55%).
As a shareholder, is it too antediluvian to look at sources and uses of cash and book value per share?
I can agree that Autodesk shares performed well, management has transitioned the business model, the new business model can generate good returns and there's untapped potential. But no getting away from the fact that cash being generated by the business has been used to pay employees either directly in cash or indirectly (by using cash to offset dilution from share based compensation) at a high level of compensation to revenue.
I'd say that "Usually such levels of SBC are indicative of "companies whose management is taking advantage of minority shareholders.
We don't particularly like SBC either, but it is a common practice in the tech industry to offer shares and options as part of their compensation packages to attract top talent. One way to account for dilution caused by SBC is to subtract the expense from your free cash flow estimates or include it in relative valuation models. We view SBC expenses as a recurring payroll expense and treat it as a cash outflow in our valuation models. In the case of Autodesk, we are not particularly concerned about SBC because it has been relatively stable in the past 5 years and we don't expect any extreme abnormalities in the future.
Really? To be blunt, look at what management of Autodesk has paid themselves in USD value; then look at the increase on book value per share for shareholders!
"Common practice" it might be, but it doesn't conceal the extent to which management has made a fortune and shareholders have not. This appears to be a feature of Autodesk - the miracle is that management managed to see off activists in 2017 and continue taking a massive share of economics thereafter.
The level of share based compensation is outrageous. This company is run for the benefit of employees (who are ongoing sellers of shares ) not shareholders who pay via dilution.
Usually such levels of SBC are indicative of high tech stocks and we agree that they are high. Autodesk uses share repurchases to offset dilution which effectively shows that SBC are 'wages' with direct cash impact. Not sure though that the company is run for the benefit of employees rather than shareholders.
For example, in the last 5 years Autodesk generated 77.49% return (of 12.15% CAGR) whereas S&P returns were 43.97% (CAGR 7.55%).
As a shareholder, is it too antediluvian to look at sources and uses of cash and book value per share?
I can agree that Autodesk shares performed well, management has transitioned the business model, the new business model can generate good returns and there's untapped potential. But no getting away from the fact that cash being generated by the business has been used to pay employees either directly in cash or indirectly (by using cash to offset dilution from share based compensation) at a high level of compensation to revenue.
I'd say that "Usually such levels of SBC are indicative of "companies whose management is taking advantage of minority shareholders.
We don't particularly like SBC either, but it is a common practice in the tech industry to offer shares and options as part of their compensation packages to attract top talent. One way to account for dilution caused by SBC is to subtract the expense from your free cash flow estimates or include it in relative valuation models. We view SBC expenses as a recurring payroll expense and treat it as a cash outflow in our valuation models. In the case of Autodesk, we are not particularly concerned about SBC because it has been relatively stable in the past 5 years and we don't expect any extreme abnormalities in the future.
Really? To be blunt, look at what management of Autodesk has paid themselves in USD value; then look at the increase on book value per share for shareholders!
"Common practice" it might be, but it doesn't conceal the extent to which management has made a fortune and shareholders have not. This appears to be a feature of Autodesk - the miracle is that management managed to see off activists in 2017 and continue taking a massive share of economics thereafter.