Shares of software company Autodesk (NASDAQ:ADSK) dropped after reporting recent quarterly financial results and now sits roughly 16% below its previous high. However, while the market didn't like its quarterly results, Fool contributor Brian Feroldi still loves the long-term prospects for this company. In this video from Motley Fool Live, recorded on Aug. 26, he explains why this a good stock to buy right now.

All right, I'm going to talk about a stock that I own and we did a deep dive on recently and that is Autodesk. The ticker symbol here ADSK. You've probably heard of this company before, they are one of the pioneers in CAD, C-A-D or computer-aided design. Essentially, this is a software company that helps you to make anything. They are primary service in three end markets. Architecture, engineering, and construction professionals, product design and manufacturing professionals, and media and entertainment professionals. They have over 80 different software tools that are all in a huge bundle suite. This company has steadily been building or buying tools to build out its product offering.

What interests me most about this business is that it successfully made the shift from a legacy software model to a software-as-a-service model. Back in 2016, this company really decided to go a whole-hog into a recurring revenue business model. Doing so forced it to give up some revenue in the near term. If you look at 2017-2018, they had reported year-over-year drop in revenue. That's not a pleasant thing for any company to do, let alone on purpose. However, that transition is now fully behind the company, and 96% of revenue today is now recurring and growing at a double-digit rate. Not a high double-digit rate, but a double-digit rate. Given that this company is approaching 40 or 50 years old, it's pretty impressive.

They are still in the midst of a business model transition right now, they are going toward a naming model where instead of selling seats to companies, they sell seats to individual names. They are still working through retiring all of their old legacy software. There are lots of users out there, we'll get into how many that are actively using Autodesk's products, but bought the software so long ago, and it works so well still that they have yet to transition to this software model. Autodesk believes that alone is a huge opportunity for it to continue growing. Again, these are people that are using the software actively but haven't upgraded to the SaaS model. That is what's happening right now.

There are numerous benefits that they're trying to roll out to convince people to make that upgrade. You can work on any device, you can work from any location, you can build in custom workflows, you could share more easily. There is a premium price to doing so, but that is their plan to transition these users over.

If you look at this company's financials, they are really starting to get mouthwatering. Billings is consistently growing, recently grew at a double-digit rate. Revenue grew 11% to almost a billion dollars, that's in the quarter. This company pumped out $316 million in free cash flow on just under $1 billion in sales. That is a very, very strong free-cash-flow conversion margin.

They also do a great job giving out details about where their revenue is coming from. While America is their core market and they've been operating in here for years. It's only about a third of revenue. Europe, Middle East, and Africa are the growth area for them, and they also have a growing presence in Asia Pacific. If you are a believer that the world is going to have to spend on infrastructure and witness the trillion dollar bill that was just passed in the US alone for infrastructure, the demand for software that makes that allows you to do those projects, which is Autodesk's bread and butter, the demand should continue to grow.

They also spread out their revenue across a couple of different sectors. The manufacturing sector, the architecture sector, the media and entertainment, etc. This is a globally diversified and product-diversified business.

As of the most recent quarter, their balance sheet looks good. Not phenomenal, but good. They had about $1 billion in cash, and they made another acquisition. They have about $3.5 billion of goodwill on the balance sheet. Again, this has been an acquisitive company to build out its product offering. Given the size and scale this company has, I normally don't like companies that grow by acquisition. However, it's a part of their strategy. It's not their entire strategy. As far as liabilities go, this company has about $1.7 billion in debt on the books.

But if you look at the most recent query results, the numbers were very appetizing. Subscription revenue, that grew 18%. Again, that maintenance revenue, that's that legacy revenue that is going down on purpose. When you combine those together, total revenue growth was about 12%. But it does show the continued ongoing transition to the Software-as-a-Service business model. Costs were up, but they still had a very strong gross profit margin of 90%. Ninety percent gross profit margin. While other costs did rise, they were able to grow the income from operations at a slightly faster rate.

Moving forward, I think there's a lot of pent-up operating leverage in this business. Again, going from the SaaS transition. They haven't fully realized all the benefits of that. I think the next couple of years is going to show outsize profit growth when compared to revenue growth.

How big is the potential pie here? The company breaks out its total addressable market opportunity in several different ways. From a design and manufacturing, they think these are multibillion dollar markets, and growing. The same thing for the design and maker market, and their media market, which is their smallest segment is a $5 billion market and growing. You add all of those together and they believe that their total addressable market opportunity by 2025 will be about $69 billion. That is a big number, and also, that number is going to continue to grow.

If you look at their current market share in each of their core markets, it's still single digits. On a revenue basis, it's under 10%. That alone is a really [laughs] good reason to be interested in this business. The entire market for their services can grow. I think that they should be able to grow their revenue roughly 10% rate for the next couple of years. Now, if you dig in to their current user base, they have about 5 million paying subscribers, 12 million people are using their software and are noncompliant. That's a friendly way of saying moochers. [laughs] People that have not updated or not paying their fair share.

Their shift to a pay-per-person model from a pay-per-license model, that should convince some of those people to come over. But I really like that about this company. They have the user base installed, it's not if they have to go out and grab new users. They're doing that, too, but these are people that are actively using Autodesk's products. The company is just trying to convince them, slowly nudging them to upgrade. Obviously, how many do in any given year is going to vary, but can the company get a small percentage of them to transition over in any given year? I think that's a pretty low risk, yes.

If you look at this company's longer term growth trajectory, it's calling for high-midteens revenue growth for the next couple of years. A very strong operating cash flow margin and pump out lots and lots of free cash flow.

Quickly into the management team here, CEO Dr. Andrew Anagnost. He is not the founder, but for all intents and purposes, he acts like one. He has been at this business since the 1990s. He wasn't a recent hire, he's been there for more than 25 years. He is also the big manager that was pushing the SaaS transition, he has very high pedigree. They also have a really diverse board and C-suite, I like to see that there. The company itself gets great Glassdoor reviews. Inside ownership, while not high in percentage terms, the CEO does have many, many millions of dollars that are on the line here. This to me is a core stock of mine that I hold and plan on doing so for a long time. I think it's a low-risk double-digit grower. That is Autodesk, ADSK.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.