Q4 2025 Autodesk Inc Earnings Call
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Speaker Change: Thank you for standing by and welcome to Autodesk fourth quarter and full year fiscal 2025 earnings 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.
Speaker Change: To ask a question during the session, you will need to press star 1 1 on your telephone. To remove yourself from the queue, you may press star 1 1 again. I would now like to hand the call over to Simon Mays Smith, Vice President, Investor Relations. Please go ahead.
Speaker Change: Thanks, Operator, and good afternoon. Thank you for joining our conference call to discuss Autodesk's Fiscal 25 fourth quarter and full year results. Andrew Anagnost, our CEO, and Janash Morjani, our CFO, are on the line with me.
Speaker Change: During this call, we will make forward-looking statements, including outlook and related assumptions, and on products, go-to-market, and strategies.
Speaker Change: Actual events or results could differ materially. Please refer to our SEC findings, 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. Autodesk disclaims any obligation to update or revise any forward-looking statements.
Speaker Change: We will quote several numerical growth changes during this call as we discuss our financial performance.
Speaker Change: 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.
Andrew Anagnost: Thank you, Simon, and welcome everyone to the call. Audibus delivered strong fourth quarter and full year results. Billings and revenues topped the higher end of our expected range, despite new foreign exchange headwinds, while margins and free cash flow exceeded our expectations.
Let me talk about them in turn.
Andrew Anagnost: Our go-to-market GTM model has evolved significantly and purposely from the transition to subscription and multi-year contracts billed annually, to self-service enablement, the adoption of direct billing, and more.
Andrew Anagnost: We are now beginning the optimization phase, which positions Autodesk to better meet the evolving needs of its customers and channel partners.
Andrew Anagnost: This comes from faster and less complex processes and more digital self-service and automation that enable tighter channel partnerships and less duplication of effort.
Andrew Anagnost: Autodesk will continue to evolve its GTM to increase customer satisfaction and Autodesk productivity.
Andrew Anagnost: Our current focus is on marketing, customer success, and operations, with an emphasis on consolidating teams into centers of excellence and investing in systems and processes that increase sales and marketing efficiency at scale.
Andrew Anagnost: Our future focus will be on tighter channel partner integration, which will drive sales productivity and a greater emphasis on value creation for customers, and the broad deployment of self-service capabilities to further increase sales and marketing efficiency.
Thank you.
Through this ongoing optimization, we expect operating profit dollars
Andrew Anagnost: and pre-new transaction model non-gap margin improvement in both fiscal 25 and fiscal 27. And once the optimization phase is complete, we expect to deliver gap margins among the best in the industry.
Andrew Anagnost: Turning to where we are, reallocating internal resources to focus on the long term.
Andrew Anagnost: Autodesk is focused on the convergence of design and make in the cloud, enabled by platform, industry clouds, and AI.
Andrew Anagnost: Our investments in cloud, platform, and AI are ahead of our peers and will drive growth by providing our customers with increasingly valuable and connected solutions and supporting a much broader customer and developer ecosystem.
Andrew Anagnost: To maintain and extend this leadership, we're shifting resources across the company to accelerate investments in these high-potential strategic priorities. We are also building the capabilities we will need to enable future optimization and ensuring that we distribute critical expertise globally to remain competitive, resilient, and flexible.
Andrew Anagnost: As I said last quarter, we are generating strong and sustained momentum in absolute terms and relative to peers. There are three main reasons, attractive long-term secular growth markets, a focused strategy delivering ever more valuable and connected solutions to our customers, and a resilient business.
Andrew Anagnost: Disciplined execution is driving greater operational velocity and efficiency. We are deploying capital to grow the business, further reduce our share count, and enhance value creation over time. We believe these factors will deliver sustainable shareholder value over many years.
Speaker Change: Janesh is with me here at our annual sales conference today. We're excited to have him at Autodesk and he's already making an impact. I'd like to welcome him and turn the call over to him so he can take you through our results and guidance for the year ahead. I'll then come back to provide an update on our strategic growth initiatives.
Janesh: Thanks, Andrew. I am delighted to be here with all of you. Before I get into our results, I'll touch on two areas of potential that I saw that attracted me to Autodesk.
Janesh: First, we are well positioned to deliver growth at scale as we drive the convergence of design and make in the cloud, enabled by platform, industry clouds, and AI.
Janesh: And second, we have significant potential to drive expanded profitability as we further optimize the level and effectiveness of investments in the business.
Janesh: Having spent the last few months gaining a deeper understanding of the business, I am confident in our ability to do both.
Let's turn to the results.
Thank you very much.
Janesh: The fourth quarter and full year Fiscal 25 results were strong.
Janesh: Overall, the broader economic environment and the underlying momentum of the business in the fourth quarter were consistent with the last few quarters, with continuing strong renewal rates and headwinds to new business growth.
Janesh: Total revenue in the fourth quarter grew 12% as reported and in constant currency.
We generated broad-based growth across products and regions.
Janesh: By product and constant currency, AutoCAD and AutoCAD LT revenue grew 9%, AECO revenue grew 15%, Manufacturing revenue grew 10% and in the low teens excluding upfront revenue and M&E revenue grew 10%.
Janesh: Our MAKES products continue to enhance growth, driven by ongoing strength in construction and fusion.
Janesh: By region and constant currency, revenue grew 11% in the Americas, 13% in EMEA, and 11% in APAC.
Janesh: The contribution from the new transaction model to revenue was $46 million in the fourth quarter and $71 million for the year.
Janesh: Direct revenue increased 35% in constant currency and represented 47% total revenue, up 8 percentage points from last year, benefiting from strong growth in the operative store and also from the tailwind to revenue from the new transaction model.
Janesh: Billings increased 24% in the quarter at constant currency, reflecting the shift to annual billing for most multi-year contracts and the transition to the new transaction model.
Janesh: RPU of $6.9 billion and current RPU of $4.5 billion grew 14% and 12% respectively.
Janesh: As expected, current RPO growth was affected by tailwinds from the new transaction model and headwinds from the declining contribution of billed and unbilled deferred revenue from larger multi-year and EPA cohorts ahead of renewal in Fiscal 26.
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Turning to margins.
Janesh: Fourth quarter gap and non-gap operating margins were 22% and 37% respectively, reflecting year-over-year increases of 90 and 160 basis points.
Janesh: For Fiscal 25, GAAP and non-GAAP margins increased approximately 220 and 140 basis points year-over-year respectively, excluding the impact of the new transaction model and currency movements.
Janesh: Pre-cash flow for fiscal 25 was 1.57 billion dollars, which was ahead of the high end of our guidance.
Janesh: In the fourth quarter, we purchased approximately 1.4 million shares for $414 million at an average price of approximately $299 per share.
