Autodesk (ADSK) 23 Nov 222023 Q3 Earnings call transcript

Thank you for standing by and welcome to the Autodesk Q3 Fiscal ‘23 Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference call is being recorded. I would now turn the conference over to your host Mr. Simon Mays-Smith, Vice President, Investor Relations. Please go ahead.

afternoon. good and operator Thanks, Thank you third to the conference joining results of our quarter call our discuss for fiscal ‘XX.

with our call On and via line me Anagnost, Andrew the our webcast. Debbie Clifford, being CFO. is conference Today’s broadcast live are CEO;

a will available In replay at the of autodesk.com/investor. call addition, be

press slide our following website Investor and find of transcript can You release, today’s the Relations this earnings presentation opening on call. commentary

products currently make may and this statements our product cause our outlook, in our strategies. the factors we to results statements important to Form risk results judgment those acquisitions, filings filed our recent Actual differ During future our other related assumptions, from release Please most XX-Q Form or These about forward-looking and differ that and known capabilities factors actual for refer and best call, and results materially. events may including with SEC could reflect forward-looking based factors. our X-K today’s statements. press on

Forward-looking any the call reviewed made information. any update call information If or being statements may contain made today. presented revise current obligation is or the today, disclaims not after or accurate during the as forward-looking this call replayed statements. Autodesk of during to are

to turn in All And will comparison. over the the will Investor Relations press non-GAAP Unless discuss release our numbers on otherwise supplemental our growth in During financial our we materials quote year-on-year and changes other referenced call, call now, performance. represents call or Andrew. reference noted, numerical several as website. reconciled are a available we XL each Financials today’s I such

tailwinds third revenue, performing remain and operating flow. margin the rates COVID-XX-related free to growth expect reported and Thank is you, the We non-GAAP macroeconomic, geopolitical call. and again Simon renewal headwinds. we’d secular policy business quarter Subscription Encouragingly, resilient. given cash record as everyone welcome and

notably slightly more upfront Our quarter, decelerated we Russia less contracts competitive multiyear overall annual growth remains growth good. for business expected. And China, and most we in and in of performance demand Europe, Outside the see new for than remains but demand strong.

Usage in are rates are partners transition next We on indicators grow of continue Russia. these for excluding And for this year in modestly trends. consistent leading multiyear signal to activity optimistic, through excluding billings backlog. Overall, China, U.S. the with are work to BuildingConnected APAC, the caution. positive contracts. as and remains but our Europe, with but robust Channel a hopeful annual continues to remain bid its hints our is industry flat

accelerating deeper into to We reinforcing the with within the secular are bringing our and industries business our ecosystem. new workflows customers and customers partnerships broader serve, we creating and tailwinds by the existing convergence between of

from and delivering value cloud further increasing to growth and year. in for optimism realize to excitement hosted which initiatives. we University. the performance the fourth come risk moving X of on being having connect now Autodesk strategy our later. an digital the and sustainability. Flow, behind by third Fusion, the on the Our provide investments data economic focused and investments I remain cloud we expensive disciplined files by the more catch-up underpinned efficiency our is cycle, of through greater I’ll quarter of in the our benefits strategy to fiscal to than In full update the expanding well back our its call enables three you our ecosystem, third-party financial customer and to invested significant over turn will enable to teams workflows September, the and velocity, XX,XXX while will trusted increase in industry even mitigating we years. together customers clouds, engineering which for at There announced and time was Forma Autodesk partners By was AU, our Autodesk At they momentum person and Debbie data, first strategic industries will energy, to and platform. through palpable serve. take There also incredible to the for transformation guidance quarter make then

environment, revenue, upfront headwinds, performance were annual than demand grew for and rates. revenue revenue geopolitical, exchange business LT constant COVID-XX-related in XX% EMEA Total Thanks, rates, of XX%, demand grew in upfront and XX% grew constant offset XX%. increased while for grew and Andrew. at and competitive AEC In currency revenue line revenue excluding and XX% a grew strong revenue. AutoCAD and quarter, the channel, grew revenue in Americas, respectively. on foreign exchange policy revenue a in expected. contracts renewal movements and XX%, APAC By growth. revenue and XX% APAC. expectations more total XX%, rates, partly and M&E representing by subscription revenue in At challenging our the XX% we indirect multiyear macroeconomic, exchange by region, Autodesk EMEA healthy less and macroeconomic movements XX% XX%. performed direct third XX% impact with product, grew By in-quarter Resilient AutoCAD new XX% driven of growth the partly manufacturing more both and By

expectations. and target Total revenue and billion. underlying XXX% upfront to was and continued XX%, XXX% billion grew rates, constant to $X.X respectively. revenue X%, $X.X to $X.X Our our Total $X.X respectively. retention Billings exchange RPO subscription by renewal RPO of remain to movements billion versus RPO XX% deferred solid grew current approximately mix XX% a and XX% foreign current XX% contracts grew and annual product offset of At comfortably RPO rates rate multiyear partly strong, range. from shift increased in exchange reflecting and net demand, billion, our within

larger growth, gross cohort. growth approximately million, operating of XX%, reflecting XX% GAAP multiyear XX%. remained non-GAAP flow revenue to margin by margin quarter operating level by at X P&L, to increased the to discipline. year-over-year a X non-GAAP strong percentage $XXX while billing ongoing approximately up Turning points increased XX%, percentage cost strong revenue and reflecting third delivered points upfront and broadly improvement robust cash We free margin margin

