Q4 2024 Autodesk Inc Earnings Call

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Yeah.

Speaker Change: Thank you for standing by and welcome to Autodesk fourth quarter and full year fiscal 'twenty 'twenty four results conference call. At this time, all participants are in a listen only mode.

Operator: Thank you for standing by. And welcome to Autodesk's fourth quarter and four year fiscal 2024 results conference call. At this time, all participants are in a listen only mode.

Operator: 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 11 on your telephone. To remove yourself from the queue, you may press star 11 again.

Speaker Change: After the speaker 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 to remove yourself from the queue. You May Press Star one one again I would now like to hand, the call over to Simon Mays Smith.

Operator: I would now like to hand the call over to Simon Mays Smith, Vice President of Investor Relations. Please go ahead.

Speaker Change: Vice President Investor Relations. Please go ahead.

Simon Mays: Thanks, Operator, and good afternoon. Thanks for joining our conference call to discuss the fourth quarter and full year fiscal 24 results. On the line with me are Andrew Anagnost, our CEO, and Debbie Clifford, our CFO. During this call, we will make forward-looking statements, including outlook and related assumptions, products, and strategies. However, actual events or results could differ materially.

Speaker Change: Thanks, operator, and good afternoon. Thanks for joining our conference call to discuss the fourth quarter and full year fiscal 'twenty four results on the line with me are Andrew Annick Nonstop, PEO and Debbie Clifford our CFO.

Speaker Change: During this call we will make forward looking statements, including outlook and related assumptions product and strategy.

Speaker Change: Actual events or results could differ materially please.

Simon Mays: Please refer to our SEC filings, including our most recent Form 10-Q 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. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information.

Speaker Change: Please refer to our SEC filings, including our most recent Form 10-Q, and the form 8-K filed with today's press release.

Speaker Change: Risks and other factors that may cause our actual results to differ from those in our forward looking statements.

Speaker Change: Forward looking statements made during the call are being made as of today. If this call is replayed or reviewed after today. The information presented during the call may not contain current or accurate information.

Simon Mays: Autodesk disclaims any obligation to update or revise any forward-looking statement. We will quote several numeric or growth changes during this call as we discuss our financial performance. Unless otherwise noted, each such reference represents a year-on-year comparison. All non-GAAP numbers referenced in today's call are reconciled in our press release or Excel financials and other supplemental material available on our Investor Relations website. And now, I will turn the call over to Andrew. Thank you, Simon.

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

Speaker Change: We will quite several numeric or growth changes during this call as we discuss our financial performance.

Speaker Change: Unless otherwise noted.

Speaker Change: Each such reference represents a year on year comparison.

Speaker Change: All non-GAAP numbers referenced in today's call are reconciled in our press release or XR financials, another supplemental materials available on our Investor Relations website.

Speaker Change: Now I will turn the call over to Andrew.

Andrew Anagnost: Thank you Simon and welcome everyone to the call. We finished the year strongly delivering 14% constant currency revenue growth in the fourth quarter of fiscal 'twenty for resilience discipline and opportunity again, underpinned, our robust financial and competitive performance.

Andrew Anagnost: And welcome everyone to the call. We finished the year strongly, delivering 14% constant currency revenue growth in the fourth quarter of fiscal 24. Resilience, discipline, and opportunity again underpinned our robust financial and competitive performance. RDS's resilience comes from its subscription business model and its product and customer diversification, which balances growth across different regions and industries.

Andrew: Rguest resiliency comes from its subscription business model and its product and customer diversification, which balances growth across different regions and industries renewal rates remained strong and new business growth and leading indicators were consistent with recent quarters, despite ongoing macroeconomic policy and geopolitical headwinds.

Andrew Anagnost: Renewal rates remained strong, and new business growth and leading indicators were consistent with recent quarters. Despite ongoing macroeconomic, policy, and geopolitical headwinds, we saw growing usage, record-breaking activity on Building Connected, and cautious optimism from channel partners. Disciplined and focused execution and strategic capital deployments through the economic cycle enable Autodesk to realize significant benefits of its strategy while mitigating the risks of having to make expensive catch-up investments later on. With the new transaction model, we are approaching the final phase of modernizing our go-to-market strategy, which has involved updating our infrastructure, retiring old systems and business models, and building more durable and direct relationships with our customers and ecosystems. At the same time, we are advancing a multi-year process to develop lifecycle solutions within and between our industry clouds, powered by shared platform services and with Autodesk's data model at its core. Together, these will enable Autodesk, its customers, and partners to create more valuable, data-driven, and connected products and services. Having led the industry in generative design, we are leading again in 3D generative AI.

Andrew: We saw growing usage record big activity on building connected and cautious optimism from channel partners.

Disciplined and focused execution and strategic capital deployment through the economic cycle enable artists to realize significant benefits of our strategy, while mitigating the risks of having to make extensive catch up investments later on with the new transaction model. We are approaching the final phase of modernizing our go to market motion.

Andrew: Which has involved updating our infrastructure retiring old systems and business models and building more durable and direct relationships with our customers and ecosystem.

Andrew: At the same time, we are advancing a multiyear process to develop lifecycle solutions within and between our industry cloud powered by a shared platform services and with artist data model at its core together. These will enable autodesk its customers and partners to create more valuable data driven.

Andrew: And connected products and services.

Andrew: Having led the industry industry in general design, we are leading again is three D. Generative AI auto if you're getting closer to a transformational leap where autodesk AI is two three design and make what Chuck GPT is the language or new Multimodal Foundation models will enable design and make customers to automate low value repetitive tasks.

Andrew Anagnost: Autodesk is getting closer to a transformational leap, where Autodesk AI is to 3D design and make what chat GPT is to language. Our new multimodal foundation models will enable design and manufacturing customers to automate low-value and repetitive tasks and generate more high-value, complex designs more rapidly and with much greater consistency. For example, we can already generate 3D representations from images 10 times faster and with vastly higher quality than currently available 3D AI.

Andrew: And generate more high value complex design more rapidly and with much greater consistency.

Andrew: We can already generate three D representation from images 10 times faster and with vastly higher quality than currently available <unk>.

Andrew: We are bolstering, our homegrown capabilities and data with partnerships and acquisitions in existing and adjacent verticals. Our recent bidirectional integration of fusion with cadence and the acquisition of payouts are a good example.

Deborah L. Clifford: We're bolstering our homegrown capabilities and data with partnerships and acquisitions and existing and adjacent verticals. Our recent bi-directional integration of Fusion with Cadence and the acquisition of PayApps are good examples. Discipline and focus when executing our strategy and deploying capital also underpin our opportunity. Our go-to-market and platform initiatives will drive even greater operational velocity and efficiency within Autodesk, which will free up further resources to invest in our industry clouds and capabilities, including AI and sustained margin. And with a modernized go-to-market motion, lifecycle solutions, and platform services, Autodesk will fulfill its potential to break down the silos within and between I will now turn the call over to Debbie to take you through our quarterly financial performance and guidance for Fiscal 25. I'll then come back to update you on our strategic growth. Thanks, Andrew.

Andrew: Discipline and focus on executing our strategy in deploying capital also underpin our opportunities are.

Andrew: Go to market and platform initiatives will drive even greater operational velocity efficiency within Autodesk, which will free up further resources to invest in our industry clouds and capabilities, including AI and sustained margin improvement.

Andrew: A modernized go to market motion lifecycle solutions and platform services Autodesk will fulfill its potential to breakdown the silos within and between manufacturing ADC and media and entertainment, enabling our customers to unleash their data and design a better world for all I will now turn the call over to Jeff.

To take you through our quarterly financial performance and guidance for fiscal 'twenty five.

Jeff: Come back to update you on our strategic growth initiatives.

Jeff: Thanks, Andrew.

Deborah L. Clifford: Our financial performance in the fourth quarter and for the fiscal year was strong, particularly in our enterprise business. Early renewals and strong upfront revenue from enterprise business agreements, or EBAs, and federal governments drove some of the outperformance relative to our expectations in both Q4 billings and revenue. Overall market conditions and the underlying momentum of the business were consistent with the last few quarters. Total revenue grew 11% and 14% in constant currency, with upfront revenue driving two percentage points of that growth. By product and constant currency, AutoCAD and AutoCAD LT revenue grew 7%, AEC revenue grew 18%, manufacturing revenue grew 16%, and M&E revenue was up 8%. AEC and Manufacturing benefited from EBA TrueUp and Upfront Revenue. By region and in constant currency, revenue grew 19% in the Americas, 11% in EMEA, and 8% in APAC.

Jeff: Our financial performance in the fourth quarter and for the fiscal year was strong, particularly in our enterprise business.

Jeff: Early renewals and strong upfront revenue from enterprise business agreements or <unk> and federal governments drove some of the outperformance relative to our expectations in both Q4 billings and revenue.

Jeff: Overall market conditions and the underlying momentum of the business were consistent with the last few quarters.

Jeff: Total revenue grew 11% and 14% in constant currency with upfront revenue driving two percentage points of that growth.

Jeff: By product in constant currency, Autocad, and Autocad LT revenue grew 7% AUC revenue grew 18% manufacturing revenue grew 16% and <unk> revenue was up 8%.

Jeff: AUC and manufacturing benefited from EMEA true up and upfront revenue.

Jeff: By region in constant currency revenue grew 19% in the Americas, 11% in EMEA and 8% in APAC.

Jeff: Direct revenue increased 19% and represented 39% of total revenue up three percentage points from last year benefiting from strong growth in both <unk> and the Autodesk store.

Deborah L. Clifford: Direct revenue increased 19% and represented 39% of total revenue, up 3 percentage points from last year, benefiting from strong growth in both EBAs and the Autodesk store. Net revenue retention rate remained within the 100-110% range at constant exchange rates. Billings declined 19% in the quarter, resulting from the transition from upfront to annual billings for multi-year contracts, as expected, though slightly offset by some early renewals in North America.

Jeff: Net revenue retention rate remained within the 100% to 110% range at constant exchange rates.

Jeff: Billings declined 19% in the quarter, resulting from the transition from upfront to annual billings for multiyear contracts as expected so slightly offset by some early renewals in North America.

Jeff: As part of our implementation sequencing for the new transaction model, we shifted our North American price increase from the end of March to the beginning of February.

Deborah L. Clifford: As part of our implementation sequencing for the new transaction model, we shifted our North American price increase from the end of March to the beginning of February. This resulted in some renewals moving from Q1 Fiscal 25 to Q4 Fiscal 24, which modestly boosted billings in January. Total deferred revenue decreased 7% to $4.3 billion, an expected result of the transition from upfront to annual billings for multi-year contracts.

Jeff: This resulted in some renewals moving from Q1 fiscal 'twenty five to Q4 fiscal 'twenty, four which modestly boosted billings in January.

Jeff: Total deferred revenue decreased 7% to $4 3 billion and expected result of the transition from upfront to annual billings for multiyear contracts.

Jeff: Total <unk> of $6 1 billion and current RPI of 4 billion grew 9% and 13% respectively.

Deborah L. Clifford: Total RPO of $6.1 billion and current RPO of $4 billion grew 9% and 13%, respectively. Early renewals drove about one percentage point of current RPO growth. However, total RPO growth decelerated in Q4 when compared to Q3, when we closed our largest ever EVA. The year-over-year deceleration was due to the lower mix of multi-year contracts in Fiscal 24 when compared to Fiscal 23, which I mentioned last

Jeff: Early renewals drove about one percentage point of current RPI growth.

Jeff: Total RPM growth decelerated in Q4, when compared to Q3, when we closed our largest ever EMEA.

Jeff: The year over year deceleration was due to the lower mix of multiyear contracts in fiscal 2004, when compared to fiscal 'twenty, three which I mentioned last quarter.

Jeff: In line with recent quarters, and our expectations. We again saw some evidence of multiyear customers switching to annual contracts during the quarter.

Jeff: Turning to the P&L GAAP and non-GAAP gross margin were broadly level, while operating margin was modestly lower in the fourth quarter, primarily due to the timing of Autodesk University costs shifting from Q3 to Q4, which we flagged last quarter.

Deborah L. Clifford: In line with recent quarters and our expectations, we again saw some evidence of multi-year customers switching to annual contracts during the quarter. Turning to the P&L, GAAP and non-GAAP gross margin was broadly flat, while operating margin was modestly lower in the fourth quarter, primarily due to the timing of Autodesk University costs shifting from Q3 to Q4, which we flagged last quarter. As expected, full-year non-GAAP operating margin was flat year-over-year, but up about one percentage point at constant exchange rates. Fourth quarter GAAP operating margin was up 40 basis points year-over-year and about one percentage point at constant exchange rates, partly due to a reduction in stock-based compensation as a percent of revenue. At the current course and speed...

Jeff: As expected full year non-GAAP operating margin was level year over year, but up about one percentage point at constant exchange rates.

Jeff: Fourth quarter GAAP operating margin was up 40 basis points year over year and about one percentage point at constant exchange rates.

Jeff: Due to a reduction in stock based compensation as a percent of revenue.

Jeff: At current course and speed.

Jeff: Our ratio of stock based compensation as a percent of revenue peaked in fiscal 'twenty four.

Jeff: We expect it to fall to 10% or lower overtime.

Jeff: Free cash flow for the quarter and full year was $427 million and $1. Two 8 billion, respectively with early renewals, providing a modest tailwind in the fourth quarter.

Jeff: The most significant free cash flow headwinds from our transition from upfront to annual billings for multiyear contracts are now behind us, which means our free cash flow trough during fiscal 'twenty, four and while mechanically rebuild over the next few years.

Deborah L. Clifford: The ratio of stock-based compensation as a percent of revenue peaked in Fiscal 24, and we expect it to fall to 10% or lower over time. Pre-cash flow for the quarter and full year was $427 million and $1.28 billion, respectively, with early renewals providing a modest tailwind in the fourth quarter.

