Q1 2023 Autodesk Inc Earnings Call

May 26, 2022

[music].

Thank you for standing by and welcome to Autodesk first quarter fiscal 2023 earnings call. At this time, all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that todays call may be recorded should you require any further assistance. Please press star zero I would now like to hand, the call over to Yoho VP Investor Relations Simon Mays Smith.

Please go ahead.

Thanks, operator, and good afternoon. Thank you for joining our conference call to discuss our first quarter results of our fiscal 'twenty three on the line with me are Andrew Agnosterol, CEO and Debbie Clifford our CFO .

Today's conference call is being broadcast live via webcast. In addition, a replay of the call will be available at Autodesk, Stockholm Slash investor.

The earnings press release Slide presentation, and transcript of today's opening commentary on our Investor Relations website. Following this call.

During this call we may make forward looking statements about our outlook.

As a result, some related assumptions acquisitions products and product capabilities and strategies.

These statements reflect our best judgment based on currently known factors.

Actual events or results could differ materially.

Please refer to our SEC filings, including our most recent Form 10-K, and our form 8-K filed with today's press release for important risks and other factors that may cause our actual results to differ from those in our forward looking statements.

Forward looking statements made during the call are being made as of today.

This call is replayed or reviewed after today the information presented during the call may not contain current or accurate information.

<unk> disclaims any obligation to update or revise any forward looking statements.

During the call we will quite several numeric grid changes as we discuss our financial performance.

Unless otherwise noted each such reference represents a year on year pass.

All non-GAAP numbers referenced in today's call are reconciled in our press release, <unk> financials, and other supplemental materials available on our Investor Relations website.

Now I will turn the call if it's Roger.

You Simon and welcome everyone to the call.

Today, we reported record first quarter revenue non-GAAP operating margin and free cash flow fueled by strong demand and a robust competitive performance the structural growth drivers for our business that were critical to our performance during the pandemic such as flexibility and agility continue to support and propel us during elevated macroeconomic.

Geopolitical and policy uncertainty.

These growth drivers further cement the important role we play in our customers' digital transformation and increase our confidence in our strategy.

Our steady strategy industry, leading products platform and business model innovation sustained and focused investments and strong execution are creating additional opportunities for autodesk.

By accelerating the convergence of workflows within and between the industries, we serve we create broader and deeper partnerships with existing customers and bring new customers into our ecosystem.

A prime example of this is infrastructure the combination of Revit Civil <unk> novice works already been collaborate pro infer works and more recently RF construction cloud and antibody delivered industry, leading end to end capabilities in transportation and water planning and design to construction and operations and our <unk>.

Customers can extend those capabilities through our partnerships with Oracle planning and every in geospatial mapping.

This is important because governments and asset owners across the globe are investing rolling them out in next generation infrastructure to meet the societal and environmental needs of the next century, and our retooling now to do it.

That equals opportunity for Autodesk for example in the first quarter, we signed our second largest EPA ever with a large global infrastructure company in a deal that included antivirus and Autodesk Bill for the first time.

Across Autodesk, we're focused on unifying more common data fluidly connecting more workflows in the cloud in ways that delight, our customers and lead them to new more efficient and more sustainable ways of work.

And by doing that we will move beyond carbon neutrality for ourselves to transform our customers' carbon footprint together, we can design and make a better world for all that advances equitable access to the in demand skills of the future.

Before I turn the call over to Debbie to take you through the details of our financial performance and outlook I want to update you on important decisions, we made about our business in Russia.

You will recall that the invasion of Ukraine occurred hours before our last earnings call in light of the conflicts we halted all of our new and renewal business in Russia on March.

We strongly believe this decision was the right thing to do and that it is in our long term interest even though it comes at a cost, which Debbie will detail in a moment.

Of course, our immediate focus remains on the safety and wellbeing of our employees in the region and we continue to monitor the situation closely.

Beyond the immediate impact in Russia, other leading indicators trend positive for example usage remained steady in Europe . During the quarter include America and Asia Pacific region.

Building connected bid activity again hit record levels and our partner channel remains optimistic.

Strong momentum sets us up well for the remainder of the year.

Debbie now over to you to take everyone through the details of our quarterly financial performance and guidance for the year.

Come back afterwards to provide an update on our strategic growth initiatives.

Thanks, Andrew.

Q1 was a strong quarter driven by broad based strength across products and regions.

If we compare the revenue result versus guidance the outperformance was due to that strength as well as the upfront revenue and a large EMEA, which we had forecasted would close later in the year.

Total revenue grew 18% and 17% in constant currency.

My product.

CAD and Autocad LT revenue grew 21%.

<unk> revenue grew 17%.

Manufacturing revenue grew 14% and <unk> revenue grew 24%.

By region revenue grew 24% in the Americas, 17%, EMEA and 10% in APAC.

Direct revenue increased 22% and represented 34% of total revenue.

One percentage point from last year due to strength in both enterprise and E Commerce.

Our product subscription renewal rates remained at record highs and our net revenue retention rate was comfortably within our 100% to 110% target range.

Billings increased 16% to $1 $1 billion, reflecting robust underlying demand.

Total deferred revenue grew 12% to $3 7 billion.

Total RTL $4 7 billion and current RPI of $3 1 billion grew 11% and 10%, respectively, reflecting strong billings growth and as I flagged last quarter, the timing and volume of multiyear contracts, which are typically on a three year cycle.

Turning to the P&L non-GAAP gross margin remained broadly level at 92%, while non-GAAP operating margin increased by six percentage points to approximately 34%, reflecting strong revenue growth in <unk>.

Our <unk> cost discipline.

GAAP operating margins increased by four percentage points to approximately 18%.

As Andrew mentioned, we delivered record first quarter free cash flow of $422 million up 34% year over year, reflecting strong billings growth in both Q4 in Q1.

With the broad equity market pullback in Q1, and our strong cash position, we again accelerated our share repurchases during the quarter.

We purchased two 1 million shares for $436 million at an average price of approximately $212 per share.

Which contributed to a reduction in our weighted average shares outstanding of approximately $2 million.

Well our capital allocation strategy remains unchanged you can expect that we will continue to invest organically and inorganically to drive growth.

The last two quarters, we've proactively used our strong liquidity to accelerate repurchasing and will continue to be opportunistic in doing so when market conditions allow for it.

Now, let me finish with guidance.

The overall headline is that the underlying business conditions that we've been seeing are unchanged safer, Russia and the continued strengthening of the U S.

Our business continues to perform well and posted top line growth ahead of our peers.

As you can imagine we're keeping a close eye on the geopolitical macroeconomic and policy environment.

But against that backdrop in Q1 renewal rates remained strong multiyear billings were in line with our expectations and we exited the quarter with strong momentum.

As we look ahead and as with previous quarters, we're assuming that market conditions in fiscal 'twenty three are consistent with recent quarters.

The decision to halt our new and renewal business in Russia had a direct impact on our outlook.

Billings decreased by approximately $115 million revenue by $40 million and free cash flow by $80 million.

Of course, we're not satisfied with that outcome and we'll work hard to mitigate the impact by accelerating our channel evolution.

<unk> retention and digital growth initiatives and by doubling down on early successes from recent acquisitions like antibiotics.

Beyond Russia U S dollar continued to strengthen during Q1.

While we benefit from a robust hedging program the pace of FX volatility has been incredibly rapid and it's having an impact on our fiscal 'twenty three outlook, reducing billing revenue and free cash flow by approximately $80 million $20 million and $50 million respectively.

Bringing these factors together, we expect fiscal 'twenty three revenue to be between $4 96, and $5 6 billion.

We expect non-GAAP operating margins increased 400 basis points year over year to approximately 36%, reflecting one point of impact from removing Russia from our forecast.

We expect free cash flow to be between 2.0 and 2.08 billion.

The slide deck on our website has more details on modeling assumptions for Q2 and full year fiscal 'twenty three.

The volatile global environment has reinforced the structural growth drivers underpinning our strategy.

Give us confidence in our long term growth potential.

We continue to target double digit revenue growth non-GAAP operating margins in the 38% to 40% range and double digit free cash flow growth on a compound annual basis.

These metrics are intended to provide a floor to a revenue growth ambitions and a ceiling to our spend growth expectations Andrew back to you.

Thank you Debbie.

Our strategy is to transform the industries, we serve with end to end.

And cloud based solutions that drive efficiency and sustainability for our customers.

Our business is scalable and extensible into adjacent vertical from architecture, and engineering to construction and owners product engineering through product data management product manufacturing. It is also scalable and extensible between verticals with industrialized construction into new workloads.

By accelerating the convergence of workloads within and between the industries. We serve we are also creating broader and deeper partnerships with existing customers and bringing new customers into our ecosystem.

For example, in AUC AE com as the world's most trusted infrastructure consulting firm that delivers professional services throughout the project lifecycle from planning design and engineering to program and construction management.

With growing investment in infrastructure customers are increasingly seeking both efficiency and sustainability to meet ESG goals, such as necessarily carbon resiliency quality of life social impact on safety.

This aligns AE com and its customers closely with autodesk values capabilities.

Q1 E com renewed and increased EBITDA with Autodesk.

Renewal promotes further platform standardization and now extends from design further into Bill with the addition of Autodesk construction cloud and from bridges and tunnels to water with the addition of antibiotics.

Across the globe customers are seeking to connect and streamline their workflows as we enable our partner network to distribute autodesk construction cloud, we serve more of that growing demand.

For example, Ramadan, which is spaced in Sweden is a leading provider of technical and consulting design installation and service solution across the Nordic region, focusing on efficiency and sustainability.

It is responsible for the installation of fire sprinklers ventilation electrics and safety systems and the tunnels at the Stockholm bypass project loss.

<unk> infrastructure project in Sweden.

