Q1 2021 Earnings Call

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Ladies and gentlemen, thank you for standing by and welcome to the Autodesk first quarter fiscal year 21 earnings conference call. At this time, all batches of bench I know listen only mode. After the speaker.

Station, there will be a question and answer session ask a question during the session you'll need to press star one on your telephone. Please be advised that today's conference is being recorded if you acquire any further questions. Please press star zero.

I would not only 10 the conference your speaker today, I buy land, but vice President Investor Relations. Please go ahead Sir.

Thanks, operator, and good afternoon. Thank for joining a conference calls to discuss it is until fiscal year 21 first quarter results on the mining Andrew and acknowledge a feel and Scarping CFO.

Today's conference call is being broadcast live webcast. In addition, Oh he built the called will be available there are a bit dot com forward slash investor.

You can find the only explicitly slide presentation and transcript of todays opening commentary on our Investor Relations website. Following this call.

During the course of this call we may make forward looking statements about Oh global future results and delivered assumptions and strategies. These statements reflect our best judgment based on currently known factors.

Cool events or results could differ materially easily if what do I guess E filing so important risks and other factors, including developments in the go wouldn't 19 pandemic and that is I'm thinking back to my business in operations that may cause our actual results to.

To differ from those in our forward looking statements.

Forward looking statements made during the call are being made as of today. If this call is deeply though reviewed after today. The information presented during the called me not contain current of accurate information.

Autodesk disclaims any obligation to update or revise any forward looking statements.

During the call <unk> quote a number of numeric a good changes as we discuss how financial performance and unless otherwise noted eat such reference represents a year on year comparison.

Non-GAAP numbers difference in today's call. He can side in the press release off the slide presentation on our Investor Relations website.

Now I would like to turn the call over to Andrew.

Thank you Goodbye to open I want to saying all the medical professionals and others Central workers, who are confronting the impact of a kogas 19 pandemic on the one point.

Their efforts are not only saving lives, but allowing many other people around the world to protect themselves the families and their communities. Their efforts are truly hurling. Thank you for everything you do our thoughts are also with everyone affected by condemning and our priorities remain the safety and well being our employees and the continued support of our customers partners.

Community.

Many of US myself included are adopting multiple rolled as we seek to juggle the demands of our professional and family lives in a world that is suddenly become much more complex and more constrained.

Personally I've had to learn how to home school, my youngest child, and while I've always had a healthy respect for the work teachers do I have developed and even deeper appreciation for the role teachers play in our society. It takes a lot of patients and skill to help a young mine learn what it needs to learn.

From a business operation standpoint, the transition to working remotely has been smooth I'm proud of how our employees and partners had balanced the personal lives with many commitments during these unprecedented times.

Men significant product upgrades were successfully really thanks to our cloud based operating structure.

One of the metrics we've been tracking closely is the weekly active users of our products and since the pandemic started usage of our product dipped slightly but overall remained relatively steady in China usage dropped rod rapidly in February but rebounded above pre cobas levels by the end of March as business started reopening in them.

Region.

And it's no surprise, we saw a major surgeon usage of our cloud collaboration project products as people work from home and throughout the quarter.

During the quarter into May renewal rates held relatively steady among our target markets easy revenue held up well, while we experienced a slowdown in the manufacturing space.

The resiliency of our business is anchored by the diversity of our geographic regions and product offerings, our subscription Bob Bob business model, and our indirect distribution model, which allows us to operate and adapt locally and economic conditions evolve in different geographic regions.

During the quarter, we helped our customers accelerate their migration to the cloud and ease their transition to working from home. We also offered extended payment terms to alleviate their liquidity concerns. Please refer to slide deck on our Investor Relations website for more details on these actions.

I am incredibly proud of not only the way our employees have rallied to support each other in the company, but also how they rally to support our customers our partners in the communities, they with and without the resiliency the resiliency of our business model wouldn't matter.

With that I'd like to turn it over to Scott now to take you through the details of our performance and guidance before I come back to provide insight into our strategic growth drivers.

Thanks Peter.

Before offer more detailed on the first quarter I want to Echo Andrew's comments. Thank you our heroes battling with pandemic on the front while.

Our products partnerships and expertise help me frontline organizations come back and then.

From a quick built hospitals to manufacturing personal protective equipment.

And the philanthropic support global national and local communities.

