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:
I’m only comparing the P&L to keep this analysis brief.
Key things to notice:
Adobe’s quarterly revenue is 2.8x Autodesk’s
Adobe’s quarterly income before taxes is 9.5x Autodesk’s
Adobe’s earnings per share was2.3x Autodesk’s
Adobe spends a lot less on marketing and sales than Autodesk. 18% vs 42% of Gross profit
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.
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.
This was the $1B acquisition of Innovyze in February 2021. I wonder why they bought a water infrastructure company
Adobe’ is buying back almost a $1B of stock every quarter. This is 0.3% of its market cap
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.