framework. within to our Turning allocation, manage actively to capital we capital continue

investments our will As the remain said, inorganic cycle. organic and focused economic Andrew through disciplined and

will shares accelerate purchased to continue an to to average million repurchases to stock-based price makes approximately $XXX to of $XXX to Year-to-date, share, it we for million last diluted million sense reduction compensation contributed X.X our opportunistically which approximately shares. when from outstanding dilution our year program million offset so. by average We per in compared do shares X and a XXX weighted at

for bond bond, sustainability further last retire our sustainability also we when due. We October published to related announced at new that million report when sustainability progress. billion we rates $X impact share first bond about historically first And in December, our it month comes that $XXX today refinanced our that has we this And authorized bond plan ago, a updates a to low effectively Recall repurchases. issued Board a which bond. the we

You can Investor find the report Relations on our website.

finish me readout guidance. and of let business the you gave the our beginning at with on a the markets Andrew Now call.

goals. in ongoing be our Our their renewal to the business achieve software customers highlight, importance helping of our continues a reflecting

growth and good. expected. annual seen demand relatively New less business for in to remains contracts than upfront be of demand multiyear growth we’ve but China, stronger decelerating, growth Russia for and North EMEA outside with And we America in and APAC overall continues slightly more

FX share as and our the reducing remainder fiscal ‘XX consistent rates headline as remained respectively, and what midpoint to full by approximately done $XX the per As ‘XX. headwinds, we our constant is market of revenue, assumes comfortably U.S. conditions the past, million guidance QX. incremental and fiscal the close previous we we during we’ve with factors margin strengthening at generated $X and of together, fiscal that earnings slight these ranges. ahead Bringing revenue in quarter saw the exited billings previous for within guidance million, QX and look ‘XX our remain exchange year and that the The dollar guidance overall

demand more contracts multiyear Our upfront we ‘XX primarily and for lower guidance cash demand free fiscal less for reflects and expected. annual than billings flow

$X.XXX revenue between We’re fiscal to billion be and billion. narrowing ‘XX the $X.XX range

operating modeling confidence and expect in us Excel expect on cash $X.XX our to be for and margin And challenges have full to website continue reinforce our the XX%. face of growth that to year flow approximately updated which $X.X non-GAAP billion financials billion. deck ‘XX. We slide long-term be between to transformation, free assumptions we The continue fiscal details gives evolve digital our customers on the more potential. need The for

range flow ceiling XX% intended growth double-digit the We to operating a cash Andrew, growth basis. to a compound free margins you. long-term to metrics and expectations. are revenue spend continue annual growth and XX% to our back growth, to ambitions floor to double-digit target revenue provide These non-GAAP a our in on

Thank you, Debbie.

platform, scalable our product architectural trusted cloud making Fusion, the management industries teams efficiency rapidly from with the sustainability that transform product into adjacent product and connect and and Forma to and manufacturing. engineering from and construction we data, Flow on our to to for operations, engineering strategy Our verticals cloud-based in workflows solutions and is customers. end-to-end drive Autodesk serve data and extensible

and verticals the their and Our existing broader new workflows is In extensible customers workflows into customers become continue and ecosystem. creating bringing customers we with AEC, are between of our By partnerships platform convergence efficient into and win new transform and our digitally more also and industrialized business scalable sustainable. with like new between deeper also industries to within to accelerating the XR. workflows serve, we construction and

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to a For and few example, United in in mechanical competitor’s and communication and the design Build fragmentation, less after complicated chose purchased resolve the detailing, product a it teams Autodesk ultimately integrated design consolidate resulting adoption the shop streamline between field all workload contractor management disconnected, the platform, were the workflows between reporting build these more field. low of handoffs on to of construction data leading and fab process. its ago, insight, issues, turning States Autodesk the To a to years to

grow. logos see greater from momentum construction, XX% transformation products. their Our almost Across added we quarter-over-quarter make to from Build’s In on Autodesk to largest than with monthly growing we X,XXX to Autodesk’s continues infrastructure, more designed to new active in becoming accelerate connect users the digital platform. construction and appetite owners construction workflows Autodesk

speed, To power and production upgrade platform XD the generation leading network, parts Fusion XXX EBA In capacity transform network substations adding transformation twins. signed enable from Autodesk, with costs, renewable BIM of maintenance incorporate using to workflows one maintenance accelerating is accelerate the of digital first and in-sourcing to customer for printing. efficiency it Docs safely. the its electricity of to and example, is it rapidly reduce third of quarter, and Europe a the XD and its the the operators as its to its and Revit sustainability and in For

manufacturing on-ramps quarter more we floor, and from manufacturing, extension. to Turning manufacturing to powerful shop our connected in good portfolio more design functionality Fusion to momentum platform through our to have we delivered as new the sustained workflows XXX this and tools developed

competitiveness resilience We continue uncertain drive times. to and efficiency provide further and our in and customers for sustainability

chain. user industrial Italian and multinational an longtime specializing and of in is technologies green electrochemistry is has production in AutoCAD the Nora a been It leader hydrogen De example, a sustainable Revit. company in For

