It's hard to overstate how engrained Autodesk (NASDAQ:ADSK) is in the architecture and construction world. The company's suite of products is an industry standard, starting with Revit and extending into products like 3ds Max, BIM 360, and Navisworks. It all starts with the design model, and information flows to more parts of the value chain that need pieces of the Autodesk suite

As Autodesk transitions to a subscription model, its financials have been a bit of a mess, but investors taking the long view should like what they see from the company -- and the stock may still be a buy. 

CAD design on a computer screen.

Image source: Getty Images.

Autodesk's place in design

Revit is the go-to design software for architects and it's what they use to communicate with clients and contractors. This is really the start of the feeder system for Autodesk. 

Once architects are hooked, then the waterfall of other available products begins. Engineering firms are more likely to use Navisworks for model reviews of engineering and construction documents if an architect works in Revit. Building information modeling software like BIM360 also becomes more efficient in optimizing the construction process. 

Autodesk is attempting to build out a suite of products that an entire ecosystem of architects, engineers, and construction professionals use every day. And it's been extremely successful in capturing most of the market.

So why isn't the company profitable? 

The move to subscriptions has lowered short-term revenue for Autodesk because an annual license was less expensive than the full software package. But long-term, the software-as-a-service model should be higher margin and more consistent for Autodesk. We've started to see some of that improvement in the last year. 

ADSK Revenue (TTM) data by YCharts.

Each incremental subscription customer added will be very high margin and should push the company to profitability. Plus, some new products should be able to grow the business long-term. 

New markets are opening up

Autodesk's growing software suite continues to add new features and iterations, with no end in sight. The company will eventually move into virtual reality design tools and augmented reality applications for devices like Microsoft's Hololens 2. These products are already starting to make their way into the market from third-party vendors, who could be acquired by Autodesk and brought into the ecosystem.

I also think we'll see a larger ecosystem of construction and maintenance software in the market as an ongoing resource that will replace the current standard of paper documents. Autodesk is digitizing every piece of the design-and-build ecosystem that it can, and in doing so, it's engraining itself in the industry. Slowly but surely, it'll add more and more products to the mix. 

A business that's built to last

Autodesk has such a powerful platform that students as young as grade school are learning the company's software in preparation for becoming architects, designers, and engineers (as well as other careers). That's an incredibly powerful position and it will grow the company's installed base and number of subscribers long-term. Customers are literally entering the Autodesk ecosystem through free software and slowly moving up the revenue curve as their careers progress. 

The strategy is one that I think investors should like long-term. It's tough to see the value from near-breakeven net income today, but this is a growth company that should be able to add users and raise prices over time. That will add value for shareholders willing to buy and hold the stock, which is a prudent investment strategy.