Autodesk Inc at Citi Global TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tyler Radke - Citi - Analyst : Well, thanks again for being here. I thought we'd just kick off big picture. So Autodesk has been around for decades. It's a company with very dominant market share in the architecture and engineering space, you have flagship products like Revit and AutoCAD. One of the big questions we get from investors is just sort of how to think about the growth profile? Architects are not exactly a high-growth profession, you have very high market share. So how do you sort of think about the building blocks and what that long-term growth looks like? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:50PM, ADSK.OQ - Autodesk Inc at Citi Global TMT Conference

Question: Tyler Radke - Citi - Analyst : Got it. Okay. So still a lot of growth ahead even beyond just design?

Question: Tyler Radke - Citi - Analyst : Got it. That's helpful framing. So turning to the demand side of the business, you recently reported last quarter. How do you sort of articulate what's going on in the macro environment? Obviously, there's continued challenges around interest rates. But at the same time, a lot of your companies have -- or a lot of your customers have long backlogs. There's big infrastructure projects data center builds. So what are you seeing when you survey the land?

Question: Tyler Radke - Citi - Analyst : Right. Got it. And I guess, specifically on the data center build, what does that look like for you? I mean, is that a combination we talked about design, make, operate. Are you seeing good traction across all those segments of the business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:50PM, ADSK.OQ - Autodesk Inc at Citi Global TMT Conference

Question: Tyler Radke - Citi - Analyst : Got it. In recent years, there's been a lot of talk about the infrastructure bill here in the US and I'd be curious, just as you look back over the last few years, how has that played out relative to your expectations? And obviously, we're heading into an election cycle where there's a lot of talk from both parties about infrastructure. How are you thinking about the next few years as it relates to US infrastructure?

Question: Tyler Radke - Citi - Analyst : Yeah, absolutely. And as you think about the products that are exposed to that, is it -- I know you have multiple products that would sort of feed into that. But how do you feel about your competitive positioning in terms of your peers being able to take advantage of that.

Question: Tyler Radke - Citi - Analyst : Got it. The topic of BIM mandates has been in the Autodesk conversation for a number of years. Every geography sort of has different requirements. But maybe if you could just frame how important is the progression of that around the world in terms of evangelizing and driving the digitization of the industries you serve? And where are we at in terms of that rollout? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:50PM, ADSK.OQ - Autodesk Inc at Citi Global TMT Conference

Question: Tyler Radke - Citi - Analyst : And is that sort of driving more sales of Autodesk construction cloud, like what products do you see it drives?

Question: Tyler Radke - Citi - Analyst : Got it. I wanted to shift and talk a little bit about Autodesk's AI strategy. So I think last November at AU, you sort of, I guess, introduced the terminology of Autodesk AI and sort of describe it as more of a vision of where you're taking the company. Can you just recap sort of what is Autodesk AI strategy? And how are you looking to sort of build out AI enabled products over the coming years?

Question: Tyler Radke - Citi - Analyst : Got it. And one of the themes that we hear from investors in AI is sort of the -- well, there's optimism perhaps on charging more price and higher value products, there's concerns that maybe the Q side of the equation could come down over time, right, if perhaps if designers or architects are getting more efficient, does an organization need fewer them over time. So how do you sort of balance that risk of potentially few receipts? Or maybe it's just say there's just always more projects for these folks to see?

Question: Tyler Radke - Citi - Analyst : And maybe also just a volume tailwind for the make business and construction business.

Question: Tyler Radke - Citi - Analyst : Got it. And obviously, one of the important parts of AI starts with the data, right? You have to have good data to feed into those models. I think it was a couple of years ago, you announced the industry cloud model with Forma kind of following some of the subsets that you did with Fusion 360. Where are we at in terms of that evolution from file based to this industry cloud data model and when do you sort of expect that to be ready?

Question: Tyler Radke - Citi - Analyst : Got it. Okay. One of the major company-specific changes at Autodesk over the last year has been this new transaction model rollout, which I imagine you've been talking a lot about with investors today. But we've obviously fielded a lot of questions around the financial impacts and have us sort of think about the nuance is on billings, and I'm sure we'll get into that. But maybe start high level strategically, why are you doing this? And maybe for investors who haven't been following closely, what specifically is being changed?

Question: Tyler Radke - Citi - Analyst : Yeah. And as we think about the sales and marketing efficiencies, I mean, how much of it is just reducing kind of general purpose, let's call it, marketing overhead, you can't necessarily tie to a specific customer? Or is there a big amount of just cost that were in place to sort of manage the commission structure of this reseller channel? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:50PM, ADSK.OQ - Autodesk Inc at Citi Global TMT Conference

Question: Tyler Radke - Citi - Analyst : Right. Well, I'm glad you brought up co-term. We have gotten a lot of questions on that as you had. So maybe just going back on the co-term, like what you saw last quarter? And I know there was a bunch of moving pieces in billings, and we got questions on why were some billings kind of being pushed out? But walk us through the billings mechanics.

