Behind Autodesk’s Numbers- (ADSK)

They manipulated cash flow- but is there anything else going on?

Just Google “Autodesk and accounting” and you will get a myriad of stories discussing shareholder lawsuits, executives ignoring accounting risks, and SEC and DOJ investigations. This is never good sign. All of this hoopla started in April when the company filed with the SEC notifying it that that it could not file its 10-K in a timely manner due to an internal investigation launched by its Audit Committee. The only thing we knew at the time was that the problem was limited to the non-GAAP presentation of operating profits and free cash flow and that the company did not believe that the matter impacted historical financial statements. That’s not much to go on.

The company has since admitted that after telling investors in FY22 that it would begin billing customer on multiyear contracts annually rather than upfront, it instead pushed upfront billing to a historically high level when it realized it was going to miss its cash flow forecasts. It has also admitted to making decisions regarding collections, accounts payable, and discretionary spending to facilitate meeting both free cash flow and operating margin targets. While none of this required the restatement of historical financials, it nonetheless has ruffled the feathers of both the SEC and shareholders, and resolution of the matter will likely dominate headlines for the foreseeable future.

With all this in mind, we thought it would be constructive to take a closer look at the company’s overall earnings and cash flow quality. We obviously hate to see a company admit to managing earnings to meet forecasts- but if you believe that ADSK is one of the few companies that makes decisions and times discretionary spending to meet analysts’ forecasts, you desperately need to spend some time in our archives.

So, are there other signs of fraud and manipulation hidden in ADSKs financial statements? Let’s get behind the numbers to find out…