I Wonder just graduated with the nursing degree will be on the front line next month.

Availability of proper pp for her at all the other superheroes construction has been my biggest concern. So I'm, particularly proud harvest has played a role in addressing that need.

Our Q1 performance was strong with total revenue growing by 20% subscription plan revenue growing by 35% and operating margin expanded by 10%.

Total remaining performance obligations grew 27% and current ratings performance obligations grew by 18% to 2.4 billion during the quarter.

We delivered free cash flow of 307 million and continue to repurchase our shares offset dilution.

Typically I'll go through our results from the quarter in more detail.

Wanted to focus on the cobot 19 impacts on our business in guidance.

You can find additional details on our Q1 performance on our Investor Relations website.

As you quickly want to mention that we have renamed we previously call core business to design and what we previously called cloud to make.

The prior labels cost and computing is almost all of our products have filed enabled functionality, there's no change to the products that fit into each of these two categories.

During the quarter renewal rates held relatively steady, whereas new business privately slowed down in the second half of Q1.

However, the impact on our business has not been uniform by geography or industry.

Our business is not only diverse from a geographic standpoint, but our products and customers are diverse as well.

Many of you asked about our exposure to small businesses, we generate approximately 10% to 15% of our revenues from small businesses defined as customers with less than 20 employees and with less than 15 seeds.

Our net revenue retention rate was within the 110% to 120% range.

One of the other metrics, we track for customer stickiness is partial renewals, which is a measure of subscription renewals, where some but not all season a contract our renewed.

Our partial renewal rate remained relatively steady as well.

In prior downturns Autocad LT was a leading indicator for demand.

However, during the current slowdown our mix of Autocad LT moves higher as some customers a fairly chose to optimize their purchases.

Lastly, we saw modest decrease in multi year deals towards the end of the quarter. Although many customers continued to move forward with multiyear commitments even in the current environment.

Given the evolving business environment as their local coated Nike we are actively managing our spending reducing travel entertainment expense monetary were hired rate shifting to virtual events across the board and rationalizing our marketing spend.

We will continue to invest in critical areas, such as R&D construction and decide in the company to ensure our future success as we come out with the endemic.

Now, let me turn to our expectations for the remainder of the year.

Our investment in cloud products and a subscription business model backslash strong balance sheet gives us a robust foundation to successfully navigate the economic challenges.

Our full year guidance range is wider than normal due to ongoing uncertainty of economic environment. They will have a more pronounced impact on our new business.

Regarding trends during the year, we expect second quarters, new business activity to be the most impacted by the endemic.

Our pipeline entering the second quarter is strong and growing but we're cautious about new business close rates.

The upper end of our range assumes a swift recovery of new business in the third quarter and continued improvement into the fourth quarter with full year, New unit volume growth modest.

At the low into the range, we are modeling deeper impact on second quarter sales followed by a slower recovery in the third quarter and further improvement in the fourth with full year, new units posting a modest year over year decline.

On the other half the majority of our businesses renewals and we have not experienced a meaningful change in our renewal rate, which offers us resilience in an uncertain environment.

Still we are modeling a decline in renewal rate for the second quarter out of an abundance of caution.

Our low end and high end guidance scenarios differ in the extent of the drop in the second quarter and the pace of recovery later in the year.

Given our strong renewal rates, we expect our net revenue retention rates to remain above 100%, but move below the current range of lumped into 120% for the rest of year.

In addition to reduce new product demand, we anticipate our billings will be impacted by fewer multiyear transactions.

The lower end of our billing guidance assumes a steeper decline to the multiyear contracts, whereas the upper end is based on a more modest decline.

The reduction in billings and timing of large transactions are impacting our free cash flow expectations. This a 41 will be a significantly more back end loaded year, which will move some of the free cash flow from this year than that.

We expect our full year operating margin to expand by approximately two to four percentage points.

Looking at the second quarter forecast, we expect the pandemic to meaningfully impact our billings, which can be sequentially down by low double digit person.

Additionally, our decision to offer extended payment terms to our customers for sales up through early August combined with a more backend loaded quarter will impact our Q2 free cash flow, which could end up a breakeven to slightly negative before accelerating in the second half of the year.

Although our fiscal year 21 results are being impacted by Govan 19, we are confident in our fiscal 2003 free cash flow target of $2.4 billion, assuming the recovery starts by the end of this fiscal year.