Janesh: For the full year, we purchased approximately 3.1 million shares for $858 million at an average price of approximately $279 per share.
Turning to guidance.
Janesh: To give you a clearer view on the underlying dynamics of the business, I will speak to the numbers excluding the impacts of the new transaction model and in constant currency.
Janesh: You'll also see in today's earnings deck that we've split out the impact of the new transaction model and currency movements for Office Code 26 guidance.
Janesh: For a further review of how the new transaction model works, please see the opening commentary and earnings deck from our Q2-25 earnings call.
Janesh: Let me start by framing how we are thinking about Fiscal 26.
Janesh: Our starting position is strong. We hold leadership positions in many of our markets and have a loyal customer base with a high degree of recurring revenue. We are leading in cloud platform and AI as we help our customers realize the benefits of converged workflows and data in the cloud.
Janesh: In building our guidance, we have not seen fundamental changes in the broader geopolitical and macroeconomic environment or in the momentum of our markets.
Janesh: Our business model is resilient and we are seeing strong momentum in our growth businesses like construction and fusion. Our focus through Fiscal 26 will be on driving growth from new and existing customers while maintaining strong renewal rates.
Janesh: Our approach to building the guidance for Fiscal 26 was similar to that for Fiscal 25.
Janesh: Our guidance is based on the range of possible outcomes in a bottom-up sales forecast, which is grounded in the momentum of the business.
Janesh: Given our restructuring plans and CRO transition, we believe some disruption is possible.
Janesh: While we have mitigation plans and actions in place for these changes, we believe it is prudent to consider these in our outlook, and our guidance reflects this.
This frames how we are thinking about Fiscal 26.
Janesh: There are more financial details in our Earnings Press Release and Earnings Deck, but let me give you some color.
Janesh: We expect constant currency billings growth of 17% to 19%, excluding the impact of the new transaction model.
Janesh: Billing growth remains elevated this year due to our transition to annual billing for most multi-year contracts.
Janesh: We expect constant currency revenue growth of between 8% and 9%, excluding the impact of the new transaction model.
This range reflects the assumptions that I mentioned earlier.
Janesh: We expect GAAP operating margin to be in the range of 21% to 22%. Excluding the impact of the new transaction model and currency movements, we expect non-GAAP operating margin to be in the range of 39% to 40%, which is at the higher end of the guidance range we gave three years ago.
Janesh: We expect to generate between $2.075 billion and $2.175 billion of free cash flow in FY26.
Janesh: This is after absorbing approximately $110 million to $120 million of cash outflows related to the actions we announced earlier today, and includes an anticipated discrete cash benefit of $130 million to $150 million from the utilization of U.S. deferred tax assets.
We've provided more information on this in the slide deck.
Janesh: We expect to buy back between approximately $1.1 billion and $1.2 billion of shares in Cisco 26, which is a 30% to 40% increase compared to Cisco 25, and the timing of which will depend on market conditions and other factors like debt refinancing.
Janesh: The slide deck on our website has more details on modeling assumptions for the first quarter and full year fiscal 26.
Janesh: Finally, I'll share how we are currently thinking about our longer-term future.
Speaker Change: Since joining Autodesk last December, my conviction in our market opportunity, our ability to meaningfully expand our operating margin, and our capacity to deliver sustainable shareholder value over many years has been reaffirmed.
Speaker Change: That said, our underlying growth has been hovering around the bottom end of the 10% to 15% revenue growth framework we previously provided, as you've seen over the past couple of years and in our Fiscal 26 guidance.
Speaker Change: While we believe our resilient base, the successful execution of our product strategy, and the benefits of the new transaction model will catalyze sustainable growth in the future, our 10% to 15% growth framework is no longer appropriate given the consistent momentum of the business today.
Speaker Change: On the other hand, it's clear to me that margins can be higher. We've announced today the first phase of our go-to-market optimization, which is primarily in marketing, customer success, and operations, and reflects the continued execution of our overall go-to-market evolution of the past few years.
Speaker Change: Through this phase, we intend to deliver underlying Operating Margin Expansion in FY26 as reflected in our guidance, while also building capabilities we need for future optimization beyond FY26.
Speaker Change: These capabilities include tighter channel partnerships with less duplication of effort and more digital self-service and automation, which increases customer satisfaction and workforce productivity.
Speaker Change: Once our overall go-to-market optimization is complete, we expect Autodesk will be able to better service customers and deliver gap margins among the best in the industry. We will share more on our path to further margin expansion at an Investor Day in the third quarter of this year.
Speaker Change: It's been invigorating getting to work, finalizing our fiscal 26 plans and preparing for execution. I can already see there's tremendous potential ahead. I look forward to meeting our investors and analysts over the coming weeks. Andrew, back to you.
Thank you, Janash.
Speaker Change: Autodesk is focused on the convergence of design and make in the cloud, enabled by platform, industry clouds, and AI. Autodesk is at the forefront of convergence because we've been evolving and investing in the business models, products and platforms, and go-to-market that capitalize on it.
Speaker Change: With convergence, simulation done in the conceptual design phase can significantly reduce rework and cost during construction. With convergence, the components of a building can be manufactured off-site and assembled on-site at lower cost and higher safety.
Speaker Change: With convergence, universal AI models can make better and more valuable inferences that power a better world designed for all. Let me give you a few examples from the quarter.
Thank you for tuning in.
Speaker Change: Mott McDonald, a global engineering development and management consultancy, known for his work on major projects such as Heathrow Airport Terminal 5 and the Bay Area Rapid Transit BART Silicon Valley Phase 2 extension, renewed its sixth EBA in the quarter.
Speaker Change: This renewal expands our longstanding partnership to drive better outcomes through digital delivery. In addition to expanding usage of Revit, Civil 3D, ArtDesk Build, and ArtDesk Water, Mott McDonald plans to leverage additional capabilities to increase project productivity and workflows for optimized design.
Speaker Change: Power Design, the number 28 ENR 600 specialty contractor, selected ArtistBuild as an essential link in their construction technology. This strategic choice enhances coordination between design and construction, ensuring seamless collaboration across teams and systems.
Speaker Change: By unifying project data from concept to completion, ARDIS helps power design and protect design integrity, optimize workflows, and drive efficiency at scale.
Thank you for tuning in.
Speaker Change: Clevis Instruction, a national commercial GC, is replacing a competitive solution with Autodesk Construction Cloud to support the next phase of its growth and leveraging our end-to-end solution from pre-construction to cost management and payments with GC pay. I talked earlier about closer integrations with our channel partners and this deal demonstrates that potential.
Speaker Change: using his proprietary technology for migrating project data from displayed solutions.
