Autodesk Inc Q2 2025 Earnings Call Summary

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

Question: Saket Kalia - Barclays Capital Inc - Analyst : Okay, great. Hey, Andrew. Hey, Betsy. Thanks for taking my questions here. Andrew, since you last reported Starboard Value has issued a couple of letters and a slide deck. Just maybe for the benefit of the Group, I was wondering if you had any high level thoughts that you wanted to share with us.

Question: Saket Kalia - Barclays Capital Inc - Analyst : Yeah, absolutely. That was super helpful, Andrew. Maybe for my follow-up for you as well, maybe just moving to the business. You gave some nice examples of construction wins in the quarter. Could we just go one level deeper into Autodesk Construction Cloud? Maybe talk about sort of the overall construction backdrop that you are seeing and how you feel about ACC competitively?

Question: Saket Kalia - Barclays Capital Inc - Analyst : Very helpful, guys. Thank you.

Question: Jay Vleeschhouwer - Griffin Capital Securities LLC - Analyst : Thank you. Good evening. Andrew, with regard to the new engagement or transactional model, the new channel compensation arithmetic is very readily understandable, but I would like to ask more about the division of labor under the new model, which is to say your inside sales, your customer success investments and the like versus the 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. AUGUST 29, 2024 / 9:00PM, ADSK.OQ - Q2 2025 Autodesk Inc Earnings Call So how do you see the role of your inside and other direct sales capacities versus that of the channel, particularly when it comes to renewals and or upselling, how do you see the role of the e-Store versus the channel under the new model? Then my follow-up.

Question: Jay Vleeschhouwer - Griffin Capital Securities LLC - Analyst : Okay. Second question with regard to the billings co-terming effects, the model effects and the like, perhaps we can parse that to get at the organic effects of the business, which is to say, how are you thinking about your license volume and mix expectations? In other words, how are you thinking near-term and long-term with regard to the volume assumptions that you've previously spoken about in your overall P times Q framework?

Question: Jay Vleeschhouwer - Griffin Capital Securities LLC - Analyst : All right. Thank you.

Question: Adam Borg - Stifel - Analyst : Awesome, and thanks so much for taking the questions. Just maybe for Andrew, just going back to the new transactional model, it is great to hear that things are going smoothly so far in North America. I was hoping you could maybe go a step deeper on what that exactly means. And importantly, what's given the confidence to rollout accelerate the rollout into Europe and Japan ahead of expectations, especially given the additional complexities you've talked about pulling out internationally.

Question: Adam Borg - Stifel - Analyst : That's super helpful. And maybe just as a quick follow-up, Andrew, obviously, US elections coming up in a few months. I hope you could talk a little bit more about what you are seeing in the end-market demand environment. Are the AEC or manufacturing industry is making any changes in their decision making process, either accelerating or slowing down decision making ahead of the election in a few months? Thanks again.

Question: Adam Borg - Stifel - Analyst : Incredibly helpful. Thanks, again.

Question: Jason Celino - KeyBanc Capital Markets - Analyst : Great. Thanks for taking my questions. I kind of wanted to kind of dig into just the performance of the quarter. Obviously, you beat nicely, you beat margins nicely. You are keeping kind of the margin framework the same for the year, even though you are absorbing some of these incremental headwinds from the transition. So internally, did you do anything to drive leverage or sources of leverage with that?

Question: Jason Celino - KeyBanc Capital Markets - Analyst : Okay. Great. And then maybe just a little more pointed on the free cash flow side. So it is a $10 million raise, nice to see. Obviously, the transition timelines have no impact to free cash flow. So, I know you said some customers signed earlier in 2Q. So is the raise on free cash flow just a function of timing or more a function like the core business? Thank you.

Question: Jason Celino - KeyBanc Capital Markets - Analyst : Excellent. Thank you.