We built a resilient business model that will allow us to capitalize on multiple tailwinds once we exit the current endemic.

And now I'd like to turn it back Sanders.

Thank you Scott, we expect all secular trends that we have been investing in for years to be accelerated during and beyond this pandemic people are being forced to change the way they work and in turn are experiencing the benefits that are cloud and subscription solutions have to offer. These companies are not going to go back to how they were.

Before and Digitization will be accelerated as businesses take all steps necessary to ensure they are more resilient.

Our investments over the last few years combined with our ongoing focus on cloud based offerings leave us with a competitive advantage and well positioned to help our customers not only during this pandemic, but also in the new world that they will be working in winning is over.

Back some of our biggest customers are already altering the mix of our products to lean more heavily into the cloud and digitization.

Although AIDC spending has held up well and work is continuing some customers are seen project delays or cancellations and in some cases job site temporarily shut down. However, despite these realities. We have seen continued adoption of our construction offerings for example, major construction agenda.

We will contractor in southeastern United States selected our products over a competitive construction managed solution at their time of renewal their business is growing rapidly and price was becoming a concern with their current vendor they needed a comprehensive solution that was fast and easy to implement the multiyear deal.

Starting with Cambridge for the feel evolved to include Bim 360 for the office and field connectivity and ultimately included building connected for project bidding.

Many construction sites were shut down temporarily impacting our new business for field focused solutions like plan great.

However, our products span the complete construction value chain and our collaboration products like Bim 360 design and docs experienced solid growth.

Our extended access program allows customers to try out and experienced the value of the cloud collaboration project products at no cost for a limited period of time.

We are seeing customers, who were in the process of adoption accelerate their timelines. We're also seeing customers purchased additional seats directly through our digital store since early March cumulative new commercial projects grew over 200%, it's been threesixty design and over 100% mm $360.

This surge in usage has been great test for our cloud product infrastructure, which has scaled up seamlessly.

As you might recall Bim 360 design is the cloud collaboration tool that allows our customers to use our design product anytime anywhere with data stored in the cloud.

Now the customers are experienced cloud based solutions that allow them to work efficiently from anywhere we do not think they will revert to previous ways of working.

One of our largest customer AG com significantly increase their adoption of Bim 360, and reached out to us beforehand to ensure that we were set out to support the increased usage.

E Com is the world's premier infrastructure from David talk our CIO Americas and construction recently commented quote we're shifting rapidly to remote working which is absolutely essential for the continuity of our business, our strategic partnership with Autodesk and the Bim 360 cloud platform along with substantial investment.

In digital solutions and technology has enabled our successful pivot to this new way of work we forecast that our use of Bim 360 will continue to grow dramatically in the short term and will become our new baseline for projects in the long term and quote.

We're not only helping our customers work remotely we are also doing so quickly.

When New Zealand went into Lockdown overnight, we help ward and Mahoney architect Thats fully mobilized our entire business to work from home in five day in the process. They doubled their number of Bim 360 design prescriptions. They told us they would not have been able to so successfully continue their business operations, while working from home.

Home without our support and they also noted that all projects will be delivered using our platform going forward.

We believe the current pandemic will accelerate digitization in automation in the industry as customers look to make their businesses more resilient.

At the end of every downturn, there is an upturn and businesses will need our products more than ever to stay competitive on the other side of this.

One segment that has historically done well as government seek to provide stimulus infrastructure.

During the quarter, we announced an alliance with or ago to better serve public and private owners.

Capital project owners at Department of Transportation Cds Counties, and enterprises will benefit from this alliance and we are already receiving positive feedback from customers.

This quarter, we had a top architecture firm and a subsidiary of one of the largest state owned enterprises in China choose our products over bentley's.

Your typical projects for domestic and international clients include healthcare infrastructure stadiums airports and skyscrapers Autodesk streamline workflows and data compatibility allow them to collaborate across teams and bring digital design down to the construction serve its phase beyond that they have already taken advantage of our products for Jennie.

Operating optimize design schemes and are excited to use gener design in revenue as we recently announced Gena design is available in Red the 2021.

As our customers plan to return to work safely they need help redesigning space layouts and buildings and this is one of the things General design enables people to do effectively.

Although manufacturing has been impacted by supply chain disruptions and temporary factory shutdown, our products are enabling customers to operate under evolving condition.