Jeff: Turning to capital allocation, we continue to actively manage capital within our framework and deploy it with discipline and focus through the economic cycle to drive long term shareholder value.

Deborah L. Clifford: The most significant free cash flow headwinds from our transition from upfront to annual billings for multiyear contracts are now behind us, which means our free cash flow troughed during fiscal 24 and will mechanically rebuild over the next few years. Turning to capital allocation, we continue to actively manage capital within our framework and deploy it with discipline and focus through the economic cycle to drive long-term shareholder value. As you heard from Andrew, we continue to invest organically and through complementary acquisitions to enhance our capabilities and the industry clouds and platform that underpin them. During the quarter, we purchased approximately 300,000 shares for $63 million at an average price of approximately $217 per share.

Jeff: As you heard from Andrew we continue to invest organically and through complementary acquisitions to enhance our capabilities in the industry clouds and platform that underpin them.

Jeff: During the quarter, we purchased approximately 300000 shares for $63 million at an average price of approximately $217 per share.

Jeff: We have now offset estimated dilution from our stock based compensation program well into fiscal 'twenty six.

Jeff: We will continue to repurchase shares opportunistically to offset dilution from stock based compensation when it makes sense to do so.

Speaker Change: Now, let me finish with guidance.

Speaker Change: Overall end market demand has remained pretty consistent over the last few quarters.

Speaker Change: Macroeconomic and one off factors like the Hollywood Writers' strike dragged on the new business growth rate during fiscal 'twenty, four and we'll modestly drag on revenue growth in fiscal 'twenty five.

Deborah L. Clifford: We have now offset estimated dilution from our stock-based compensation program well into Fiscal 26. We will continue to repurchase shares opportunistically to offset dilution from stock-based compensation when it makes sense to do so. Now, let me finish with guidance. Overall, end market demand has remained pretty consistent over the last few quarters. Macroeconomic and one-off factors, like the Hollywood Writers' Strike, dragged on the new business growth rate during Fiscal 24 and will modestly drag on revenue growth in Fiscal 25, but Autodesk's resilience and robust underlying demand for its products and services reinforce its long-term growth potential. Turning to revenue, I want to highlight four key puts and takes impacting revenue growth in Fiscal 25. First, let me talk about the new transaction model.

Speaker Change: Autodesk resilience and robust underlying demand for its products and services reinforce its long term growth potential.

Speaker Change: Turning to revenue I want to highlight four key puts and takes impacting growth in fiscal 'twenty five.

Speaker Change: First let me talk about the new transaction model.

Speaker Change: Added some slides to the earnings deck to help illustrate how to think about this shift which I'll briefly summarize.

Speaker Change: The new transaction model enables autodesk to build closer more direct relationships with its customers and partners and to better understand and serve them with more data more self service and greater predictability it.

Speaker Change: It will be a cornerstone of the data services that Andrew talked about earlier.

Speaker Change: As you can see from slide 11, the transition mechanically drives higher revenue and cost is broadly neutral to operating profit and free cash flow dollars and as a headwind to operating margin percent.

Speaker Change: About $600 million of payments made to resellers in developed markets in fiscal 'twenty four were accounted for as Contra revenue.

Speaker Change: As this business moves to the new transaction model. These payments will shift to marketing and sales expense over the next few years all else equal with.

Deborah L. Clifford: We've added some slides to the earnings deck to help illustrate how to think about this shift, which I'll briefly summarize. The new transaction model enables Autodesk to build closer, more direct relationships with its customers and partners and to better understand and serve them with more data, more self-service, and greater predictability. It will be a cornerstone of the data services that Andrew talked about earlier. As you can see from slide 11, the transition mechanically drives higher revenue and costs, is broadly neutral to operating profit and pre-cash flow dollars, and is a headwind to operating margin percent. About $600 million of payments made to resellers and developed markets in Fiscal 24 were accounted for as contra revenue.

Speaker Change: With the timing of cost recognition not materially different than before.

Speaker Change: The change effects, a substantial majority of our business, but note that emerging markets and our federal government business will remain on the buy sell model for the foreseeable future.

Speaker Change: The pace of the shift will primarily be determined by the mechanical build from ratable subscription revenue accounting and the rate of regional rollout of the new transaction model.

Speaker Change: While the former is relatively easy to predict given the ratable revenue recognition of our subscription business model, which builds over time.

Speaker Change: Router will in part be determined by what we learn as we rollout the model further.

Speaker Change: We gained useful insights from the successful rollout in Australia, and we're expecting to learn more as we rollout with much higher volumes in North America. This year.

Speaker Change: We will be able to apply those learnings when we launch in EMEA.

Deborah L. Clifford: As this business moves to the new transaction model, these payments will shift to marketing and sales expense over the next few years, all else equal, with the timing of cost recognition not materially different from before. The change affects a substantial majority of our business, but note that emerging markets and our federal government business will remain on the buy-sell model for the foreseeable future. The pace of the shift will primarily be determined by the mechanical build from rateable subscription revenue accounting and the rate of regional rollout of the new transaction model. While the former is relatively easy to predict given the rateable revenue recognition of our subscription business model, which builds over time, the latter will be, in part, determined by what we learn as we roll out the model further.

Speaker Change: Our fiscal 'twenty five guidance assumes the new transaction model is deployed in North America in Q2 of fiscal 'twenty five and provides about a one percentage point tailwind to autodesk revenue growth and a three to four point tailwind to billings growth.

Speaker Change: Second the acquisition of pay ups, which closed on February 20th is expected to contribute about half a point of revenue growth in fiscal 'twenty five.

Speaker Change: Third token consumption for the fiscal 'twenty, one EMEA cohort exceeded consumption predictions made during the pandemic, which resulted in true up payments in fiscal 'twenty four.

Speaker Change: Coke and consumption in the smaller post pandemic fiscal 'twenty two EMEA cohort is tracking more in line with predictions, which means we expect fewer true up payments in fiscal 'twenty five.

Deborah L. Clifford: We gained useful insights from the successful rollout in Australia, and we're expecting to learn more as we roll out with much higher volumes in North America this year. We will be able to apply those learnings when we launch in EMEA. Our Fiscal 25 guidance assumes the new transaction model is deployed in North America in Q2 of Fiscal 25 and provides about a 1 percentage point tailwind to Autodesk's revenue growth and a 3 to 4 point tailwind to Billings' growth. Second, the acquisition of Payapps, which closed on February 20th, is expected to contribute about half a point of revenue growth in fiscal 25. Third, token consumption for the Fiscal 21 EDA cohort exceeded consumption predictions made during the pandemic, which resulted in true-up payments in Fiscal 24.

Speaker Change: This pandemic Echo effect is about a point of headwind to fiscal 'twenty five revenue growth.

Speaker Change: And fourth our rolling four quarter foreign exchange hedges means that FX is expected to be about a one percentage point headwind to reported revenue growth in fiscal 'twenty five.

Speaker Change: Bringing this all together, we expect revenue of between $5 99, and $6 9 billion in fiscal 'twenty, five which translates into revenue growth of about 9% to 11% compared to fiscal 'twenty four.

Speaker Change: Adjusting the midpoint of our guidance to exclude noise from the new transaction model acquisitions. The absence of EMEA true up revenue and FX, we expect underlying revenue to grow more than 10% in fiscal 'twenty five.

Speaker Change: Moving on to margins, we're going to manage our non-GAAP operating margins between a range of 35 and 36% in fiscal 'twenty five.

Speaker Change: With the goal of keeping them roughly level with fiscal 'twenty four.

Deborah L. Clifford: Token consumption in the smaller post-pandemic Fiscal 22 EVA cohort is tracking more in line with predictions, which means we expect fewer true-up payments in Fiscal 25. This pandemic echo effect is about a point of headwind to fiscal 25 revenue growth. And fourth, our rolling four-quarter foreign exchange hedges mean that FX is expected to be about a one percentage point headwind to reported revenue growth in fiscal 25. Bringing this all together, we expect revenue of between $5.99 and $6.09 billion in fiscal 25, which translates into revenue growth of about 9 to 11 percent compared to fiscal 24.

Speaker Change: This means we expect a roughly one point underlying margin improvement will be broadly offset by the margin headwind from the new transaction model.

Speaker Change: As we transition to the new transaction model, we'll see operating margin headwinds from the accounting change of moving reseller costs from Contra revenue to sales and marketing expense.

Speaker Change: We will also have incremental investment in people processes and automation, but over the long term, we expect that this transition to the new transaction model will enable us to further optimize our business, which we anticipate will provide a tailwind to revenue operating income and free cash flow dollars, even after the incremental cost.

Speaker Change: We expect to incur.

Speaker Change: Moving on to free cash flow, we expect to generate between $1 43, and $1 5 billion of free cash flow in fiscal 'twenty five.

Speaker Change: And Australia, some channel partners accelerated renewals ahead of the transition to the new transaction model to Derisk months, one of the transition.

Deborah L. Clifford: Adjusting the midpoint of our guidance to exclude noise from the new transaction model, acquisitions, the absence of EBA TrueUp revenue, and FX, we expect underlying revenue to grow more than 10% in fiscal 25. Moving on to margins, we're going to manage our non-GAAP operating margins between a range of 35 and 36% in fiscal 25, with the goal of keeping them roughly level with Fiscal 24. This means we expect a roughly one-point underlying margin improvement will be broadly offset by the margin headwinds from the new transaction model. As we transition to the new transaction model, we'll see operating margin headwinds from the accounting change of moving reseller costs from contra revenue to sales and marketing expense. We'll also have incremental investment in people, processes, and automation.

Speaker Change: Because the new transaction model will be rolled out in Q2 in North America. It may be that the behavior. We saw in Australia of course also in North America, which may accelerate billings and free cash flow to earlier quarters, but should not materially change the outlook for the year.

Speaker Change: Excluding 200 million from fiscal 'twenty, four free cash flow from multiyear upfront billings, which are now billed annually in fiscal 'twenty five we expect free cash flow growth of about 35% at the midpoint of our guidance.

Speaker Change: We expect faster free cash flow growth in fiscal 'twenty six because of the return of our largest multi year renewal cohort the mechanical stacking of multiyear contracts billed annually and a larger EBITDA cohort.

Speaker Change: As we navigate the new transaction model transition the pace of the rollout will create noise in the P&L. So we think free cash flow is the best measure of our performance.

Deborah L. Clifford: But over the long term, we expect that this transition to the new transaction model will enable us to further optimize our business, which we anticipate will provide a tailwind to revenue, operating income, and free cash flow dollars even after the incremental costs we expect to incur. Moving on to free cash flow, we expect to generate between $1.43 and $1.5 billion of free cash flow in Fiscal 25.

Speaker Change: At current course and speed our free cash flow estimate for fiscal 'twenty six at the midpoint is approximately $2 5 billion, which is in line with consensus estimates.

Speaker Change: In the context of significant macroeconomic geopolitical policy health and climate uncertainty the mechanical rebuilding of our free cash flow as we transition to annual billings for multiyear contracts gives autodesk and enviable source of visibility uncertainty.

Speaker Change: We continue to manage our business using a rule of 40 framework with the goal of reaching 45% or more overtime.

Speaker Change: We are taking significant steps toward our goal this year and next.

Deborah L. Clifford: In Australia, some channel partners accelerated renewals ahead of the transition to the new transaction model to de-risk month one of the transition. Because the new transaction model will be rolled out in Q2 in North America, it may be that the behavior we saw in Australia also occurs in North America, which may accelerate billings and free cash flow to earlier quarters but should not materially change the outlook for the year. Excluding $200 million from fiscal 24 free cash flow from multi- or upfront billings, which are now billed annually, in fiscal 25, we expect free cash flow growth of about 35% at the midpoint of our guidance.

Speaker Change: We think this balance between compounding growth and strong free cash flow margins captured in the rule of 40 framework is the hallmark of the most valuable companies in the world and we intend to remain one of them.

Speaker Change: The slide deck on our website has more details on modeling assumptions for Q1 and full year fiscal 'twenty five Andrew.

Andrew: Andrew back to you.

Andrew: Thank you Debbie.

Andrew: Let me finish by updating you on our strong progress in the fourth quarter.

Andrew: We continue to see good momentum in AUC, particularly in infrastructure and construction fueled by customers consolidating onto our solutions to connect and optimize previously siloed workflows through the cloud.

Andrew: Cornerstone is that growing interest in our comprehensive end to end solutions encompassing design pre construction field execution through handover and into operations.

Deborah L. Clifford: We expect faster free cash flow growth in fiscal 26 because of the return of our largest multi-year renewal cohort, the mechanical stacking of multi-year contracts billed annually, and a larger EBA cohort. As we navigate the new transaction model transition, the pace of the rollout will create noise in the P&L, so we think free cash flow is the best measure of our performance. At current course and speed, our free cash flow estimate for fiscal 26 at the midpoint is approximately $2.05 billion, which is in line with consensus estimates.

Andrew: Rest of connected capability enables us to extend our footprint further into infrastructure and construction and also expand our reach into the mid market.

Andrew: As a sign of that growing momentum we closed a record number of deals over 100000 and $1 million in construction accounts in the United States and worldwide. During this quarter, let me give you a few examples.

Andrew: First Vinci a world leader in concessions energy and construction has been leveraging autodesk solutions to streamline its operations and drive international expansion.

Andrew: The platform approach rapid customization and beam as a standard practice Vinci. She has significant time savings annually and captured more business abroad. In Q4, Itchy renewed its fourth enterprise business agreement with Autodesk expanding the deployment of Autodesk construction cloud on major projects to further integrated data and workflows.

Andrew Anagnost: In the context of significant macroeconomic, geopolitical, policy, health, and climate uncertainty, the mechanical rebuilding of our free cash flow as we transition to annual billings for multi-year contracts gives Autodesk an enviable source of visibility and certainty. We continue to manage our business using a rule of 40 framework with a goal of reaching 45% or more over time. We are taking significant steps toward our goal this year and next. We think this balance between compounding growth and strong free cash flow margins captured in the Rule of Forty framework is the hallmark of the most valuable companies in the world, and we intend to remain one of them. The slide deck on our website has more details on modeling assumptions for Q1 and full-year Fiscal 25. Andrew, back to you. Thank you, Debbie.

