The Nasdaq Composite (^IXIC 0.36%) has been stuck in a bear market for quite a while now, and some investors are getting impatient for a recovery. Yet even as some other major market benchmarks have managed to move closer to their former high-water marks, the Nasdaq is still more than 22% below its record high from late 2021.
The key to the Nasdaq returning to all-time highs will be for the fast-growing companies that sent the index to record levels to regain their former momentum. Unfortunately, although some businesses have rebounded, others are still seeing ongoing challenges. That's what investors are seeing from the latest financial results from Autodesk (ADSK -1.74%) and Splunk (SPLK 0.13%) on Thursday morning, and the wide disparities in how shareholders are responding to those reports suggest that new all-time highs could still be a long way away.
Autodesk paints a pretty picture
Shares of Autodesk were up almost 9% near the open on Thursday morning. The company behind the popular AutoCAD software package for design use saw solid gains in its fiscal second-quarter report.
Autodesk's key performance metrics were encouraging. Revenue and billings for the quarter ended July 31 were both up 17% from year-earlier levels. Autodesk reported significant improvement in operating margin, with gains of 5 to 6 percentage points from where they were 12 months ago. Net revenue retention rates remained between 100% and 110%, and adjusted earnings of $1.65 per share jumped 36% year over year.
Revenue gains were consistent across geographies and product offerings. Interestingly, the AutoCAD segment saw the weakest change in year-over-year sales, but even there, a 13% rise showed the overall strength of demand for Autodesk's software.
Autodesk is upbeat about its future prospects, projecting total revenue of $4.985 billion to $5.035 billion for the current fiscal year. Adjusted earnings of $6.52 to $6.71 per share would also make shareholders happy, and with more than $2 billion in free cash flow anticipated for fiscal 2023, Autodesk is in a strong position to keep making smart moves to bolster its growth and find new pathways for success.
Splunk stock goes thunk
However, shareholders in Splunk weren't as fortunate. The stock fell 11% in early morning trading Thursday even after the data platform provider announced solid revenue gains in its fiscal second quarter.
Splunk's backward-looking numbers for the quarter ending July 31 were strong. Total revenue amounted to nearly $800 million, up 32% year over year and supported by a 59% jump in cloud-based sales. Splunk's cloud dollar-based net retention rate weighed in at 129%, showing solid loyalty from existing customers. The company now boasts 723 customers producing $1 million or more in annual recurring revenue, up 24% from where the number was 12 months ago.
However, Splunk's guidance for the near future didn't live up to high expectations. The company sees revenue of $835 million to $855 million in the third quarter, which would indicate an ongoing slowing in sequential sales gains. Even though Splunk boosted its full-year sales guidance to a new range of $3.35 billion to $3.4 billion, investors seemed disappointed by the implied annual revenue growth to roughly 26%.
The key to success for Splunk and most of its Nasdaq peers is whether they can keep drawing in new business for the products and services they provide. With so much uncertainty on the macroeconomic front, any sign that a company might not be able to sustain past growth rates results in the stock of that company getting punished. As long as investors have that attitude, it's going to be hard for the Nasdaq to work its way out of its current bear market.