Having adopted Autodesk AUC collection, and realizing 50% cost savings and a significant reduction in carbon dioxide using rapid in the design phase of the project Robin I was looking for a complementary system to seamlessly connect the build space.

<unk> auditors built enables interconnect office field data and workflows in the cloud standardized projects accurately and manage procurement and logistics health and safety and cost more effectively and efficiently.

With the launch of <unk> built the introduction of an account based pricing business model distribution through our channel partners and giving subcontractors the ability to have their own instance of their data we're connecting more workflows, both within construction and between adjacent workflows design, Preconstruction and operations and maintenance.

After evaluating various project management solutions for more than a year Donahoe construction company a top mid market GC in Washington D. C chose August built seamlessly connect project site and cost management workflows.

<unk> industry, leading cost management system, which is integrated into an included with Autodesk Bill is anticipated to enable donohoe to control change order management and reporting much more seamlessly with its projected site management workflows.

Excited to partner with donohoe to build a sustainable future together.

We're also rapidly integrating <unk>. So the estimates can be pushed to the cost module and artist bill, enabling it to automatically create a budget.

With strong growth from <unk>, Bill and the benefit of recently launched ACC bundles for pre construction and construction operations Autodesk construction cloud reported its best ever new business.

With an increasing proportion of that growth coming from EMEA, and APAC and growing contract size and renewal rates.

Turning to manufacturing, we sustained strong momentum in our manufacturing portfolio. This quarter as we connected more workflows beyond the design studio develops more on ramps to our manufacturing platform and delivered new powerful tools and functionality through fusion 360 extension.

As we connect and develop new workflows in the cloud and provide more ways for customers to use our products, we have the opportunity to renew engagement with some of our legacy customers. For example, a high tech manufacturer in Germany, which had been using Autodesk software 1991 was using inventor software purchased in 2018 by <unk>.

Getting from a perpetual license to a product design and manufacturing collection subscription in Q1, the team will benefit from significant process and performance improvements, which alleviates mechanical engineering bottleneck and better serve the high demand periods.

Because of its familiarity with Autodesk customer enabled these improvements immediately and leveraged its existing IP migration, we are happy to have them back on our latest and most secure software.

In automotive, we continue to grow our footprint beyond the design studio into manufacturing as automotive Oems seek to break down silos, and shorten handoff and design cycles.

<unk> Motors and electric vehicle manufacturer in China added product design and manufacturing.

Top of the alien you bet subscriptions to achieve a seamless digital workflows across design and manufacturing.

<unk> will be able to build higher quality cars more efficiently by connecting workflows in the cloud that enable more collaboration and better data integrity.

Our fusion 360 platform approach enables customers to seamlessly connect workflows, while also delivering powerful tools and functionality to those in need through extensions for example.

Education toy manufacturer based in the U S. Starting to use and fusion 360 about a year ago and quickly recognized the impact working on the cloud would have on its ability to collaborate across sites between product design and product engineering.

Q1 was able to seamlessly activate manage nesting and product design extensions within the fusion 360 user interface, giving access to even more powerful tools and functionality to those that needed. It for example, the fusion 360 manage extension unlocks additional data management functionality to manage design changes at any stage of production.

With the click of a button using prebuilt workflows.

Fusion 360 commercial subscribers grew steadily ending the quarter with 198000 subscribers with demand for our new extensions include machining generative design nesting and fabrication continued to grow at an exceptional pace.

Outside of commercial use our education partnerships are helping students learn the in demand skills in the future for example, government tool room and training center or <unk> is a premier vocational institution in India was 6000 students across 28 campuses Q.

Q1, Gtt's adopted fusion 360, and X two and by making courses because it was easy for students to learn spanned the entire course from conceptual design through stimulation to fabrication and gave students and an experienced with next generation workflows, such as generative design three printing for additive manufacturing and digital stimulation of Jenna.

<unk> T code outputs and finally, we continue to bring more users into our ecosystem through business model innovation and license compliance initiatives.

Basic as a multidisciplinary firm whose contract in construction infrastructure and machine works often have a high level of complexity.

He supported standardization effort across all projects that regions. The basic group uses beam collaborate pro adopts to collaborate on rebit projects in a secure common data environment for <unk>.

Security efficiency, it now Leverages, our premium plan and flex.

By better understanding its usage through the enhanced reporting functions within our premium plant. It can provide access to occasional users to blacks, while realizing the additional security benefit a single sign on across its global employee base.

We continue to work with our customers to maximize their access to current and secure versions of our software for example, an international research institution in Europe , which is both students and employees was mistakenly using education subscriptions for commercial use cases.

Partnering with their leadership, we ensured the relevant departments had access to the necessary tools by combining subscriptions to our industry collections with flex tokens and collaborative approach resulted in a compliance deal over 1 million euros during the quarter, we closed eight deals over $500000 start by suppliers.

Two of which were over $1 million.

Let me finish with a story I recently visited the futures exhibition Smithsonian institution in Washington D. C are.

I highly recommend visiting if you are in the area. This summer before it closes in mid July .

It is the Smithsonian first building wide exploration of the future.

<unk> partnered with the Sony and to create interactive experience called future communities that brings visitors together to build a sustainable community block using analytics and Gold's gym design with Autodesk generative design technology.

<unk> collaborate both with each other and AI adjusting the input they deemed most important.

Each guest takes on a different persona with specific goals input factors, social ecological and economic consideration ranging from availability of green space low carbon transportation to the reach of public services and employment opportunities.

Evolving community pocket displayed in real time, and the technology showcases the types of tradeoffs necessary to achieve various outcomes.

The exhibit structure was generally designed to be strong lightweight using sustainable materials and modular space frame components that can be easily assembled and disassembled our minimum construction waste.

The exhibit not only represents artists vision of the future that is collaborative and connected workflows and data in the cloud that design that makes it better worlds for all that meets the challenges posed by carbon water and waste and advances equity and access to the in demand skills in the future. But in addition, the exhibit represent a very diverse.

First set of decisions for how the future manful.

The one thing they share.

Unwavering sense of optimism about what we can all accomplish together.

Every day, our goal is to empower innovators with design and make technology. It turns their vision into reality.

Bring them to achieve that new possible.

I share this story because it gives me great confidence in the future of Autodesk and our vision of a better world designed and need for all <unk>.

Operator, we would now like to open the call for questions.

Thank you and as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.

Please standby, while we compile the Q&A roster.

Our first question comes from the line of Phil Winslow of Credit Suisse. Your line is open.

Thanks for taking my question and congrats on a great strong start to the year now construction cloud delivered its best new business growth quarter ever you signed your second largest EMEA ever within our company and I loved obviously, the example of a manufacturing.

Vendor getting current moving to subscription from a lapsed perpetual license.

But when you think about this investors have been concerned about autodesk exposure, specifically to the cyclical end markets and the potential impact to your business. However, the numbers you just reported.

The large deals we've highlighted clearly don't don't show. This so my questions are what are you hearing from customers about why autodesk.

Sustained demand and what gives you confidence in the durability of these drivers.

Yeah. So Phil I think I think somebody wrote a report about not being a cyclical business anymore I can't remember who it was.

Analysts probably yes.

Probably an incredibly bright analyst so look a couple of things happening in the quarter and we're <unk>.

Projecting those forward to the year, just consistently and I think it's <unk>.

According to kind of talk about this notion of diversification not only.

Geography geographical spread of our business, but disciplined spread and also business model spread.

I will talk about that on a couple of vectors, but first off this is.

Talking about what kind of highlighted in blue.

So you can see around our business.

Throughout the quarter the monthly active usage that we track regularly continued to strengthen throughout the entire quarter. It continued to strengthen right up to the end, yes, we absolutely saw a pullback during the early part of the invasion of Ukraine in Europe , but that rebounded as the quarter progressed. The one we have a strong demand.

Environment, and we're selling into that.

The demand environment from multiple vectors construction infrastructure.

In general building design as well as manufacturing working across these things and what was happening at the same time and I think this is an important point about the underlying kind of health and resilience in our business is even when we saw a dip in our new business growth in Europe . During just as the invasion in the Ukraine started which by the way.

As the quarter progressed renewal rates strengthened.

Broadly we saw broad strengthening in renewal rates, so that broad strengthening of renewal rates actually been able to offset some of the slowness in the new businesses. All of these things are things that we expect to see continue throughout the year and provide durability and stability for our business now the U S with.

Strong during the year as well we did see we did see some.

It's early on in APAC, because it was most sensitive to the currency effect, but if you take out some of the Kobe effective regions, like Japan, and China, or Japan, specifically, we saw a much higher growth rate in APAC. Then are indicated by by the overall results all of it.

Balanced between new business and offsetting impacts from renewable businesses. So between the diversity of our geographic diversity, where we're kind of distributed across multiple spaces.

Think of diversity, we have around selling into infrastructure construction core design.

The court sent manufacturing and the offsetting a really strong renewal rates, increasing renewal rates even in areas.

Weaker or at least some weakness some new business that gives us confidence in terms of the durability for the rest of the year.

Awesome, Thanks keep up the great work.

Thank you Phil.

Yeah.

Thank you. Our next question comes from Jay Felicia Griffin Securities. Your question. Please.

Good evening.

<unk> ahead into next year first fiscal 'twenty for cash flow.

A question as to how Youre going to work with the channel to get through that.

Five or six years ago. When you went through your first multi phase transition in the model you were very country anxious about making sure you've got the channel through all the changes in terms of upfront upgrades maintenance and so forth.

And so when you look into next year and beyond.

Are you thinking about preserving or managing channel margins their cash flow their recurring revenue streams.

You go through that valley of your own cash flow next year, and then look through a rebuild.

That's the first question.