Speaker Change: An Auditor's Platinum Partner produced a comprehensive implementation plan that gave Cleveland Construction the confidence to make this transition.
Speaker Change: These stories have a common theme, converging people, processes, and data across the project life cycle to increase efficiency and sustainability while decreasing risk.
Speaker Change: Our comprehensive end-to-end industry clouds and platform drive convergence and extend our footprint further into larger growth segments like infrastructure and construction.
Speaker Change: As a sign of our progress, construction revenue growth accelerated in the fourth quarter and we added almost 400 net new logos.
Speaker Change: Moving on to manufacturing, we made excellent progress on our strategic initiatives. Customers continue to invest in their digital transformations and consolidate on our design and make platform to drive growth and increase resilience.
Speaker Change: For example, a global leader in toys is expanding its usage of Autodesk to all three of our industry clouds, Fusion, Forma, and Flow, to meet its profitability goals in manufacturing, while launching new revenue models into digital entertainment.
Speaker Change: Autodesk's unique industry expertise across AECO, manufacturing, and media bridges data across physical and digital product development and between design and make.
Speaker Change: Mühle, a family-owned Swiss multinational plant equipment manufacturer, renewed and expanded its EBA in the quarter.
Speaker Change: Ardess will be one of Beulah's key strategic partners in the development and execution of their digital strategy as it moves to optimize for outcomes by connecting data and workflows from product and plant design to project delivery, including installation.
Speaker Change: MSC Industrial Supply, one of the largest industrial distributors in North America with a leading position across metalworking product categories, will begin leveraging ArtisFusion's connected supply chain capabilities and unique all-in-one Cloud, CAD, CAM, CAE, and PCB platform to enhance its industry-leading application optimization, APoA, program.
Speaker Change: Through the strategic relationship, MSC's team of metalworking specialists will be able to optimize toolpaths and validate cutting parameters more efficiently through enhanced virtual testing capabilities that further strengthen their best-in-class tooling recommendations for manufacturing customers.
Converged data opened new opportunities for Autodesk.
in this case with a failed team.
As customers seek to drive efficient innovation...
Speaker Change: Fusion extension and cash rates are increasing and driving average sales prices up.
Speaker Change: And we're delivering meaningful productivity gains to customers where we deploy AI. For example, our recently launched Auto Constraints tool in Fusion, which leverages AI to simplify the process of defining sketch geometry, has a roughly 50% acceptance rate on suggested geometry, saving significant time for higher value work.
Speaker Change: In education, universities continue to modernize their courses and curriculum to attract and prepare future engineers.
Speaker Change: For example, in Q4, ARD assigned a memorandum of understanding with the Indian Institute of Technology Bombay to integrate our industry-leading solutions into IIT Bombay's innovative education and research programs to equip the next generation of engineers and designers with industry-ready skills.
Speaker Change: And lastly, we continue to work with our customers to ensure that they are using the latest and most secure versions of our software.
Speaker Change: For example, while working with an administrator of European Railway Infrastructure in the process of adopting BIM to optimize its infrastructure development and sustainability practices, we identified gaps in compliance. Working together, we addressed compliance while supporting their digital transformation.
Speaker Change: Attractive, long-term, secular growth markets, a focused strategy delivering ever more valuable and connected solutions to our customers, and a resilient business are generating strong and sustained momentum in absolute terms and relative to peers. Disciplined execution is driving greater operational velocity and efficiency.
Speaker Change: We are deploying capital to grow the business, further reduce our share count, and enhance value creation over time. In combination, we believe these factors will deliver sustainable shareholder value over many years.
Speaker Change: Throughout all of this history, we have taken decisive actions to drive our business forward, even when they are difficult. This commitment has been paramount to our success over the last 40 years and remains true today.
Speaker Change: To our team members who departed as a result of our restructuring, I extend my sincere appreciation for your contribution to Autodesk. You will always be a part of Autodesk's story, and I am grateful for everything you have done. Operator, we would now like to open the call up for questions.
Speaker Change: Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. Please stand by while we compile the Q&A roster.
Thank you. Bye.
Our first question comes from the line of...
Saket Kalia
Barclays.
Please go ahead, Sackett.
Sackett: Hey guys, thanks for taking my questions here and welcome Janesh.
Thank you. Thank you.
Thanks, everybody.
Andrew Anagnost: Absolutely. Andrew, maybe to start with you, I want to zoom into the 10 to 15% medium growth rate a little bit.
Sackett: And if I'm understanding your comments correctly, the rate of new business growth is the key reason why that medium-term growth rate maybe is no longer appropriate.
Sackett: And you've been talking about slow new business for a while now. Maybe the question is, what drives that new business growth higher over time?
Thank you for tuning in.
All of us. All of us. All of us.
Yeah, Sackett, well, good evening, Sackett.
Sackett: Good to talk to you. Thanks for this question. Look, first off, I think you've got the thinking right up front. Let me just comment a little bit on what's happened in the past, and then I'll answer the substance of your question. So first off, if we look back in the past,
Sackett: There's a couple of things that were really impacting new business growth as we were moving through the last couple of years. One is all the things that Autodesk was changing. So we changed a lot of things that has a...
Sackett: measurable impact on partner productivity with regards to balancing renewals and new business. The other thing was economic uncertainty, all the things associated with the macro environment. These things impaired some of our customers' willingness to invest in their business. So those things happened latently in the past.
Sackett: Moving forward, there's some things that we have control of and that we don't have control of that are going to drive us back onto our growth path. The first thing, if we look at the things we don't have control of, we don't have control of the macro uncertainty. That's going to continue, and that will definitely impact some of our customers' thinking.
Sackett: But what we do have control of is in two key areas, one related to new product subs and one related to our new businesses that primarily show up in the make category, the emerging and high growth businesses.
With regard to the former...
Thanks for tuning in. We'll see you next time.
Speaker Change: We are on a journey of go-to-market optimization right now, and that is going to enhance the productivity of our channel. We've been impacting their productivity with all the change. We're on a cycle now where, over a period of time, we'll be increasing their productivity. That's going to allow them to focus more on new business growth. That's in our control.
Speaker Change: The other thing that's in our control is during this current risk cycle, we actually invested in driving the growth of our emerging and high-growth business on the make side, and that includes investing in...
Speaker Change: the industry cloud, the core cloud platform, and in AI. So these things are going to not only continue the current momentum, but our goal is to enhance the current momentum, and these are high-growth businesses having long-term impact on our business.
Speaker Change: So those are the things that are in our control that get us back to a place where we can feel confident in reinforcing the floor of our long-term business growth.
Speaker Change: Got it, got it. And maybe that's a natural segue for you, Janash. As you know, mortgage and potential has been one of the key investor debates on Autodesk.
