Why Autodesk Spent $ 240 Million On This Early-Stage Real Estate Development AI Platform
Back in November, Autodesk (NASDAQ: ADSK) announced that it has completed the acquisition of Spacemaker, which provides a cloud-based artificial intelligence (AI) platform that helps urban designers and architects save time, money and materials. The all-cash, $ 240 million deal was Autodesk’s fifth acquisition and 13th investment in construction design solutions in the past three years. Such acquisitions are important to investors as Autodesk tries to dominate the architecture, engineering and construction (AEC) software space.
Here’s how the Norwegian start-up will fit into Autodesk.
So what exactly is Spacemaker?
Spacemaker’s platform is designed to help urban developers and architects plan land developments. The value proposition is that designers can save time and improve results for the many factors that go into successful property planning. Quality of life, building density, and other variables can make or break great construction projects, and getting the right details in the early stages of planning can potentially save building owners millions of dollars.
Let’s say you are an urban developer planning a 300 room apartment complex on the Norwegian coast. When mapping and designing this expensive complex of buildings, you’ll want to analyze wind protection, density, quality of life, and dozens of other factors. Weighing all of these variables is difficult for developers alone. However, when their skills are enhanced by the rich data sets and simulation capabilities of Spacemaker, these sitemaps can be optimized, with the designer receiving guidance from the software as it goes.
As you might expect, this can be an extremely valuable service. Autodesk highlighted in the acquisition press release some Spacemaker case studies where companies have saved millions of dollars using it. And if Spacemaker can save businesses tons of money, Autodesk will likely be able to charge extra to use it.
How does this integrate with Autodesk
Autodesk sells dozens of services to architects, engineers, and construction workers. These include AutoCAD (2D and 3D design for engineers and architects), Revit (design and construction management), and Civil 3D (design and construction tools for civil engineers). The company frequently bundles its services, depending on customer needs.
Autodesk already has thousands of architects and designers as clients, giving it an advantage in monetizing its newly acquired Spacemaker platform. Spacemaker will also likely be paired with other architectural and design products, which should help increase customer base and create a better value proposition over any competitor. As Haukeland said when asked about the TechCrunch acquisition:
[W]We understood that it can put our vision on steroids and we can really achieve that vision much faster. And that’s what motivates us, that’s what we want to do: we want to realize our vision and spread our offer around the world, in the hands of millions of architects, engineers and developers.
Invest take away
While the public couldn’t see any of Spacemaker’s financial information (the company was privately held, so it had nothing to disclose), a price tag of $ 240 million doesn’t seem outrageous for Autodesk. Once the product is integrated with its other services for architects and designers, its customer base is expected to increase as long as the value proposition remains intact.
Right now, Autodesk is trading at 19.2x sales and has a price to free cash flow ratio above 50, which means investors will have to pay a premium if they want to buy. actions in the society. However, if you think that acquisitions like Spacemaker are helping it create a wedge against other AEC software companies, it might not be too late to jump on. the Autodesk train.
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