to users. able demand processes its quarter products consolidating students competition, and with take would able data with XXX,XXX secure customers. access easily XX decarbonized through has of its And of participants world. the Vault Singapore, customers use, they Over become X of Fusion printing for parts like seamless aptly ingenuity recently to cloud engineering, provide been XD pace. finally, supporting managed on an reducing downtime vocational hours, manufacturing most onboard bring and between with at skills. the By will WorldSkills the with initiatives. materials additive outcomes and and to workforce additive their ecosystem over and consumption strategy of such Fusion to In for and how Heineken and gaining Group by hone on their breweries. to transformation resources the Shun wide vocational Construction the of named users optimistic XXX’s as It customers. XXX customers number ending disciplines is valuable, by for last amount on won weeks of QX, am and and those mission in the who able firstly continue with AS, inspired I number purified wastewater took a transparency of impact manage secondly, Heineken unforeseen across years, own is our countries the from undergoing also compliance necessary. Autodesk a another next-generation expanded design its extensions are clean medal technologies and future. skills acquisitions. workflows of technology its easily then subscribers, in adding Le used single see gold carbon as digital energy when initiative into digital shipping Sit the been the for the ever-changing workflows chain a competitor’s improve rapidly processes greater more find compete XXX-managed ensure data, platform has license to a and to steadily, skills Fusion the evergreen AS occasional of circular All generate deliver manufacturing replacing from and technology for on-premise commercial will minimize adding on security Olympics XXX part example equipment it To reporting, Fusion manufacturing, the Students its sustainable with lessening better transparently of is PLM used Heineken’s more insights a solutions workflows by XXX through a Outside of competed Vow to finals a the connect times technology. significantly latest and the Scanship has help, to and to prepared developed over enables and growing our supply customers. our replacement Autodesk and By mechanical in and for in will in current adoption few used to subscribers it premium transformation Cloud waste continuing of while of and additive integrate great to congratulate innovation and the construction. XXX manufacturing. collaborate who usage X their were and to new an using Flex solution security Upchain, hobbyists work from to learning and to product be grew Scanship is referred using an integrated providing to efficiently, just about challenges sign a to optimum to and the exceptional and collaboration its and accelerated manufacturing a that sustainable transitioning parts designing Fusion and the the cloud them structure reduction parts to efficiently Fusion step we as with brewer Fusion to for We company and range to next-generation in-house, best commercial by of students in a workforce. grow optimize software the an connected strategy its digital the to from

and and all crafted identifies to the employees and we a globe. safest seeking that the in We customers example, collaboratively subscription access adhere multinational operations company gaps manufacturing self-audit and then its in latest software large helped For plan. China for across optimized same worked its ensure a standards bespoked conduct the software with a to to

agreed As ever largest in million a result, contracts QX, agreement. an X approximately we to compliance our license

deals During To subscription renewal rates $XXX,XXX close, we of $X four compound. revenue net eight deals million. quarter, closed and to the retention over and continue

remains competitive good, is business our headwind. and geopolitical, given tailwinds growth New and and The remains performance COVID-XX expect business strong. as we’d secular performing growth macroeconomic, policy

and will and and call of breadth would expand cycle organic remain like ahead and potential our that substantial, Operator, will our offsetting the Our through to it. growth investment The dilution. investments and accelerating realization disciplined and us share depth now we the with for intensity capital is allocation competitive the and platform market opportunity acquisitions of open buyback opportunity of questions. focused

Saket Our question Instructions] [Operator of you. comes Thank Barclays. Kalia first from

is open. line Your

Okay. the and looking high there just Great. Debbie, taking us we fine-tune on anything some maybe to Hey, evolving kind will level start start with on given put here. that we the that guess my models I you Andrew. spot about, our spoke for the maybe want But factors want ‘XX thinking don’t to fiscal Hey, as you about to other macro is of I Debbie. out? know you. Thanks questions here. how of we you’re

Hi, you great. Saket. doing Hope are

‘XX But to here So in we quarter’s February are will give next guidance about. formal report things when some on think fiscal for we results.

revenue. out of First, we gate. expect point, At headwinds exogenous on the this some

another grow growth continued headwind FX We at way, progress of couple revenue of incremental is the going point revenue means digits. creates a beyond will dollar headwind. margins consensus U.S. then make There look Put from consider. limited in $X.X Russia. margin another exiting important a strengthening X-point-or-so fiscal That’s on On and to to exchange the tough have range rates. headwind to $X.X That’s free constant of will FactSet incremental for of now likely because margins reported then a better to cash flow, which margin, And ‘XX. right the is on headwinds, about billion. us billion it double of things

The And which to overall billings. environment. the first the annual is at macroeconomic is rate customers second the transition our

the on focused really standpoint, us. as the fast that We for it’s good while be executing our a good continue as on is possible want financial from behind customers, change to transition for us, and noise because we

free the flow remember, our the in annual based will ‘XX. give we on we will, conditions fiscal exit So greater guidance the as billings, we macro, see usual, headwind fiscal macro multiyear faster cash the based that move On fiscal we ‘XX. the that see we as ‘XX

about the That end know, just And Got maybe just preferences quarter? of rates curious or helpful. pace how if the of saw one on new I if you of the of you, sort commentary But high commentary for was rates business, lot could be Any level makes go changing think pipeline duration Most and demand it. Andrew, a maybe just is trends towards business, I I’m of fared the would close or the we it. Got versus sense. deeper. of through as helpful follow-up for all pretty in we lot earlier? my a velocity. there quarter you talk retention wondering could