Customers use our solution to develop new products and R&D continues even when production floor experienced tours experienced disruption.

Automation and flexible supply chains will be vital to competitiveness in the future.

Our products to help customers work remotely in the distributed environment and collaborate among their division customers and supply chain in the cloud.

Fusion 360 is the leading comprehensive multitenant cloud CAD Cam and PLM solution and continued to gain traction. During this pandemic as customers are reassessing their technology portfolios readiness to cope with the demands of distributed work in fact April was the fastest growing month for new user.

Acquisition.

A good example of this is that we closed a large standalone fusion 360 deal with a big semiconductor company currently they use the electronics design capabilities infusion for their printed circuit Board design work and we expect to further expand our presence with them to the integrated functionality offered by our products and a more attractive price point in.

Addition, BSF the largest chemical producer in the world increase their EPA users of fusion 360 to 2000 during the quarter. They look forward to using 303 fusion 360, as a collaboration platform to improve the efficiency of communication between several teams starting with equipment design and maintenance at one of.

They are chemical plant.

Growth remained strong relative to our competition across our manufacturing portfolio customers of our on premise solutions report minimal disruption in the move to remove offer which has been supported by cloud features included in our subscription offering.

During the quarter, we signed our first enterprise visits agreement with an automobile manufacturer in China. The usage based model with a good fit for the customer who needs flexible access to our expansive portfolio of products Cobot 19 was a catalyst for them to substantially increase their engagement with us they made the decision to address.

The most efficient solution to ensure they stay competitive in their industry on the other side of this downturn.

In addition to growing our presence in the commercial space, we continue to maintain our leadership in the education space, where future engineers are rapidly adopting our products are new user acquisition. The education space driven by fusion 360 went up over 70% in April.

Moving onto another high priority area for us, we're still making traction monetizing noncompliant users in terms of sales led initiatives, we are being sensitive to customer situation and are often deferring. The final outreach, but this does not mean progress has stopped the first deal we closed and move on after the business Rio.

And was a license compliance transaction that we have been working on for many months prior to the pandemic.

We closed an additional license compliance deal and competitive win over Bentley and Central America and the customer is now piloting Bim 360 docs.

In closing.

All of US are impacted by the current pandemic, we are building a stronger autodesk for the next year and beyond.

We have a head start over our competition in critical capabilities like cloud computing and cloud based collaboration and we will continue to invest in our strategic initiatives.

There are three key areas that make us confident in our fiscal 2003 target and our growth after that one digitization and AIDC is going to accelerate in the coming years as companies seek to adopt not only been a complete designed to make workflows enabled by the cloud that not only make current processes more resilient and efficient.

Lets support new industrial paradigms for the construction site.

To.

The evolution of manufacturing to more distributed network and cloud based workflow is also going to accelerate significantly over the next few years and we have the industry, leading multitenant cloud based solution to address merging customer needs that will creeping up before cunego.

And three find that were presented our business model is more robust adaptable and resilient than is going to higher history of the company. This will allow us to not only invest aggressively in the future, but do so with an eye to both revenue and margin growth.

We look forward to virtually engaging with many of you at Investor day on currency.

We will have more time to share our strategic initiatives with that operator, we'd now like to open the call up for questions.

Thank you.

Mine there to ask a question you'll need to press star one on your telephone.

A question touched upon key.

Please standby lobby compare the trend a roster.

Our first question comes from Saket Kalia with Barclays capital.

And is now open.

Okay, Great Hey, Thanks, guys for taking my questions here and I hope everyone is doing well.

Andrew maybe just to start with view thanks for the commentary just bye bye.

Area I want to look at it from a different lens and maybe see if you can talk about what you're seeing from your customers on engineering headcount and hiring.

Now clearly that situation is going to differ between manufacturing between your manufacturing customers in there.

You see customers, but im wondering if you could give us some some high level observations just about higher customers are approaching headcount during these times.

Yes in fact, I hope you're doing well, it's as well.

If there is.

What I'll do is I'll give you some indirect measures of what we're seeing if if our customers were engaging in a lot of head count reductions what we would see is a tendency towards more partial renews and are in our base, we're not seeing that all right as we mentioned in the opening commentary. So we're not seeing this will increase in partial renew.

It's which kind of talks to a stable employment base and stable.