Andrew: And ensure a seamless transition from design through construction.

Andrew: Second after a competitive RFP process early in the year, Florida construction and Ian are 400 firm based in Oregon ran a thorough peer assessment and selected Autodesk construction cloud for a six month pilot with the confidence gained during the pilot and closer alignment between our construction technology vision.

<unk> and Autodesk roadmap to a connected design build operate platform.

Andrew: <unk> is committed in Q4 to a multi year agreement across pre construction and construction.

Andrew: And third the Pennsylvania Department of Transportation recently chose Autodesk construction cloud as the primary tool powering its project delivery collaboration center, which will manage the project delivery infrastructure projects in the state in large part due to our software inclusive open ecosystem.

Andrew: Again these stories have a common theme managing people processes and data across the project lifecycle to increase efficiency and sustainability, while decreasing risk overtime. We expect the majority of all projects to be managed this way and we remain focused on enabling that transition through our industry.

Andrew Anagnost: Let me finish by updating you on our strong progress in the fourth quarter. We continue to see good momentum in AEC, particularly in infrastructure and construction, fueled by customers consolidating onto our solutions to connect and optimize previously siloed workloads through the cloud. The cornerstone of that growing interest is our comprehensive end-to-end solutions, encompassing design, pre-construction, field execution through handover and into operation. This breadth of connected capability enables us to extend our footprint further into infrastructure and construction and also expand our reach into the mid-market. As a sign of that growing momentum, we closed a record number of deals, over $100 million in construction accounts in the United States and worldwide during this quarter. Let me give you a few examples.

Andrew: Three clouds with the acquisition of payouts Autodesk will embed payment and compliance management into the project lifecycle. It can take an average of 83 days for sub contractors to get paid after putting work in place and because of the risk many will not bid on a project if a general contractor or an owner has a reputation for slow paying.

Andrew: Right.

Andrew: Our goal is to leverage technology.

Andrew: This is the burden of construction payment management, and a simpler faster and more efficient process for all construction project stakeholders.

Moving on to manufacturing.

Andrew: We made excellent progress on our strategic initiatives customers continue to invest in their digital transformations and consolidate are designed to make platform to grow their business and make it more resilient.

Andrew: In automotive, we continue to grow our footprint beyond the design studio into manufacturing and connected factories as automotive Oems connect data and shorten handoffs through the design cycle in the U S. A leading manufacturer leveraged AUC solutions fusion and artist platform services to develop a connected factor.

Andrew Anagnost: First, Vinci, a world leader in concessions, energy, and construction, has been leveraging Autodesk solutions to streamline its operations and drive international business. With a platform approach, Revit customizations, and BIM as a standard practice, Vinci has achieved significant time savings annually and captured more business abroad. In Q4, Vinci renewed its fourth enterprise business agreement with Autodesk, expanding the deployment of Autodesk Construction Cloud on major projects to further integrate its data and workflows and ensure a seamless transition from design through construction. Second, after a competitive RFP process early in the year, Fortis Construction, an ENR 400 firm based in Oregon, conducted a thorough peer assessment and selected Autodesk Construction Cloud for a six-month pilot.

Andrew: It delivered a much greater ROI to significantly faster design durations product prototyping and data Federation.

Andrew: Through its expanded DBA signed in Q4, it is exploring using VR studio tools and customization and increasing its adoption of autodesk construction cloud to bring its new factories to wise.

Andrew: We continue to serve some of the largest manufacturers in the world with a full breadth of our portfolio as they design and make both product and factory one of the largest private manufactured in the U S. Leverages, our advanced manufacturing portfolio, including fusion power mill and more flow, which has helped reduce rework and plastic designed by <unk>.

Andrew: 3%.

Andrew: To build clean energy solutions. It utilizes our AUC clips question, including Tim Metadata Assembly breakout and installation instructions for building products in Q4, the customer increase the CBA with Autodesk and plan to expand our partnership beyond Rabbit and Autodesk construction cloud to support the digital.

Andrew Anagnost: With the confidence gained during the pilot and close alignment between its construction technology vision and Autodesk's roadmap to a connected design, build, and operate platform, Fortis committed in Q4 to a multi-year agreement across pre-construction and construction. Third, the Pennsylvania Department of Transportation recently chose Autodesk Construction Cloud as the primary tool powering its Project Delivery Collaboration Center, which will manage the project delivery of infrastructure projects in the state, in large part due to our software-inclusive Open eCloud. Again, these stories have a common theme, managing people, processes, and data across the project lifecycle to increase efficiency and sustainability while decreasing risk. Over time, we expect the majority of all projects to be managed this way, and we remain focused on enabling that transition through our industry cloud. With the acquisition of Payapps, Autodesk will embed payment and compliance management into the project lifecycle. It can take an average of 83 days for subcontractors to get paid after putting work in place.

Andrew: Station of its factories.

Andrew: Fusion remains one of the fastest growing products in the manufacturing industry and ended the quarter with 255000 subscribers driven by the growing number of customers, who recognize the value of cloud based workflows and enhancing efficiency sustainability and resilience within their organization.

Andrew: As the breadth and depth of Fusion's features and capabilities expand we are beginning to drive adoption by larger companies and sort of higher value segments of the professional market through extensions as we do this commercial <unk> subscriptions will become less complete indicators of fusion's performance relative to the value, we can realize a reporting or.

Andrew: Change to reflect that.

Andrew: In education, we are preparing future engineers to drive innovation through next generation design analysis and manufacturing solutions in the fall the University of Delaware selected fusion for more than 600 students to use in his introduction to engineering class, replacing a competitor solution.

Andrew: Fusion was chosen because it facilitated better team collaboration with easily adopted thanks to available teaching resources and provided a single integrated platform.

Andrew: Simulation and care.

Andrew: And lastly, we continue to work with our customers to ensure they are using the latest and most secure versions of our software in Q4 and American pharmaceutical company look to understand its own usage better and ensure remain compliant as the transition to a named user model.

Andrew Anagnost: And because of the risk, many will not bid on a project if a general contractor or an owner has a reputation for slope. Our goal is to leverage technology that eases the burden of construction payment management in a simpler, faster, and more efficient process for all construction project stakeholders. Moving on to manufacturing, we made excellent progress on our strategic initiative. Customers continue to invest in their digital transformations and consolidate our design and make platform to grow their business and make it more resilient. In the automotive industry, we continue to grow our footprint beyond the design studio into manufacturing and connected factories, as automotive OEMs connect data and shorten handoffs to the design cycle. In the US, a leading manufacturer leveraged AEC solutions, Fusion, and Autodesk platform services to develop a connected factory that delivered a much greater ROI due to significantly faster design iterations, product prototyping, and data federation.

Andrew: In collaboration with our license compliance team a preventative audit was conducted to identify risk areas and construct a combination of subscription and what's tokens for continued access.

Andrew: It is also taking the opportunity flex enables to trial new products from our portfolio, resulting in an annual spend increase of more than 30%.

Andrew: Artist remains relentlessly curious with propensity and desire to evolve and innovate.

Andrew: And again, our success in executing strategic transformation has added new growth vectors.

Andrew: For a more diverse and resilient business towards broader trusted and more durable partnerships with more customers and given autodesk a longer runway of growth in free cash flow generation.

Andrew: We are building the future with focused purpose and optimism.

Speaker Change: Operator, we would like to open the call up for questions.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone to remove yourself from the question queue. You May Press Star one again, please standby, while we compile the Q&A roster.

Speaker Change: Our first question.

Speaker Change: From a line of sight to Korea of Barclays. Your question. Please.

Korea: Okay great.

Korea: Hey, Andrew Hey, Debbie Thanks for taking my questions here and nicely done.

Korea: Hey, guys.

Andrew Anagnost: Through its expanded EBA sine and Q4, it is exploring using VR studio tools for customization and increasing its adoption of Argus Construction Cloud to bring its new factories to life. We continue to serve some of the largest manufacturers in the world with the full breadth of our portfolio as they design and make both products and factories. One of the largest private manufacturers in the U.S. leverages our advanced manufacturing portfolio, including Fusion, PowerMill, and MoldFlow, which has helped reduce rework in plastic design by 20%. To build clean energy solutions, it utilizes our AEC collection, including BIM metadata, assembly breakouts, and installation instructions for its building products.

Korea: Andrew maybe just to start with you.

Speaker Change: You talked a little bit more about generative AI on this call, which was which was great to hear maybe just to make sure. The question is asked can you just talk about what what your sort of core engineering customers are saying about about generative AI and I'm sure. It's a very long discussion, but how do you think about the value.

Speaker Change: That autodesk can provide sort of on that journey.

Speaker Change: Yeah. So first off let me, let me make it clear that it is our intent to be the market leader in generative AI just like we were in generative design over 10 years ago. So we intend to lean into this pretty heavily.

Speaker Change: Our AI lab has been in existence since 2018, it's been where some of the core research that's contributing to some of the things I talked about in the opening commentary came from.

Speaker Change: But also we've been delivering AI in our products for several years now in a compelling way to just released drawing automation into fusion, which allows people to automate manufacturing.

Andrew Anagnost: In Q4, the customer increased its EBA with Autodesk and plans to expand its partnership beyond Revit and Autodesk Construction Cloud to support the digitization of its fast. Fusion remains one of the fastest growing products in the manufacturing industry and ended the quarter with 255,000 subscribers, driven by the growing number of customers who recognize the value of cloud-based workflows in enhancing efficiency, sustainability, and resilience within their organization. As the breadth and depth of Fusion's features and capabilities expand, we're beginning to drive adoption by larger companies and serve higher-value segments of the professional market. As we do this, commercial subscriptions will become less complete indicators of Fusion's performance relative to the value we can realize, and our reporting will change to reflect that. In education, we are preparing future engineers to drive innovation through next-generation design, analysis, and manufacturing. In the fall, the University of Delaware selected Fusion for more than 600 students to use in an introduction to engineering class, replacing a competitor's solution.

Speaker Change: Manufacturing, drawing stack, which is a very labor intensive effort.

Speaker Change: High productivity driver for for our customers. So in terms of what our customers are saying to us.

Speaker Change: They're looking for the productivity increase that they are asking what are they going to look like what kind of productivity increases are going to deliver to this and how are you going to use our data to deliver those productivity increases now.

Speaker Change: Now in terms of how we're going to do this there's two avenues that we're going to be approaching what is going to be more disruptive to how our customers work and the other one is going to be basically automating the capabilities and workflows. They have today, we have to do both both have different value levers both will have different adoption curves.

Speaker Change: Some of the things I talked about in the opening commentary about some of our new tools for generating <unk> models from photographs or for incomplete <unk> models. Those are disruptive approaches that set up initial bottle ideas for our customers and allow them to do things initially with a blank slate kind of concept where they've created.

Speaker Change: Our model from specifications and requirements, we haven't released any of that yet we will at some point released that to a private beta but right now. It's just something we're really proud of and we think is really important that's an important disruptive technology. The other technologies are also going to look a lot like what we did with fusion drawing automation, they're going to be tool.

Speaker Change: Is that take the complexity of delivering and creating a <unk> model and all of its output to our process and take it from months to weeks or sometimes even days and thats going to make customers who are currently using these tools may be slower in the adoption of more disruptive tools incredibly more productive both avenues are valid both are important.

Andrew Anagnost: Fusion was chosen because it facilitated better team collaboration, was easily adopted thanks to available teaching resources, and provided a single, integrated platform to learn CAS, simulation, and more. And lastly, we continue to work with our customers to ensure they are using the latest and most secure versions of our software. In Q4, an American pharmaceutical company looked to understand its own usage better and ensure it remained compliant as it transitioned to our named user model. In collaboration with our License Compliance team, a preventative audit was conducted to identify risk areas and construct a combination of subscriptions and flex tokens for continued access.

Speaker Change: And both are areas that we're focusing on.

Speaker Change: Got it got it that makes a lot of sense Debbie maybe for my follow up for you.

Speaker Change: Okay.

Speaker Change: Autodesk, obviously provides a lot of value.

Speaker Change: Customers, which are also able to capture as well.

Deborah L. Clifford: Maybe the question is can you just talk a little about some of the recent pricing actions that have been out there and what sort of customer behavior.

Deborah L. Clifford: It might drive as a result, I think there was a little bit of difference in pricing between one year and multiyear subscriptions. How do you think about that impacting the model if at all going forward.

Operator: It is also taking the opportunity FLEX enables to trial new products from our portfolio, resulting in an annual spend increase of more than 30%. Autodesk remains relentlessly curious with a propensity and desire to evolve and innovate. Time and again, our success in executing strategic transformation has added new growth factors, built a more diverse and resilient business, forged broader, trusted, and more durable partnerships with more customers, and given Autodesk a longer runway of growth and free cashflow. We are building the future with focus, purpose, and optimism. Operator, we would like to open the call up for: As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the question queue, you may press star 11.

Speaker Change: Sure. So, let's let's start first with what we did so theres a couple of things that are going on we did about a three point increase for market factors and then we did a 5% increase for renewals with market factors such as something that we've been talking about for a while our goal is to streamline pricing around.

Speaker Change: In the World and then for the renewal price change before the increase we had a 10 point price differential between new and renewal and with this move to agency or the move to the new transaction model and we don't see as much of a need for that Delta.

Speaker Change: In Q4, what we did was we moved up the timing of the price increase so that we can better sequence things with the new transaction model coming and that led to some early renewals down the stretch.

Speaker Change: That's part of what gave an extra point of growth to current Rps.

Operator: Please stand by while we compile the Q&A roster. Our first question comes from the line of Saket Kalia of Barclays. Your question, please, Saket. Okay, great. Hey, hey, Andrew. Hey, Debbie.