Europe you or that different that was no Europe across was good proceeded throughout Saket, and was Look, the But QX like was acceleration was quarter. the taking out. hear What across fairly There was that consistent something that very definitely right? that different the quarters. in Yes. quarter. you. QX as slowing entire about was of the between the QX down weak QX change quarter. quarter And Russia and from was was to Alright. consistent, much the

preferences of regards some trend the reluctance billings, more headed was no – of of further kind there the multiyear were to quarter. and down and as you more As with further

quarter. of So of those business it’s consistent fairly regards all performance a across consistent fairly quarter to the and the with things

thing And about Look, things the for towards fundamentally had currency some of we the that probably the QX nothing is that responsible really QX only fluctuations the that thing those fluctuations different were over the in was different, changed that the end. one that quarter. of was miss. – and So majority small currency revenue is another

lot Got Very taking helpful, questions here. for my guys. a it. Thanks

you. Thank

next of question of of comes Vleeschhouwer from next Our Our line Jay from the Phil [Operator Suisse. line the question Securities. Credit Winslow of comes Instructions] Griffin

open. is line Your

comments Thank some first, Andrew, allow for Good on for made at your and regarding evening. AU you, a then Debbie. follow-up to strategy you. follow-up you

various an some at you been is manufacturing made that the manufacturing introduced, So you’ve cloud the AU, longer. mature. and in AEC comments the cloud, market and made more clouds namely distinction the to with regard between out important you cloud It’s that perhaps

so some capable, from structure, various get doing or be else and was is an it any margins channel of your that where open going you’re regard be programmatically, for follow-up way maturity to versus to in expectation to are AU? it’ll if on you cloud and to needs all AEC And the that it margin So comparably and FY the implement for have your then development of to talk you the multiyear those the you discussion, flow? to going ‘XX what things everything the about is, cloud to the to way manufacturing planning a annual the described it terms think those doing apart cash mature be you’re comping or could since effect door at things as with you’re on compensation of your Debbie

Alright, Jay.

in Forma the And regards with we to the we of Fusion, to it started I’ll Fusion actually what Fusion, It’s with tell happened evolution. design kind We on start of way. I’ll similar anchored two kind process. When going started Fusion be right? to this things. So upfront all

manufacturing bookends connections start the aligning is upfront between of products to we have Think the of and is off upfront bolting design and a it of with consumer remember between about phases on days focused conceptual was deal filling utilization, types And It cloud to Fusion Forma don’t of – started the to going processes. close focusing processes very conceptual evolution downstream that architects, early those or of building to cloud-based two [indiscernible] to Cloud. and also the design two application. individual actually aspects Construction that, them various right? middle far distributing doing design and Forma started similar highly some of it’s conceptual an the basically manufacturing, onto helping make and was probably Fusions, You what on The all the those planners, off we the building helping But design. to decisions and early of upfront to work cloud decisions development utilization, integrate going the in design, people conceptual space better we’re developers, in design. downstream to

to cloud of we that with early getting Cloud And bring basically entire the the cloud. Construction between value going So bits to time, same downstream Forma Cloud, to the Fusion. the what start our through of of walked Construction similar to and evolution today representing that and are evolution bits does. Cloud entire Forma manufacturing, be example the on what customers development the to to all adding And time, will Construction close over what’s going very process doing filled the are is that of out throughout over happen the will platform, continuously some in but

adoption, how in customers, value details, think we how with our programs, are engaging partners, the channel And is compensation, the Jay, they still works. about driving about to we our driving compensation engaging customer to about second think ultimately, question, customers, delivering our everything with satisfaction. But the your channel

XX% value. that of the So, of guided that, terms as us to historically back-end that things I margins committed metrics, fiscal that specifically in we like guys. like next examples on guided ‘XX the you’ve year, to of next the haven’t all achieving well, I front-end other to to year deliver some left more of moving of trying some are just that in ‘XX said things do adoption some impact that XX% incentives we’ve of But to things target again, to breadcrumbs we’re we in would in mandate margin incentives margins, you before, our than service the haven’t window. range seen to anything And kind say

you. Thank

Winslow Our Thank next Credit from [Operator Phil Suisse. Instructions] of you. line of question the comes

Your line is open.

Hi, you, for taking question. have one thanks I then Debbie. Andrew, But a my follow-up earlier. for question a for should

a of the the mentioned, cyclicality But and with this backlog from macroeconomic XXXX. out, has the as you AEC of think One the questions I frankly, industry industry. about is you even the as obviously XXXX entered year environment pointed And deteriorated.