Alright, Okay. So let's start with that Jay So first off let's just back up and talk about the high level principle that we're working towards here right. We're trying to move away from these upfront multiyear deals to annualized billings none of US want this we don't like the way it creates the lumpiness in our cash flow frankly, our partners don't like the way it creates.

Lumpier in their cash flow as well and they don't like discounting to get multiyear upfront deals closed so.

You look at this we're trying to create a more stable reliable and predictable cash flow build out beyond FY 'twenty FY 'twenty four and beyond okay. So, yes, FY 'twenty four will be the trough, but after that we're going to grow much more consistently double digits out and predictably moving forward, which is what we want.

What you want we can't get there fast enough and frankly, our partners can't get there fast enough, but we do integrate programs to help them get there one of the core programs here right. Now is we're encouraging them to work with us on conserving some of that upfront passed they they're going to be collecting because that's cash flow directly into the partner's pocket alright, and then we do adjust.

Core early on some of their back end and they are back and incentives to ensure that they can transition smoothly from a cash flow basis, we continue to.

<unk> working.

Support our business the way they have so it's not that different from what we've done previously, but youre right. We have to support them through this dip, but once we're all through this dip is this nice predictable cash flow buildup that we all want and it's going to create a stronger and more reliable business and more durable business.

They are they like it we like it and we're helping them through it.

Okay. Thank you for that.

Shorter term question, you've mentioned a couple of times so far in the call.

Usage rate, which is always useful to hear about could you speak about that Andrew in terms of vertical or end markets. You spoke about it by Geo and generally but could you speak about it in terms of AUC, including in particular ACC.

Manufacturing and perhaps even when we've seen in terms of Standalone apps versus collection usage.

Yeah.

Here's what's interesting alright, and this is another one of these things.

Really great about our portfolio.

The increase in monthly active usage was broad based.

There wasn't any particular place.

<unk>.

Stronger or weaker than the other alright. So we saw increases in monthly active usage of Autocad rabbit invent.

Inventor fusion.

And in fact in construction cloud, we saw a 30% year over year increase in monthly active usage.

A really nice surge on the construction cloud side. So there wasn't any particular standout or hold out in.

Monthly active usage numbers, they really were broad across the across the spectrum now when you talk about.

Collection.

Don't really look at it that way I mean, we just look at adoption with.

Adoption of the individual products, we don't necessarily flag it according to a collection, but one thing we've consistently saw multi product usage continues to be robust in the collection environment and actually we've been fighting that data differently over time, So we've got a better sense for how multi product usage with predict.

Moving forward and it looks pretty solid so the people who buy collections really are engaged in multi product usage, but no hotspots or cold spots in terms of its monthly active usage growth growth geographic or industry wise.

I remember it was a slowdown when when Russia invaded Ukraine, but it came back as the quarter progressed.

Understood. Thank you Andrew.

Thank you again.

Thank you. Our next question comes from Telia.

Barclays. Your line is open.

Okay, Great Hey, guys. Thanks for taking my questions here.

Debbie maybe maybe I'll start with you.

Our adjusted 34% operating margin this quarter great to see the guide is for 36% for the year I know, we're taking a point out of that for Russia. So it's not not a.

A huge ramp through the year, but it's a question that we get nonetheless, so I'm just wondering if for everyone's benefit you can just go one level deeper into some of the moving parts around the margin expansion this year, particularly in this inflationary environment.

Sure. Thanks, Doug So before I say anything I want to let all of you guys know that I have a terrible cold.

It is now.

Because I know my voice sounds where I believe I, just figured I'd be upfront about it so there werent any questions I also.

I don't want you to interpret my unusual sounding voice of the lack of enthusiasm. Unfortunately, it's just a garden variety called not COVID-19 that I'm struggling all good anyway, and we wanted to be upfront about it I appreciate that.

Answer your question.

At the end of the day.

The biggest driver of margin improvement over time is going to be revenue growth and it's that revenue growth combined with our continued discipline with spend that's going to deliver that leverage.

For this year's guide.

236% is a little bit.

Does have the impact to the top line that we saw from Russia, and we had that impact flow through to the margin let.

We think it's important to continue to invest to further our strategy, we don't want to be doing any kind of knee jerk reaction on spend because of Russia.

The inflationary pressures that you mentioned are there were monitoring them closely but right now we feel it's all manageable.

I'd also point out that the <unk>.

Margin target at 36% represents a four percentage point improvement year over year. So we're delivering considerable operating margin leverage at our scale.

As we progress through fiscal 'twenty, three we're assuming a gradual improvement in margin as the revenue grows and as we continue to tightly manage our spend and that's a similar pattern to what we saw in fiscal 'twenty two.

Got it very helpful.

Drew maybe maybe for you.

Follow up thanks, Thanks, a bunch for the macro commentary great to see the the consistent renewal rates and the and the increase in monthly active users I was wondering if you could just look at it from a different lens and and wondering if you could just talk about your new business sort of how that trended in Q1 qualitatively of course, and how youre thinking about that as part of the <unk>.

Full year guide.

Yeah, so the new business trended pretty consistently in the U S throughout the quarter.

It trended fairly consistently in APAC throughout the quarter there was a slowdown.

During the Ukrainian in Beijing at the beginning that recovered as the quarter progressed and what we're doing right. Now is we're looking at those new business trends and we're essentially carrying them forward into the year expecting them to continue at similar levels as we as we go through the year, obviously, we saw.

And a complete evaporation of new business in Russia, and some impact from Belarus, but like I said.

Europe Europe recovered.

After shortly after the invasion progressed. So that's the way we're viewing these that's the way they played out throughout the quarter and were assuming similar performance throughout the year.

Got it very helpful guys. Thank you.

Thank you Seth.

Good one.

Thank you. Our next question comes from Adam Borg with Stifel. Your line is open.

Great and thanks for taking the questions.

Maybe just for Andrew you spent.

That amount of time in your prepared remarks talking about infrastructure, including the largest deal in just the breadth of your portfolio.

I'd love to just get an update.

Our conversations with the industry, how youre thinking about the upfront.

Existing infrastructure Bill latest thoughts on the impact of the industry and ultimately the impact of autodesk or any such timing there.

Yeah. So.

You've probably read recently that not a lot of money is made it out yet.

What we told you in when the building originally path. It takes time for these things to make their way into the system.

Most of our customers are in proposal mode right now.

The transportation and other places are in proposal mode. Some grants have been awarded and the money will start flowing soon so we expect to see projects related to some of the infrastructure build spending to show up we're particularly interested in the $100 million.

That's being targeted to help departments of transportation drive digital technologies into their processes.

<unk> been talking to the department of transportation in the U S Department of transportation on how best to kind of drive that into the data. So that they can actually utilize that money to change their processes, but we haven't seen a lot yet, but what we are seeing is customers like for instance, what we saw with AE com.

EPA renewals coming on they are layering in.

Structuring cloud and infrastructure capabilities, specifically in advise in the AE com deal to get ahead of some of that water is going to be a big deal in the infrastructure spending and it's showing up to be a big deal and a lot of places I expect we're going to see that trend continue as we head into some of the contracts.

Actually getting awarded in the money actually flowing out of Washington that people will buy for instance in a buys on some of their renewals.

They're kind of deal discussions with us to get ahead of some of the things that they are probably going to be bidding on.

That's really helpful and maybe just a real quick follow up on the macro obviously you guys are very clear about the diversity of the strength that you've seen and maybe I'll just ask the diversity question slightly differently.

In the past you've talked about small enter the market a bit and in the larger end by different customer sizes by employees of seat I'm. Just curious any differentiation you saw across the installed base, but we're looking that way in terms of.

Macro both the installed base and do business there. Thanks again.

Yes, no significant differentiation absolutely that's the low end of the business hold up.

Quite well actually and we have a standard clip of new customer acquisition that we that we see just about every quarter as a percentage of our business.

Didn't change it held steady and the new customer acquisition generally speaking you know the customers that have never been in our database before generally come from the low end of our business. So the low end held up well you saw the high end held up well there was some pressure with regard to.

People kind of growing their installs net revenue net revenue retention rate. So no new inside of existing accounts saw some pressure, but not a lot and actually that that improved as well. So no no discernible strong differences worth noting between the various segments.

Excellent. Thanks again for the time.

Thank you. Our next question comes from Matt Hedberg of RBC capital markets. Please go ahead.

Great. Thanks, guys, Hey, Andrew maybe for you first obviously I think we all understand that this business is not as cyclical as autodesk of old.

And I think that's clear through the subscription transaction transaction transition here now if the global economy were to slow I just wanted to double click on really the value of your subscriptions and why these renewal rates could could be better than a lot of investors perceive even if even if there is a slowing.

Well.

First off and foremost.

They they need these subscriptions to do their jobs alright, alright.

They have to they need the software to build their books to do their book of business right.

If you look at our customers you talk to our customers and I'm sure you looked at some of the indicators of some of the things that are out there our customers have a fairly robust book of business. In fact, most of our customers are building up a backlog and.

If you have a conversation with them their biggest challenge right now is I cant hire.

Having trouble hiring materials arent showing up on time like I told you last year, they were likely to price inflationary pressure into their bids. So it's not so much that they're dealing with.

Cost.

Cost compression between bid price and cost price. It has a lot more to do with labor and.

And access to the materials for delivery none of them are talking about pulling back anytime soon because of the backlog, they're seeing in their business because they need the software they need it they.

They need it now so they're going to continue to renew the software.

To keep using it and.

They're looking to hire more people they just can't find them right now.

That is that's super helpful. Thank you for that and then Debbie outlook, we'll see for voice can hold up here.

Obviously, a big year for multiyear renewals that ramps throughout the year, but I was wondering was there anything that surprised you about billings duration and <unk> and maybe how might that progress as the year unfolds.

Uh huh.