Question: Tyler Radke - Citi - Analyst : Right. And in terms of what you saw last quarter and what you put into the guide, you said sort of surprised the upside by the co-term and so you sort of assume that that behavior would continue as you roll it out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:50PM, ADSK.OQ - Autodesk Inc at Citi Global TMT Conference

Question: Tyler Radke - Citi - Analyst : Right. I'm curious with this rollout now that you've seen more and more data points this past quarter. I guess, was there any surprises in terms of customers maybe just wanting to go more direct with you than as opposed to buying the channel? Like was there any surprises in that indirect versus direct mix?

Question: Tyler Radke - Citi - Analyst : Right. Got it. And then just in terms of the customer response to this, was there a confusion? Was there -- I guess, happiness? Were folks kind of buying into this more simplified vision? Or anything you'd call out just on the --

Question: Tyler Radke - Citi - Analyst : Right. So you mentioned earlier just how this transaction model is really designed to unlock some of the efficiencies which -- and give you better visibility into that. Have you identified sort of the magnitude of sales and marketing dollars that could be impacted by this? Or how do you sort of think about the size of that that capacity gain?

Question: Tyler Radke - Citi - Analyst : Right. Okay. It sounds exciting.

Question: Tyler Radke - Citi - Analyst : Right. And last quarter, I mean, despite the moving pieces and stronger transaction model rollout, the implied margins were actually much longer than folks expected. You were able to hold that flat despite taking on more of the commission expenses. So walk us through what were the factors that enabled you to effectively raise margins. Was that to what you talked about, some of identifying that marketing spend and making those trims? Or was it other areas of efficiency?

Question: Tyler Radke - Citi - Analyst : Right. Maybe turning to the construction side of the business. The make part is certainly seen stronger growth trends as of recently. I think you did call out some M&A tailwind in the numbers, but still growth is stronger than it was last year. What's going on in the make side give us framing for some of the company-specific drivers that could be driving those resilience?

Question: Tyler Radke - Citi - Analyst : And on the go-to-market side, what are some of the things that you're doing differently and maybe more successfully with some of the -- I think about a year ago, you did a reorg of that business. What was the major change?

Question: Tyler Radke - Citi - Analyst : Yeah. And then on the competitive landscape, your publicly traded competitors is called out some of their own go-to-market changes. What are you seeing in terms of win rates? Are you doing things more effectively, you think to win deals from them? Or just any comment on that?

Question: Tyler Radke - Citi - Analyst : Okay. The manufacturing business is to continue to show steady above-market growth rates. Fusion 360, I know has been talked about over the years. Help us understand what are the key drivers of the manufacturing growth? And where are we at just in terms of the monetization of Fusion 360? I know you kind of use that as kind of your landing strategy with plans to turn out pricing.

Question: Tyler Radke - Citi - Analyst : And there's been some -- on that point, like you've seen pretty healthy large logo wins, but obviously, maybe where you're sitting is very small as a percent of wallet. Remind investors what are sort of the use cases or products that you're targeting initially for -- to get Fusion in the door? And then where off in that easiest path of the --

Question: Tyler Radke - Citi - Analyst : Okay. Got it. On the media and entertainment business, it's not a business that we get too many questions on, obviously.

Question: Tyler Radke - Citi - Analyst : Until it slows down and you get the writer strike and everything. But help us understand just structurally kind of what's going on in that business. Obviously, there's concerns sort of that writers and media and entertainment could be disruptive from AI. And we know that the revenue results is kind of a function of what was going on in the two quarters ago. So if you started to see some turnaround. How should we think about the structural growth of that?

Question: Tyler Radke - Citi - Analyst : Right. And should we think about the growth drivers for that industry mainly being more seats? Or is it kind of data and volume and throughput driving?

Question: Tyler Radke - Citi - Analyst : Okay. Very interesting. One of the things that's, I think been critical to the Autodesk story over the years is, just attracting that next user, right? You talked about some rapid Fusion 360 users. You've done things over the years, whether it's your support for university programs and everything. But how do you sort of ensure that, that top of funnel is very strong? And what are some of the metrics you track to get confidence that you're still kind of gaining that next architect that's ready to use Autodesk?

Question: Tyler Radke - Citi - Analyst : Right. Now that's great perspective. Speaking of users, one of the things you've talked about in years past is the non-paid user or non-compliant user opportunity. I think it's been a while since we've gotten an update on that. But is that still a growth driver? Should we think about the magnitude in terms of contributing to your growth is sort of consistent with what we've seen in years past? Or is it ramping up, slowing down? Just give us an update.

Question: Tyler Radke - Citi - Analyst : Very steady, it sounds like. Yeah. Okay. So in the last minute, I thought I would just open it up to you and I know there's a lot of things going on at Autodesk. Anything you'd like to share with the room or any key takeaways for the audience here?

Question: Tyler Radke - Citi - Analyst : Right, right. Great. Well, with that, I think we're exactly out of time. Andrew, thanks for being here. And thank you everyone for attending.

Question: Tyler Radke - Citi - Analyst : Yeah. You ended perfectly.