During the quarter, Autodesk announced a new transaction model for customers in the Australian market. While the Australian market itself is irrelevant to Addnode, Autodesk aims to implement the new transaction model on all bigger markets globally, which will affect Addnode significantly. With the new model, Autodesk partners, such as Addnode’s Symetri, will provide the quote to customers, but the actual transaction happens between Autodesk and the customer.

From a purely financial perspective, the change has no substantial implications. It will lower Symetri’s sales and increase its gross margin, leaving gross profit, EBITA and cash flow unchanged. However, the change is more interesting from a strategic perspective. In addition to Addnode and other VARs (adding expertise and, in some cases, add-on software), there are still distributors in the digital world, mainly competing with price. With the new agent model, the strategy of selling cheap subscriptions is no longer, and distributors and VARs will have to add value in another ways. Considering Addnode’s expertise and portfolio of add-on software (customers have not chosen Addnode because of its cheap licenses), we believe the expected change in Autodesk's business model is slightly positive for Addnode. Also, it might open interesting M&A opportunities as smaller players struggle to adjust to the anticipated change in the transaction model.

Regarding our Q4 expectations for Design Management, we note a slightly more optimistic view from Autodesk in its fiscal Q3 2024 (published 21 November), raising its guidance marginally. However, we believe the AEC market continues to be weak but expect slight improvements in the manufacturing-dominated recently acquired TeamD3. Overall, our sales forecast is roughly unchanged as a lower positive effect from FX mitigates our somewhat more optimistic market view. Key currencies, USD and GBP, have fallen relative to the SEK during Q4. Regarding margins, we expect 7.5% on the EBITA level, down from 11.1% in Q4 2022, but above the 6.2% and 5.4% seen in Q2 and Q3 2023. We expect better momentum in TeamD3 and some cost adjustments to drive the q/q improvement.

While a few large deals partly drove the strong momentum in Q3, we expect a rather solid Q4 from PLM. Its end markets are generally stronger than DMs, and the cost initiatives are starting to pay off. We increase our organic forecast somewhat, which is largely mitigated by a less positive contribution from FX. Key currencies, EUR and GBP, have fallen relative to the SEK during Q4. Regarding margins, we expect 8.5% on the EBITA level, down from the strong 9.9% seen in Q3, which was boosted by larger license deals. Therefore, we have a somewhat more defensive assumption for Q4.

While new sales constitute a small share of the market, Addnode seems to have performed rather well in a softening market regarding new sales during Q4 – with Sokigo signing deals with Karlstad, Ekerö, and Trollhättan, and S-GROUP with Kalmar. We leave our forecasts for Process Management unchanged and expect organic growth of 5%, a solid level but at the lower end of the 5-10% level seen over the last 2.5 years. Regarding margins, we expect 19% on the EBITA level, in line with the solid performance seen in 2023 so far.

We retain our Base Case at SEK100 and note that Addnode is still trading below our Base Case, which is rare historically, despite the share rising by ~25% in the last three months.