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Autodesk (ADSK +6%) completes its ongoing audit investigation, resulting in no restatement or adjustment of any of its previous financial statements, providing quite a bit of relief among investors today. The architecture and construction software developer announced in early April that it would perform an internal investigation surrounding its free cash flow and non-GAAP operating margin procedures, prompting a sharp sell-off that culminated in a more than 30% correction from multi-year highs reached on March 1 following upbeat Q4 (Jan) results. Coinciding with the completion of ADSK's audit was uplifting near-term guidance, projecting Q1 (Apr) and Q2 (Jul) numbers ahead of consensus. Meanwhile, the company also bumped up its FY25 adjusted EPS forecast and reiterated its FY25 revenue and billings targets. ADSK also announced a new CFO, replacing former CFO Deborah Clifford, who transitioned to Chief Strategy Officer.

With the internal audit behind it, ADSK is working to formally issue its Q1 results and hold a conference call, which could alleviate further investor angst. However, given the magnitude of ADSK's sell-off over the past two months, the company has significant ground to make up, which could be tricky given it remains in a shift to billing multi-year customers on an annual contract basis instead of an upfront basis. At the same time, macroeconomic trends remain uncertain.

Nevertheless, several positive indicators could sustain today's buoyant momentum.

• Most of ADSK's revenue stems from architectural, engineering, and construction (AEC) end markets. Therefore, healthy demand across the AEC industry is crucial for ADSK to sustain today's momentum. On that note, companies exposed to the construction industry have had positive remarks, including Steel Dynamics (STLD), which is optimistic about additional construction spending this year and throughout 2025 due to the Inflation Reduction Act programs. Similarly, Fluor's (FLR) pipeline through the end of 2025 represents a total installed cost of 14 times the size of its current backlog of $32.7 bln.
• However, favorable construction demand is only half the battle for ADSK as it still needs to sell its software to an industry that can be hesitant to transition from legacy software. While businesses are steadily moving toward the cloud, there are sections of the global economy where ADSK remains underpenetrated, such as the U.S. public sector. ADSK commented in March that it is working to capitalize on the federal government's incentives for the Federal and State Departments of Transportation to become more digital and shift their work to the cloud.
• Penetrating new markets and expanding within existing ones still depends on customers becoming familiar with ADSK's software. ADSK's training camps can assist in attracting more businesses toward its offerings. The compelling factor of ADSK's software is that it is costly to switch off, as it would involve learning a competitor's software as well as shifting existing workflows to their system.

Bottom line, ADSK cleared many of the clouds hanging over its stock following the completion of its audit investigation. There are still uncertainties on the horizon, especially given the high interest rate environment. However, as companies continue moving toward a more digital ecosystem, ADSK stands to benefit, keeping FY25 as a possible turning point for the company following several quarters of stagnant growth.