Thanks, Matt nothing nothing surprising we continue of course to track the multiyear cohort closely.

The proportion of volume that we've been seeing for multi year was in line with our expectations for all of fiscal 'twenty, two and also into Q1 and fiscal 'twenty three so that gives us.

Confidence in our fiscal 'twenty three outlook.

Got it well done guys.

Cool.

Our next question comes from drove for Inc.

Baird Your line is open.

Great.

Hi, everyone. One thing that stood out this quarter was the accelerating growth from the partner channel how much would you credit some of the recent initiatives like opening up construction cloud or being able to get in front of customers with some of the new commercial formats.

So just kind of the general trends in the business that you've been talking about.

Yes, that's an excellent question I can't give you a particularly deep answer their house.

We did see significant growth in the partner channel with construction cloud and we're starting to light up construction cloud in the channel, which is really important for us in terms of our mid market expansion of that business. So it probably had an effect on certain key partners, but to give you the exact detail about how much of that was related to new <unk>.

Within the channel versus their traditional business theyre turning over.

Can't really give you an exact breakdown on that David.

Do we have any fidelity on that at all with regards to the channel business.

Not at this point I would say.

We saw broad based strength through the channel through our channel partners during the quarter outside of course of Russia, and then that immediate slowdown that we talked about in Europe , then pick back up as we exited Q1, and we did see that momentum as we exited Q1, but I wouldn't highlight anything specific certainly the success that we're seeing in construction is helping.

But remember construction.

<unk> is a growth area for us on the whole, it's still a smaller part of our business. So that strength is contributing to overall partner strength, but we're also seeing just broad based strength through the core of our business as well.

Okay great.

And then all of them.

Asked another macro question, but can you maybe contrast.

This environment, we've been in late February onward, it sounds like ultimately trends have been good and stable.

Contrast that with last fall, obviously inflationary pressures still around they haven't abated, we're layering on some incremental macro things.

But stability now as opposed to some moderation last fall maybe differences or why do you see as contributing to the stability more recently.

Yes, well if you remember back in the fall I talked a lot about some of our customers being caught off guard by the rapid inflation and supply chain difficulties.

So some of our customers are on fixed bid contracts and fixed bid contracts. When your cost of goods are going up are really a serious issue for for their businesses. So their businesses, we're feeling a lot of pinch manufacturers.

We're having we're able to path.

Through to their customers directly AUC customers less so so manufacturers suffered more from some of the supply chain things.

What youre seeing now is customers. They don't you are not surprised by this they know how to bid the contract. So theres a general kind of bidding parity out there and people are building in inflationary impacts into their bids and into their projects. So that creates a much more stable environment for them with regards to having a book of projects that are.

Having their margins deteriorate rapidly and some that you want to get to that have better margins.

What they're seeing but now is it just a better spectrum of margins across the project. That's one key thing that contributes to the stability is that makes sense.

It does yes.

Thank you.

And we fully expected them to do that.

Thank you. Our next question comes from Keith Weiss of Morgan Stanley . Your line is open.

Hi, guys.

Thanks for taking the question very nice quarter.

Maybe following on on that last question.

Really a two part or one.

Debbie when you're talking to us about the full year guidance. It seems like we're adjusting for currency. That's just about it it doesn't sound like we are adjusting the forecast down or anticipation of any macro weakness or any further weakening of demand for it. So what I just wanted to clarify on that side of the equation and then too it's demand.

Those weekend.

And you can see.

Macro impacts kind of catching up with all of us.

In software land.

What's the reaction on sort of the spending side of the equation is the philosophy that we're looking to protect free cash flows or is it the market opportunity is too big and we really need to keep investing for growth.

We're going to look like we're saying take advantage of your balance sheet to be able to sustain that investment and get ahead of your.

Our competitors trying to understand kind of your philosophy on how you view.

Potential demand slowdown thank you.

Thanks, Keith lots to unpack there so if I got lost a little bit does it go. Please keep me honest, let's start with the guidance with the impact to the guidance.

We are talking about today relates to FX and Russia, you said FX, but it also includes Russia Theres no change to the underlying business assumptions for the rest of our business and that's because we.

We haven't seen a change in the demand environment for the rest of our business as a matter of fact, although we saw a bit of a slowdown focus mostly on Europe at the onset of the invasion of Ukraine, We saw a bounce back and we really exited Q1 with momentum and so that gives us confidence as we look to the rest of this year.

Year.

We've built into our guidance assumptions that reflect the demand that we saw as we exited Q1.

And then when we think about margin remember that with the subscription business model, we have a very resilient business model, even with the adjustment to revenue for Russia. It was only about a point of our total revenue, we let that flow through to operating margins because we want to make sure that we're not doing any kind of knee.

Jerk reaction on spend we think it's important to continue to invest to make sure that we can further our strategy.

I don't think I don't see a scenario at this point.

If the world or the economy were to deteriorate, even further that we would see substantial further pressure on operating margins because of that resilient business model, but of course, we're going to manage our business in the best way possible.

And this is absolutely the right time to invest in the business. When you are a business of our size with our resilience and our footprint and your youre up against smaller less resilient.

More challenged competitors you would that you invest you pull ahead of the competition you keep you keep focused on the things you are trying to do you expand your category leadership, you solidify category leadership and other places we've got category leadership and in <unk> and <unk>, which is.

Very important growth segment in AUC, we've got category leadership or designed through construction in.

In the construction space deals like deals like bravado.

E Comm basic these are all people trying to buy into the connected.

Hi, driven cloud based design to construction environment. That's the category, we're in and we're kind of already the team. So this is the perfect time to continue to invest.

It helps you lap the competition.

Competition won't be able to invest to the same degree I think this is not the time you pulled back alright, especially given the underlying strength of our business.

Solid you can see it we've got the deck, we've got the multiple vectors of resiliency here and the like.

Kind of a nice portfolio of <unk>.

<unk> that we can leverage.

I am definitely in a mindset that investment is good for us right now.

Got it that's super clear and long term I think that makes a ton of them.

Thank you. Our next question comes from Steve Koenig of SMB seem Nico Your line is open.

Hey, Andrew Hey, Debbie Thanks for taking my question, Debbie I have a cult too and it's not COVID-19. So we're on the sandbox. So I hope you get better soon here.

Hey, I wanted to.

May have missed it.

And I apologize if I did but.

Can you give can you give us a little more specifics on.

When you saw business start to bounce back in EMEA was it right at the end of the quarter was at a week after was it a little before.

And.

Yeah.

Got it.

One more for you Debbie.

Yeah actually it was.

Clearly short term after the initial invasion.

Within weeks Alright.

Wasn't like this long thing.

Fell off.

It slowed down a bit.

The invasion started and then within a few weeks. It was it was rising back up again.

Backup toward it started so.

It didn't it didn't take that long it surprised us honestly.

Mhm.

And was it.

I was trying to parse your earlier statements was it.

Was it kind of balanced between new business and renewals or was it was it kind of more one or the other.

Renewal states strength strong throughout the entire cycle alright, so renewals kept building as the quarter progressed, there was never a slowdown and renewal momentum.

And matter of fact, if anything it just kept strengthening and strengthening right. It was only it was only in the new business Park that we saw.

A slowdown post invasion that that recovered so no. It just kept building.

Yes.

Got it got it okay great.

Then for my follow up in an accident, you know youre walking into after that because you see fit.

So you raised prices at the end of March and I'm sure. That's all embedded in your guidance.

And it allows you to invest appropriately and just on the margins you want how do you think about you know in this inflationary environment.

Sure.

Your internal compensation.

Trajectory and also what Youre doing with partners and how does inflation affect your your plants. There what did you what do you have to tweak or for NAFTA.

You have very high employee retention very good rate so.

How do you maintain that percentage.

Taking my questions.

Yeah. So let me let me because there's two there's two questions. There first let me comment on the price increases so that we're all on the same page here.

On the price increases were highly targeted to certain parts of the world, where we had artificially suppress the price below our long term goal of having standard Euro U S and yen denominated pricing. So what youre seeing is in certain places we are raising prices to equalize.

We can get to this kind of standard based pricing that simplifies that sum up our go to market practices. So we had some artificially suppressed prices and regions and that that's what was going on there. Okay. If there's no change in our standard pricing policy impact places like Europe did not see a price increase alright. So I just wanted to be clear we're all on the same.

Page with regards to pricing and the things associated with that now with regards to inflationary pressures and you're on certainly unemployment areas, but we're no different alright.

We see pressure in terms of employee compensation and trying to help our employees navigate an increasingly inflationary environment. We increased our raised a raise pool, we increased our bonus this year and equally important we are increasing our stock based compensation and youll, probably see us continue to increase our stock based compensation.

Our employee base. So these these moves were made and baked into the year well.

Well ahead of the start of the year to ensure that we were able to meet our employees or at least try to meet our employees, where they where they were at but we will certainly continue to look at our position we will.

We continue to see some pressure there in terms of staying competitive we are retaining employees at high rates.

So continue to use stock based compensation more robustly and more broadly within the organization, which we think is good for the company good good for investors and good for employees.

Sounds good thanks very much Andrew.

Thank you. Our next question comes from Rob ensure of Deutsche Bank. Your line is open.

Great. Thanks for taking my questions and I'll focus my question to Amgen said that has both courts.

Just hoping to get them to call you noted the robust competitive performance during the quarter can you maybe just elaborate on this what verticals or products are seeing better success, and even improved win rates and what's driving some of this.

Yeah well.

It basically every sector.

I mean every one of our industries, we're growing faster than our competitors alright. So we're taking share as we're selling more seats in some highly competitive industries.

So youre seeing it.

It's doing well in ADC youre seeing is doing well in manufacturing.

Both on seat count and revenue count, which I think is really important because you want to watch both of those performances.