So my what are the about the this wait is various the that vertical, to and especially I’ll Thanks. pipeline, software question the Autodesk seeing about from to go-forward ask maintain? hearing then build spaces think design, the just of in sells you here, you as sort plan, and Debbie. question And

Yes.

backlog sure of to business. forward, architectural struggling They pressure and the companies but have are some off, execute. their a they first still moving shrinking have saw business. leading in territory, still thing into buildings more the a capacity continues So some the which through business I’m have. they still are than a to or you of to industry one architects backlog the the demand, to of it that is labor execute Construction see and that decline also the entered of buildings indicators of have some that gone means going shortages

we’re related. So they still haven’t labor-related, queue related, execution a know have I problems seeing of they and still projects, They are executed it. getting look, business big material on pipeline customers of pretty what, capacity you are a have are of I through that saying, I

in are they XX seeing XX not that say our various segments. book continue business they of have that’s of not for are hearing a that’s backlog to an next to we’re still for some what not to still That’s to and pretty pressure, seeing not of the customers. going lot say next seeing our year we So they pressure overhang into that’s from customers, are good and a months. But

of Now as about pressure see much the than their concerned But continue, accumulating. they’ll to backlog. are they to they that start book ability downward that are now, execute business all things right they kind are more of of in some about

then drawdown you at toll as the the Thanks the deferred And if broad. update $X.X on year, of Awesome. obviously, a pretty of a range us of talked beginning obviously, think, of as help and revenue, the next XXs Debbie, you that color. impact right quantify you just billings, you sell-side percentage high now the could on billion deferred billings, terms for move maybe that’s us about being long-term in sort of year, in that. you to give revenue long-term towards as flagged an follow-up wonder fiscal then I but And that? year. this I X-year of billion, Because exit the $X.X of

So maybe deferred the be next some of year impact would helpful, on Thanks. color too. long-term

Yes.

our overall, hasn’t So in two these areas changed. messaging

talking a be were deferred in we XXs and guidance going not a that a billion deferred little about long-term million to range, for adjustment $X total our continue billings, it’s there. impact of to percent is as So on over $XXX The of significant. number

will major so you that And not the we’re on described. have impact a that metrics anticipating they

said about than is reiterate get year, think financial right that I now, additional about because move to as there out really this anything then possible to you, our decline really about $X.X the before, that billion don’t or to have us. of we on billion. have reiterate behind to like to to what noise range think as think share And $X.X it’s that’s to consensus fast the to goal that FactSet I we As and other next how what

lot. Great. Thanks a

Stifel. the question Thank Our of [Operator Borg from of next Instructions] line comes you. Adam

Your line open. is

guys. questions. Hey, taking for Thanks the

First, for for and Debbie. then follow-up Andrew, a

the earlier I – to any otherwise LT? given doing conversely, or solutions And year? any not necessarily trends just a in Or collections are either of so from follow-up. downs collections the So seeing trade point macro, or you to even upgrading customers that have then

Yes.

Okay. the If Adam. where steady. That’s there renewal seeing collections these people you we’re renewal no Great. essentially of pretty expect climate those the have mix The this. and preferences rates a regards renewal steady end seeing quarter. we’re percentages, anything, low and of the lowed, buying. which of what some have seen LT The softness is would the our remained is collections throughout is is the pressure. with has what are same, actually, to things. rate in rates, states No, business, in year state growth demand throughout LT the in change collections like what

Debbie. just maybe Awesome. for And

So a right? but or know into to the if how if original mix – answer, even Thanks was expectations, the the in harder year, that going with and the the is the original guide results If in quarter. mix it question billings multiyear line again. don’t came this think about I billings we your

would to annual of billings our contracts, guide. reducing understand making flow cash so multiyear your in or your If that correctly, then maybe I in hit I had annual choose that free proportion business with our was billings the and And that have if seeing the been to expectations cohort line fact we guide. But that’s move we’re question some our did the understand we’re that it question – original correctly?

clear. Super again. Thanks

Okay.

Tusa Stephen of from comes question next Our line Instructions] [Operator the you. JPMorgan. of Thank

Your line is open.

How you? are Hi, guys. evening, good

Good.

Thanks.

all So idiot, reading I’m will other Or just the the year I’m guys transition, faster equal, free are next be, between moving lower maybe an there move around? the else just things lines, correct? in the the you cash but flow – like

of have to into portion the well, that relatively the next those built and minor going of year. customers our want a be multiyear certain faster an to was proportion to follow-on ultimately, implications I was the The was elected would expectation numbers continue have of of characterize the be what small transition, that upfront. to impact a annual. small, But business is to guidance first, it A

faster negative a So multiyear impact form to year we annual year in to would impact that would slight billings continue have upfront fast if going that cash back that $X.X greater billion number year. next next it billion. year range positive of transaction free talking to move of FactSet is goal annual flow go, the really flow want to that relatively next a that consensus this $X.X year. the weren’t very impact cash our base year, it because the than the the And being next to range the the multiyear next headwind to to But guidance billings I billings of want possible. you think to impact of small. this I I we as that year, be to totality was about to And The And is small. be is the to rather a is our free relatively as go reiterate about scale to

going $X.X Yes, reiterating and you’re move that kind about then asking telling you’re as to of Basically, billion try as billion I was you’re and – I was us fast yes, exactly. possible. to ‘XX. $X.X

was answered. question, of So ‘XX just, just more I much which it you a think,

Great. Okay.

you next year? impact move, Right. the more The you faster have

Yes. Correct.