Team team environment. The other thing that were that we pay attention to is the whole notion of what's happening with weekly active users okay.

That's the real measure of economic activity happening on top of our applications. This is something we didnt have during the last downturn, we weren't able to monitor weekly active use of our desktop product that that weekly active usage, while it declined a little bit as we headed into this is definitely starting to stabilize so that's another indicator that tells us.

People are hanging onto their R&D R&D and early project development team members.

We're well up in front of the process here on multiple factors so people need to keep the people working on the stuff that uses our products in order to effectively meet that demand as they come out of that so that that's what we're seeing socket.

That's really helpful.

Scott maybe maybe for my follow up for you you touched on this a little bit in your prepared remarks, but I'm wondering if it would just flush it out a little bit more can you just talk about what you saw in the quarter on those multi year paid up subscriptions and just talk about how you're thinking about that in the fiscal 21 free cash flow guide.

Yeah. Thanks, second I hope, you and and your family are staying safe to its such a such a bizarre time.

What we did our fees a multi year continued to be relatively strong.

That was it was interesting quarter.

At the beginning of the quarter was quite strong across the board demand was strong multi year with strong. It was really a continuation of a strong Q4, and then run around mid March we saw things slow down and it slowed not evenly as we've talked about the opening commentary has slowed down a little bit by.

As countries were affected at a different rate.

What we saw in multi years, we did see it come down a bit and the second half of the quarter, but not while substantially and you see that when you look at the total long term deferred balance in relationship to the total deferred revenue balance so.

While it did come down a lot of our customers continue to see value in buying the multi year.

Our partners continue to see value and selling that and of course, we get value. Because those are those are renewals. We don't have to chase it frees up sales capacity so that.

The triumvirate of good for customers good for part of its good for US continues I do expect to see some headwind on multi year transactions through the second half of the year and Thats part of what is influencing the the changed our guidance on billings and free cash flow as an expectation that multiyear will trend down through the year certainly in the second core.

Order some recovery toward the second half of the year.

That's very helpful. Thanks, guys.

Thanks second.

Thank you.

Next question comes from Phil Winslow with Wells Fargo. Your line is now open.

Hi, Thanks for taking my question Im glad to hear that Yarwun hopeful same store for your families and your team members.

Question first for you Andrew that approved for Scott and are you talking about obviously the different phases of the construction lifecycle and different products you have there. When you are tied to your customers. How do you think about sort of reopening sorry.

Pat.

The call it the architecture side planning construction et cetera, and considering the fact, particularly on the AC side, we seem to have a backlog of projects coming ended the year. What are now saying to you in terms of restarting and were sort of that backlog is especially when you kind of guy go forward basis than one called for Scott.

Yes, so the backlog comes in to form the first backlog as projects that were just put on hold and we're about to go into the pipe. We hear a lot about that from our customers is that look a lot bunch of products were just put on hold until people know where that those projects are not going away none of them or in any kind of category that would would represent a pull.

Back from the projects so yes, it at the front end in the design and kind of engineering side. There is definitely this Q project that were put on hold the interesting thing on the downstream side and the construction side, what what you saw was a hole in some municipality people actually stopped construction now those construction.

They are coming back on right now and in some place construction never stop but they're not coming back on the same alright. So what's your what Youre seeing is people are working with distancing listing requirements on the on the construction site. So there's fewer people on the construction site and these people are working in more.

Yes, so what what you're actually seeing is more pickup in the digital tools and an anticipation from our customers that they need more tools to digitally manage their sites as they stand up. These construction sites. The same goes in manufacturing manufacturing. They their biggest problem is that there are their output side was shut down there.

New product development and all the things that are going on there none of that was stopping they just couldn't push the units out because of various restrictions on them. That's all started thats all starting to open up as well and that that's what we're hearing from our customers frankly, the one segment of our customer base. It's still doesn't know what they're at what their fate is is the people making films TV.

Film, there's there's still there's still struggling with when the sets are going to go backup games games, obviously, they never they never saw a slowdown so but the people in the film business are still waiting for when the production is going to restart.

Hey that was super helpful and Scott just a follow up obviously, we came in there with a significant number of active users they weren't on subscription or maintenance, but what are you sort of the trend that you saw in Q1 relative to last year and towards the convert version are those it's a pain paying subscribers and just how you're thinking about this year.