Speaker Change: But the price increase overall was most helpful to billings, but it wasn't material to revenue and free cash flow.

Speaker Change: Got it very helpful. Thanks, guys.

Thank you.

Speaker Change: Our next question.

Speaker Change: Comes from the line of Adam Borg of Stifel. Your question. Please Adam.

Saket Kalia: Thanks for taking my questions here and nicely done. Hey Saket. Hey guys. Andrew, maybe just to start with you, you talked a little bit more about generative AI on this call, which was great to hear. Maybe just to make sure the question is asked, can you just talk about what your sort of core engineering customers are saying about generative AI? I'm sure it's a very long discussion, but how do you think about the value that Autodesk can provide on that journey? Yeah, so first off, Saket, let me make it clear that it's our intent to be the market leader in generative AI, just like we were in generative design over 10 years ago. So, we intend to invest heavily in this. Our AI lab has been in existence since 2018.

Adam Charles Borg: Great and thanks for taking the question.

Adam Charles Borg: Maybe on the transactional model and thanks, guys for all the disclosures around that.

Adam Charles Borg: Maybe talk a little bit more about the <unk>.

Adam Charles Borg: <unk> you have from the early customer and partner feedback in Australia.

Adam Charles Borg: And even now that you have the early days of this direct relationship anything interesting there that you're learning from your more direct relationship with customers be it usage or adoption or expansion.

Adam Charles Borg: You clearly didn't have before.

Adam Charles Borg: With the prior model thanks.

Speaker Change: Yeah. Thanks, Adam for that question first off let me just reinforce something I want to make sure that we're all in the St. Peter about why we're doing this right. This is a critical part of our relentless ongoing modernization of artist business getting us ready for the long term success, we expect that a world of AI driven cloud based solutions for <unk>.

Speaker Change: <unk> through make lifecycle right its a necessary step in this is the last big one in our journey to of all the ones. We've done at this point and it really has some big benefits for our customers long term one it's going to allow us to understandable out better ways that we can't currently understand them because we don't have the full account record of what the customer is doing.

Andrew Anagnost: It's where some of the core research that's contributing to some of the things I talked about in the opening commentary came from. But also, we've been delivering AI in our products for several years now in compelling ways. We just released drawing automation into Fusion, which allows people to automate manufacturing drawing stacks, which is a very labor-intensive effort, and it's a high productivity driver for our customers. So, in terms of what our customers are saying to us, one, they're looking for productivity increases. They're asking me, what are they going to look like?

Speaker Change: It's going to allow us to deliver a lot more self service capability to these customers and three is going to turn our partner channel into design made collaborators and consultants for our customers with their own unique IP and their own services and away from transaction partners. So it's critical that we kind of get on the same page with that.

Andrew Anagnost: What kind of productivity increases are you going to deliver with this? And how are you going to use our data to deliver those increases? Now, in terms of how we're going to do this, there are two avenues that we're going to be approaching here. One is going to be more disruptive to how our customers work, and the other one is going to be basically automating the capabilities and workflows they have today. We have to do both. Both have different value levers.

Speaker Change: With regards to Australia, we actually did learn a lot right, mostly about the transactions at this point because it was only for a quarter and a little bit it didn't it didn't necessarily have direct impact on customer behavior, but what we did learn we've now put into the process. In fact, we actually delayed our our U S role.

Speaker Change: By 30 days based on some of the learnings during the Australia process, we changed our roadmap for some of the capabilities updated and upgraded.

Andrew Anagnost: Both will have different adoption curves. Some of the things I talked about in the opening commentary about some of our new tools for generating 3D models from photographs or for incomplete 3D models, those are disruptive approaches that set up initial model ideas for our customers and allow them to do things initially with a blank slate kind of concept, where they create a model from specifications and requirements. We haven't released any of that yet. We will at some point release it to a private beta, but right now, it's just something we're really proud of and we think is really important. That's an important disruptive technology. The other technologies are also going to look a lot like what we did with Fusion Drawing Automation.

Speaker Change: Some of the capabilities in the transaction systems to kind of correspond with some things we saw in Australia, and we also kind of deliberate some new enablement materials for partners and frankly for customers as well so they understand how this transaction model it impacts their relationship with Autodesk. So we definitely took the learnings as a bank to make sure that we were better prepared.

Speaker Change: We even gave ourselves a little bit more time based on what we learned to finish up a few things that we think are going to be impactful.

Speaker Change: That's great and maybe just as a quick follow up you talked about some success with state Dot's.

Speaker Change: As you think about kind of the infrastructure Bill and the stimulus that continues to be deployed maybe just give a quick update on antibodies.

Speaker Change: And then just a quick state of the Union, there and the opportunity as part of the broader infrastructure question. Thanks, So much.

Andrew Anagnost: They're going to be tools that take the complexity of delivering and creating a 3D model and all of its outputs and take it from months to weeks or sometimes even days, and that's going to make customers who are currently using these tools maybe slower in the adoption of more disruptive tools incredibly more productive. Both avenues are valid, both are important, and both are areas that we're focused on. Got it. Got it. They make a lot of sense. Debbie, maybe for my follow up for you.

Speaker Change: Yes, Youll, probably hear us use the word named antibodies, a lot less and talked a little bit more about autodesk construction.

Speaker Change: Water solutions moving forward right. So.

Speaker Change: I just wanted to be clear about that.

Speaker Change: What are is it has been a big part of our EPA successes larger customers are adding water solutions I think there is an obvious reason for that.

What are is just as important as it was before if not more so thank.

Speaker Change: Thank you probably aware than California, we just had yet another kind of flood where people didn't expect to have plugged in San Diego and that's all because water movement motor management infrastructure is moving water in the wrong places so people need to build and rebuild water infrastructure of all types of water scarcity water purity all of these things water is core.

Deborah L. Clifford: Autodesk obviously provides a lot of value to customers, which you're also able to capture as well. Maybe the question is, can you just talk a little about some of the recent pricing actions that have been out there? And what sort of customer behavior that might drive as a result? I think there was a little bit of difference in pricing, sort of between one year and multi-year subscriptions.

Speaker Change: Going to be a big business moving into the future and it's continued to enhance some of our EPS without respect that since you mentioned infrastructure in general.

Speaker Change: Wanted to kind of point, a little bit to something that that you heard in the opening commentary about Penn Dot Alright, I think thats, a really important story about what's going on there.

Speaker Change: Why is <unk> not choosing our solutions what's going on.

Speaker Change: Because of the infrastructure Bill and some of the money that was put in the infrastructure build to help some of these departments of transportation and understand how to invest in the future Penn Dot looked at its portfolio of tools. They looked at the future. It looked at what they need going out 10 20 years in the future what kind of modern stacks they want to work on and they chose.

Deborah L. Clifford: How do you think about that impacting the model, if at all going forward? So let's, let's start first with what we did. So there are a couple of things that are going on. We did about a three point increase for market factors, and then we did a five percent increase for renewals. With market factors, this is something that we've been talking about for a while. Our goal is to simplify pricing around the world. And then for the renewals price change, before the increase, we had a ten point price differential between new and renewal, and with this move to agency, or the move to the new transaction model, we don't see as much of a need for that delta. In Q4, what we did was we moved up the timing of the price increase so that we could better sequence things with the new transaction model coming, and that led to some early renewals down the stretch. That's part of what gave an extra point of growth to current RPO, but the price increase overall was most helpful to billings, but it wasn't material to revenue and free cash flow.

Speaker Change: To move to our solutions that incorporate more of our solutions in their in their environment. That's an important first step in what we're trying to do we want to be part of modernizing. These departments of transportation with the kind of modern stack that we've created in the end to end design to make solutions. That's another vector here to pay attention to is the infrastructure.

Speaker Change: Boom kind of continues to rollout into the United States.

Speaker Change: Great. Thanks for all the detail.

Speaker Change: Thank you.

Speaker Change: Our next question.

Jay Vleeschhouwer: Comes from the line of Jay believe shower.

Jay Vleeschhouwer: Griffin Securities. Your question please Jay.

Jay Vleeschhouwer: Thank you good afternoon.

Jay Vleeschhouwer: Andrew first question concerns the transaction model and what I'd like to ask about is relating the operational and transactional and accounting systems and compensation systems that you've put in place relative to the scale of your volume.

Saket Kalia: Very helpful. Thanks, guys. Thank you. Our next question comes from the line of Adam Borg. A staple.

Jay Vleeschhouwer: You added well over 700000 subscriptions in fiscal 'twenty four more than you added in fiscal 'twenty three you've spoken of certain.

Adam Charles Borg: Your question, please, Adam. Great, and thanks so much for taking the question. Maybe on the transactional model, and thanks, guys, for all, that you clearly didn't have before with the prior model. Thanks.

Jay Vleeschhouwer: Expectations for volume overtime, So maybe help us understand the capacity that you have in place now to support.

Jay Vleeschhouwer: The long term volume growth expectations that you have undoubtedly youre looking to do substantially more subscription additions than you did in fiscal 'twenty four.

Adam Charles Borg: Yeah, thanks, Adam, for that question. You know, first off, let me just reinforce something here. So I want to make sure that we're all on the same page here about why we're doing this, right? This is a critical part of a relentless, ongoing modernization of Autodesk's business, getting us ready for the long-term success we expect in a world of AI-driven, cloud-based solutions for design-through-make life cycles, right? It's a necessary step in this process. It's the last big one on our journey of all the ones we've done at this point. And it really has some big benefits for our customers long-term. One, it's going to allow us to understand them a lot better in ways that we can't currently understand them because we don't have the full account record of what the customer is doing.

Jay Vleeschhouwer: Yes, so Jay obviously, the modernization of Autodesk and its back office infrastructures is it just about rolling out the new transaction model and the kind of the nuts and bolts of that it's actually about increasing our internal capacity to do these things at scale, which is exactly what we were trying to test in Australia.

Jay Vleeschhouwer: In the various environments and that we've been testing since that so we are very confident that we've not only built a transaction environment, but a cascading set of capabilities that allow us to scale significantly as we move forward. Because you are right, we intend to get deeper and deeper into People's design and make processes.

Jay Vleeschhouwer: And thats going to increase the amount of subscriptions that are being used downstream in other types of make processes and we have to be able to operate at scale. So this is not just a new transactional models modernization effort and it's a full scale modernization effort inside of Autodesk that captures all aspects of this and the good thing.

Andrew Anagnost: Two, it's going to allow us to deliver a lot more self-service capability to these customers. And three, it's going to turn our partner channel into design-made collaborators and consultants for our customers with their own unique IP and their own services, and away from transaction partners. So it's critical that we kind of get on the same page about that. With regard to Australia, we actually did learn a lot, right?

Jay Vleeschhouwer: About the cascading rollout with the way we're doing it this year with the U S. First because again, we're going to get it yet another test on the volume and capacity of the systems that allows us to understand where were out before we go live with the next level.

Andrew Anagnost: Mostly about the transactions at this point because, you know, it was only for a quarter and a little bit, so it didn't necessarily have a direct impact on customer behavior. But what we did learn, we've now put into the process. In fact, we actually delayed our UX rollout by 30 days based on some of the learnings during the Australia process. We changed our roadmap for some of the capabilities, updated, and upgraded some of the capabilities in the transaction systems to kind of correspond with some things we saw in Australia. And we also delivered some new enablement materials for partners and, frankly, for customers as well, so that they understand how this transaction model impacts their relationship with Autodesk. So we definitely took the learnings to the bank to make sure that we were better prepared, and we even gave ourselves a little bit more time based on what we learned to finish up a few things that we think are going to be impactful. That's great. And maybe just as a quick follow-up, you know, you talked about some success with state DOTs.

Jay Vleeschhouwer: Of rollout and volume capture but just know that this is this is more than just a transaction model is a full scale modernization of what's going on under the Hood at Autodesk.

Speaker Change: Okay understood second question concerns products and technology.

Speaker Change: When you think back to the various product sessions and roadmap sessions that you talk about a few months ago. What do you think are the critical executable product deliverables that you're aiming for.

Speaker Change: For this year either in terms of <unk>.

Speaker Change: Proving upon or expanding the existing products such as rabbit.

Speaker Change: Sure.

Speaker Change: Other new tools.

Speaker Change: Yes, so I'll just hit obviously had a few here okay.

Speaker Change: First off and manufacturing the key.

Speaker Change: Critical thing that.

Speaker Change: Really needs to happen this year for perfusion. For example is we have to improve our capability to help move fusion from small teams in the in the design and make part of the business all the way up to supporting full scale engineering team. So basically scaling the size of its the installations inside of our customer base with fusion.

Speaker Change: That's going to be through a combination of things, we do with our cloud based data management solutions as well as some of our AI based solutions, which basically attract people to the product because of the productivity enhancement, but that is definitely an important effort. There is a second ancillary effort with regard to the fusion around ensuring that our partnerships with companies like cadence and the internal.

Andrew Anagnost: As we think about kind of the infrastructure bill and the stimulus that continues to be deployed, maybe just give a quick update on Innovize and just a quick State of the Union there on the opportunity as part of the broader infrastructure push. Thanks so much. Yeah, so you'll probably hear us use the word enterprise a lot less and talk a little bit more about Autodesk construction or water solutions moving forward, right? So I just want to be clear about that. Water is and has been a big part of our EBA successes. Larger customers are increasingly adding water solutions. I think there's an obvious reason for that.

Speaker Change: <unk> capabilities, we built in the fusion set us up for a boom in smart products, we want to be the solution that people choose for smart products, we built enough capability to fusion that people can get a certain way and to end with fusion and we're partnering to make sure that when things get more sophisticated we're able to move up into the more sophisticated prost.

Speaker Change: Associated with these smart products.

Andrew Anagnost: You know, water is just as important as it was before, if not more so. I think you're probably aware that in California, we just had yet another kind of flood where people didn't expect to have floods in San Diego. And that's all because water management infrastructure is moving water in the wrong places. So people need to build and rebuild water infrastructure of all types. Water scarcity, water purity, all of these things.

