Updating Autodesk, Crowdstrike, and Veeva Systems

Wanted to share some more updates on recent quarterly reports from followed stocks Autodesk, Crowdstrike, and Veeva Systems. Nothing too interesting here, only minor (upwards) movements in all 3 stocks' fair values after incorporating results.

Autodesk (ADSK)

A good quarter for Autodesk, with total revenue up 9% (12% on constant currency). Margins held steady at 36%, and net revenue retention was "between 100 and 110 percent". Free cash flow was almost cut in half, but remember this is a company undergoing a transition from multi-year to annual billings, so this isn't unexpected as new payments are going to be smaller for a time. Long-term, annual billing allows more frequent (small) price hikes and opportunities to cross-sell new features. Over time, management is shooting for a "rule of 45", which means that revenue growth as a percentage plus free cash flow margin as a percentage should exceed 45%.

Autodesk is a steady, predictable, modestly-growing business that looks reasonably undervalued to me at present. The fair value price gets a small bump from $286 to $289.

Crowdstrike (CRWD)

Crowdstrike continues its strong growth performance, with revenues up 37% year-over-year. Ending annual recurring revenue (ARR) also grew 37%, indicating continued strong growth trends moving forward. Both figures exceeded management guidance and analyst expectations.

This one continues to play into the thesis. Cloud security, identity, and SIEM (security information and event management) tooling are "must haves" for enterprises now, and Crowdstrike is a leader in the space, as shown by its multiple awards again during the quarter. The number of customers adopting 5 or more modules continues to grow, which continues to deepen the firm's switching cost moat.

Crowdstrike is one of our few active picks to be in current "buy" territory, and it will be even more so after a slight bump in fair value from $224 to $227.

Veeva Systems (VEEV)

Pharmaceutical CRM and clinical data management software provider Veeva continued its steady performance. Sales grew 10% in the quarter. This seemed a bit light to me, but management explained some details around a contract change that went into effect this year affecting the timing of some client's revenue. As a result, 2023 revenues will be impacted to the downside, but 2024 to the upside, evening out over time. Free cash flow conversion was outstanding, nearly tripling from an unusually low margin in last year's Q2. Trailing twelve month free cash margin now stands at 43%, a fantastic figure.

I didn't see anything particularly notable that changes the model or thesis in the notes or conference call. The fair value gets a few dollar bump from $171 to $175 based on time value of money increases. This is a great company but one needs to be very opportunistic to buy it at a decent price.