Yes, it continues to be an enormous opportunity for us fill and it's one that that will continue to pursue out even beyond fiscal 2003.

Well, we have seen during the quarter is.

We talked about this in the fourth quarter call as well, we've gotten better at the data science at identifying those passing on higher quality leads that's led to the productivity of those license compliance teams improving and as the productivity improves we're investing more head count there that trend continued into the first half of the quarter I will tell you as the economy got more.

A difficult in as many of our customers space.

Shot down and very difficult situations, what we did do toward the second half of the quarter is well, we'll continue to pursue those transactions were not forcing a final transactional final outcome of that in many cases, so that pipeline continues to build.

We continue to work that and build that up and that's an opportunity that still ahead of us in the second half the year.

Great. Thanks, guys.

If you to Phil Thank you Phil.

Thank you.

Next question comes from Heather Bellini with Goldman Sachs. Your line is now open.

Thank you very much gentlemen for taking the question Im glad to hear you on your family is on the Autodesk employees are doing well I just two questions first.

You mentioned the license compliance deal and will.

Hi, good morning.

Given your global reach how are you seeing business trend in parts of Asia Aside from that one where the economy is has maybe been open for a little while longer and any commentary.

I want to be any commentary on how the first month of this quarter overall it is tracking versus the the month of April and then I just had a follow up before.

A follow up one after that.

Okay, great. So how did let me let me give you a little context I'll kind of I'll try to answer your question a little broader than you ask just so that you can get a full set of contacts as Scott said, we kind of entered Q1 with a war we had like a week to celebrate our successful fiscal year 20, and and then what happened is March hit you saw China's start to decline you saw Korea fall.

The suit you saw general decline in APAC, and then you know kind of Europe came online after that started to decline than the U.S., Here's here's what we saw though as things played out.

China and Korea rebounded right monthly weekly monthly active usage in China is now above the pre coded highs.

In that country Korea returned to became stable, Japan was surprisingly steady through the entire crisis alright, both from a business perspective from a.

Business collections and from the weekly active usage numbers that we were tracking and now what we're seeing as kind of the same kind of cascade happening in Europe, we're starting to see Europe weekly active usage is going up new business is starting to go up and you're seeing we're seeing a kind of.

Stabilization in the us not not any upward upward trajectory, yet, but it's all cascading like that and we saw this in our weekly active usage numbers, we're seeing it in our new business numbers and another thing that stayed constant stayed relatively steady was renewal rates now we always told you that we anticipated.

Renewal rates with declined slightly during a downturn.

What happened was that renewal rates actually declined less than we expected. So they've been they stay they've held up incredibly well through this downturn and that with consistent across geography at all times during the crisis, there hasn't been some kind of seven different renewal rates and some wavering, it's actually stays like it a fairly consistent rate the one thing on.

And to make sure you understand during the whole entire thing our cloud products and our of our make products did incredibly well like for instance in March during the heat of all of this fusion added 50000 monthly active users in the month right in the sheet of all of this all right well.

We already told you about what was going on Bim 360 design and been through 60 docs those products all did very well even through the downturn.

That's great. Thank you and then just one quick follow up for Scott and I know you mentioned that responds to someone's question I think about long term deferred but you had talked about.

One point, most recently those being maybe as much of 25% or the total deferred revenue balance I'm. Just wondering is there a level that you would set up for for this year that you think might be more might be more reasonable.

Yes, I think thats the right range Heather I think it ends up in the mid Twentys that had been slightly higher than that and if you remember on the fourth quarter actually on the third quarter and the fourth quarter call.

I think there was concern that multi year paid upfront product subs, who is going to run too hot and what's going to create a problem for free cash flow. This year Bakken. We thought this was going to be a year of stability as opposed to a year of a pandemic and I have the our multiyear offer actually on my watch list because if I got the impression that was running too.

Unstable level, so hot but that we couldn't maintain that percent I wanted to make changes to the offering to kind of Tampa down a bit.

We haven't made any changes to the offer at this point I don't think we need to it's the same pay for three years upfront at a 10% discount, but it's always been.

We saw in the second half of the year come down modestly Thats my expectation for the year and that'll put long term deferred in that mid 20% of total bridge.

Okay, great. Thank you so much gentlemen stay safe.

You too Heather thanks.

Thank you.

Next question comes from JV shallow with Griffin Securities. Your line is now open.

