Activist Starboard launches boardroom battle at Autodesk over margin concerns

(Reuters) -Starboard Value on Wednesday launched a boardroom battle at Autodesk, raising concerns over the design software maker's margins and intensifying the activist investor's prolonged struggle to effect changes at the company.

Starboard, which holds a $500 million stake in Autodesk, intends to nominate a minority slate of director candidates for election at the 2025 annual meeting, it said in a letter to Autodesk shareholders.

"Board change is necessary at Autodesk," said Starboard, which lost a bid to appoint its nominees to the company's board last year.

Autodesk's shares rose nearly 4% in afternoon trading. They have fallen more than 12% so far this year, marking a far deeper slump than the S&P 500's 4.5% drop.

Despite benefiting from its unique position in the design software market, Autodesk's flat margin expansion has emerged as a key investor concern.

"Autodesk spends significantly more than a wide range of scaled software peers on operating expenses," Starboard said, reiterating concerns about the company's spending.

In February, Autodesk laid out a restructuring plan including reducing its workforce by about 9% and reallocating resources towards cloud and artificial intelligence.

However, the company's outlook for 240 basis points of margin improvement in fiscal 2026 underplays the potential impact of these restructuring efforts, which could bring in as much as 500 basis points of margin improvement this year, Starboard said in its letter.

Starboard said Autodesk should be targeting underlying adjusted operating margins of about 45% by fiscal 2028, a huge jump over the company's forecast of between 36% and 37% for fiscal 2026.

Autodesk said that it had reached out to Starboard to participate in the process of appointing new directors, an offer that the activist investor dismissed.

It would review Starboard's candidates as part of its regular director evaluation process, should the investor proceed with the nomination, Autodesk added.

(Reporting by Arsheeya Bajwa in Bengaluru and Juby Babu in Mexico City; Editing by Maju Samuel and Mohammed Safi Shamsi)

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