Autodesk Raises Outlook After Activist Investor Criticism

(Bloomberg) — Autodesk Inc. raised its full-year earnings outlook following pressure on the software maker from activist investor Starboard Value LP.

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Profit, excluding some items, will be $8.18 a share to $8.31 a share in the fiscal year ending in January 2025, the company said Thursday in a statement. The forecast topped analysts’ average estimate and was an increase from a previous outlook of $7.99 a share to $8.21 a share.

The maker of engineering software has been scrutinized since delaying its financial filings in April, citing an accounting investigation. In the past four months, Autodesk has replaced its CFO and Starboard has pushed for changes such as increasing margins as well as considering the ouster of Chief Executive Officer Andrew Anagnost.

Disciplined execution is driving efficiency and margins that are “among the best in the industry,” Anagnost said in the statement. “We believe these factors will deliver sustainable shareholder value over many years.”

Investors will likely be paying close attention to any signs that Autodesk is taking investor feedback into consideration and focusing on margins, wrote Jason Celino, an analyst at KeyBanc Capital Markets, in a note ahead of earnings. Autodesk left its full-year adjusted margin outlook unchanged at about 35.5%.

Fiscal second-quarter revenue jumped 12% to $1.51 billion, ahead of the average estimate of $1.48 billion. Profit, excluding some items, was $2.15 per share, compared with analysts’ average projection of $2.

The shares rose about 5% in extended trading after closing at $258.23 in New York. The stock has gained 6.1% this year through the close.

Starboard announced its stake in Autodesk in June, calling for more accountability following the accounting investigation. The hedge fund, led by CEO Jeff Smith, unsuccessfully sued to reopen Autodesk’s board nomination window, saying the company had purposely hidden the probe until after it had closed.

“We’ve met with Starboard several times,” Anagnost said on a conference call with analysts after the results were released. “One thing we’ve very much aligned with them on here is there is a lot more shareholder value to be created.”

Bloomberg reported earlier this month that documents showed Autodesk ignored internal warnings about the use of a controversial sales strategy that was central to the accounting probe’s findings.

(Updates with comments from conference call in the ninth paragraph.)