Good.

Quite nicely in the media and entertainment and year over year. So we are absolutely seeing broad based competitive performance I mean, obviously one of the places that we all all watch it construction too.

Structure and if you if you look at the kind of the raw make numbers, we grew 24% year over year, but you got to remember some of that construction that make opportunity is actually in the EPA is that's where candidates designed so when you look at our total make performance.

And taking that those EPA impacts, where we kind of put make components into the EBITDA. We grew into the mid thirties and construction cloud monthly active usage grew.

It's slightly north of 30%.

This is all great solid competitive performance.

Construction quality of assessment.

This growth quarter international growth for construction cloud was significantly higher.

Then it's regular growth.

Lighting up the channel in the mid market.

We're kind of solidifying our category leader position in this design through construction position.

Essentially anybody else in this player in the space kind of outside that category. They are very niche or there is on the waiting waiting for the industry to move on and move past them. So.

I think we're in a very strong competitive position right now.

It's our job to continue to maintain that but it was across all the industries. We served.

Super helpful and thanks for that color and just one quick follow up it was really interesting to see that largely did deal include an adviser and these are good things there as well where are you on your innovation plans just with this solution and where are you in terms of evolving the product set here and how do we just think about the pipeline of customers who are looking to leverage some of your water based products.

Yes look we've made really.

Great progress integrating in advising the company was fairly similar to us.

When we when we bought them. So theres a lot of things that are rapidly getting integrated of course, there are some product integration pieces and some back office systems that are still kind of working through some of the integrations, but in terms of integration that's not a barrier right now.

Two to where we're at within advisors, one of the things Thats exciting about what <unk> does is it already kind of fulfill the end to end vision for water that we have for construction and manufacturing. It goes everywhere from design all the way to operate and it has some fairly sophisticated cloud based tools for water infrastructure.

Structure operators.

Very broad piece of it and it fits incredibly nicely into our portfolio. Both story wise strategy wise and frankly sales motion wise.

And ladies and gentlemen that is all the time, we have for Q&A. Today. This concludes today's conference call. Thank you for participating you may now disconnect.

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Thank you for standing by and welcome to Autodesk first quarter fiscal 2023 earnings call. At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question. During the session you are willing.

To press Star one on your telephone please be advised that todays call may be recorded should you require any further assistance. Please press star zero I would now like to hand, the call over to your host VP Investor Relations Simon Mays Smith. Please go ahead.

Thanks, operator, and good afternoon. Thank you for joining our conference call to discuss our first quarter results of our fiscal 'twenty three.

With me are Andrew agnostic.

And Debbie Clifford our CFO .

Today's conference call is being broadcast live via webcast. In addition, a replay of the call will be available at Autodesk Stockholm forward Slash investor.

You can find the earnings press release slide presentation and transcript of today's opening country. Following.

Investor Relations website following this call.

During this call we may make forward looking statements about our outlook future results and related assumptions acquisitions products and product capabilities and strategy.

These statements reflect our best judgment based on currently known factors.

Actual events or results could differ materially.

Please refer to our SEC filings, including our most recent Form 10-K, and the form 8-K filed with today's press release for important risks and other factors that may cause our actual results to differ from those in our forward looking statements.

Forward looking statements made during the call are being made as of today.

This call is replayed or reviewed after today the information presented during the call may not contain current or accurate information.

<unk> disclaims any obligation to update or revise any forward looking statements.

During the call we will quote several numerical growth changes as we discuss our financial performance.

Unless otherwise noted each such reference represents a year on year pass.

All non-GAAP numbers referenced in today's call are reconciled in our press release, <unk> financials, and other supplemental materials available on our Investor Relations website.

Now I will turn the call over to Andrew.

Thank you Simon and welcome everyone to the call.

Geopolitical and policy uncertainty.

These growth drivers further cement the important role we play in our customers' digital transformations and increase our confidence in our strategy.

Our steady strategy industry, leading products platform and business model innovation sustained and focused investments and strong execution are creating additional opportunities for autodesk.

By accelerating the convergence of workflows within and between the industries, we serve we create broader and deeper partnerships with existing customers and bring new customers into our ecosystem.

Customers can extend those capabilities through our partnerships with Oracle.

Planning and every geospatial mapping this is important because governments and asset owners across the globe are investing growing amount in next generation infrastructure to meet the societal and environmental needs over the next century, and our retooling now to do it that equals opportunity for Autodesk for example.

In the first quarter, we signed our second largest EPA ever with a large global infrastructure company in a deal that included enterprise and Autodesk built for the first time.

And by doing that we will move beyond carbon neutrality for ourselves to transform our customers' carbon footprint together, we can design and make a better world for all of the advances equitable access to the in demand skills of the future.

Before I turn the call over to Debbie to take you through the details of our financial performance and outlook I want to update you on important decisions, we made about our business in Russia.

You will recall that the invasion of Ukraine occurred hours before our last earnings call.

Why are the conflicts we halted all of our new and renewal business in Russia on March <unk>.

We strongly believe this decision was the right thing to do and that it is in our long term interest even though it comes at a cost, which Debbie will detail in a moment.

Of course, our immediate focus remains on the safety and wellbeing of our employees in the region and we continue to monitor the situation closely.

Beyond the immediate impact in Russia, other leading indicators trend positive for example usage remained steady in Europe during the quarter and grew in America and Asia Pacific Region building connected bid activity again hit record levels and our partner channel remains optimistic.

The strong momentum sets us up well for the remainder of the year.

Debbie now over to you to take everyone through the details of our quarterly financial performance and guidance for the year I'll come back afterwards to provide an update on our strategic growth initiatives.

Thanks, Andrew.

Q1 was a strong quarter driven by broad based strength across products and regions.

If we compare the revenue result versus guidance the outperformance was due to that strength as well as the upfront revenue and a large EMEA, which we had forecasted would close later in the year.

Total revenue grew 18% and 17% in constant currency.

By product.

Auto Cat and Autocad LT revenue grew 21%.

<unk> revenue grew 17% manufacturing.

<unk> revenue grew 14% and <unk> revenue grew 24%.

By region revenue grew 24% in the Americas, 17% in EMEA and 10% in APAC.

Direct revenue increased 22% and represented 34% of total revenue up one percentage point from last year due to strength in both enterprise and E Commerce.

Our product subscription renewal rates remained at record highs and our net revenue retention rate was comfortably within our 100% to 110% target range.

Billings increased 16% to $1 $1 billion, reflecting robust underlying demand.

Total deferred revenue grew 12% to $3 7 billion.

Total <unk> of $4 7 billion and current RPI of $3 1 billion grew 11% and 10%, respectively, reflecting strong billings growth and as I flagged last quarter, the timing and volume of multiyear contracts, which are typically on a three year cycle.

GAAP operating margins increased by four percentage points to approximately 18%.

As Andrew mentioned, we delivered record first quarter free cash flow of $422 million up 34% year over year, reflecting strong billings growth in both Q4 in Q1.

With the broad equity market pullback in Q1, and our strong cash position, we again accelerated our share repurchases during the quarter.

We purchased $2 1 million shares for $436 million at.

At an average price of approximately $212 per share.

Which contributed to a reduction in our weighted average shares outstanding of approximately $2 million.

Well our capital allocation strategy remains unchanged you can expect that we will continue to invest organically and inorganically to drive growth.

Last two quarters, we've proactively used our strong liquidity to accelerate repurchasing and will continue to be opportunistic in doing so when market conditions allow for it.

Now, let me finish with guidance.

The overall headline is that the underlying business conditions that we've been seeing are unchanged safer, Russia and the continued strengthening of the U S.

Our business continues to perform well and to post top line growth ahead of our peers.

As you can imagine we're keeping a close eye on the geopolitical macroeconomic and policy environment.

But against that backdrop in Q1 renewal rates remained strong multiyear billings were in line with our expectations.

Did the quarter with strong momentum.

As we look ahead and as with previous quarters, we're assuming that market conditions in fiscal 'twenty three are consistent with recent quarters.

The decision to halt our new and renewal business in Russia had a direct impact on our outlook.

Billings decreased by approximately $115 million.

Revenue by $40 million and free cash flow by $80 million.

Of course, we're not satisfied with that outcome and we'll work hard to mitigate the impact accelerating our channel evolution.

<unk> retention and digital growth initiatives and by doubling down on early successes from recent acquisitions like <unk>.

Beyond Russia.

<unk> continued to strengthen during Q1.

Bringing these factors together, we expect fiscal 'twenty three revenue to be between $4 96, and $5 6 billion.

We expect non-GAAP operating margins increased 400 basis points year over year to approximately 36%, reflecting one point of impact from removing Russia from our forecast.

We expect free cash flow to be between 2.0 and 2.08 billion.

The slide deck on our website has more details on modeling assumptions for Q2 and full year fiscal 'twenty three.

The volatile global environment has reinforced the structural growth drivers underpinning our strategy gives us confidence in our long term growth potential.

We continue to target double digit revenue growth non-GAAP operating margins in the 38% to 40% range and double digit free cash flow growth on a compound annual basis.

These metrics are intended to provide a floor to our revenue growth ambitions and a ceiling to our spend growth expectations Andrew back to you.

Thank you Debbie our strategy to transform the industries, we serve with end to end cloud based solutions that drive efficiency and sustainability for our customers.

Our business is scalable and extensible into adjacent verticals from architecture, and engineering to construction and owners from product engineering through product data management and product manufacturing.

It is also scalable and extensible between verticals with industrialized construction into new workloads.

By accelerating the convergence of workflows within and between the industries. We serve we are also creating broader and deeper partnerships with existing customers and bringing new customers into our ecosystem.

