Autodesk Inc Q4 2025 Earnings Call Transcript

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

Question: Saket Kalia - Barclays - Analyst : Welcome, Janesh.

Question: Saket Kalia - Barclays - Analyst : Andrew, maybe to start with you, I want to zoom into the 10% to 15% medium growth rate a little bit. And if I'm understanding your comments correctly, the rate of new business growth is the key reason why that medium term growth rate maybe is no longer appropriate. And you've been talking about slow new business for a while now. Maybe the question is, what drives that new business growth higher over time?

Question: Saket Kalia - Barclays - Analyst : And maybe that's a natural segue for you, Janesh. I mean, as you know, margin potential has been one of the key investor debates on Autodesk. And so I mean I think maybe to start, it's important to flag that the margins here for '25 were ahead and the guide for '26 is higher than expected as well. But maybe you could just give us a little bit more color on the margin potential here. And how today's restructuring announcement, to Andrew's point, maybe fits into that debate?

Question: Adam Borg - Stifel Nicolaus and Company, Incorporated - Analyst : And I'd like to extend the welcome to Janesh as well. Maybe for Andrew just pigging back on a comment you just made to Saket's question around this macro uncertainty. And obviously things that are outside of your control. I'd love to hear a little bit more about kind of what you're hearing with your customer conversations around overall sentiment. How that's playing out overall? And then maybe talk a little bit about the new administration and some potential puts and takes there either shortening regulation being a tailwind or some questions around tariffs and immigration policy and how they will ultimately impact customers and their decision making over the next 6 to 12 months.

Question: Jay Vleeschhouwer - Griffin Securities, Inc. - Analyst : Andrew, with respect to the 10% to 15% growth range you've previously spoken of, the company at its last analyst meeting gave us multiple elements of that. In other words, a variety of price and volume components for that, most of which had to do with your core business as you call it. Renewal and expansion within the core business, less so with newer adjacent businesses. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:00PM, ADSK.OQ - Q4 2025 Autodesk Inc Earnings Call So maybe break down that thinking about the growth range. In those terms, perhaps, with regard to how you're thinking about pricing leverage from here? And the multiple elements of Q or volume that you had previously spoken of. Then I have a product question.

Question: Jay Vleeschhouwer - Griffin Securities, Inc. - Analyst : Outside of the various go-to-market changes and optimization and so forth, what would you say for this year and beyond are the critical product or technology executables that you are reallocating to or investing in? Maybe talk about how you're thinking about the business impact of platform services, the new data models, and so on and so forth. Things that we've talked about consistently and most recently at AU.

Question: Jason Celino - KeyBanc Capital Markets Inc. - Analyst : One question on the guide and then the reduction in force. Now I'm cognizant that you've got some business momentum and I understand why you're making the changes. But does the revenue guide assume any extra conservatism just on potential of disruption? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:00PM, ADSK.OQ - Q4 2025 Autodesk Inc Earnings Call It's just, the change is quite a large reduction. So I guess what have you built in to the guide relative to that?

Question: Jason Celino - KeyBanc Capital Markets Inc. - Analyst : And then on prior calls, there were some mentions of a bigger EBA cohort, multi-year customers coming up for renewals. That wasn't really brought up on this call. Is that still an opportunity for you for this year and any details on how big of a cohort this might be or what's built in?

Question: Taylor McGinnis - UBS - Analyst : Just the margin guide. So the underlying 300 basis points of margin improvement is really strong. So can you just break down and quantify the drivers of that expansion? So how much is from cost savings like scaling back on some of the duplicative costs and streamlining the sales force? How much might be from cost savings associated with the RIF? And then maybe just secondly, when we think about the margin potential beyond 2026, I guess any initial thoughts you could provide there?

Question: Bhavin Shah - Deutsche Bank - Analyst : Janesh, just kind of following up on that. Like what's the timeline you guys are thinking about in terms of kind of seeing some of the benefits from a lot of the adjustments you're making to sales and marketing? And when you kind of see that sales and marketing efficiency show up from a revenue perspective?

Question: Bhavin Shah - Deutsche Bank - Analyst : Just one quick follow up. And it sounds like you guys are going to be pretty aggressive from a shareholder's return perspective in fiscal '26. And kind of given some of the changes you're talking about from the top line perspective and focused on efficiencies, how are you now thinking about M&A and did these actions change your view at all?

Question: Joseph Vruwink - Robert W. Baird & Co., Inc. - Analyst : I wanted to go back a few questions just on the year over year margin assumptions. It looks like if I'm reading slide 10 correctly, you're assuming that agency change is about a 6 point impact on growth in the upcoming year. So I think that means a 6 points headwinds on margins. You're kind of guiding the margins flat to slightly up. So can you bridge the 6 points you're able to layer back on to get to where you're guiding the year?