Speaker Change: Now when it comes to the former former infusion kind of danced together here and one of the things that it's really important to do as we move into this year is make sure that pharma and rabbit play together as our customers try to move forward as they adopt fusion and also as they use rebate more collaborative in the cloud that these two products work together in some way.

Speaker Change: That they exchange data and inter operate in ways that nobody else can achieve because the truth of the matter is but work that people are doing with revenue isn't going away. It's a huge amount of what they do and we need to make sure that that work is more efficient in a form of world. So look for us to not only increase the capabilities of <unk>, but increased.

Andrew Anagnost: Water is going to be a big business moving into the future, and it's continued to enhance some of our EBAs with that respect. Since you mentioned infrastructure in general, I just want to kind of point a little bit to something that you heard in the opening commentary about PennDOT. All right, I think that's a really important story about what's going on there. Why is PennDOT choosing our solutions? What's going on?

Speaker Change: Our relationship with Revit as well, which I think is really important the last thing I'll say just around media and entertainment.

Speaker Change: We have to continue to take what we're doing with regards to moving beyond the postproduction special effects into full production management script to screen capabilities for our customers and the filmmaking industry. It makes some of that real with the flow platform and that's really the big goal for the media Entertainment team is to make flow real.

Andrew Anagnost: Because of the infrastructure bill and some of the money that was put in the infrastructure bill to help some of these departments of transportation understand how to invest in the future, PennDOT looked at its portfolio of tools, they looked at the future, they looked at what they need going out 10, 20 years in the future, what kind of modern stacks they want to work on, and they chose to move to our solutions and incorporate more of our solutions in their environment. That's an important first step in what we're trying to do. We want to be part of modernizing these departments of transportation with the kind of modern staff that we've created in the end-to-end design process to make solutions. That's another vector here to pay attention to as the infrastructure boom kind of continues to roll out across the United States. Great, thanks for all the details.

Speaker Change: This year and help our customers really see possibilities of integrating new types of complex solutions on top of a single production management environment.

Speaker Change: Okay.

Speaker Change: Very good thank you Andrea Thank you Debbie.

Speaker Change: Variable.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Joe <unk> Baird. Please go ahead Joe.

Joseph D. Vruwink: Great Hi, everyone. Thanks for taking my questions.

Joseph D. Vruwink: I wanted to ask so autodesk is framed growth rates over the long arc of time in that 10% to 15% range 2025 guidance is obviously holding to the 10.

Joseph D. Vruwink: When you think about 10 conceptually is that ultimately as you would expect just given the nature of your business is being exposed to certain end markets that are perhaps now closer to their bottoming or dropping points in a given cycle and if that maybe is the case and this is the bottom end point.

Andrew Anagnost: Thank you. Our next question comes from the line of Jay Vleeschhouwer of Griffin Securities. Your question, please, Jay. Thank you, good afternoon.

Jay Vleeschhouwer: Andrew, my first question concerns the transaction model. And what I'd like to ask about the operational and transactional and accounting systems and compensation systems that you've put in place relative to the scale of your volume. You added well over 700,000 subscriptions in fiscal 24, more than you added in fiscal 23.

Joseph D. Vruwink: Indications are you watching over coming quarters.

Joseph D. Vruwink: Maybe.

Joseph D. Vruwink: Set the stage for a recovery scenario, which of course your markets typically do after they reach that bottoming point.

Speaker Change: Yes, I think so we continue to target that 10% to 15% revenue growth algorithm.

Jay Vleeschhouwer: You've spoken of certain growth expectations for volume over time. So maybe you could help us understand the capacity that you have in place now to support the long-term volume growth expectations that you have. Undoubtedly, you're looking to do substantially more subscription additions than you did in fiscal 24. Yeah, so Jay, obviously the modernization of Autodesk and its back office infrastructures isn't just about rolling out the new transaction model and the kind of the nuts and bolts of that; it's actually about increasing our internal capacity to do these things at scale, which is exactly what we were trying to test in Australia, in the various environments, and that we So we are very confident that we've not only built a transaction environment but a cascading set of capabilities that allow us to scale significantly as we move forward. Because you're right, we intend to get deeper and deeper into people's design and manufacturing processes, and that's going to increase the amount of subscriptions that are being used downstream in other types of manufacturing processes, and we have to be able to operate at scale.

Speaker Change: You are right the midpoint for fiscal 'twenty five was right at that 10% coming off a year, where we did 13% growth in constant currency.

Speaker Change: And really what we've said is that where we end up in that 10% to 15% range is going to be contingent upon the macroeconomic backdrop that we operate in as well as our ability to harvest the opportunities that we have before us across AUC manufacturing and so on and so the things that were.

Speaker Change: Watching as we are.

Speaker Change: Proceed through this year with that 10% mid point or some of the things that we've been talking about for a while now so new business growth.

Speaker Change: It's really important indicator of future revenue performance for the company.

Speaker Change: We said in this last quarter that new business growth. It grew but it was relatively soft consistent with what we had seen over the previous several quarters, so definitely being impacted by macro and that's one of the factors that's driving the 10% revenue growth midpoint in fiscal 'twenty five so we'll continue to watch that closely we also watch.

Jay Vleeschhouwer: So this is not just a new transactional model modernization effort; it's a full-scale modernization effort inside of Autodesk that covers all aspects. And the good thing about the cascading rollout, the way we're doing it this year with the U.S. first, is that again, we're going to get yet another test on the volume and capacity of the systems that allows us to understand where we're at before we go live with the next level of rollout and volume capture. But just know that this is more than just a transaction model. It is a full-scale modernization of what's going on under the hood at Autodesk. Yeah, I understand.

Speaker Change: <unk> usage, we watch bidding activity on our building connected platform and we stay close to our channel partners trying to understand what they're seeing in terms of their demand. So those are the things that we're going to be watching to see how this year progresses and beyond.

Okay. Thanks, that's helpful and then.

Speaker Change: I wanted to follow up on the free cash flow I think I heard the two points.

Speaker Change: <unk> 5 billion for fiscal 2026.

Andrew Anagnost: The second question concerns products and technology. When we think back to the various product sessions and roadmap sessions that you talked about at AU a few months ago, what do you think are the critical executables, product deliverables that you're aiming for this year, either in terms of improving upon or expanding the existing products, such as Revit, or other new tools? Yeah, so I'll just hit a few here, okay?

Speaker Change: At one point there was a comment that the progression between FY 'twenty four and 2026 that was going to be linear of course, if you normalized for that $200 million.

Speaker Change: Yes benefit last year and then.

Speaker Change: It comes out this year I guess as I look at that in the 2.05, it's not quite linear.

Andrew Anagnost: First off, in manufacturing, the critical thing that really needs to happen this year for Fusion, for example, is we have to improve our capability to help move Fusion from small teams in the design and make part of the business all the way up to supporting full-scale engineering teams. So basically, scaling the size of installations inside of our customer base with Fusion. That's going to be through a combination of things we do with our cloud-based data management solutions, as well as some of our AI-based solutions, which basically attract people to the product because of the productivity enhancement. But that is definitely an important effort.

Speaker Change: Seem like FY 'twenty six is actually maybe a bit stronger did something.

Speaker Change: Change in kind of the modeling out of the progression just any any color there.

Speaker Change: Nothing's changed.

Speaker Change: We've said that we anticipate that cash flow would grow greater in fiscal 'twenty. One what we saw in fiscal 'twenty five and when you think about modeling the growth rate just remember that you have to remove the $200 million in fiscal 'twenty four before we stopped selling multi year contracts upfront.

Speaker Change: Okay I'll leave it there thank you very much.

Speaker Change: Thank you.

Speaker Change: Our next question jumps from the line of Jason Celaeno of Keybanc capital markets. Your line is open Jason.

Andrew Anagnost: There's a second ancillary effort with regard to Fusion around ensuring that our partnerships with companies like Cadence and the internal EDA capabilities we built with Fusion set us up for a boom in smart products. We want to be the solution that people choose for smart products. We built enough capability into Fusion that people can get a certain way end-to-end with Fusion, and we're partnering to make sure that when things get more sophisticated, we're able to move up into the more sophisticated processes associated with these smart products. Now, when it comes to Forma, Forma and Fusion kind of dance together here, and one of the things that it's really important to do as we move into this year is make sure that Forma and Revit play together as our customers try to move forward, as they adopt Fusion and also as they use Revit more collaboratively in the cloud. These two products work together in some way, that they exchange data and interoperate in ways that nobody else can achieve It's a huge amount of what they do, and we need to make sure that that work is more efficient in a Forma world.

Jason Vincent Celino: Great. Thanks for taking my question, maybe first for Andrew.

Jason Vincent Celino: Okay.

Jason Vincent Celino: <unk> partner of yours.

Jason Vincent Celino: Just curious on what drove the decision to acquire them outright versus just extending the partnerships.

Jason Vincent Celino: Thanks.

Andrew: Yeah, Alright, so let's.

Since you opened up the door there, let's talk a little bit about construction in general because I think it's.

Andrew: I think it's important to kind of highlight what's been going on there we had a great <unk>.

Speaker Change: Quarter for construction construction saw strong growth in our largest accounts, which is really important for the long term health of construction.

Speaker Change: Okay.

Speaker Change: High level. We also also saw increase in 100, K deals and $1 million deals both in the U S and internationally I think that's really important and this is where what are the things where payoffs payoffs comes in right remember, we're going end to end with our solutions here from design, all the way to make and we want.

Speaker Change: To make sure that we get into the Preconstruction planning and other types of our customers processes. It takes 83 days for our customers to process payments and they're in there in their environment. That's just too long now we're not getting into the transaction business. What we're doing is we're getting into the business of helping them automate and track those.

Andrew Anagnost: So look for us to not only increase the capabilities of Forma but its relationship with Revit as well, which I think is really important. The last thing I'll say about media and entertainment is, you know, we have to continue to take what we're doing with regard to moving beyond post-production special effects into full production management, script-to-screen capabilities for our customers in the filmmaking industry and make some of that real with the Flow platform. And that's really the big goal for the media and entertainment team, to make Flow real this year and help our customers really see possibilities of integrating Very good Thank you, Andrew. Thank you, Deb. What?

Speaker Change: Those payments across their entire lifecycle.

Speaker Change: Can get quicker returns reduce that 83 days to be faster and increase their cash flow. This has to be something we tightly integrate into our solution. So we intend to tightly integrate in this.

Speaker Change: And just like we rebuilt some of the other solutions. We acquired previously into what is today already built which is a new modern platform for doing some of these things. So we thought it was very important to own. This so that we can integrate it and then we went out there and we bought up a premium asset. It's a leader it is a global leader in payment processors.

Speaker Change: Not a small company is what we could afford it's what we needed and I think that's really important so when we look forward at our construction right now we see tools like this being critical as well as our pre construction tools and we actually see the deal cycles, maybe getting a little longer but we're competing head to head a lot more.

Andrew Anagnost: Thank you. Our next question... comes from the line of Joe Vrunk, Up Baird. Please go ahead, Joe.

Joseph D. Vruwink: Great. Hi everyone. Thanks for taking my questions. I wanted to ask, so Autodesk has framed growth rates over the long arc of time and that 10 to 15% range. 2025 guidance is obviously holding to the 10, but when you think about 10 conceptually, is that ultimately, as you would expect, just given the nature of your businesses being exposed to certain end markets that are perhaps now closer to their bottoming or troughing points in a given cycle? And if that maybe is the case, and this is the bottoming point, what indications are you watching over coming quarters to maybe set the stage for a recovery scenario, which So, thanks.

Speaker Change: And I want to again highlight that the forest deal out of Oregon, which was a head to head competitive deal with a pilot period and ended up going fully to Autodesk. So what we see right now in our business is building momentum driven by the end to end solution and kind of acquisitions like payoffs as well so when we.

Speaker Change: Look forward into next year, we don't see deceleration of the business, we see acceleration.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: That's very helpful.

Speaker Change: And then my quick follow up for Debbie.

Speaker Change: Sorry, if I missed it.

Deborah L. Clifford: 14% constant currency growth. We did this year did you mention how much was from the strong renewal cohort and then maybe any upfront revenues I'm just trying to understand the several points.

Deborah L. Clifford: So, we continue to target that 10 to 15 percent revenue growth algorithm. And you're right, the midpoint for Fiscal 25 was right at that 10 percent, coming off a year where we did 13 percent growth in constant currency. And really, what we've said is that where we end up in that 10 to 15 percent range is going to be contingent upon the macroeconomic backdrop that we operate in, as well as our ability to harvest the opportunities that we have before us across AEC manufacturing and so on. And so, the things that we're watching as we proceed through this year with that 10 percent midpoint are some of the things that we've been talking about for a while now. So, new business growth is a really important indicator of future revenue performance for the company.

Deborah L. Clifford: T cell embedded in the 25 guide thanks.

Deborah L. Clifford: Yeah, So Dave.

Deborah L. Clifford: Yeah.

Dave: Early renewal cohort it didn't have any impact to revenue really that had more of an impact on billings.

Dave: Half on revenue and then the strength that we saw in enterprise represented about a point of growth.

Speaker Change: Okay, great. Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Tyler Radke of Citi. Please go ahead Tyler.

Tyler Maverick Radke: Yes, thanks for taking the question.

Tyler Maverick Radke: Along the similar lines.

Tyler Maverick Radke: <unk> question.

Tyler Maverick Radke: Construction and Andrew I'm, just wondering if you could provide us an update on that.

Tyler Maverick Radke: The go to market.

Tyler Maverick Radke: Changes that you made I believe last year and how youre expecting.

Tyler Maverick Radke: That business I mean, you talked about acceleration.

Tyler Maverick Radke: Obviously make revenue is.

Tyler Maverick Radke: <unk> is growing in the teens is this is this a business you think can be 20%.

Tyler Maverick Radke: Over the medium term just help us frame.

