Product Company vs Product Company

Comparing financials of Autodesk and Adobe

Autodesk and Adobe are both in the business of building products for creative people. Both have moved to a subscription based business model.

Financial results of Autodesk are published here

Financial results of Adobe are published here

I am not comparing 6 monthly data for both companies because Autodesk had a much higher than normal benefit from income taxes in Q4, 2020 or Jan 31, 2021 earnings report. This skewed their earnings in Q4. So, I am only comparing their Q1 to Adobe’s Q2 results.

Here is what we see:

Adobe vs Autodesk Early 2021 Quarterly P&L Comparison

I’m only comparing the P&L to keep this analysis brief.

Key things to notice:

1. Adobe’s quarterly revenue is 2.8x Autodesk’s

2. Adobe’s quarterly income before taxes is 9.5x Autodesk’s

3. Adobe’s earnings per share was2.3x Autodesk’s

4. Adobe spends a lot less on marketing and sales than Autodesk. 18% vs 42% of Gross profit

5. A cursory look at the cash flow statement will tell you that Adobe generates a lot more cash for the business and cash generation is growing faster year on year than Autodesk.

6. Adobe has $4.3B in compared to $923M with Autodesk. Autodesk had $1.8B until Q4 2020 but they spent about $1B in investing activities in Q1, 2021.

7. This was the $1B acquisition of Innovyze in February 2021. I wonder why they bought a water infrastructure company

8. Adobe’ is buying back almost a $1B of stock every quarter. This is 0.3% of its market cap

9. Autodesk is buying back about a $140M of its common stock. This is 0.2% of its market cap

So how does wall street see this?

• Adobe’s total market cap is $288B

• Autodesk’s total market cap is $64B

• Adobe’s stock has grown 519% in the last 5 years

• Autodesk’s stock has grown 408% in the last 5 years

This is much closer than I thought. I think this is because both companies are in a growing category and dominant in their segments. Autodesk is betting on water. Adobe is betting on creativity for all.