Janash Morjani: And so, I mean, I think maybe to start, it's important to flag that margins here for 25 were ahead and the guide for 26 is higher than expected as well, but
Speaker Change: Maybe you could just give us a little bit more color.
Speaker Change: on the margin potential here and how today's restructuring announcement to Andrew's point maybe fits into that debate.
Thank you very much.
Speaker Change: Thanks, Akit. I appreciate this is one of the foremost issues on investors' minds. As I step back and look at Fiscal 25 first, we're actually really pleased that we delivered strong outperformance here, thanks to our strong fiscal discipline in the fourth quarter. And I want to thank Betsy for setting us up for a strong Q4 on that front.
Speaker Change: Today's announcement does reflect the continuation of our multi-year journey, as Andrew was talking about, to evolve our go-to-market, and it fits in very nicely with our overall margin expansion goals. It's something that the team had been planning for thoughtfully since the introduction of the new transaction model.
Speaker Change: It's also allowing us to expand our underlying non-GAAP operating margin quite meaningfully this year when you hold aside the effects of the new transaction model.
Speaker Change: So when I look at it, serving customers better through tighter integration and more self-service eventually expands our market opportunity and also ultimately lowers the unit cost of serving those customers, which will help drive an even more efficient go-to-market motion in the future.
Speaker Change: So, we have conviction in our potential to drive higher margins over time as we execute this plan and as we focus on future opportunities that I touched on in the opening commentary.
Very helpful, guys. Thank you.
Thank you.
Speaker Change: Thank you. Our next question comes from Adam Borg of Stiefel. Please go ahead, Adam.
Adam Borg: Awesome, thanks so much for taking the question and I'd like to extend a welcome to Janesh as well. Maybe for Andrew, just piggybacking on a comment you just made to Saka's question around this macro uncertainty and obviously things that are outside of your control, I'd love to hear a little bit more about what you're hearing with your customer conversations around overall sentiment.
Adam Borg: how that's playing out overall, and then maybe talk a little bit about the new administration and some potential puts and takes there, either, you know, shortening regulation being a tailwind, or some questions around tariffs, immigration policy, and how that will ultimately impact customers and their decision-making over the next 6 to 12 months. Thanks so much.
Speaker Change: Yeah, okay Adam, thanks for asking that question. So first off, our business is resilient enough, it's diversified enough that it can absorb and react to any kind of policy changes in a sustainable way.
Adam Borg: The thing I'm hearing from our customers is they want certainty.
Adam Borg: It's uncertainty that's kind of fueling customer angst. It's not what the output is, what the answer is. It's just the uncertainty. And that's the thing that we want to move past. We want to move to certainty policy. Once policy is in place, I have faith in Autodesk Business to navigate whatever the policy is. But uncertainty is not something that our customers want to work through.
Speaker Change: Thank you for watching. We appreciate it. And we hope you enjoyed this video. If you did, please give us a thumbs up and subscribe to our channel.
Great, thank you so much.
Speaker Change: Thank you. Our next question comes from the line of Jay Bleishauer of Griffin Security. Please go ahead, Jay.
Thank you.
Speaker Change: Thank you. Good evening. Andrew, with respect to the 10 to 15 percent growth range you've previously spoken of,
Speaker Change: The company at its last analyst meeting gave us multiple elements of that, in other words, a variety of price and volume components for that.
Speaker Change: most of which have to do with your core business as you call it, renewal and expansion within the core business, less so
with New Or Adjacent Businesses.
Speaker Change: So, maybe break down that thinking about the growth range in those terms, perhaps in regard to how you're thinking about pricing leverage from here and the multiple elements of Q or volume that you had previously spoken of, then I have a product question.
Speaker Change: Jay, I'm going to go back to what I said previously and focus on these two key elements.
Speaker Change: enhancing channel productivity as we move through all these changes, that is a critical thing for us.
Speaker Change: It's part of our ongoing optimization cycle. It's going to be something that delivers over multiple years. That will create a tailwind within our channel business for some of these core subs issues. And I think that's the more important thing to focus on. And the emerging businesses have always been a part of our plan. And I think you see very clearly that the make businesses are growing robustly.
We are
Speaker Change: Investing to make sure that those continue to grow at that rate or accelerate beyond that rate So that's that's where you want to focus right now in terms of getting the business Back to where we want it to be over time
Thank you very much.
Okay.
Speaker Change: outside of the various go-to-market changes and optimization and so forth what would you say for this year and beyond are the critical product or technology executables that you are reallocating to or investing in maybe talk about
Speaker Change: How are you thinking about the business impact of platform services, the new data models, and so on and so forth? Things that we've talked about consistently, most recently at AU.
Thank you. Thank you. Thank you.
Thank you for watching. See you next time.
Speaker Change: Yeah, so what we're doing is we're accelerating some of the roadmaps associated with our industry clouds.
Speaker Change: And, of course, we're going to continue to turn the crank on some of the ARC features. As you know, Jay, we just introduced ARC.
our first commercial AI, generative AI feature in Diffusion.
Speaker Change: It's the auto-constraint feature, it's out there, getting used by our users. It's got, you know, approximately a 50% acceptance rate, which is a really high rate for a generative technology and it just gets smarter as it goes. That's a real productivity tool for our customers that really makes a difference. There's going to be more of those.
and that's where the investment is going.
Thank you, Andrew.
Thank you very much. Thank you.
Speaker Change: Thank you. Our next question comes from Jason Salino of KeyBank Capital Markets. Your question please, Jason.
Jason Salino: Great. Thanks for taking my question. One question on the guide and then the reduction in force.
Jason Salino: I'm cognizant that you've got some business momentum and I understand why you're making the changes.
Jason Salino: But does the Revenue Guide assume any extra conservatism just on potential of disruption?
Jason Salino: The change is quite a large reduction, so I guess what have you built into the guide relative to that?
Thank you.
Janash Morjani: Hey, this is Janesh. Maybe I'll take that. So, you know, as I mentioned in the opening commentary, our approach to building the guidance for Fiscal 26
Janash Morjani: We did consider a range of possible outcomes from our overall bottoms-up sales forecast and then we did factor in
Janash Morjani: some level of risk potential associated with the restructuring plans and the CRO transition. We've put in place good mitigation plans and actions that we have to manage those, but we thought it's prudent to consider these in our outlook, so our guidance does reflect that.
Okay.
Speaker Change: I appreciate that. And then on prior calls, you know, there were some mentions of
Speaker Change: you know, a bigger EBA cohort, you know, multi-year customers coming up for renewals. That wasn't really brought up on this call. Is that still an opportunity for you for this year? And, you know, any details on how big of a cohort this might be or what's built in? Thank you.