Growing investment in infrastructure customers are increasingly seeking both efficiency and sustainability to meet ESG goals, such as net zero carbon resiliency quality of life social impact on safety.

Aligned AE com and its customers closely with autodesk values capability.

Q1 E com renewed and increased EBITDA with Autodesk.

Across the globe, our customers are seeking to connect and streamline their workflows as we enable our partner network to distribute autodesk construction cloud, we serve more of that growing demand.

For example, Ramadan, which has faced in Sweden is a leading provider of technical end to end consulting design installation and service solutions across the Nordic region, focusing on efficiency and sustainability.

It is responsible for the installation of fire sprinklers emulation electrics and safety systems and the tunnel the Stockholm bypass project the largest infrastructure project in Sweden.

Dumping auditors built enables interconnect often fueled data and workflows in the cloud standardized.

<unk> accurately and manage procurement and logistics health and safety and cost more effectively and efficiently.

With the launch of <unk> built the introduction of an account based pricing business model distribution through our channel partners and giving some contracts with the ability to have their own instance of their data we're connecting more workflows, both within construction and between adjacent workflows design, Preconstruction and operations and maintenance.

After evaluating various project management solutions for more than a year Donahoe construction company a top mid market GC in Washington D. C shows August built seamlessly connect project site and cost management workflows, Autodesk industry, leading cost management system, which is integrated into an included.

With Autodesk Bill is anticipated to enable donohoe to control change order management and reporting much more seamlessly with its project and site management workflows.

Excited to partner with donohoe to build a sustainable future together.

We're investing in harvest construction cloud to do even more for example, we launched bridge to enable sub contractors to have their own instance of their data a critical factor in improving their business processes. We're also rapidly integrating <unk>. So the estimates can be pushed to the cost module and artist bill, enabling it to automatically create a.

Right.

With strong growth from <unk>, Bill and the benefit of recently launched ACC bundles for pre construction and construction operations Autodesk construction cloud reported its best ever new business quarter.

With an increasing proportion of that growth coming from EMEA, and APAC and growing contract size and renewal rates.

Turning to manufacturing, we sustained strong momentum in our manufacturing portfolio. This quarter as we connected more workloads beyond the design studio develops more on ramps to our manufacturing platform and delivered new powerful tools and functionality through fusion 360 extension.

As we connect and develop new workflows in the cloud and provide more ways for customers to use our products, we have the opportunity to renew engagement with some of our legacy customers. For example, a high tech manufacturer in Germany, which has been using Autodesk software. Since 1991 was using inventor software purchased in 2018.

By updating from a perpetual license to a product design and manufacturing collection subscription in Q1, the team will benefit from significant process and performance improvements, which have libre in mechanical engineering bottleneck and better serve its high demand periods because of its familiarity with autodesk customer enabled these improvements immediately and leveraged <unk>.

Listing IP migration, we are happy to have them back on our latest and most secure software.

In automotive, we continue to grow our footprint beyond the design studio into manufacturing as automotive Oems seek to breakdown work silos, and shorten handoff and design cycles, innovate motors and electric vehicle manufacturer in China and in product design and manufacturing plus on top of it.

Subscriptions to achieve a seamless digital workflow across design and manufacturing.

Innovate, we'll be able to build higher quality cars more efficiently by connecting workloads in the cloud that enable more collaboration and better data integrity.

Our fusion 360 platform approach enables customers to seamlessly connect workflows, while also delivering powerful tools and functionality to those that needed. Some extensions for example in educational toy manufacturer based in the U S. Starting to use the fusion 360 about a year ago and quickly recognize the impact working on the cloud would have on its ability to call.

Operating across sites between product design and product engineering Q.

Q1, it was able to seamlessly activate manage nesting and product design extensions within the fusion 360 user interface, giving access to even more powerful tools and functionality to those that needed. It for example, the fusion 360 manage extension unlocks additional data management functionality to manage design changes at any stage of production.

With the click of a button using prebuilt workflows.

Q1, Gtt's adopted fusion 360, <unk>, two and by making courses because it was easy for students to work spanned the entire course from conceptual design through stimulation to fabrication and gave students and an experienced with next generation workflows, such as generative design three printing for additive manufacturing and digital stimulation of Gen.

<unk> T code outputs and finally, we continue to bring more users into our ecosystem through business model innovation and license compliance initiatives basically.

<unk> is a multi disciplinary firm whose contract in construction infrastructure and machine works often have a high level of complexity.

We supported standardization effort across all projects that regions. The basic group uses beam collaborate pro adopts to collaborate on rebit projects in a secure common data environment for <unk>.

Security efficiency it now Leverages, our premium plan and flat by better understanding its usage through the enhanced reporting functions within our premium plant and can provide access to occasional users to flat while realizing the additional security benefit a single sign on across its global employee base.

With their leadership, we ensured the relevant departments had access to the necessary tools by combining subscriptions to our industry collections with flex tokens and collaborative approach resulted in a compliance deal of over 1 million euros. During the quarter. We closed eight deals over $500000 Starbucks suppliers, two of which were over one.

Thank you.

Let me finish with a story I recently visited the futures exhibition Smithsonian institution in Washington DC.

I highly recommend visiting if you are in the area of the summer before it closes in mid July .

It is the Smithsonian's first building wide exploration of the future.

What is partnering with the Smithsonian to create an interactive experience called future communities that brings visitors together to build a sustainable community block using analytics and Gold's gym design with Autodesk generative design technology.

<unk> collaborate both with each other and AI adjusting the input they deemed most important.

Each guest takes on a different persona with specific goals input factors, which include social ecological and economic considerations ranging from availability of green space low carbon transportation to the reach of public services and employment opportunities.

Bolton community pocket displayed in real time, and the technology showcases the types of tradeoffs necessary to achieve various outcomes.

The exhibit not only represents rns vision of the future that is collaborative and connected workflows and data in the cloud that desire that makes a better world for all that meet the challenges posed by carbon water and waste net advances equity and access to the in demand skills in the future. But in addition, the exhibit represent a very diverse.

First set of decisions for how the future manful.

The one thing they share is an unwavering sense of optimism about what we can all accomplish together.

Every day, our goal is to empower innovators with design and make technology at turns their vision into reality.

Bring them to achieve that new possible.

I share this story because it gives me great confidence in the future of Autodesk and our vision of a better world designed and made for all <unk>.

Operator, we would now like to open the call for questions.

Thank you and as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.

Standby, while we compile the Q&A roster.

Our first question comes from the line of Phil Winslow of Credit Suisse. Your line is open.

Thanks for taking my question and congrats on a great strong start to the year now construction cloud delivered its best new business growth quarter ever you signed your second largest EMEA ever with an infrastructure company and I loved obviously, the example of a manufacturing.

<unk>.

Getting current moving to subscription from a lapse of perpetual license.

When you think about this investors have been concerned about autodesk exposure, specifically to the cyclical end markets and the potential impact to your business. However, the numbers you just reported.

The.

Large deals we highlighted clearly don't don't show. This so my questions are what are you hearing from customers about why autodesk, you're seeing sustained demand and what gives you confidence in the durability of these drivers.

Yes.

Bill I think I think somebody wrote a report about not being a cyclical business anymore I can't remember who it was.

Analysts probably yes.

Probably an incredibly bright analytics.

A couple of things happened in the quarter end.

We're projecting those forward to the year, just consistently and I think it's important to kind of talk about this notion of diversification not only of geography geographical spread of our business, but disciplined spread and also business model spread.

And I'll talk about that on a couple of vectors. So first off let's just talk about what kind of highlighted in.

So you can see around our business.

Environment, and we're selling into that.

The demand environment from multiple vectors construction infrastructure.

In general building design as well as manufacturing so we're working across the bank and what was happening at the same time and I think this is an important point about the underlying kind of health and resilience in our business is even when we saw a dip in our new business growth in Europe . During the invasion in the Ukraine started which by the way Ricky.

As the quarter progressed renewal rates strengthened.

Strong during the year as well we did see we did see some.

<unk> early on in APAC, because it is most sensitive to the currency effect, but if you take out some of the Kobe effective regions like Japan, and China, where just Japan, specifically, we saw much higher growth rate in APAC. Then are indicated by by the overall results all of it.

Balanced between new business and offsetting impacts from renewable businesses. So between the diversity of our geographic diversity, where we're kind of distributed across multiple spaces.

The diversity, we have around selling into infrastructure construction core design.

The court sent manufacturing and the offsetting of really strong renewal rates, increasing renewal rates even in areas.

Weaker or at least some weakness some new business that gives us confidence in terms of the durability for the rest of the year.

Awesome, Thanks keep up the great work.

Thank you Phil.

Yeah.

Thank you. Our next question comes from Jay Felicia Griffin Securities. Your question. Please.

Good evening.

Looking ahead into next year first fiscal 2000 and for cash flow.

A question as to how Youre going to work with the channel to get through that.

And so when you look into next year and beyond.

Are you thinking about preserving our managing channel margins their cash flow their recurring revenue streams.

You go through that valley of your own cash flow next year, and then look through a rebuild.

25, that's the first question.

Lumpier in their cash flow as well and they don't like discounting to get multi year upfront deals closed so.

You look at this we're trying to create a more stable reliable and predictable cash flow build out beyond FY 'twenty to FY 'twenty four and beyond okay. So, yes, FY 'twenty four will be the trough, but after that we're going to grow much more consistently double digits out and predictably moving forward, which is what we want.

What you want we can't get there fast enough and frankly, our partners can't get there fast enough, but we do integrate programs to help them get there one of the core programs here right. Now is we're encouraging them to work with us on conserving some of that upfront past day theyre going to be collecting because that's cash flow directly into the partners pockets Alright, and then we do adjust.

Poor early on some of their backend their backend incentives to ensure that they can transition smoothly from a cash flow basis and continue to do.