Question: Joseph Vruwink - Robert W. Baird & Co., Inc. - Analyst : And that's the underlying -- you're talking about -- okay.

Question: Joseph Vruwink - Robert W. Baird & Co., Inc. - Analyst : And then going to just it makes sense that as you see slower new subscriber edition, that builds over time and kind of compresses the revenue growth rates. I guess the one thing that's a bit surprising is the growth rates in the AEC product segments are still really good. And I think this quarter was 14%. And that seems just as difficult an environment as what manufacturing customers and a lot of way are going through. Do you think you're kind of outperforming there in that segment? And maybe there's challenges elsewhere because it would seem like the AEC performance is ultimately standing out in this environment.

Question: Elizabeth Porter - Morgan Stanley - Analyst : Self-service sounds like a pretty big opportunity to drive the underlying efficiency. And just given Autodesk can be a complex piece of software that does require some higher touch from sales or partners, just how should we think about the base of business that could be applicable to self-service? Any sort of comments to help us understand where it is today and where it could go over time would be very helpful.

Question: Elizabeth Porter - Morgan Stanley - Analyst : And then just given we're just now entering this optimization phase for sales and marketing and it is going to be a multi-year journey it sounds like. At a high level, could you just help us understand a bit more what are some of the near term versus longer term key milestones we should look towards as we're going through this optimization phase? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:00PM, ADSK.OQ - Q4 2025 Autodesk Inc Earnings Call

Question: Matthew Hedberg - RBC Capital Markets - Analyst : And congrats, again, Janesh. Really look forward to working with you again here at Autodesk and starting out the year with a really strong free cash flow guide is really great to see as well. Maybe Andrew, you talked a little bit earlier about Fusion, GenAI. The product launch there. I guess I'm just wondering more philosophically, could you talk about sort of how we should think about additional generative AI rollouts across the product portfolio. How we should think about pricing? And just kind of the sensitivity around some of these data models given obviously a lot of it's customer specific?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : And then the next one for you, it sounds like we're going to get maybe a bit more color on kind of a midterm model perhaps on the Q3 Analyst Day. And so maybe just as a follow up question to the kind of thinking about the lower end of that 10% to 15% guidance range. I guess how should we think about like maybe a floor of growth? We're getting that from a couple investors today. Is there kind of a way to think about like is it kind of like high single digits? Is it 10%? Just any way to kind of think about how you think about kind of the lower end of kind of a growth outcome?

Question: Joshua Tilton - Wolfe Research - Analyst : I have two quick ones. The first question is, is there any sense you can give -- you can just help us understand maybe where the NRR finished for the year relative to what you're guiding to for revenue for next year. So for example, you're guiding to about 8.5% core growth ex-transition for next year, like where relative to that are existing customers growing finishing this year? And then my second question is just a little more simple. How much of the recent like restructuring a RIF announcement benefit is factored into the current operating margin guidance for this year?

Question: Joshua Tilton - Wolfe Research - Analyst : Yeah. Just how much of the recent RIF announcement or layoff announcement benefit is baked into the current operating margin guidance for this year?

Question: Michael Turrin - Wells Fargo - Analyst : I know there have been a few different angles on this, but Janesh, just on the commentary on the long term targets, just any perspective you can add given it's early in your tenure? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:00PM, ADSK.OQ - Q4 2025 Autodesk Inc Earnings Call So decision process that went into this? And maybe help us parse how much is using a different set of assumptions there or just any more context you can add because that's where we're getting the most questions initially.

Question: Michael Turrin - Wells Fargo - Analyst : And then Andrew, just on the headcount reduction. I know these are tough decisions. Maybe just speak to how you ensure you're making the right level of change there balancing efficiency with preserving the continuity and business momentum you're seeing.

Question: Ken Wong - Oppenheimer & Co., Inc. - Analyst : Maybe the last one on just that 10% to 15% range. I realized inappropriate to kind of keep that out there given the conditions and the performance. But with all the improvements that you guys are putting through with the go-to-market changes, the work with the channel, I mean should we think about the other side of this when macro is fine, when you guys have delivered on the go-to-market changes that 10% to 15% is back in play? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 27, 2025 / 10:00PM, ADSK.OQ - Q4 2025 Autodesk Inc Earnings Call Is it arguably maybe even a better number? Like help us think through kind of what the end goal with some of these changes would be in respect to what were the prior 10% to 15% goals.

Question: Ken Wong - Oppenheimer & Co., Inc. - Analyst : And then just a quick follow up on like look, where you guys have rolled out across all three regions now as far as the agency transition. Any update on how kind of those three areas are tracking? Obviously, we have the Americas which were kind of a little further along, but you just rolled out APAC. Would just love a sense of kind of how those are mapping relative to internal plans.