Speaker Change: It's still an opportunity. We didn't reference it discreetly because we have mentioned it before. Nothing has really changed on that front. We've got both the EBA cohort as well as the product subscription multi-year cohorts that will come up for renewal later this year.
Okay, thank you Janash.
Thank you.
Speaker Change: Thank you. Our next question comes from Taylor McGinnis of UBS. Please go ahead, Taylor.
Thank you.
Taylor McGinnis: Yeah, hi. Thanks so much for taking my question. Just on the margin, guys, so the underlying 300 basis points of margin improvement is really strong. So can you just break down and talk about that?
Taylor McGinnis: quantify the drivers of that expansion. So how much is from cost savings, like scaling back on some of the complicative costs and streamlining the sales force, how much might be from cost savings associated with the risk. And then maybe just secondly, you know, when we think about the margin potential
Taylor McGinnis: beyond 2026. I guess any initial thoughts you can provide there. Thanks.
Thank you for tuning in.
Speaker Change: Yeah, I'm happy to take that. So as we think about the overall impact in Cisco 26 and the underlying operating margin increase that we're guiding to, that demonstrates our overall commitment to expanding profitability this year, obviously, but it's part of our longer-term plans.
Speaker Change: The reinvestment and our organic hiring plans, all of that is an integrated plan.
Speaker Change: The actions that we've taken in the field organization and the RIF, and that's all part of the same plan.
Speaker Change: We also had our organic hiring plans that we had for Fiscal 26, so it's hard to break all of that apart. But that said, to just give you a sense of how we are thinking about it, if you look at our Fiscal 25 total spending,
Speaker Change: That proves 7% year-over-year, excluding the new transaction model. And our fiscal 26 total spending, that implies growth of only 4% year-over-year on a similar basis in constant currency.
Speaker Change: So that gives you a sense of the extent of both the optimization and the spend discipline that we are driving in the business overall.
Speaker Change: And then, you know, as I think a little bit ahead on FISCO 27, we are committed to further margin expansion beyond FISCO 26 on an underlying basis, as we've talked about.
Speaker Change: And that will continue, and ultimately when that overall go-to-market optimization is complete, we expect that we'll have gas margins among the best in the industry, and we'll share a little bit more details in terms of what that means when we get to our investor day in the third quarter.
Great, thank you so much.
Thank you. Thank you.
Speaker Change: Thank you. Our next question comes from Babin Shah of Deutsche Bank. Please go ahead, Babin.
Babin Shah: Great, thanks for taking my question. Janice, just kind of following up on that, what's the timeline you guys are thinking about in terms of kind of seeing some of the benefits from a lot of the adjustments you're making to sales and marketing and when do you kind of see that sales and marketing efficiency show up from a revenue perspective?
Thank you.
Speaker Change: Yeah, Pavel, clearly we are seeing a significant benefit here in Fiscal 26 itself. As I mentioned, that's a big part of the underlying margin expansion that we are delivering.
Speaker Change: with respect to what that translates to for FISCO 27 and beyond. As I mentioned, we've got more work to do in terms of the next set of activities that we need to plan for as we think about what it means to drive tighter channel partner integrations and build the capabilities that we need for self-service.
Speaker Change: We're investing this year to build those capabilities so that we can be set up to lower our overall cost to serve our customers in future years, and again, we'll spell some of the details out around that in the investor day in the third quarter.
Speaker Change: That's super helpful. Just one quick follow-up, and it sounds like you guys are gonna be pretty aggressive from a shareholders return perspective in fiscal 26, and kind of given some of the changes you're talking about from the top-line perspective and focus on efficiencies, how are you now thinking about M&A and do these actions change your view at all?
Thank you very much.
Speaker Change: Yeah, that's it. Our view on M&A doesn't change. We've always been an acquisitive company. We're always looking for anything that can accelerate our strategy or take us into adjacencies that we think are relevant to the company. But, you know, that's consistent with previous stances on this.
Speaker Change: If we see something like that, we will act on it.
Speaker Change: Thank you for watching. I'm Andrew Mays. I'll see you next time.
Thank you.
Yeah.
Our next question.
Comes from Joe Vrunk.
Your line is open. Please go ahead.
Speaker Change: Great. Sorry, I was on mute. I'll get this right one of these times. I wanted to go back a few questions just on the year-over-year margin assumptions. It looks like
Speaker Change: If I'm reading slide 10 correctly, you're assuming that agency change is about a six-point impact on growth in the upcoming year. So I think that means a six-point headwind on margins.
Speaker Change: You're kind of guiding the margins flat to slightly up. So can you bridge the six points you're able to layer back on to get to where you're guiding the earth?
Thank you. Thank you.
Speaker Change: Okay, and that's the underlying you're talking about, okay, and then keep in mind you've got partner commissions that we pay as well in that model.
Thank you. Thank you.
Speaker Change: Yeah, okay, understood. And then, you know, going to just, it makes sense that as you see a slower new subscriber addition that builds over time and kind of compresses the revenue growth rate.
Speaker Change: I guess the one thing that's a bit surprising is the growth rates in the AEC product segment.
Speaker Change: are still really good, and I think this quarter was 14%, and that seems just as difficult an environment as what manufacturing customers in a lot of way are going through.
Speaker Change: Do you think you're kind of outperforming there in that segment, and maybe there's challenges elsewhere? Because it would seem like the AEC performance is ultimately standing out in this environment.
Thank you for tuning in.
Speaker Change: Yeah, so what you're seeing in AEC is you're seeing our construction performance.
Speaker Change: to get in front of where they need to be. That's what you're seeing in AEC. I also want to make sure that I just address something you said. Remember, with regards to manufacturing growth, you just have to take into account that we had some upfront revenue compared to last year. Those upfront revenue blips kind of have a disproportionate impact on how the manufacturing looks when you account for that. That growth is actually in low double digits, so we're actually performing well there as well relative to peers, especially on a full
Speaker Change: So, what you're seeing in AEC, that's why you want to see us drive those make businesses even more because they're really having an impact. Revit's doing great, there's no doubt, but construction's doing fantastic.
Thank you.
Okay, thank you very much.
Speaker Change: Thank you. Our next question comes from Elizabeth Porter of Morgan Stanley. Please go ahead, Elizabeth.
Great, thank you very much for the question.