Question: Elizabeth Porter - Morgan Stanley & Co. LLC - Analyst : Great. Thank you so much for the question. I wanted to ask a bit on the pricing environment. I believe one of the things we picked up was the move to the transactional model should allow you to have some more control on discounting behavior and help narrow some of the price differentials you've seen. So I wanted to ask, is this a lever you expect to use? And is it something you are doing today or a future opportunity and how we could think about that going forward?

Question: Elizabeth Porter - Morgan Stanley & Co. LLC - Analyst : Great. And then just as a follow-up, I appreciate the comments on the overall demand environment. I was hoping you could unpack a little bit more around the new business trends. I understand the macro remains challenging. Anything you are picking up from a new business standpoint in the quarter or how that outlook is changing?

Question: Elizabeth Porter - Morgan Stanley & Co. LLC - Analyst : Great. Thank you very much.

Question: Joe Vruwink - Robert W. Baird & Co. - Analyst : Hi. Great. Hi, everyone. Going back, Andrew to your manufacturing comments, so growth in the upper teens there or low teens for just the ratable business. Those numbers definitely stand out relative to what we've been hearing throughout the summer, I think particularly at the high-end where there is been some commentary about more deal lumpiness at enterprise. I mean, you have exposure to mid-market and enterprise. You gave anecdotes about both segments. I'm wondering if you are ultimately seeing maybe more share movement and that's ultimately explaining the strength there.

Question: Joe Vruwink - Robert W. Baird & Co. - Analyst : Okay. And then on the slide showing underlying margin improvement that's taken place since FY23, how much latent investment is still being absorbed in that normalized 39%? So you talked about making investment in cloud platform AI. Those investments are -- so you're ahead of peers and not needing to make up some future catch-up investment. I mean, another way to say is you are spending some amount and you haven't matched it against revenues yet. So just wondering if it is possible to quantify what that is because that would seem to be an area of future improvement in addition to what you are doing with the transaction model?

Question: Joe Vruwink - Robert W. Baird & Co. - Analyst : Okay, thank you.

Question: Ken Wong - Oppenheimer & Co. Inc. - Analyst : Fantastic. I wanted to maybe dig into the margins a little bit. You mentioned being ahead of schedule on the margin profile, also confident you can make further improvements in fiscal 2026. I guess, how should we think about where that could go? We are at a point where you haven't even optimized for sales and marketing. What's the right way to think about that trajectory?

Question: Ken Wong - Oppenheimer & Co. Inc. - Analyst : Okay. Perfect. We will await anxiously for these details. Maybe second, just thinking about the -- we've talked a lot about the potential economics and kind of the partner activity on the transaction model. Like what are you guys hearing from customers and do they REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 29, 2024 / 9:00PM, ADSK.OQ - Q2 2025 Autodesk Inc Earnings Call even care, do they even notice like is there some sort of a benefit on their side that they might be seeing that we're maybe on the analyst world not quite as cognizant of?

Question: Ken Wong - Oppenheimer & Co. Inc. - Analyst : Okay, perfect. Thank you for the insights, guys.

Question: Tyler Radke - Citigroup Inc - Analyst : Yes. Thank you for taking the question. I guess just to start off on the free cash flow number for next year, I guess that's one piece of guidance or at least a target that you've given. Can you just talk about the confidence behind that? And as you think about being ahead of plan in terms of some of these margin optimizations, like how much margin and cost optimizations is built into that number?

Question: Tyler Radke - Citigroup Inc - Analyst : Great. And for Andrew the make revenue in the quarter was particularly strong, I think the strongest sequential growth in a number of years despite sort of having the leap year last quarter. Was there any one-time factors there, or is that sort of a function of share gains and some of the re-org that you've done in that organization to sort of accelerate growth?

Question: Tyler Radke - Citigroup Inc - Analyst : Yeah, any way to quantify the Payapps in the quarter?

Question: Tyler Radke - Citigroup Inc - Analyst : Okay. Thank you. Thought I'd try.