Yes.

when XX% through the assume Okay. helpful. any manage cash super guess color flow at on I don’t kind to on – billings it’s a on gross That’s you of would like flow, quarterly margin. just – or with sorry, the free free I really drops bookings guess, That’s, that look I drop-through And cash it your basis. I

am So that around moves cost line the something on billings? it makes and in that I mitigates at is I some looking sense. right there Or that way? the decline

No.

you directionally billings think flow in reduction about The going free it There there. cash is follow-on I has else reduction. a implication on nothing a thinking accurate way. to the then are

color. the it. Great. Yes, lot Thanks a Really okay. appreciate for

Our Michael America. Thank you. comes the of question [Operator from Instructions] of of Funk line next Bank

open. is line Your

Yes. Thank questions. you for the

trying So you to few to from a multiyear mentioned the times shift annual. incentivize

impact? over trying flow the we about And transition that? as annual different your what question, how base shift? that behavior drove you guess is with what the incentivize cash free guess the believe part, same customer quarter to I are to you first, expected I second, So think than this out can do quickly model doing you to third

Okay.

So taking let’s detailed – note.

for incentives our still terms partners are incentives, channel for of well, So in partners – the the our channel both in place.

Remember, So that fiscal is majority on details we and our ‘XX, of in be still that’s now engage going as execute of part we are through those to substantial our next in year flight. with the programmatic transition a that the right partners transition. are we details working why and that’s

collected of goes they discount a customer a side, the upfront had contract and to have what from have and that XX% X% away. invoiced On multiyear discount anywhere that’s to historically

them on necessarily for they customers the upfront. those And future to getting So there customers that from to for based the been from you billings. have the volatility our pay in good those removes upfront with quarter, the not guidance trying that for It’s annual we for multiyear be in see that is volatility we with feedback cash want see we the that it’s as like to contracts managing can we our just incentive their see this think us. good and It have multiyear contracts. flow

year. start this the is behavior of saw well, drove the coming we multiyear what past end the next discount that In terms the of of quarter, at

And so in discount we we trade-off upfront for macroeconomic demand were than multiyear upfront, we right customers expected. surprising. the not In environment, demand the not slightly And for as anticipating less cash the the versus end, are current contracts. of now. more The seeing that’s some enticing it’s

move it And overall guidance. that to in philosophy. QX. we that’s persists that It’s multi-years into QX annual think assumed guidance what’s have through respect our the And strategy with the We our behavior billings. we saw reinforces built to to our with consistent really that

then being at going it’s all set And before, that details order pace, lot that to these how And discussion you and mentioned us the a we ultimately, are come partners. are that available. up pace. a our we more investing very can year. these on hopeful will work terms price of to drive it’s and we months. of our these systems going to from scale, the through much come what to what’s under down are system internal are that now, for next in manage do couple well, to finally, sign positive in over list are hear us our With capabilities to in transition we down next the decisions to have of on I and contracts those right We changes, that’s with programmatic all

you Thank for Great. the Okay. question.

please. you. Thank One moment

from line Munda Our Wolfe Gal next question of Research. of comes the

Your open. line is

Thanks for questions. taking my

your anything really, seeing with Autodesk than there portfolio? University just around first feedback. that, is Thank the us, throughout and any Fusion manufacturing slowdown makes in you seen cycle Is At you particularly of you know you. slow. in you The have of manufacturing that bit perform think little sort your a going XXX see the Fusion there. what is visited is are good we time, in to better kind when XXX what environment the or do really potentially that in going past one macro the same I guys

Yes.

still off, best-in-class first space. that’s on So, for currency, grew XX% our manufacturing XX%, Gal, constant

you strong, Innovyze to that in that a slowdown can’t in continue believe we So, seeing very where in Look, without taking Europe, regards acquisition some share we respect. we are with new to [ph] have are Fusion. slowdown

continue still to However, of than space. users our competitors any more we acquire new in the

for And in disruptive the player, customers are of metric is capabilities. Fusion. of terms embrace in appetite point, continue be competitors, our and slowing, headwinds. the face disruptive which price here some solution where even some outpacing the the the the So, the we desire kind even the we our disruptive important of see of headwinds It in continues to to environment

really end-to-end they efficiency not an and are need because want we really deliver price kind we get the points So, the at connected they of of that solution, concerned with customers what Fusion.

be preferred performance I that to – strong. relative expect to to continue I that So, and solution. expect I we continue remain the continue, our

little then macro, when thinking of are opportunity. come bit environment, you perfect. said That’s and everything, little Thank when posed And and a COVID know you. we as especially the the kind about opportunity, happened I a to talked stronger. follow-up, is user back non-compliant bit a going just about the we you

much have If lenient the last more X thinking from non-compliant Thank years might coming am is or the how into be heading an of weakness, until maybe out? over opportunity You much year. plays about year or that how that you a done macro I you. users, another for

Yes.

and right we think on impact in there our rhythm was have very where business got situation COVID mean our I I customers. now. a was good precipitous a I unique compliance a think sudden

many into respect. different of in a we are I environment kind heading think

energy of material and associated terms in costs and with increased seeing are costs things that. manufacturers course, Of

with So, sense. to slowing I But accelerator always in Like and to the going actually on this pace changing the on makes rate and regards compliance try we isn’t I down the real. any are see are now that now, that pace pressures But think license to of said, right something right or our way. move faster. we are I don’t kind slam us have

think that winter. we we at it through be are that of to might any head a we bumpiness will think kind I clip we see able right now, the I and nice maintain into as

Appreciate that. Andrew. Thanks

Thank One please. moment you.