Deborah L. Clifford: And we said in this last quarter that new business growth grew, but it was relatively soft, consistent with what we had seen over the previous several quarters. So, definitely being impacted by macro, and that's one of the factors that's driving the 10 percent revenue growth midpoint in Fiscal 25. So, we'll continue to watch that closely. We also watch product usage.

Tyler Maverick Radke: What you're seeing both from the go to market and pipeline perspective. Thank you.

Yeah, So as you know.

Tyler Maverick Radke: Last year was the full year of integrating the sales force.

Tyler Maverick Radke: Into the mainline Salesforce, we went through some of the integration efforts to do that there were obviously some some slowdowns in the business related to integration of those things those things are past US now the business is fully integrated at starting the year off not only fully integrated from the get go but with all of the processes.

Deborah L. Clifford: We watch bidding activity on our Building Connected platform, and we stay close to our channel partners to try and understand what they're seeing in terms of their demand. So, those are the things that we're going to be watching to see how this year progresses and beyond. Okay, thanks. That's helpful.

Tyler Maverick Radke: <unk> capabilities, all wind up according to how we want to grow the business heading into the year and one of the things I wanted you to notice in my in my previous commentary is that we're seeing deal activity going up so the pipeline actually firming up really well and we're in more deals and some of these deals are more competitive, but we embrace that because when we're in.

Joseph D. Vruwink: And then I wanted to follow up on the free cash flow. I think I heard $2.05 billion for fiscal 2026. At one point, there was a comment that the progression between FY24 and 2026 was going to be linear, of course, if you normalize for that $200 million effect benefit last year and then come out this year. I guess as I look at that and the $2.05, it's not quite linear, you know, it would seem like FY26 is actually maybe a bit stronger.

Tyler Maverick Radke: The competitive deals that means we're showing up in places, we werent showing up before because people are calling us in that that's a really important part of this whole entire process people are starting to ask themselves what solution do they need for the next 10 15 years versus what's available out there today in the end to end capabilities, we're delivering.

Tyler Maverick Radke: <unk>, especially leaning more heavily into our preconstruction capabilities, which lock in a lot of the cost and complexity and risk of our construction projects. This is this is where we're leaning into this year and this is where we're going to be driving the growth. So I think we're past integration issues moving forward into pure.

Jason Vincent Celino: Did something change in kind of the modeling out of the progression? Just any color that A lot of things changed, Joe, so we said that we anticipate that cash flow would grow greater in Fiscal 26 than what we saw in Fiscal 25, and when you think about modeling the growth rate, just remember that you have to remove the $200 million in Fiscal 24 before we stop selling multi-year contracts up front. Okay, I'll leave it there. Thank you very much.

Tyler Maverick Radke: Sure.

Tyler Maverick Radke: Execution at scale inside the mainline Salesforce <unk> success is a great example of that.

Speaker Change: That's helpful and maybe a follow up for Debbie and I apologize I've been jumping around calls, but can you just frame how are you thinking about that.

Deborah L. Clifford: Relative drivers.

Deborah L. Clifford: The top line growth outlook for FY 'twenty five between.

Speaker Change: Subs growth.

Speaker Change: Pricing.

Speaker Change: The usual factors.

Jason Vincent Celino: Thank you. Our next question comes from the line of Jason Celino of KeyBank Capital Markets. Your line is open, Jason.

Speaker Change: The buildup to that thank you.

Speaker Change: Sure so we.

Speaker Change: We are trying to target roughly 50 50 split of growth coming from volume.

Jason Vincent Celino: Great. Thanks for taking my question. Maybe first for Andrew, just on that.

Speaker Change: You can see their price mix or.

Speaker Change: Margin basically partner margin is how we think about it.

Andrew Anagnost: They were a great partner of yours; I was just curious what drove the decision to acquire them outright versus just extending the partnership. Thank you. Yeah, all right, so let's, since you opened up the door there, talk a little bit about construction in general because I think it's important to kind of highlight what's been going on there. We had a great EBA quarter for construction. Construction saw strong growth in its largest accounts, which is really important for the long-term health of construction. At a really high level, we also saw an increase in 100K deals and million-dollar deals, both in the U.S. and internationally. I think that's really important.

Yes.

Speaker Change: Volume and price are again, our target is to do roughly 50 50 in fiscal 'twenty five that would continue to be our goal now theres certainly years, where its going to vacillate between one or the other.

Speaker Change: And we've talked about how this past year, our new business.

Speaker Change: It's growing slower than we would anticipate in a more normal macroeconomic environment. As we look ahead, we're hoping to get that growth coming from.

Speaker Change: Equally across those two volume and price. So that's how we're thinking about it.

Speaker Change: Yeah.

Speaker Change: Thanks Debbie.

Deborah L. Clifford: Thank you.

Speaker Change: Our next question.

Speaker Change: It comes from the line of Michael Funk of Bank of America. Your question. Please Michael.

Speaker Change: Okay.

Michael J. Funk: Yeah. Thank you for the questions.

Michael J. Funk: So first one of your competitors mentioned.

Andrew Anagnost: And this is where one of the things where payoffs comes in, all right? Remember, we're going end-to-end with our solutions here, from design all the way to delivery. And we want to make sure that we get into the pre-construction planning and other types of our customers' processes. It takes 83 days for our customers to process payments in their environment. That's just too long.

Michael J. Funk: Sure on projected seat growth due to the declining ranks of engineers.

Michael J. Funk: Are you seeing a similar impact or is that not impacting your customers.

We are not seeing a decline in our growth rates because of the pressure out there associated with engineer as a matter of fact, one of the things Thats really important because we're moving into design and make processes, we have a pretty broad.

Andrew Anagnost: Now, we're not getting into the transaction business. What we're doing is we're getting into the business of helping them automate and track those payments across their entire life cycle so that they can get a quicker return, reduce that 83 days to be faster, and increase their cash flows. This has to be something we tightly integrate into our solution.

Michael J. Funk: Swath of people that we're able to touch also we continue to displace competitive products.

Michael J. Funk: Especially with fusion in the manufacturing space so.

Michael J. Funk: We're not seeing that kind of effect declining basis, we do see customers at times optimizing their installations with autodesk to try to.

Andrew Anagnost: So we intend to tightly integrate this, just like we rebuilt some of the other solutions we acquired previously into what is today Autodesk Build, which is a new, modern platform for doing some of these things. So we thought it was very important to own this so that we could integrate it. And then we went out there, and we bought a premium asset. It's a leader.

Michael J. Funk: Right size things, but not because they are downsizing their their employment base.

Michael J. Funk: Thank you for that and then one for you Debbie and thank you for the clarity of the moving pieces in and 25 in the press release, you mentioned that the guidance for growth in 'twenty. Five you said adjusting for FX EMEA acquisition transaction model you gave additional data points on the call.

Andrew Anagnost: It's a global leader in payment processes. It's not a small company. It's not what we could afford.

Andrew Anagnost: It's what we needed, and I think that's really important. So when we look forward to construction right now, we see tools like this being critical as well as our pre-construction tools. And we actually see the deal cycles maybe getting a little longer, but we're competing head-to-head a lot more. And I wanna again highlight that Fortis deal out of Oregon, which was a head-to-head competitive deal with a pilot period that ended up going fully to Autodesk. So what we see right now in our business is building momentum driven by the end-to-end solution and kind of acquisitions like payoffs as well. So when we look forward into next year, we don't see a deceleration of the business. We see acceleration. Okay. No, that's very helpful.

Deborah L. Clifford: The right way to think about it that guidance constant currency ex EPA transaction model an acquisition basically nine five to 11, 5% growth rate in 'twenty five is that the right very basic math.

Deborah L. Clifford: So what we talked about was a point of headwind from FX, a point of headwind from the absence of TBA true ups.

Deborah L. Clifford: Half a point of tailwind from acquisitions on a point of tailwind from the new transaction model. So the.

Deborah L. Clifford: The net effect of that is a half a point so yes.

Great. Thank you very much.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Stephen Tusa of Jpmorgan. Your question. Please Stephen.

Stephen Hooper: Hey, guys congrats.

Stephen Hooper: On a good quarter.

Jason Vincent Celino: And then my quick follow-up for Debbie, sorry if I missed it, but the 13% constant currency growth we did this year, did you mention how much was from the Strong Renewal Cohort and then maybe any upfront revenues? I'm just trying to understand the several points of detail embedded in the 25 guide. Thanks. Yeah, so the...

Stephen Hooper: What would the.

Stephen Hooper: What would do you think is in the kind of Crystal ball that drive you to the low end of the range like what are you.

Stephen Hooper: What are you concerned about that you can see today I assume that's part of the macro.

Stephen Hooper: What what within the macro would get you to the low end of the range.

Deborah L. Clifford: The early renewal cohort didn't have any impact on revenue, really; that had more of an impact on billing than it would have on revenue. And then the strength that we saw in enterprise represented about a point of growth. Okay, great.

Stephen Hooper: We'll continue to watch that new business growth.

Stephen Hooper: It's something that we're laser focused on them.

Stephen Hooper: Macroeconomic conditions were to shift and that would be probably one of the first things that we'd be impacted and that can take us to the lower end of the range.

Tyler Maverick Radke: Thank you. Thank you. Our next question comes from the line of Tyler Radke of Citi. Please go ahead, Tyler.

Stephen Hooper: We're watching and market demand pretty closely so that's why we talk about bid activity on building connected.

Tyler Maverick Radke: Yes, thanks for taking the question. Along the similar lines of Jason's question on construction, Andrew, I'm just wondering if you could provide us an update on the go-to-market strategy, changes that you made, I believe, last year, and how you're expecting that business. And you talked about acceleration.

Stephen Hooper: And it continues to be at record highs, but of course, if that were to take a turn and that could have an impact on us.

Stephen Hooper: And then we monitor the sentiment that we're hearing from our channel partners to understand how they're seeing end market demand and what the impacts might be for our business. So those are the types of things that could inform whether or not we would be at the lower end of the range.

Andrew Anagnost: Obviously, Make Revenue is growing in the teens. Is this a business you think can beat 20% over the medium term? Just help us frame what you're seeing both from the go-to-market and pipeline perspectives. Thank you.

Stephen Hooper: And then just to be clear I didn't I thought it was.

Stephen Hooper: When you went through some of the other moving parts on guidance that.

Stephen Hooper: It netted out to kind of a point of tailwind I guess youre throwing in the EMEA true ups.

Andrew Anagnost: Yeah, so, as you know, last year was the full year of integrating the salesforce back into the mainline salesforce. We went through some of the integration efforts to do that. There were obviously some slowdowns in the business related to integration of those things, but those things are past us now.

Stephen Hooper: Or at least adjusting those out to get to an underlying rate.

Stephen Hooper: Is that is that would you.

Stephen Hooper: That part of the count there.

Speaker Change: Yes, yes, I'm sorry to go back to the last question because there is theres a lot of moving parts here.

Andrew Anagnost: The business is fully integrated. It's starting the year off, not only fully integrated from the get-go, but with all of the processes, plans, and capabilities all lined up according to how we want to grow the business heading into the year. And one of the things I wanted you to notice in my previous commentary is that we're seeing deal activity go up, so the pipeline's actually firming up really well, and we're in more deals. And some of these deals are more competitive, but we embrace that, because when we're in a competitive deal, that means we show up in places we weren't showing up before because people are calling us in. That's a really important part of this whole entire process.

Do you think so.

Speaker Change: Revenue in the guide, it's one point of headwind from FX, one point of headwind from the absence of TBA Trups half a point of tailwind from the acquisitions and a point of tailwind from the new transaction model, which is a net negative.

Speaker Change: So net 0.5 negative headwind as we look at the guide for fiscal 'twenty five Okay. And then just one last quick one on the subs are up I guess they are up.

Speaker Change: <unk>.

Speaker Change: For the year, if I have that number right.

Speaker Change: Constant currency was 13 can you maybe explain what you mean by half coming from volume and half coming from price. It seems like that's a lot from much more from from volume there maybe there is some mix or something like that.

Tyler Maverick Radke: People are starting to ask themselves, what solution do they need for the next 10, 15 years versus what's available out there today? And the end-to-end capabilities we're delivering, especially leaning more heavily into our pre-construction capabilities, which lock in a lot of the cost, complexity, and risk of a construction project. This is where we're leaning into this year, and this is where we're going to be driving growth. So I think we're past integration issues, moving forward into pure execution at scale inside the mainline sales force. The EBA success is a great example of that. That's helpful.

Speaker Change: Yeah, there is definitely a mix effects.

Speaker Change: And our target is to have it be roughly 50 50 between volume and price on in any given year, we're going to have some puts and takes.

Speaker Change: Between that when we think about our guidance for fiscal 'twenty five we're targeting that 50 50 Mexicana.

Speaker Change: Okay, great. Thanks, a lot.

Speaker Change: Thank you.

Our next question comes from the line of May So man up Ehrenburg. Your question. Please.

Hi, everyone. Thank you for taking my questions.

Speaker Change: Two if I may starting with.

Speaker Change: You mentioned that a lot of.

Speaker Change: Positive developments in the products like ACC building connect machines in 2016 I was wondering how we should think about that.

Deborah L. Clifford: And maybe a follow-up for Debbie and apologies; I've been jumping between calls. But can you just frame how you're thinking about the relative drivers of, you know, the top line growth outlook for FY25 between subs growth and pricing and, you know, the usual factors that build up to that. Thank you.

Speaker Change: When it comes to Youll make revenue.

Speaker Change: Look at the growth rates and migrate make segment its been consistent.

Speaker Change: System at around 17% on constant currency after three quarters.

Speaker Change: Is there a possibility with all the positive developments that make revenue look go back to growth.

Deborah L. Clifford: So we typically are trying to target roughly a 50-50 split of growth coming from volume and It's either price, mix, or margin. Basically, partner margin is how we think about it. So across

Growth rates in the 'twenty going forward.