Speaker Change: Self-service sounds like a pretty big opportunity to drive the underlying efficiency and just giving a given Autodesk can be a Complex piece of software that it does require some higher touch from sales or partners Just how should we think about the base of business that could be applicable to self-service? Any sort of comments to help us understand where it is today and where it could go over time would be very helpful Thank you
Speaker Change: Yeah, self-service can touch just about every aspect of our business from a transactional point of view. So, you know, for instance, as a matter of fact, some of our reinvests are going into improving some of these self-service capabilities right out of the gate. So on a transaction basis, the easier you make it for customers to see what they own, manage what they own, add new seats and all the things, and be aware of what their users are using and where they might need more capacity, that drives upsell and cross-sell immediately.
and Darien Nettles.
Speaker Change: human resources on the high value returns. So every aspect of the business can benefit from an improved and enhanced self-service. And there's lots of low-hanging fruit as we move forward in terms of making the self-service capabilities easier to access, easier to use, and more complete in terms of how they work with our customers.
Thank you.
Speaker Change: Yeah, so first off, let me just remind everybody, this optimization phase is a deliberately planned activity connected to the last two years of changes.
Speaker Change: when we began the move to the new transaction model is when we began the planning of this optimization phase. So this is a purposeful, deliberate, planned out effort. The high level main focus is for this are on
Speaker Change: Optimizing certain processes, enhancing self-service like I talked about earlier, and also improving efficiency and tightening the relationships with our partners so that we just generally reduce duplication and get more efficiency from the whole system overall.
Speaker Change: The initial phases were focused primarily on some of our marketing efficiency and some of the marketing-related go-to-market aspects of our efficiency. As we move forward, you're going to see us drill a little bit more into making sure that we're creating tighter relationships with our partners and ensuring that there's more optimization in terms of productivity associated with partner relationships, and you're going to see self-service have a bigger impact on the business moving forward.
Speaker Change: So, we've got a continuum from starting with the marketing optimizations, moving through a continuum to enhancing partner engagement and getting more efficient there, all the way through maximizing returns on self-service.
Thank you.
Thank you. Bye-bye.
Speaker Change: All of that's going to deliver long-term operating income improvement for the company.
Thank you.
Thank you very much.
Speaker Change: Thank you all for joining us. Thank you for tuning in. I'm Andrew Anagnost and I will see you next time.
Speaker Change: Thank you. Our next question comes from Matt Hedberg of RBC. Matt, your line is open.
Matt Hedberg: Great. Thanks for taking my questions. And congrats again, Janesh. Really look forward to working with you again here at Autodesk.
Matt Hedberg: And, you know, starting out the year with a really strong free cash flow guide is really great to see as well.
Speaker Change: You know, maybe Andrew, you know, you talked a little bit earlier about Fusion, Gen AI, the product launch there. I guess I'm just wondering more philosophically, could you talk about sort of how we should think about additional?
Speaker Change: generative AI rollouts across the product portfolio, you know, how we should think about pricing and just kind of the sensitivity around some of these data models given obviously a lot of it's, you know, customer specific.
Speaker Change: Yeah, look, you know, we're very much focused on enhancing customer productivity with these tools. You know, as the tools get more and more productive, you know, obviously there is opportunity to charge additional money for really high productivity AI features so that we capture some of the productivity we bring to the customers, we share some of the productivity with them, and we capture some of the value back to us.
Speaker Change: What you're seeing with some of these early features is essentially things that help the customer build 3D models more quickly, more rapidly, with a lot less labor. So that's really hitting them right in their productivity, and it also makes our products much more competitive in situations, especially in Fusionland, you know, where we're dealing with a very large ecosystem of products that we compete with, and this essentially sets up Fusion to be much more competitive as we move forward.
Speaker Change: If you look forward at some of the things we're doing in AEC, Forma is...
Speaker Change: Bring building information modeling down to smaller and smaller companies that have found Revit out of reach for both their capabilities and their budgets.
Speaker Change: Forma has an opportunity to really expand the footprint of who can do building information modeling, and that's one of the things we're targeting with those long-term. So, look for AI to provide not only new productivity, better competitive value, and long-term potentially higher monetization for some of these highly productive features, but also look for it to expand our market footprint.
Thank you.
Got it. That's super helpful.
Speaker Change: You know, Janesh, one for you, it sounds like we're going to get maybe a bit more color on kind of a midterm model, perhaps, on the Q3 Analyst Day. And so maybe just as a follow-up question to the kind of the kind of thinking about the lower end of that 10 to 15% guidance range, you know, I guess, how should we, how should we think about like, maybe a floor of growth? You know, we're getting that from a couple investors today. Is there kind of a way to think about like,
Speaker Change: you know, is it kind of like high single digits? Is it 10%? Just any way to kind of think about, you know, how you think about kind of the lower end of kind of a girl's outcome.
Speaker Change: Matt, great to be reconnected and looking forward to working with you actually so in terms of that growth range of the bottom end of that framework of around 10% if you look back over the last couple of years that's where we fundamentally been
Speaker Change: And in Fiscal 26, we are guiding to 8% to 9% in constant currency, excluding the new transaction model effects.
Speaker Change: And actually, that's consistent with the underlying growth that we delivered in Fiscal 25. So, overall, we think that the business is resilient, and we've had consistent performance over a period of time, and our focus fundamentally is actually on driving sustainable growth.
Speaker Change: As we continue to focus on new business growth and driving our make business, especially through construction and manufacturing, and the overall platform strategy like Andrew was saying.
Thank you.
Thanks, guys. Congrats.
Thank you.
Speaker Change: Thank you. Our next question comes from Joshua Tilton of Wolf Research. Please go ahead, Joshua.
Hey, guys, can you hear me?
Yes, we can.
Thank you for tuning in.
Speaker Change: Great, thanks for sneaking me in. I have two quick ones. The first question is
Speaker Change: Is there any sense you can give, you can, you know, just help us understand maybe where the NRR finished for the year relative to what you're guiding to for revenue for next year? So, for example, you know, you're guiding to about 8.5% core growth X transition for next year, like where relative to that are existing customers growing, finishing this year?
Speaker Change: And then my second question is just a little more simple, how much of the recent restructuring or risk announcement benefit is factored into the current operating margin guidance for this year?
Speaker Change: Thank you for watching. I'm Andrew Mays. I'll see you next time.
Speaker Change: Yeah, maybe I'll just address both of those. So in terms of the net retention rate, you'll see that in the modeling guidelines we've provided a view on how we're thinking about it for Fiscal 26, which is basically the same as it was for Fiscal 25.
Speaker Change: It's a range of 100% to 110%, and I realize that's a wide range, and we're essentially guiding to 8% to 9% growth on the underlying, but the way I think about that is that net retention rate essentially is, you know, hovers around the middle of the range, it can bounce around by a few points in any particular quarter, that's why we put a reasonably wide range to it.
Speaker Change: And so that's how we're thinking about that piece. And I'm sorry, would you mind repeating the second question, please?