next RBC. the Hedberg of question from Matt comes of Our line

Your line open. is

taking I to question guys. come cash Great. you gave. to Debbie, that the flow breadcrumbs wanted back my Thanks for

does the Sort consensus as range of you it of billion effectively a and low $X.X possible. Just end of that? of as play? wanting phrase billion about keep I – progress FactSet that, mean talking to that is like $X.X imply sort curious range fast to at as on that why

Matt. Thanks

on call today. the guiding not are we So,

to transition it. continue are to how that factors in are we We some the realm is trying range And that into emphasize to provide possibility, to want of insight about the there a couple at and of think that call. the our have customers annual is environment. as macroeconomic will provide rate billings and I which that said, overall next specifics But to the And that. impact on we to going are earnings

you we of kind the a on hiring long-term currency right expense one consciousness now just year reiteration of things whether next just and maybe I economic Are the spend then the margin of And as more like there into that uncertainty? framework. the Thanks. headwinds it. sort perspective, sort cost appreciate guys it’s doing general side, from get Got of are or

Thanks.

don’t that ahead to growth. want top on we say I first, that spend line been we focused of have ensuring So,

over margin delivered the have couple considerable expansion We years. last of operating

delivered margin goals that for have spend continue a the we the market conditions our from benefit we now focus the have If near-term, discipline evolve. we on exhibited as We year-to-date. to on

do We are end on of to the year. track through so the

from that change see in guidance. margin can You no our operating

plans and investment what required is our the margin beginning achieve balance hiring the proactive the between to year solid targets. at a Our really discipline reflected of

but right process that next to the this ahead continue planning pattern on look we are year, in ensuring As disciplined we we now, spend. of we are focused

the can the we to are in to We that areas drive strategy. looking right invest ensure

healthy purposeful clouds that a to areas than So, say a also shared And our things rather want ensure like to broad-based too and of strategic I backdrop but services, in want margin. like thinking. not delivering against industry that our are in investing we we and short-term all

balance the we We strong downturn to we as in the all sheet. keeping window. ‘XX want sure in macro but that a right have We are XX% on make navigate waters. want We to margin. continue strike we capitalize these as that on to balance to to range fiscal operating that before, achieving said eye And while a XX% to committed we that to watchful invest, margin ‘XX target

Thanks. Alright.

Radke question line of Citi. Thank from the you. comes Instructions] Tyler Our [Operator next of

open. is line Your

I that out AU, Flow. to announced product it about how, engineers? to am Thanks in how are for just monetization monetization engineering more expecting to of you announcements at velocity, this if timeline the to so And of time? Thanks. us trend re-prioritization just roll of kind over just the Forma you curious plans the help play of then it your the cycle, accelerate is little you kind out on that is hiring, going product specifically, or the and talk a comparing and Andrew, bit saw my is Fusion obviously kind the taking question. understand require could you

Yes.

Spacemaker. the might that invest we existing team resources to did expand of continue to we acquired you team, company work with recall have in just to and will a start called of that or one things as continued Forma, And off, the we either we at to first the that by Norwegian beginning repurposing So, by team pandemic, to the break to But foundational make and them in trying adding in track. with things on team we sure that And Revit the accessible do we investment to granular data. files the data. that’s trying as additional in make to that of investment all ongoing cloud supports an of our resources up more are one that investments are

at – cloud native by its net the it built Forma is has and granular data nature on and core.

So, ensure are we will of today. right have absorbed that will some And core of investing doing. we we that’s with But the vectors investments kind solution. of that we the heading of incrementally on of path kind be to But done that some those have we this already. one be

with Now, one what doing the to are improve right. with kind capabilities about of especially process different, on is the its have to its tools think native Fusion. and working because connections Fusion asking It good different with time a question us what alright, performance timeline Forma our But doing we is improve we It its connection time roughly industry, is customers do are took to better. was to for based – making we on – decade, takes like doing, decade. penetrate different. its I different for with Revit current just – been is speaking over their transformations is downstream these are Forma a what a really What

that So, our years you longer Forma what X mature even can customers are for expect and doing. to totally for to take to it’s going replace it

incremental construction the as connection the just with data to goal with to are the downstream value value to we with the goes our the downstream like incremental to to time process processes. to and we manufacturing. added Fusion. did on, we platforms In regards value incrementally However, Fusion, add Forma, connection add going is

to So, saw take similar that’s all what connected, Fusion. but to going is time it we with

you. That’s maybe helpful. a Debbie, And for question

thinking like billings? us help the if how do of – RPO, the EBA view that indicator you you bit looked quarters. on you kind best on current do coming these just Can did in us are So, headwinds first, understand about just back the puts that you the pick I currency. as in leading renew given customers remind quarter-over-quarter out the large just you up a and takes it that just as guess And

you. should we mindful of be anything Just there? Thank

Sure. Yes.

impacts current a a for very right, growth So zone. was that RPO yes, is you monitoring performance. are mean normalize healthy our important you I business when in metric in And the currency particularly

to that’s been has continue to FX the growth really going that rate. continue just to impact want I volatile, So, stress to and

constant the time. definitely at the look timing growth growth So, EBAs period-to-period. Also, the rate and volume our over currency rates of impacts

start would deceleration renewal, QX you and And for tends in when to we it that our growth progresses, see most in for sometimes be what large so our EBAs those QX we back-end have loaded up tick see up of often fiscal renewal. years to cohorts in coming as QX, to our back back cases, come the for EBAs many year up as that impacts cohorts is

patterns So, consistent with zinger just time, impact here. But currency while growth for again, been the has a – back up patterns. rate growth given remember going historical rates should our over constant a given quite historical that’s to consistent tick

it – for us, metric it we So but and monitor is an important closely.