Speaker Change: My first question and second question is on the new transaction model space I think Debbie you mentioned that you're expecting one percentage point of growth tailwind from the.

Deborah L. Clifford: Volume and price, again, our target is to do roughly 50-50, and fiscal 25, that would continue to be our goal. Now, there are certainly years where it's going to vacillate between one or the other, and we've talked about how this past year our new business was growing slower than we would anticipate in a more normal macroeconomic environment. As we look ahead, we're hoping to get that growth coming from roughly equally across those two, volume and price, so that's how we're thinking about it. Thanks, Debbie.

Translation, FY, 'twenty, five which would equate to about $55 million and then the slide deck, you mentioned that $600 million.

We sell a commission in total so the remaining.

Speaker Change: $450 million or so.

Speaker Change: Sorry apologies.

Speaker Change: $50 million.

Speaker Change: Will that all come through in FY, 'twenty, six or will it take longer for all of that all the contract revenue to flush through in your in your P&L.

Speaker Change: So a couple of things. So first are you review, a little bit garbled and coming through so we didn't quite get the first question and we'll go ahead and try and take those on the call backs, but when we think about the new transaction model and the $600 million I think the most important things to take away our $600 million is a good number to model.

Michael J. Funk: Thank you. Our next question... This comes from the line of Michael Funk of Bank of America. Your question, please, Michael. Yeah, thank you for the questions.

Andrew Anagnost: So first, one of your competitors mentioned pressure on projected seat growth due to declining ranks of engineers. Are you seeing a similar impact? Or is that not impacting your customers? We are not seeing a decline in our growth rates because of any pressure out there associated with engineers.

Speaker Change: Think about how to model the business during the transition and the pace at which you'll see the new transaction model costs that $600 million bleed into revenue and expense overtime is really going to be dictated by the pace of that rollout and so think of it as something that's gonna be bleeding into revenue and expense over the next couple of years.

Andrew Anagnost: As a matter of fact, one of the things that's really important because we're moving into design and make processes is that we have a pretty broad swath of people that we're able to touch. Also, we continue to displace competitive products, especially with fusion in the manufacturing space. So we're not seeing that kind of effect, declining bases. We do see customers at times optimizing their installations with Autodesk to try to right-size things, but not because they're downsizing their employment. Yeah, thank you for that. And then one for you, Debbie, you know, thank you for the clarity and moving pieces and in 25.

Speaker Change: But I think in the previous quarter, you mentioned that it would take about two years to implement this new transaction model.

Speaker Change: So presumably the total 600 million bleeding into revenue and costs will take longer than two years to complete and totality.

Speaker Change: So the act of transitioning the invoicing.

Speaker Change: We will take approximately two years to complete but remember that we recognize revenue over approximately one year. So it's going to be a little past that when the invoices at the higher amount bleed into revenue.

Speaker Change: Right Okay understood.

Speaker Change: First question is around the <unk> revenue.

Deborah L. Clifford: In the press release, you mentioned that the guidance for growth in 25, you said, adjusting for FX, EBA, acquisitions, transaction model, and you gave additional data points on the call. Is the right way to think about it that guidance, constant currency, ex EBA, transaction model, and acquisitions, basically nine and a half to an 11 and a half percent growth rate in 25? Is that the right way to think about it?

Speaker Change: The growth rate has been consistent around 17% past three quarters should we expect that to go back to the 20 plus that we had in the past given the positive developments.

Speaker Change: The products like building connect or ACC or fusion 360.

Speaker Change: Our goal would be to drive greater growth from the make revenue line.

Speaker Change: It's going to be an important aspect of our ability to achieve our target 10% to 15% growth algorithm over time, and it's an area, where we've been making incremental investments. So we anticipate that that revenue growth rate is going to be higher than the core business.

Deborah L. Clifford: Right. Very basic math, uh, So what we talked about was a point of headwind from FX, a point of headwind from the absence of EBA TrueUp, a half point of tailwind from acquisitions, and a point of tailwind from the new transaction model, so the net effect of that is a half point, so yes. Great. Thank you very much.

Speaker Change: Ladies and gentlemen that is all the time, we have for Q&A today I would now like to turn the call back to Simon Mays Smith for closing remarks, Sir.

Speaker Change: Thank you everyone for joining us we'll look forward to seeing many of you on the road.

Speaker Change: Weeks out of the Q1 conference call later in the year. Thanks, so much.

Stephen Hooper: Thank you. Our next question comes from the line of Stephen Tusa of J.P. Morgan. Your question, please, Steve. Hey guys, congrats. Have a good quarter. Um, what would, uh, what would you think is in the kind of crystal ball to drive you to the low end of the range? Like, who are you?

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

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Deborah L. Clifford: You know, what are you concerned about that you can see today? I assume that's part of the macro. But what within the macro would get you the low end of the range?

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Deborah L. Clifford: We'll continue to watch that new business grow. That's something that we're laser-focused on, and if macroeconomic conditions were to shift, then that would probably be one of the first things that we'd be impacted by, and that could take us to the lower end of the range. We're watching end-market demand pretty closely, so that's why we talk about bid activity on building connected, and it continues to be at record highs, but, of course, if that were to take a turn, that could have an impact on us. And then we monitor the sentiment that we're hearing from our channel partners to understand how they're seeing end-market demand and what the impact might be for our business. So those are the types of things that could inform whether or not we would be at the lower end of the range.

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Deborah L. Clifford: Okay, and then just to be clear, I didn't think it was when you went through some of the other moving parts on guidance that it netted out to kind of a point of tailwind. I guess you're throwing in the EBA true ups or at least adjusting those out to get to an underlying rate. Is that or is that not part of the calc there?

Speaker Change: Yes.

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Deborah L. Clifford: Yes, yes, I'm sorry, to go back to the last question, because there are a lot of moving parts here and it has been confusing. So for revenue in the guide, it's one point of headwind from FX, one point of headwind from the absence of EVA true-ups, a half point of tailwind from the acquisitions, and a point of tailwind from the new transaction model, which is a net negative. So a net 0.5 negative headwind as we look at the guide for fiscal 25. Okay, and then just one last quick one on the subs.

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Deborah L. Clifford: I guess they're up 12 for the year, if I have that number right. Your constant currency was 13. Can you maybe explain what you mean by half coming from volume and half coming from price? It seems like that's a lot from – much more from volume there. Maybe there's some mix or something like that.

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Deborah L. Clifford: Yeah, there's definitely mixing effects, and like I said, our target is to have it be roughly 50-50 between volume and price, but in any given year, we're going to have some puts and takes between that, but when we think about our guidance for fiscal 25, we're targeting that 50-50 mix again. Okay, great. Thanks a lot.

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Deborah L. Clifford: Thank you. Our next question comes from the line of Nay So Nang of Ferenberg. Your question, please, Nay. Hi, everyone.

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Great.

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Nay Soe Naing: Thank you for taking my questions. I've got two, if I may, starting with, you know, when we heard you mentioned a lot of positive elements in products like ACC, Building Connect, and Fusion 360. I was wondering how we should think about that when it comes to your make revenue. If we look at the growth rates, and the make segment has been consistent around 17% on constant current for the past three quarters. Is there a possibility, with all the positive elements, that the company's revenue will go back to growth rates in the 20s going forward? That was my first question.

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Deborah L. Clifford: And second question is on the new transaction model, please. I think, Debbie, you mentioned that you're expecting one percentage point of growth tailwind from the new transaction model FY25, which will equate to about $55 million. And then on the slide deck, you mentioned there's about $600 million of reseller commission in total. So the remaining, $450 million or so. 550 million.

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Deborah L. Clifford: So will that all come through in FY26? Or will it take longer for all of that all the contract revenue to flush through in your P&L? So, a couple of things.

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Deborah L. Clifford: The first, Sar, you were a little bit garbled in coming through, so we didn't quite get the first question, and we'll go ahead and try and take those in the callbacks, but when we think about the new transaction model and the $600 million, I think the most important things to take away are the $600 million is a good number to model with if you think about how to model the business during the transition, and the pace at which you'll see the new transaction model cost, that $600 million, bleed into revenue and expense over time is really going to be dictated by the pace of the rollout, and so think of it as something that's going to be bleeding into revenue and expense over the next couple of years. Right, I think at the previous quarter, you mentioned that it would take about two years to implement this new transaction model.

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Deborah L. Clifford: So presumably, this total $600 million bleeding into revenue and cost will take longer than two years to complete in totality? So the act of transitioning, the invoicing, will take approximately two years to complete. But remember that we recognize revenue over approximately one year, so it's going to be a little past that when the invoices at the higher amount bleed into revenue. Right, okay, understood. Thank you.

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Nay Soe Naing: So my first question is around revenue growth. You know, the growth rates have been consistent around 17% for the past three quarters. Should we expect that to go back to the 20 plus that we had in the past, given the positive developments? around the products like Building Connect or ACC or Fusion 360. Our goal would be to drive greater growth from the make revenue line. That's going to be an important aspect of our ability to achieve our target 10 to 15% growth algorithm over time, and it's an area where we've been making incremental investments. So we anticipate that that revenue growth rate is going to be higher than the corpus. Ladies and gentlemen, as that is all the time we have for Q&A today, I would now like to turn the call back to Simon Mays Smith for closing remarks, sir. Thank you everyone for joining us. We'll look forward to seeing many of you on the roads over the coming weeks and at our Q1 conference call later in the year. Thanks very much.

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Simon Mays: This concludes today's conference call. Thank you for participating. You may now go. Goodbye.

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Operator: Thank you for watching! ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? www.autodeskincare.com ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Thank you for standing by. And welcome to Autodesk's fourth quarter and four year fiscal 2024 results conference call. At this time, all participants are in a listen only mode.

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Operator: 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 11 on your telephone. To remove yourself from the queue, you may press star 11 again.

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Simon Mays: I would now like to hand the call over to Simon Mays Smith, Vice President of Investor Relations. Please go ahead.

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Simon Mays: Thanks, Operator, and good afternoon. Thanks for joining our conference call to discuss the fourth quarter and full year Fiscal 24 results. On the line with me are Andrew Anagnost, our CEO, and Debbie Clifford, our CF. During this call, we will make forward-looking statements, including outlook and related assumptions, products, and strategies. However, actual events or results could differ materially.

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Thank you for standing by and welcome to Autodesk fourth quarter and full year fiscal 2024 results conference 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 will need to press star one on your telephone to remove yourself from.

Simon Mays: Please refer to our SEC filings, including our most recent Form 10-Q 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. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information.

Speaker Change: The queue you May press Star one again I would now like to hand, the call over to Simon Mays Smith.

Speaker Change: As president of Investor Relations. Please go ahead.

Thanks, operator, and good afternoon, and thanks for joining our conference call to discuss the fourth quarter and full year fiscal 'twenty four results on the line with me are Andrew <unk>, CEO and Debbie Clifford our CFO.

Speaker Change: During this call we will make forward looking statements, including outlook and related assumptions product and strategy.

Speaker Change: Actual events or results could differ materially.

Andrew Anagnost: Autodesk disclaims any obligation to update or revise any forward-looking statement. We will quote several numeric or growth changes during this call as we discuss our financial performance. Unless otherwise noted, each such reference represents a year-on-year comparison. All non-GAAP numbers referenced in today's call are reconciled in our press release or Excel financials and other supplemental materials available on our Investor Relations website. And now, I will turn the call over to Andrew.

Speaker Change: Please refer to our SEC filings, including our most recent Form 10-Q, 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.

Speaker Change: Forward looking statements made during the call are being made as of today. If this call is replayed or reviewed after today. The information presented during the call may not contain current or accurate information.

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

Speaker Change: We will quote several numeric or growth changes during this call as we discuss our financial performance.

Andrew Anagnost: Thank you, Simon, and welcome everyone to the call. We finished the year strongly, delivering 14% constant currency revenue growth in the fourth quarter of fiscal 24. Resilience, discipline, and opportunity again underpinned our robust financial and competitive performance. Autodesk's resilience comes from its subscription business model and its product and customer diversification, which balances growth across different regions and industries.

Speaker Change: Unless otherwise noted.

Speaker Change: Each such reference represents a year on year comparison.

Speaker Change: All non-GAAP numbers referenced in today's call are reconciled in our press release or XL financials, another supplemental materials available on our Investor Relations website.

Speaker Change: Now I will turn the call over to Andrew.

Andrew: Thank you Simon and welcome everyone to the call. We finished the year strongly delivering 14% constant currency revenue growth in the fourth quarter of fiscal 'twenty for resilience discipline and opportunity again, underpinned, our robust financial and competitive performance.

Andrew: August resiliency comes from its subscription business model, and its product and customer diversification, which balances growth across different regions and industries renewal rates remained strong and new business growth and leading indicators were consistent with recent quarters, despite ongoing macroeconomic policy and geopolitical headwinds.

Andrew Anagnost: Renewal rates remained strong, and new business growth and leading indicators were consistent with recent quarters. Despite ongoing macroeconomic, policy, and geopolitical headwinds, we saw growing usage, record-breaking activity on Building Connected, and cautious optimism from channel partners. Disciplined and focused execution and strategic capital deployments through the economic cycle enable Autodesk to realize significant benefits of its strategy while mitigating the risks of having to make expensive catch-up investments later on. With the new transaction model, we are approaching the final phase of modernizing our go-to-market strategy, which has involved updating our infrastructure, retiring old systems and business models, and building more durable and direct relationships with our customers and ecosystems. At the same time, we are advancing a multi-year process to develop life-cycle solutions within and between our industry clouds, powered by shared platform services and with Autodesk's data model at its core. Together, these will enable Autodesk, its customers, and partners to create more valuable data-driven and connected products and services. Having led the industry in generative design, we are leading again in 3D generative AI.

Andrew: We saw growing usage record big activity on building connected and cautious optimism from channel partners.

