In today's world, most companies span several regions and sell across the world. As Foolish colleague Morgan Housel notes, 10 years ago, less than a third of S&P 500 revenue came from abroad. Today, that makes up more than half of the S&P 500's growth.
And that number is growing. The truth is, investors regularly underestimate how much demand comes from abroad. More importantly, for large, multinational corporations that have already established a presence in their home markets, much of their future growth comes from abroad.
With that in mind, today we're looking at Autodesk (NYSE: ADSK ) . We'll examine not only where its sales and earnings come from, but also how its sales abroad have changed over time.
Where Autodesk's sales were four years ago
Four years ago, 37% of sales went to the EMEA (Europe, Middle East, and Africa) region, but the United States wasn't far behind at 34%.
Source: S&P Capital IQ.
Where Autodesk's sales are today
Today, Europe's influence continues to grow on the company's financials. The segment now accounts for 40% of sales, while the United States has slipped back to 29% of sales.
Source: S&P Capital IQ.
You'll notice that most of Autodesk's sales are still concentrated around three key developed markets: the United States, Europe, and Japan. Like other software peers, Autodesk is having a difficult time enjoying growth from emerging markets because of high piracy rates, which are estimated at 80%-90% in those regions. As my colleague Bryan Hinmon notes, the company hopes increasing subscription revenue and cloud offerings could help decrease piracy's impact. However, software companies' difficulty profiting in growth markets is a key investment consideration.
Competitor checkup
One last point to check is how Autodesk's footprint compares with some of its software peers and industry rivals:
|
Company
|
Geography With Most Sales
|
Percent of Sales
|
| Autodesk |
EMEA |
40% |
| Dessault Systemes |
Americas |
39%* |
| Parametric (Nasdaq: PMTC ) |
Europe |
39%* |
| Red Hat (NYSE: RHT ) |
United States |
64% |
Source: S&P Capital IQ.
*2010 results.
Among its closest peers Dessault Systemes and Parametric, the geographic profile of sales looks pretty close. Dessault is dominant in its domestic French market, but elsewhere in Europe it's a competitive fight between the companies. Dessault has also posted impressive recent gains in its Asia-Pacific market.
I also put Red Hat in because it's a software company that collects mostly "subscription-style" maintenance revenue, a market that Autodesk is trying to move further into. While the company is heavily concentrated toward American sales, its Asian growth has been impressive. In the past five years the company notched 200% growth in the region. Its success selling to these markets indicates that Autodesk could see higher growth in Asia moving forward as it further tilts its model to collecting recurring revenue.
Keep searching
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