Working.

Support our business the way they have so it's not that different from what we've done previously, but you are right we have to support them through this dip, but once we're all through this dip is this nice predictable cash flow buildup that we all want and it's going to create a stronger and more reliable business and more durable business.

They are they like it we like it and we're helping them through it.

Okay. Thank you for that.

Shorter term question you mentioned a couple of times so far in the call.

Usage rate, which is always useful to hear about.

You speak about that Andrew in terms of vertical or end markets you spoke about it by Geo and generally but could you speak about it in terms of AUC, including in particular ACC manufacturing.

Manufacturing and perhaps even when you're seeing in terms of standalone apps versus collection usage.

Yes.

What's interesting alright, and this is another one of these things.

Really great about our portfolio.

Increase in monthly active usage was broad base.

There wasn't any particular place that was <unk>.

<unk> are weaker than the other alright. So we saw increases in monthly active usage of Autocad rabbit.

Inventor fusion.

And in fact in construction cloud, we saw a 30% year over year increase in monthly active usage.

A really nice surge on the construction cloud side. So there wasn't any particular standout core holdout in monthly active usage numbers. They really were broad across the across the spectrum now when you talk about.

Collection.

We don't really look at it that way I mean, we just look at adoption with.

Adoption of the individual products, we don't necessarily flag.

Going to a collection, but one thing we've consistently saw multi product usage continues to be robust in the collection environment and actually we've been placing that data differently over time, So we got a better sense for how multi product usage with predict.

Moving forward and it looks pretty solid so that people who buy collections really are engaged in multi product usage, but no hotspots or cold spots in terms of its monthly active usage growth growth geographic or industry wise.

I remember there was a slowdown when when Russia invaded Ukraine, but it came back as the quarter progressed.

Understood. Thank you Andrew.

Thank you again.

Thank you. Our next question comes from Telia.

Barclays. Your line is open.

Okay, Great Hey, guys. Thanks for taking my questions here.

Debbie maybe maybe I'll start with you.

Our adjusted 34% operating margin this quarter great to see the guide is for 36% for the year I know, we're taking a point out of that for Russia. So it is not.

A huge ramp through the year, but it's a question that we got nonetheless, so I'm just wondering if for everyone's benefit you can just go one level deeper into some of the moving parts around the margin expansion this year, particularly in this inflationary environment.

Sure. Thanks packet so before I say anything I want to let all of you guys know that I have a terrible cold.

It is now.

Because I know my voice gradually I, just figured I'd be upfront about it so there werent any questions I also.

I don't want you to interpret my unusual astounding voice of the lack of enthusiasm. Unfortunately, it's just a garden variety called not covered that im struggling.

I just wanted to be upfront about it I appreciate that.

Answer your question.

At the end of the day.

The biggest driver of margin improvement over time is going to be revenue growth and it's that revenue growth combined with our continued discipline with spend that's going to deliver that leverage.

This year's guide the ramp to 36% is a little less.

Because of the impact to the top line that we saw from Russia, and we had that impact flow through to the margin. So we think it's important to continue to invest to further our strategy. We don't want to be doing any kind of knee jerk reaction on spend because of Russia, yes. The inflationary pressures that you mentioned are there we're monitoring.

Them closely but right now we feel it's all manageable.

I'd also point out that the margin target at 36% represents a four percentage point improvement year over year. So we're delivering considerable operating margin leverage at our scale.

As we progress through fiscal 'twenty, three we're assuming a gradual improvement in margin as the revenue grows and as we continue to tightly manage our spend that's a similar pattern to what we saw in fiscal 'twenty two.

Got it very helpful.

Andrew maybe maybe for you.

For my follow up thanks, Thanks, a bunch for the macro commentary great to see the the consistent renewal rates and the and the increase in monthly active users I was wondering if you could just look at it from a different lens and and wondering if you could just talk about your new business sort of how that trended in Q1 qualitatively of course, and how youre thinking about that is.

Part of the full year guide.

Yeah, so the new business trended pretty consistently in the U S throughout the quarter.

It trended fairly consistently in APAC throughout the quarter there was a slowdown during the Ukrainian in Beijing at the beginning that recovered as the quarter progressed and what we're doing right. Now is we're looking at those new business trends in more essentially carrying them forward into the year expecting that to continue.

It's kind of similar levels as we as we go through the year, obviously, we saw.

And a complete evaporation of new business in Russia, and some impact from Belarus, but like I said.

Europe Europe recovered.

After shortly after the invasion progressed. So that's the way we're viewing these that's the way they played out throughout the quarter and were assuming similar performance throughout the year.

Got it very helpful guys. Thank you.

Thank you.

Have a good one.

Thank you. Our next question comes from Adam Borg with Stifel. Your line is open.

Great. Thanks, a lot for taking the question.

Just for Andrew you spent a good amount of time in your prepared remarks talking about infrastructure, including the largest deal in just the breadth of your portfolio.

So love to just get an update on.

In your conversations with the industry, how youre thinking about the upfront or the existing infrastructure Bill latest thoughts on the impact of the industry and ultimately the impact of Autodesk any corresponding them.

Yeah. So.

You've probably read recently that not a lot of money is made it out yet.

What we told you when the building originally path. It takes time for these things to make their way into the system. Most of our customers are in proposal mode right now.

Harvest to transportation and other places are in proposal mode. Some grants have been awarded and the money will start flowing soon so we expect to see projects related to some of the infrastructure built spending to show up we're particularly interested in the $100 million.

Its being targeted to help departments of transportation drive digital technologies into their processes and we've been talking to the department of transportation in the U S Department transportation on how best to kind of drive that into the data. So that they can actually utilize that money to change their processes, but we haven't seen a lot yet, but what we are.

Our team is customers like for instance, what we saw with AE com.

<unk> renewals coming on they are layering in.

Construction cloud and infrastructure capabilities, specifically in advise in the AE com deal to get ahead of some of that water is going to be a big deal in the infrastructure spending and it's showing up to be a big deal and a lot of places.

We're going to see that trend continue as we head into some of the contracts actually getting awarded in the money actually flowing out of Washington that people will buy for instance in a buys on some of their renewals and some of their their kind of deal discussions with us to get ahead of some of the things that they are probably going to be bidding.

One.

In the past you've talked about small end of the market the mid end and the larger and by different customer sizes by employees of seat I'm. Just curious any differentiation you saw across the installed base, what we're looking at that way in terms of.

Macro both the installed base and do business there. Thanks again.

No significant differentiation actually the low end of the business hold up.

Quite well actually and we have a standard clip of new customer acquisition that we that we see just about every quarter the percentage of our business.

Didn't change it held steady and the new customer acquisition generally speaking the customers that have never been in our database before generally come from the low end of our business to the low end held up well you saw the high end held up well there was some pressure with regard to.

Excellent. Thanks again for the time.

Thank you. Our next question comes from Matt Hedberg of RBC capital markets. Please go ahead.

Great. Thanks, guys, Hey, Andrew maybe for you first obviously I think we all understand that this business is not as cyclical as autodesk of old.

And I think that's clear through the subscription transaction transaction transition here now if the global economy were to slow I just wanted to double click on really the value of your subscriptions and why these renewal rates could be better than a lot of investors perceive even if even if there is a slowly.

Well.

First off and foremost.

Good day, they need these subscription to do their jobs alright, alright.

They have that they need the software to build their books to do their book of business right and if you look at our customers, we talk to our customers and I'm sure you looked at some of the indicators and some of the things that are out there our customers have a fairly robust book of business. In fact, most of our customers are building up a backlog and if you have a conversation.

With them their biggest challenge right now is I cant hire.

Having trouble hiring materials arent showing up on time like I told you last year, they were likely to price inflationary pressure into their bids. So it's not so much that theyre dealing with.

<unk> cost compression between bid price and cost price.

It has a lot more to do with labor and.

And access to the materials for delivery none of them are talking about pulling back anytime soon because of the backlog they're seeing in their business. So they need the software they need it.

They need it now so they're going to continue to renew the software in order to keep using it and.

They're looking to hire more people they just can't find them right now.

That is that's super helpful. Thank Debbie outlook, we'll see for voice can hold up here.

Obviously, a big year for multiyear renewals that ramps throughout the year, but I'm wondering was there anything that surprised you about billings duration and <unk> and maybe how might that progress is the euro pools.

Thanks, Matt nothing nothing surprising we continue of course to track the multi year cohort closely.

And the proportion of volume that we've been seeing for multi year was in line with our expectations for all of fiscal 'twenty, two and also into Q1 of fiscal 'twenty three so that gives the cons.

Confidence in our fiscal 'twenty three outlook.

Got it well done guys.

Our next question comes from drove for Wink.

Baird Your line is open.

Great.

So just kind of the general trends in the business that you've been talking about.

Yes, that's an excellent question I can't give you a particularly deep answer there how's.

However, we did see significant growth in the partner channel with construction cloud and we're starting to light up construction cloud in the channel, which is really important for us in terms of our bid market expansion of that business. So it probably had.

<unk> on certain key partners, but to give you the exact detail about how much of that was related to new business within the channel versus their traditional business theyre turning over.

Can't really give you an exact breakdown on that David.

Do we have any fidelity on that at all with regards to the channel business.

Not at this point I would say I mean, we saw broad based strength through the channel through our channel partners during the quarter outside of course of Russia, and then that immediate slowdown that we talked about in Europe that then pick back up as we exited Q1, and we did see that momentum as we exited Q1, but I wouldn't highlight anything specific certainly the success.

That we're seeing in construction is helping.

But remember construction wallets and explosive growth area for us on the whole, it's still a smaller part of our business. So that strength is contributing to overall partner strength, but we're also seeing just broad based strength through the core of our business as well.

Okay great.

And then all of that.