Thank you good evening Angelo Scott.

Oh I spoke questions at once.

So first Andrew you noted a number of trends and requirements that are being accelerated by the current situation. What are the implications of that if any for your sales and distribution model.

You've been doing a lot of hiring planned hiring.

For direct sales coverage named accounts inside sales the store and so forth and of course.

And with the channel. So maybe you could talk about any applications. There and then secondly, looking past this current valley.

Acting business looking for your longer term roadmap.

You've spoken of course, often at you and other occasions about your.

New platform plasma.

What are the milestones for that internally that you'd be able to communicate over the next number of years in terms of its progress and overlaying that at the applications layer.

Are there any major brands, such as relative to inventor or anything else.

Do you think would be prudent to rebuild or re wire in some way to take advantage of of the new platform in terms of collaboration date orchestration, perhaps multi core and multi thread in and all those good things so.

Sales question that technology question.

Okay. So let me start with the sales question so as as we headed into this and looked at the year.

As you've noticed we've continued to invest while while we're not going to spend as much as we originally anticipated. This year, we're continuing to invest in R&D and things that we think are core to our future infrastructure. There are some areas and go to market. We did continue to invest in like international expansion for our construction solutions and things related to supporting the fusion.

Business, but you're right.

Probably slowed down a little bit on inside sales efforts when you're inside sales teams are you don't want to hire more inside sales teams when you're having trouble getting in touch with customers. When they are working from home. So we slowed down some of those efforts, but there was no across the board slowdown in our go to market activity. In fact, what we did as we prioritize those things that we thought were.

Most important that invested there and I think they'll all would make sense to you in terms of what we're doing there in terms of the longer term growth I think you're going to continue to see us investing go to market internationally amount of construction and cloud solutions I think you're going to see us continue to invest in.

Datacenters and servers in our international locations that service our customers are some of our cloud solutions because those are going to be in demand right now with regard to your second question. Okay. We don't call. It plasma any more by the way, it's a different name, which is which you'll get some view of later probably around a few timeframe. So I'm going to be careful about what I talked about there but.

Look first off I want to make sure you understand we there's a lot in our cloud alright, a lot in our cloud platform a lot that has been exposed a lot that hasn't yet been exposed some of those things you're talking about allowing multi disciplinary collaboration simultaneous access to a a common model.

All that thats updates based on different disciplines, but maintains control within the architects engineers, you're going to hear a lot more about that in the coming months and probably around Autodesk University. So I'm not going to steal the thunder from that what I will say at this point is.

We've got a lot going on and we're big believers in the App model and what I mean by that is we believe that relatively relatively modestly sized to sit clients with a really robust cloud back end are the future and we got there in a very informed way so for instance.

Usually has a big client and but it has a very very very fine grained.

Multitenant cloud cloud data infrastructure hidden behind it.

Fusion cloud will get thinner over to client will get thinner overtime.

Could you could also see an evolution with rabbit, it's similar to that that's going to take a little longer and we made that choice very deliberately Jay because we've had lots of experience a pure browser based applications for instance that you might be aware that Tinker cat has 25 million users right now in any given day 11 11000 people use.

Tinker had its the K through 12 Defacto standard for three modeling out there it's called Tinker Cabot, it's actually an amazing tool. It is a multitenant browser based solution as is autocad web, which has 50000 monthly active users a month, alright, which switch does add it and the creation of drawings as well as a.

Collaboration on drawings, both of those solutions taught us that ficker clients are better alright, not totally thick clients Wade thinner than our current desktop quite way thinner, but like I like an app model. We learn this early on from our long years of experience with these pure browser based tools. So thats why you see.

Doing that with fusion, you'll see us do something similar in the AC space overtime.

No, it's winning because it helps get people to the cloud, but it has that same robust multitenant cloud database structure sitting underneath it.

Okay.

Thank you you will.

You too Jay Thanks, Jay.

Thank you.

Next question comes from that.

See capital markets. Your line is now open.

Hey, guys. Thanks for taking my questions Im glad you guys are well.

There's always a lot of questions on construction and all the improvements you made on a product perspective, there, but wanted to talk a little bit more both the momentum in manufacturing.

Here really good things about fusion 316, I know Andrew you called it out on the call.

Being a real disruptive offering where are we in the momentum of that business.

To the.