Speaker Change: Yeah, just how much of the how much of the recent RIF announcement or layoff announcement benefit is baked into the current operating margin guidance for this year?
Speaker Change: from 7% last year to 4% this year in constant currency.
Thank you.
Thank you, very helpful.
Thank you. Thank you.
Speaker Change: Thank you. Our next question comes from Michael Turin of Wells Fargo Securities.
Your question, please, Michael.
Michael Turin: Hey, great. Thanks. I appreciate you taking the question. I know there have been a few different angles on this, but Janesh, just on the commentary around the long-term targets, just any perspective you can add, given it's early in your tenure. So decision process that went into this, and maybe help us parse how much is using a different set of assumptions there, or just any more context you can add, because that's where we're getting the most questions
Yeah, I'm happy to talk about that, and look, fundamentally,
Michael Turin: My view on the business is very similar to what we've experienced in the past.
Michael Turin: You know, coming into the business, recognizing that for the past couple of years we've been hovering around the low end of that range, and Cisco 26 on an Apple-to-Apple basis is very similar. The reality is we've just not been in the middle to high end of that range, and that's – you know, as I looked at the range, it felt inappropriate to have a range out there if we've not delivered against that.
Michael Turin: in the last couple of years, at least being towards the middle or high end of that. And that was really the core principle behind this.
Michael Turin: But fundamentally, when I look at the business, as I said, we've delivered consistently and it's a resilient business. You've seen us deliver over the last couple of years when there's been a lot of external factors that have been outside of our control. You've seen us do that through the business model transitions we've been driving. We've got a strong and loyal customer base. Our products are excellent.
Michael Turin: in multi-leading positions, we feel very good about our position overall.
Speaker Change: Yeah, that's helpful, Culler. And then, Andrew, just on the headcount reduction, I know these are tough decisions. Maybe just speak to how you ensure you're making the right level of change there, balancing efficiency with preserving the continuity and business momentum you're seeing. Thanks.
Thank you for watching. Be safe out there. Be well.
Speaker Change: Yeah, so we look at these things, you know, definitely over a long time frame, and we're definitely trying to balance the risk, short term, with the reward, long term, in terms of what we did, and we feel like we've taken a really balanced approach here. You can see we've reinvested some of the money into future systems and capabilities that will allow us to do additional optimizations in the future. So we're trying to make sure that we cut the right kind of balance here so that we keep the business moving in the right direction, and we factored a lot of that risk into the
Speaker Change: Guiding. So I think we've done it right, and I think the ongoing optimizations are going to continue to deliver increasing profits as we move forward into next year.
Thank you for joining us. Thank you.
Thanks very much.
Speaker Change: Thank you. Our next question comes from Ken Wong of Oppenheimer & Company. Please go ahead, Ken.
Thank you.
Ken Wong: Great, maybe the last one on just that 10 to 15 percent range. I realize inappropriate to kind of keep that out there given given the conditions and the performance But you know with all the improvements that you guys are putting through with the go-to-market changes You know the work with the channel. I mean should we think about the other side of this?
Ken Wong: You know, when macro is fine, when you guys have delivered on the go to market changes that, you know, that 10 to 15 is back in play. Is it, is it arguably maybe even a better number? Like, help, help us think through kind of what the, what the end goal.
Ken Wong: with some of these changes would be in respect to what were the prior 10 to 15 goals.
Ken Wong: So, Ken, where we're at right now is just a tacit acknowledgement of where the business is right now. What you're not hearing is a reduction in faith of the long-term growth potential for the company. All right? The areas we're talking about are the areas that really need to improve to drive the kind of behavior we want long-term. It's all about getting the channel more productive. That's going to be a result of some of the changes that we're doing right now and some of the optimizations.
Ken Wong: The more energy it has to spend on new business, the more the new business starts to build up over time and actually show up as revenue growth over time.
The other thing is...
Ken Wong: We're really excited about moving to design and make solution in a lot in a lot of our customers So watch that make bucket because that's a that's a clear sign that we're being successful Penetrating the end-to-end solution that is real long-term new growth for Autodesk and by investing in that we're essentially Front-loading the capability to keep building up that book of business which then shows up in in the top the top line over time So that's the way to look at it. It's not a retreat from confidence in the law
Ken Wong: Long-term growth strategy of the business, quite the contrary, but it is an acknowledgement of where we are at today.
Ken Wong: Got it. Okay, perfect. And then just a quick follow-up on
Ken Wong: You guys have rolled out across all three regions now, as far as the agency transition. Any update on how those three areas are tracking? Obviously, we have the Americas, which were a little further along, but you just rolled out APAC. We'd just love a sense of how those are mapping relative to internal plans.
Yeah, so for the most part, things are going...
Ken Wong: as we planned. There's an initial kind of pull forward of the business and then there's some production and new business as people go through getting their systems set up and renewing. We did see a few more productivity problems.
Ken Wong: As we were hitting the end of all these rollouts than was originally expected, but we're now working through all of that. But for the most part, this is perceived as we expected with a little bit more kind of, okay, we have some work to do to help the partners manage these systems effectively moving forward.
Okay, perfect. Thank you so much, Andrew.
You're very welcome.
Thank you.
Speaker Change: Thank you, and ladies and gentlemen, that is all the time we have for Q&A today. I would now like to turn the conference back to Simon Mays-Smith for closing remarks.
Thank you.
Simon Mays-Smith: Thank you everyone for joining us today. We'll look forward to seeing many of you over the coming weeks. If you have any questions, please just email me, simon at autodesk.com, and we'll look forward to catching up on our Q1 earnings call. Thanks very much, Latif, and goodbye everyone.
Thank you for tuning in.
Simon Mays-Smith: This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change: Thank you for standing by and welcome to Autodesk fourth quarter and full year fiscal 2025 earnings 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.
Speaker Change: To ask a question during the session, you will need to press star one 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, Vice President, Investor Relations. Please go ahead.
Speaker Change: Thanks, Operator, and good afternoon. Thank you for joining our conference call to discuss Autodesk's Fiscal 25 fourth quarter and full year results. Andrew Anagnost, our CEO, and Janash Moorjani, our CFO, are on the line with me.
Speaker Change: During this call, we will make forward-looking statements, including outlook and related assumptions, and on products, go-to-market, and strategies.
Speaker Change: Actual events or results could differ materially. Please refer to our SEC findings, 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.
Thank you. Thank you.
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: Autodesk disclaims any obligation to update or revise any forward-looking statements. We will quote several numerical growth changes during this call as we discuss our financial performance. Unless otherwise noted, 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 Excel financials and other supplemental materials available on our Investor Relations website. And now I will turn the call over to Andrew.