Thank you.

from [Operator Celino of the Instructions] Our comes line you. Thank question next Jason Key. of

Your line is open.

me Thanks Hi. taking for in.

quick ones. two Just

decel big from I like factors about third we guidance, pretty built other the year what we at headwind when So, into there And growth exit quarter. it fourth is look the QX? will think guess at that any at the are looks midpoint, quarter the you X% FX should for here?

Yes.

the is currency. Jason, biggest impact So,

tailwind as X-point up year, and have in at We QX. the that’s a beginning X-point headwind the in was and the during year a neutral was rates in QX of the about the headwind growth progresses. seen in currency year. the gradually growing It a showing It’s headwind

to deceleration but have Also, business, of you during driver growth having rate biggest – a our modest a that extent rate. significant Europe particularly can saw are Andrew the talking we that So, the in lesser new did That’s that QX, slight gradually impact our impact follow-on growth to see mention QX. does that a implied a in revenue in you it’s about. on

Thanks. you. do like, most trying dynamic takes. And domestic? that this last sounds puts understand Was it see with larger where your smaller some and Just multiyear then macro Thank related. Great. prevalent? of Okay. the customers, customers, kind to appetite, the international to it of some versus your I is extent, guess you

be to sizes, not surprisingly. tends larger It Yes. deal

behavior, customers still totality to contracts, be some handle willing multiyear behavior exhibit base our tend when for infrastructure we cash annual signing scale. of larger sizes. the that of that for accommodate they they multiyear to start prevalent to just deal And at in the the annual those billings, and more larger think signing to billings invest asking remember, does with back-office are contracts the deals, are be multiyear conservation I are to with to we while continue which able

Okay, perfect. Thank you.

of Morgan Thank comes of Our question Stanley. line Keith Instructions] you. [Operator Weiss the from next

Your line is open.

on the Hi, renewal given expansion rates, changes similar should those into behavior historical in Thank on the just much. broader I’d it’s to any of expansion the just thank if and seeing you shift you risk are The like with into range, so tension just a XXXX? the the you. stable could outside comments range we and that never ranges we not headwinds? and stayed within macro like Is motion but dig the there any expect curious macro fall

rates So to retention maintain continue with to and rates, retention strong steadiness. look, regards be

where the continue is next area are our end going The see we steadiness to headwinds softness of into macro to to see think one low market. that with we at I year. expect

of market ASPs, volume. end low high but is the low the So

can there But holding up. rates see rates the basis this. So, business, our is broadly generally when retention speaking, retention a headwinds we like volume move around on across

low material headwinds the at business, probably are see our larger Our of to end do. customers the They mission-critical won’t what But business. but some there, to products need we be will our them. they

revenue would range. net was that XXX% our retention and short-term, the that range the I that is XXX% expectation our add will to in target in within just it rate comfortably of stay

the kind on following behavior about landscape, seeing you. have may behavior balance and that overall? the you just change seeing sheet? the some So then strong especially not willing are sheet And Great. competitive any as you in comments from in see Thank wanted strong invest, are balance to a up changes if of in to companies any the

want give bit what me question. in So to environment on on to your with how I understand. With it how in competitive – to that – a there. clarification I didn’t give question that regards the – does way just regards a little just a quite clarification terms of

Yes, sure.

though a as well there you the sheet maybe current So you of out balance not even or likely in have strong have there funded macro that headwinds. But to kind invest guys may just willing some some balance has peers be sheets. environment, strong

So just curious landscape? if behavior the you changes in any across sort competitive of are seeing

Yes, okay.

it. sure was I in make just wanted that Okay, good. to I

our profitable. to forward. will boost revenue going are are be unfriendly or pull of that try better of look, than that competitors kind situations, to things customer long-term in So we In chasing, are I be revenue forward. some pull not certain shape They things to things doing people think

right are position in especially types sectors. of not We in now, that certain

maintaining are We practices. customer-friendly

on long-term. the focusing are We

things. And And slowdown short-term the profitability, to pull will advantage in get we profitability it’s or always to move great to long-term. achieve to of invest a the levers maintain not actually that try way position in be slowdown. investing as to provide competitive of in during We’re have out the a and to

for through powder as competitors We more activity of we dry inorganic will our some probably head have this. than

balance So invest helps we through sheet ahead things. yes, of us while strong these go the actually curve

pretty am we that I in the are of places. lot of game ahead confident So a

is Thank that we the you. question. all do That time for have

So for I’d like to turn any remarks. Simon to the Mays-Smith over back call closing

I Thanks call was hope useful. us. everyone the joining for

For fourth with and New at quarter conferences Year you the those celebrated forward to happy catching and of at much. that and Thanks earnings. very again you look up holidays we’ll happy Thanksgiving in our

Thank conclude you today’s you. does for this Thank conference. Ladies all and gentlemen, participating.

Have disconnect. a great day. now may You