Andrew: Disciplined and focused execution and strategic capital deployment through the economic cycle enable artists to realize significant benefits of our strategy, while mitigating the risks of having to make expensive catch up investments later on with the new transaction model. We are approaching the final phase of modernizing our go to market motion.

Andrew: Which has involved updating our infrastructure retiring old systems and business models and building more durable and direct relationships with our customers and ecosystem.

Andrew: At the same time, we are advancing a multiyear process to develop lifecycle solutions within and between our industry cloud powered by a shared platform services and with artist data model at its core together. These will enable autodesk its customers and partners to create more valuable data driven.

Andrew: And connected products and services having.

Andrew: Having led the industry industry in general design, we are leading again is three D. Generative AI I don't know if youre getting closer to a transformational leap where autodesk AI is two three design and make what Chuck GPT is the language or new Multimodal Foundation models will enable design and make customers to automate low value repetitive tasks.

Andrew Anagnost: Autodesk is getting closer to a transformational leap where Autodesk AI is to 3D design and make what ChatGPT is to Langley. Our new multimodal foundation models will enable design and manufacturing customers to automate low value and repetitive tasks and generate more high value complex designs more rapidly and with much greater consistency. For example, we can already generate 3D representations from images 10 times faster and with vastly higher quality than currently available 3D AI.

Andrew: And generate more high value complex design more rapidly and with much greater consistency.

Andrew: We can already generate three D representation from images 10 times faster and with vastly higher quality than currently available <unk> AI.

Andrew Anagnost: We're bolstering our homegrown capabilities and data with partnerships and acquisitions and existing and adjacent verticals. Our recent bi-directional integration of Fusion with Cadence and the acquisition of PayApps are good examples. Discipline and focus when executing our strategy and deploying capital also underpin our opportunity. Our go-to-market and platform initiatives will drive even greater operational velocity efficiency within Autodesk, which will free up further resources to invest in our industry clouds and capabilities, including AI and sustained margin. And with a modernized go-to-market motion, lifecycle solutions, and platform services, Autodesk will fulfill its potential to break down the silos within and between manufacturing I will now turn the call over to Debbie to take you through our quarterly financial performance and guidance for Fiscal 25. I'll then come back to update you on our strategic growth. Thanks, Andrew.

Andrew: We are bolstering, our homegrown capabilities and data with partnerships and acquisitions in existing and adjacent verticals. Our recent bidirectional integration of fusion with cadence and the acquisition of pay up for a good example.

Andrew: Discipline and focus on executing our strategy in deploying capital also underpin our opportunity our go to market and platform initiatives will drive even greater operational velocity efficiency within Autodesk, which will free up further resources to invest in our industry clouds and capabilities, including AI and sustained margin improve.

Andrew: And with a modernized go to market motion lifecycle solutions and platform services Autodesk will fulfill its potential to breakdown the silos within and between manufacturing ADC and media and entertainment, enabling our customers to unleash their data and design a better world go for all I'll now.

Andrew: Turn the call over to Debbie to take you through our quarterly financial performance and guidance for fiscal 'twenty. Five I'll then come back to update you on our strategic growth initiatives.

Deborah L. Clifford: Thanks, Andrew.

Deborah L. Clifford: Our financial performance in the fourth quarter and for the fiscal year was strong, particularly in our enterprise business. Early renewals and strong upfront revenue from enterprise business agreements, or EBAs, and federal governments drove some of the outperformance relative to our expectations in both Q4 billings and revenue. Overall market conditions and the underlying momentum of the business were consistent with the last few quarters. Total revenue grew 11% and 14% in constant currency, with upfront revenue driving two percentage points of that growth. By product and constant currency, AutoCAD and AutoCAD LT revenue grew 7%, AEC revenue grew 18%, manufacturing revenue grew 16%, and M&E revenue was up 8%. AEC and Manufacturing benefited from EBA TrueUp and Upfront Revenue. By region and constant currency, revenue grew 19% in the Americas, 11% in EMEA, and 8% in APAC. Direct revenue increased 19% and represented 39% of total revenue, up 3 percentage points from last year, benefiting from strong growth in both EBAs and the Autodesk Store. The net revenue retention rate remained within the 100 to 110% range at constant exchange rates.

Deborah L. Clifford: Our financial performance in the fourth quarter and for the fiscal year was strong, particularly in our enterprise business.

Early renewals and strong upfront revenue from enterprise business agreements or <unk> and federal.

Deborah L. Clifford: Governments drove some of the outperformance relative to our expectations in both Q4 billings and revenue.

Deborah L. Clifford: Overall market conditions and the underlying momentum of the business were consistent with the last few quarters.

Total revenue grew 11% and 14% in constant currency with upfront revenue driving two percentage points of that growth.

Deborah L. Clifford: Byproduct in constant currency, Autocad, and Autocad LT revenue grew 7% AUC revenue grew 18% manufacturing revenue grew 16% and <unk> revenue was up 8%.

Deborah L. Clifford: AUC and manufacturing benefited from EPA true up and upfront revenue.

Deborah L. Clifford: By region in constant currency revenue grew 19% in the Americas, 11% in EMEA and 8% in APAC.

Deborah L. Clifford: Direct revenue increased 19% and represented 39% of total revenue up three percentage points from last year benefiting from strong growth in both <unk> and the Autodesk store.

Deborah L. Clifford: Net revenue retention rate remained within the 100% to 110% range at constant exchange rates.

Deborah L. Clifford: Billings declined 19% in the quarter, resulting from the transition from upfront to annual billings for multi-year contracts, as expected, though slightly offset by some early renewals in North America. As part of our implementation sequencing for the new transaction model, we shifted our North American price increase from the end of March to the beginning of February. This resulted in some renewals moving from Q1 Fiscal 25 to Q4 Fiscal 24, which modestly boosted billings in January. However, total deferred revenue decreased 7% to $4.3 billion, an expected result of the transition from upfront to annual billings for multiyear contracts.

Deborah L. Clifford: Billings declined 19% in the quarter, resulting from the transition from upfront to annual billings for multiyear contracts as expected.

Deborah L. Clifford: Slightly offset by some early renewals in North America.

Deborah L. Clifford: As part of our implementation sequencing for the new transaction model, we shifted our North American price increase from the end of March to the beginning of February.

Deborah L. Clifford: This resulted in some renewals moving from Q1 fiscal 'twenty five to Q4 fiscal 'twenty, four which modestly boosted billings in January.

Deborah L. Clifford: Total deferred revenue decreased 7% to $4 3 billion and expected result of the transition from upfront to annual billings for multi year contracts.

Deborah L. Clifford: Total RPO of $6.1 billion and current RPO of $4 billion grew 9% and 13%, respectively. Early renewals drove about one percentage point of current RPO growth. However, total RPO growth decelerated in Q4 when compared to Q3, when we closed our largest ever EBA. The year-over-year deceleration was due to the lower mix of multi-year contracts in Fiscal 24 when compared to Fiscal 23, which I mentioned last

Deborah L. Clifford: Total <unk> of $6 1 billion and current RPI of 4 billion grew 9% and 13% respectively.

Deborah L. Clifford: Early renewals drove about one percentage point of current RPI growth.

Total RPM growth decelerated in Q4, when compared to Q3, when we closed our largest ever EMEA.

Deborah L. Clifford: The year over year deceleration was due to the lower mix of multiyear contracts in fiscal 'twenty, four when compared to fiscal 'twenty, three which I mentioned last quarter.

Deborah L. Clifford: In line with recent quarters and our expectations, we again saw some evidence of multi-year customers switching to annual contracts during the quarter. Turning to the P&L, GAAP and non-GAAP gross margin was broadly flat, while operating margin was modestly lower in the fourth quarter, primarily due to the timing of Autodesk University costs shifting from Q3 to Q4, which we flagged last quarter. As expected, full-year non-GAAP operating margin was flat year-over-year, but up about one percentage point at constant exchange rates. Fourth quarter GAAP operating margin was up 40 basis points year over year and about one percentage point at constant exchange rates, partly due to a reduction in stock-based compensation as a percent of revenue. At the current course and speed...

Deborah L. Clifford: In line with recent quarters, and our expectations. We again saw some evidence of multiyear customers switching to annual contracts during the quarter.

Deborah L. Clifford: Turning to the P&L GAAP and non-GAAP gross margin were broadly level, while operating margin was modestly lower in the fourth quarter, primarily due to the timing of Autodesk University costs shifting from Q3 to Q4, which we flagged last quarter.

Deborah L. Clifford: As expected full year non-GAAP operating margin was level year over year, but up about one percentage point at constant exchange rates.

Deborah L. Clifford: Fourth quarter GAAP operating margin was up 40 basis points year over year and about one percentage point at constant exchange rates, partly due to a reduction in stock based compensation as a percent of revenue.

Deborah L. Clifford: At current course and speed.

Deborah L. Clifford: The ratio of stock-based compensation as a percent of revenue peaked in Fiscal 24, and we expect it to fall to 10% or lower over time. Pre-cash flow for the quarter and full year was $427 million and $1.28 billion, respectively, with early renewals providing a modest tailwind in the fourth quarter.

Deborah L. Clifford: The ratio of stock based compensation as a percent of revenue peaked in fiscal 'twenty four.

Deborah L. Clifford: We expect it to fall to 10% or lower over time.

Deborah L. Clifford: Free cash flow for the quarter and full year was $427 million and $1. Two 8 billion, respectively with early renewals, providing a modest tailwind in the fourth quarter.

Deborah L. Clifford: The most significant free cash flow headwinds from our transition from upfront to annual billings for multi-year contracts are now behind us, which means our free cash flow troughs during fiscal 24 and will mechanically rebuild over the next few years. Turning to capital allocation, we continue to actively manage capital within our framework and deploy it with discipline and focus through the economic cycle to drive long-term shareholder value. As you heard from Andrew, we continue to invest organically and through complementary acquisitions to enhance our capabilities and the industry clouds and platform that underpin them. During the quarter, we purchased approximately 300,000 shares for $63 million at an average price of approximately $217 per share.

Deborah L. Clifford: The most significant free cash flow headwinds from our transition from upfront to annual billings for multi year contracts are now behind us, which means our free cash flow trough during fiscal 'twenty, four and while mechanically rebuild over the next few years.

Deborah L. Clifford: Turning to capital allocation, we continue to actively manage capital within our framework and deploy it with discipline and focus through the economic cycle to drive long term shareholder value.

Deborah L. Clifford: As you heard from Andrew we continue to invest organically and through complementary acquisitions to enhance our capabilities and the industry clouds and platform that underpin them.

Deborah L. Clifford: During the quarter, we purchased approximately 300000 shares for $63 million at an average price of approximately $217 per share.

Deborah L. Clifford: We have now offset estimated dilution from our stock-based compensation program well into Fiscal 26. We will continue to repurchase shares opportunistically to offset dilution from stock-based compensation when it makes sense to do so. Now, let me finish with guidance.

Deborah L. Clifford: We have now offset estimated dilution from our stock based compensation program well into fiscal 'twenty six.

Deborah L. Clifford: We will continue to repurchase shares opportunistically to offset dilution from stock based compensation when it makes sense to do so.

Speaker Change: Now, let me finish with guidance.

Deborah L. Clifford: Overall, end market demand has remained pretty consistent over the last few quarters. Macroeconomic and one-off factors, like the Hollywood Writers' Strike, dragged on the new business growth rate during Fiscal 24 and will modestly drag on revenue growth in Fiscal 25, but Autodesk's resilience and robust underlying demand for its products and services reinforce its long-term growth potential. Turning to revenue, I want to highlight four key puts and takes impacting growth in Fiscal 25. First, let me talk about the new transaction model. We've added some slides to the earnings deck to help illustrate how to think about this shift, which I'll briefly summarize. The new transaction model enables Autodesk to build closer, more direct relationships with its customers and partners and to better understand and serve them with more data, more self-service, and greater predictability.

Speaker Change: Overall end market demand has remained pretty consistent over the last few quarters.

Speaker Change: Macroeconomic and one off factors like the Hollywood Writers' strike dragged on the new business growth rate during fiscal 'twenty, four and we'll modestly drag on revenue growth in fiscal 'twenty, five, but autodesk resilience and robust underlying demand for its products and services reinforce its long term growth potential.

Speaker Change: Turning to revenue I want to highlight four key puts and takes impacting growth in fiscal 'twenty five.

First let me talk about the new transaction model.

Speaker Change: We've added some slides to the earnings deck to help illustrate how to think about this shift which I'll briefly summarize.

Speaker Change: The new transaction model enables autodesk to build closer more direct relationships with its customers and partners and to better understand and serve them with more data more self service and greater predictability.

Deborah L. Clifford: It will be a cornerstone of the data services that Andrew talked about earlier. As you can see from slide 11, the transition mechanically drives higher revenue and costs, is broadly neutral to operating profit and free cash flow dollars, and is a headwind to operating margin percent. About $600 million of payments made to resellers and developed markets in Fiscal 24 were accounted for as contra revenue. As this business moves to the new transaction model, these payments will shift to marketing and sales expense over the next few years, all else equal, with the timing of cost recognition not materially different from before. The change affects a substantial majority of our business, but note that emerging markets and our federal government business will remain on the buy-sell model for the foreseeable future. The pace of the shift will primarily be

Speaker Change: It will be a cornerstone of the data services that Andrew talked about earlier.

Speaker Change: As you can see from slide 11, the transition mechanically drives higher revenue and cost is broadly neutral to operating profit and free cash flow dollars and as a headwind to operating margin percent.

Speaker Change: About $600 million of payments made to resellers in developed markets in fiscal 'twenty four were accounted for as Contra revenue.

Speaker Change: As this business moves to the new transaction model. These payments will shift to marketing and sales expense over the next few years all else equal with.

Speaker Change: With the timing of cost recognition not materially different than before.

Speaker Change: The change effects, a substantial majority of our business, but note that emerging markets and our federal government business will remain on the buy sell model for the foreseeable future.

Speaker Change: The pace of the shift will primarily.