Andrew Anagnost: Thank you, Simon, and welcome everyone to the call. Audibus delivered strong fourth quarter and four-year results. Billings and revenues topped the higher end of our expected range, despite new foreign exchange headwinds, while margins and free cash flow exceeded our expectations.
Andrew Anagnost: You will all have seen our restructuring announcement this afternoon, which has two parts. First, we have initiated the optimization phase of our sales and marketing plan. And second, we are reallocating internal resources to accelerate our strategic priorities and strengthen our resilience. Let me talk about them in turn.
Andrew Anagnost: Our go-to-market GTM model has evolved significantly and purposely from the transition to subscription and multi-year contracts billed annually, to self-service enablement, the adoption of direct billing, and more.
Andrew Anagnost: We are now beginning the optimization phase, which positions Autodesk to better meet the evolving needs of its customers and channel partners.
Andrew Anagnost: This comes from faster and less complex processes and more digital self-service and automation that enable tighter channel partnerships and less duplication of effort.
Andrew Anagnost: Autodesk will continue to evolve its GTM to increase customer satisfaction and Autodesk productivity.
Andrew Anagnost: Our current focus is on marketing, customer success, and operations, with an emphasis on consolidating teams into centers of excellence and investing in systems and processes that increase sales and marketing efficiency at scale.
Andrew Anagnost: Our future focus will be on tighter channel partner integration, which will drive sales productivity and a greater emphasis on value creation for customers, and the broad deployment of self-service capabilities to further increase sales and marketing efficiency.
Andrew Anagnost: Through this ongoing optimization, we expect operating profit dollars and pre-new transaction model non-gap margin improvement in both Fiscal 25 and Fiscal 27. And once the optimization phase is complete, we expect to deliver gap margins among the best in the industry.
Andrew Anagnost: Turning to where we are, reallocating internal resources to focus on the long term.
Andrew Anagnost: Autodesk is focused on the convergence of design and make in the cloud, enabled by platform, industry clouds, and AI.
Andrew Anagnost: Our investments in cloud, platform, and AI are ahead of our peers and will drive growth by providing our customers with increasingly valuable and connected solutions and supporting a much broader customer and developer ecosystem.
Andrew Anagnost: To maintain and extend this leadership, we're shifting resources across the company to accelerate investment in these high-potential strategic priorities. We are also building the capabilities we will need to enable future optimization and ensuring that we distribute critical expertise globally to remain competitive, resilient, and flexible.
Andrew Anagnost: As I said last quarter, we are generating strong and sustained momentum in absolute terms and relative to peers. There are three main reasons, attractive long-term secular growth markets, a focused strategy delivering ever more valuable and connected solutions to our customers, and a resilient business.
Andrew Anagnost: Disciplined execution is driving greater operational velocity and efficiency. We are deploying capital to grow the business, further reduce our share count, and enhance value creation over time. We believe these factors will deliver sustainable shareholder value over many years.
Janash Morjani: Janesh is with me here at our annual sales conference today. We're excited to have him at Autodesk and he's already making an impact. I'd like to welcome him and turn the call over to him so he can take you through our results and guidance for the year ahead. I'll then come back to provide an update on our strategic growth initiatives.
Janesh: Thanks, Andrew. I am delighted to be here with all of you. Before I get into our results, I'll touch on two areas of potential that I saw that attracted me to Autodesk.
Janesh: First, we are well positioned to deliver growth at scale as we drive the convergence of design and make in the cloud, enabled by platform, industry clouds, and AI.
Janesh: And second, we have significant potential to drive expanded profitability as we further optimize the level and effectiveness of investments in the business.
Speaker Change: Having spent the last few months gaining a deeper understanding of the business, I am confident in our ability to do both.
Let's turn to the results.
Speaker Change: The fourth quarter and full year Fiscal 25 results were strong.
Speaker Change: Overall, the broader economic environment and the underlying momentum of the business in the fourth quarter were consistent with the last few quarters, with continuing strong renewal rates and headwinds to new business growth.
Speaker Change: Total revenue in the fourth quarter grew 12% as reported and in constant currency.
We generated broad-based growth across products and regions.
Speaker Change: By product and constant currency, AutoCAD and AutoCAD LT revenue grew 9%, AECO revenue grew 15%, Manufacturing revenue grew 10% and in the low teens excluding upfront revenue, and M&E revenue grew 10%.
Simon Mays-Smith: Mays products continue to enhance growth, driven by ongoing strength in construction and fusion.
Simon Mays-Smith: By region and constant currency, revenue grew 11% in the Americas, 13% in EMEA, and 11% in APAC.
Simon Mays-Smith: The contribution from the new transaction model to revenue was $46 million in the fourth quarter and $71 million for the year.
Simon Mays-Smith: Direct revenue increased 35% in constant currency and represented 47% total revenue, up 8 percentage points from last year, benefiting from strong growth in the operative store and also from the tailwind to revenue from the new transaction model.
Simon Mays-Smith: Billings increased 24% in the quarter at constant currency, reflecting the shift to annual billing for most multi-year contracts and the transition to the new transaction model.
Simon Mays-Smith: The contribution from the new transaction model to billings was $155 million in the fourth quarter and $262 million for the full year.
Simon Mays-Smith: RPU of $6.9 billion and current RPU of $4.5 billion grew 14% and 12% respectively.
Simon Mays-Smith: As expected, current RPO growth was affected by tailwinds from the new transaction model and headwinds from the declining contribution of billed and unbilled deferred revenue from larger multi-year and EPA cohorts ahead of renewal in Fiscal 26.
Turning to margins.
Simon Mays-Smith: Fourth quarter gap and non-gap operating margins were 22% and 37% respectively, reflecting year-over-year increases of 90 and 160 basis points.
Simon Mays-Smith: We were pleased that we exceeded our non-GAAP margin expectations, demonstrating strong fiscal discipline.
Simon Mays-Smith: For Fiscal 25, GAAP and non-GAAP margins increased approximately 220 and 140 basis points year-over-year respectively, excluding the impact of the new transaction model and currency movements.
Simon Mays-Smith: Pre-cash flow for fiscal 25 was $1.57 billion, which was ahead of the high end of our guidance.
Simon Mays-Smith: In the fourth quarter, we purchased approximately 1.4 million shares for $414 million at an average price of approximately $299 per share.
Simon Mays-Smith: For the full year, we purchased approximately 3.1 million shares for $858 million at an average price of approximately $279 per share.
Turning to guidance.
Simon Mays-Smith: To give you a clearer view on the underlying dynamics of the business, I will speak to the numbers excluding the impacts of the new transaction model and in constant currency.
Simon Mays-Smith: You'll also see in today's earnings deck that we've split out the impact of the new transaction model and currency movements for our Fiscal 26 guidance.