Shares of engineering software expert Autodesk (NASDAQ:ADSK) reached new all-time highs on Wednesday after a strong third-quarter earnings report. The company crushed Wall Street's expectations across the board and raised its full-year guidance targets.

Autodesk's quarter by the numbers

Sales for the third quarter of fiscal year 2021 rose 13% to $952 million. Your average analyst would have settled for $942 million. On the bottom line, adjusted earnings increased by 33% to $1.04 per diluted share. Here, the analyst consensus pointed to $0.96 per share. Management's original guidance for this period targeted adjusted earnings of roughly $0.94 per share on revenue near $937 million.

In other numerical news, Autodesk's GAAP operating margin landed at 18% -- the highest reading in more than 10 years, completing a dramatic rebound from negative operating margins in 2016 and 2017. Furthermore, Autodesk saw free cash flows rise 29% year over year to $340 million. The company has now completed a strategic transformation that replaced permanent software licenses with recurring subscription fees for Autodesk's cloud-based solutions and services. The shift was painful at first, but should reap generous dividends in the long run.

Two young businesspeople celebrate a good-looking pie chart with fist pumps.

Image source: Getty Images.

Headwinds? What headwinds?

Autodesk achieved these strong results despite the ongoing COVID-19 pandemic. The company extended the payment terms for many customers who were unable to make their scheduled subscription payments in the last couple of quarters. Now, some of the strong top-line sales in this quarter were collections of extended payments from the second quarter, as some of Autodesk's troubled clients saw better days in the late summer and early fall. The total effect on third-quarter revenues from this generous policy was still negative.

Looking ahead, Autodesk lifted the midpoint of its full-year revenue guidance from $3.74 billion to $3.77 billion. The guidance range was tightened around the top end of last quarter's updated range. Adjusted earnings are now expected to stop near $3.94 per share, up from $3.81 in last quarter's full-year guidance and roughly 40% above the total result of $2.80 per share in fiscal year 2020.

Cisco just gave Autodesk's strategy shift a big thumbs-up

Having completed the development of Autodesk's Software-as-a-Service (SaaS) business model, longtime CFO R. Scott Herren is moving on to push similar ideas from the CFO office at networking equipment giant Cisco Systems (NASDAQ:CSCO). When mighty Cisco reaches in and grabs one of the chief architects of an audacious strategy shift, it's a solid testament to Autodesk's successful transformation.

The company is exploring the next chapter of its storied business from a position of strength, leaning back against record-high revenues and earnings as well as share prices that are at all-time highs. Losing a quality leader like Herren is never fun, but if it has to happen, now is a good time. Autodesk is firing on all cylinders despite the lurking coronavirus crisis.