Another macro question, but can you maybe contrast business environment. We've been in late February onward, it sounds like ultimately trends have been good and stable.

Contrast that with last fall, obviously inflationary pressures still around they haven't abated, we're layering on some incremental macro things.

But its stability now as opposed to some moderation last fall maybe differences or why do you see as contributing to the stability more recently.

Yes.

If you remember back in the fall I talked a lot about some of our customers being caught off guard by the rapid inflation and supply chain difficulties.

Some of our customers are on fixed bid contracts and fixed bid contracts. When your cost of goods are going up are really.

Serious issue for for their businesses. So the businesses, we're feeling a lot of pinch manufacturers.

We're having.

We're able to pass the cost through to their customers directly AUC customers less so so manufacturers suffered more from some of the supply chain things.

What youre seeing now is customers. They don't you are not surprised by that they know how to bid the contract. So theres a general kind of bidding parity out there and people are building in inflationary impacts into their bids and into their projects. So that creates a much more stable environment for them with regards to having a book of projects.

Are having their margins deteriorate rapidly and some that you want to get to that have better margins.

We're seeing much better now is it just a better spectrum of margins across the project. That's one key thing that contributes to the stability is that makes sense.

It does yes.

Thank you.

And we fully expected them to do that.

Thank you. Our next question comes from Keith Weiss of Morgan Stanley . Your line is open.

Hi, guys and.

Thank you for taking the question.

This quarter.

Maybe following on on that last question.

A two parter.

One.

Debbie when you are talking to us about the full year guidance. It seems like we're adjusting for current Steve that's just about it it doesn't sound like we are adjusting the forecast down or anticipation that any macro weakness or any further weakening of demand for it. So I just wanted to clarify on that side of the equation and then too.

Does weekend.

You can see.

The macro impact kind of catching up with all.

Software land.

What's the reaction on the spending side of the equation with the philosophy that we're looking to protect free cash flows or.

Is it the market opportunity is too big and we really need to keep investing for growth.

And we're going to look with the same take advantage of your balance sheet to be able to sustain that investment and get ahead of your.

Our competitors are trying to understand kind of your philosophy on how you view.

Potential demand slowdown thank you.

Thanks for your thoughts on pack there. So if I got lost a little bit as I go. Please keep me honest, let's start with the guidance with the impact to the guidance that we're talking about today relates to FX and Russia, you said FX, but it also includes Russia Theres no change to the.

Underlying business assumptions for the rest of our business and that's because.

Year.

And we built into our guidance assumptions that reflect the demand that we saw as we exited Q1.

And then when we think about margin remember that with the subscription business model, we have a very resilient business model, even with the adjustment to revenue for Russia.

It was only about a point of our total revenue.

Let that flow through to operating margins, because we want to make sure that we're not doing any kind of knee jerk reaction on spend we think it's important to continue to invest to make sure that we can further our strategy.

I don't think I don't see a scenario at this point.

And this is absolutely the right time to invest in the business. When you are a business of our size with our resilience and our footprint and your you are up against smaller less resilient.

More challenged competitors you invest you invest you pull ahead of the competition you keep you keep focus on the things you are trying to do you expand your category leadership, you solidify category leadership and other places we've got category leadership and in <unk> and <unk>, which is.

Very important growth segment in AUC, we've got category leadership for design through construction in.

In the construction space deals like deals like bravado.

E Comm basic these are all people trying to buy into the connected.

Hi, driven cloud based design to construction environment. That's the category, we're in and we're kind of already the key. So this is the perfect time to continue to invest.

It helps you lap the competition.

Competition will be able to invest to the same degree I think this is not the time, you pullback alright, especially given the underlying strength of our business.

It's solid you can see it we've got the deck, we've got the multiple vectors of resiliency at year end.

Kind of nice portfolio.

<unk> that we can leverage.

I am definitely in a mindset that investment is good for us right now.

Got it that's super clear and long term I think that makes common sense.

Thank you. Our next question comes from Steve Koenig of SMB <unk>. Your line is open.

Hey, Andrew Hey, Debbie Thanks for taking my question, Debbie Agriculture, too and it's not Covid. So we're on the sandbox. So I hope you get better soon here.

Hey, I wanted to.

May have missed it.

And I apologize if I did but.

Can you can you give us a little more specifics on.

When you saw business start to bounce back in EMEA was it right at the end of the quarter or was it a week after was it a little before.

And.

Yes.

Got it.

One more for you Debbie.

Yes actually it was.

Clearly short term after the initial invasion.

Within weeks Alright.

Isn't like this long thing.

Fell off.

It slowed down a bit.

The invasion started and then within a few weeks. It was it was rising back up again.

Backup toward it started so.

It didn't it didn't take that long it surprised us honestly.

Mhm.

And was it.

I was trying to parse the earlier statements was it was it kind of balanced between new business and renewals or was it was a kind of more one or the other.

Renewal states strength strong throughout the entire cycle alright, so renewal kept building as the quarter progressed, there was never a slowdown and renewal momentum.

And matter of fact, if anything it just kept strengthening and strengthening right. It was only it was only in the new business Park that we saw.

Slowdown post invasion that that recovered so no.

That building.

Yes, Scott.

Got it got it okay great.

Then for my follow up in an accident you are walking to after that because you see fit.

Bob.

So you raised prices at the end of March and I am sure Thats all embedded in your guidance.

And it allows you to invest appropriately and just on the margins you want how do you think about in this inflationary environment.

Sure.

Your internal compensation.

Trajectory and also what Youre doing with partners and how does inflation.

Your your plans or what have you what do you have to tweak or for NAFTA.

You have very high employee retention rate very good rate so.

How do you maintain that percentage.

Appreciate you taking my questions.

Yes, So let me let me because there's two there's two questions. There first let me comment on the price increases so that we're all on the same page here.

On the price increases were highly targeted to certain parts of the world, where we had artificially suppressed the price below our long term goal of having standard Euro U S and yen denominated pricing. So what youre seeing is in certain places we are raising prices to equalize.

We can get to this kind of standard based pricing that simplifies some of our go to market practices. So we had some artificially suppressed prices and regions and that that's what was going on there. Okay. It's no. There's no change in our standard pricing policy impact places like Europe did not see a price increase alright. So.

To be clear, we're all on the same page with regards to pricing and the things associated now with regards to inflationary pressures and certainly unemployment areas look we're no different alright.

We see pressure in terms of employee compensation and and trying to help our poised navigate an increasingly inflationary environment. We increased our raised a raise pool, we increased our bonus this year and equally important we are increasing our stock based compensation and youll, probably see us continue to increase our stock based compensation.

Our employee base.

These moves were made and baked into the year well.

We continue to see some pressure there in terms of staying competitive we are retaining employees at high rates.

So continue to use stock based compensation more robustly and more broadly within the organization, which we think is good for the company good for good for investors and good for employees.

Sounds good thanks very much Andrew.

Thank you. Our next question comes from Rob ensure of Deutsche Bank. Your line is open.

Great. Thanks for taking my questions and I'll focus my question to Andrew I would say that it's both.

Courts.

And then just looking to get on the call you noted the robust competitive performance during the quarter can you maybe just elaborate on this what verticals or products are seeing better success, and even improved win rates and what's driving some of this.

Yeah well.

Basically every sector.

I mean every one of our industries, we're growing faster than our competitors alright. So we're taking share as we're selling more seats in some highly competitive industries.

So youre seeing it.

It's doing well in ADP youre seeing is doing well in manufacturing.

Both on seat count and revenue count, which I think is really important because you want to watch both of those performances.

Good.

Quite nicely in the media and entertainment year over year. So we are absolutely seeing broad based competitive performance I mean, obviously one of the places that we all I'll watch with construction too.

Instruction. If you if you look at the kind of the raw make numbers, we grew 24% year over year, but you got to remember some of that construction that make opportunity is actually in the EPA has which are accounted as designed so when you look at our total make performance.

And taking that those EPA impacts, where we kind of put components into the EBITDA. We grew into the mid thirties and construction cloud monthly active usage grew.

Slightly north of 30%.

This is all great solid competitive performance.

Construction quality of assessment.

Score quarter International growth for construction cloud was significantly higher.

Then it's regular growth.

Lighting up the channel in the mid market.

We're kind of solidifying our category leader positions designed through construction position.

Essentially anybody else in this player in the space kind of outside that category. They are very niche or there is RMB waiting waiting for the industry to move on and move past them. So I think we're in a very strong competitive position right now.

It's our job to continue to maintain that but it was across all the industries. We served.

Super helpful and thanks for that color and just one quick follow up it was really interesting to see that large unit deal included an adviser and these are good things there as well where are you on your innovation plans just with this solution and where are you in terms of evolving the product set here and how do we just think about the pipeline of customers who are looking to leverage some of your water based products.

Yes look we've made.

Really great progress integrating in advising the company was fairly similar to us.

When we bought them. So theres a lot of things that are rapidly getting integrated of course, there are some product integration pieces and some back office systems that are still kind of work with you some of the integrations, but in terms of integration that's not a barrier right now.

Two to where we're at within advisors one of the things that's exciting about what <unk> does is it already kind of fulfill the end to end vision for water that we have for construction and manufacturing that goes everywhere from design all the way to operate and it has some fairly sophisticated cloud based tools for water infrastructure.

Structure operators.

Two weeks treatment operators other water water infrastructure operators that allow them to actually manage the facilities once they've they've been put into operation. So it's a very robust solution that it covers a very broad piece of it and it fits incredibly nicely into our portfolio. Both story wise strategy wise, and and frankly sales motion wise.

And ladies and gentlemen that is all the time, we have for Q&A. Today. This concludes today's conference call. Thank you for participating you may now disconnect.

Q1 2023 Autodesk Inc Earnings Call

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