ADSK - Earnings call transcript Q2 2020

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Operator

Good day, ladies and gentlemen, and thank you for your patience.

You've joined Autodesk Q2 Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference may be recorded.

to VP call of like host, to now Lamba, Abhey Investor would turn over the your I Relations.

You may begin.

Abhey Lamba

Thanks, for joining the afternoon. Thank call 'XX. good second discuss fiscal our results Operator, to of of our and conference quarter you

Anagnost, is our CEO; and On CFO. Andrew Scott the our line Herren,

Today's webcast. being via is conference live call broadcast

In addition, call the of will be a replay available at autodesk.com/investor.

Relations our earnings slide our Investor a press presentation and find Web release also can You site. on

Web today's We this site will our post commentary also following of opening transcript call. on a

During other of forward-looking conference differ Please actual could strategies. or materially. factors we to statements best currently from differ may call, about reflect and and factors judgment statements events the results, refer known results this course our cause Actual those our may SEC to based forward-looking statements. filings in on our to make our results that for outlook, risks These us. our important future

during call presented of statements during Forward-looking information any statements. current made may replayed this the the or call or as If call today. update Autodesk any not revise the reviewed today, obligation disclaims information. is forward-looking contain made or after accurate are to being

of we growth our today's noted call call, a the non-GAAP numeric presentation in referenced represents reconciled our All we slide numbers and each on Web financial site. a unless are quote the reference or During of such changes number performance, Investor will release press discuss as otherwise Relations year-on-year in comparison.

over I would to the like Andrew. now, to call And turn

Andrew Anagnost

Thanks, Abhey.

coming performance and strong carried momentum expectations. second from resulting the free in with in of billings, great first revenue, quarter earnings, ahead into Our the cash flow quarter

which the by billion ARR for was performance products. all crossed mark across the first $X We and regions driven also solid on time,

million highest year of well recurring history. in execution ever demonstrating months in the and last the of flow the four-quarter model. flow cash our first-half have the strength a in cash company's We is amount performed generated free we of of $XXX period Our XX free the focused revenue

execute trade not well business to uncertainty of macro Although that current the and we conditions, impacted by environment market. materially the geopolitical and causing are is and continue in we are current aware tensions

across six outlook we the fiscal taking 'XX. remainder a to As next we approach months, the prudent are for look our of

However, macro-related is in we a confident achieve issue. remain our you. the the think fiscal ability for uncertainty to caused we goals events by only 'XX laid We out have short-term

delivered innovation value community. help by user Our focused digitization, confidence execution significant ability partners capture to is and strides sales and their teams, and in products, grounded by our differentiate customers non-paying delivered are the the our via to our making we the

we some I would on that also quarter. steady, this competitors share construction manufacturing, from in saw like the invest in headlines industry strength environment outgrew are verticals, impact few like and out although industry gained continues there solutions, and we this The and ongoing space. to holding construction point also of in innovative a current is to

to transformation Scott of on up insights of construction, results, guidance. further drivers offer return second highlights on our more updated 'XX as give turn let our over to it key and business, manufacturing, Q&A. then details for our I'll the with digital including we fiscal before open quarter, first strategic I the Before quarter me color it you well more on details during you as

Scott Herren

Andrew. Thanks,

a respectively. pricing, also of grew as XX% as our our strong second which of XX% as indicated result by remained billings LT revenue indicator all AEC free leading of ahead second products potential performed LT and by Sales As a the expectation of see, in volume customers. AutoCAD quarter. mentioned, you And the can our end revenue historically by growth. quarter, solid is markets AutoCAD from with rose revenue, during been in Overall demand as manufacturing billings, existing cash Growth earnings, strong was uptake well the volume and during flow of Andrew revenue XX% both slowdown. and and AutoCAD was quarter. our the demand products has driven usage increased users, strong. new This and and

with all saw countries. grew we almost EMEA, based regions. XX% Geographically broad XX% the in all in strength and Americas, across in Revenue XX% across APAC, strength

sales, We up which second of year, rose in XX% last the our of also XX% strength versus in represented quarter last from direct revenue, year. saw and XX% total

subscriptions. comment $X.X ARR to the actual was to our up I XX%. and our growth, the with in XX%. you want or fourth Within was I total for growth strength annualized product steadily, total continued acquisitions recurring multiplied quarter four. Adjusting driven revenue by it. define by another was ARR ARR, is Total of is roughly the was the line value on quarter organic said billion revenue Before ARR reported for quarter, up grow recurring in we of for and ARR core, remind of way, how the

ARR In in performance Cloud, grew strong propelled our construction. by XXX%,

from million set. BIM primarily and Fusion XXX, XXX record growth up ARR, in quarter from increased made which XX%, is a acquisitions, for first cloud that our in to of of $XX ARR Excluding quarter XX% organic fourth product is the which

it subscriptions maintenance program. advantageous our our rate than historical to progress expectations range migrated, renewal in range Of XX% the of rates continue historical those rate. uptick remain to MXS renewal We is prices among in eligible migrating with subscription. the that to which customers in rate within in conversion make of Subscription, The higher Maintenance high the XX%. more our maintenance to to was MXS This product line was move as QX, upgrade by the the subscriptions in up opportunities went for or XX% made quarter, in XX% which conversion second to significantly

to the fiscal we in during Now, of moving of continued rate be it net range range XXX%, XXX% QX within expect for retention to revenue to to 'XX. the the be rate, this approximately and remainder

dividing retention related year-over-year ARR year the customers ago. the period the calculated the base current of those one reminder, by for base in to year ARR change measures that those one or customers. a population from total customers ARR by ago customers the rate existed net It's As revenue

Moving XX%. growth we million quarters are plans, to momentum continued billings our prior products. $XXX billings, in up in with was we core a benefiting from also return billings line multi-year as had quarter, more The said renewals by our driven strength billings have billings strong with to the of during levels agreements. from in customer in and new in normalized And

deferred be sequentially represents RPO, months recognized over the and sum billion. to contract which unbilled we is revenue, $X.X of $X past RPO, over last or an the increase billion, as billed which and and have both under the Obligations was future Performance Remaining revenues in of total XX% deferred versus XX referred rose next X% to revenue year, little expected Current XX%. to the

On the our as significant up gross journey. margin versus front, growth Non-GAAP execute two phase XX% operating percentage we margins to we points were of leverage continue of last realized in the year.

to and track XXXX. fiscal deliver and sales while further XX% points non-GAAP marketing enabled are expansions to in We management from margin margin in significant significant Our percentage acquisitions. disciplined operating approximately expense growth approach XX our and on and our by with in initiatives us expand investments the operating fiscal during XX%, margin leverage realized two 'XX meaningful absorbing to expand to to combined R&D quarter, revenue non-GAAP

we to Moving million in free cash QX. $XXX generated flow,

Over a billings. we've by $XXX the of generated driven strong million months, cash and last growing XX income record flow, free net

which is excess continue cash, to our shares strategy. allocation consistent with repurchase we Lastly, capital our with

an at entered plan, quarter, $XX most was into the per before we price During market our $XXX.XX we all during XXbX-X our second of the repurchased shares recent million Almost activity average the quarter XXX,XXX share. repurchase which volatility. of for through

the conditions customers. our our of our by on discussion reflect outlook. environment potential I'll turn has business I'll disputes and our various to the updated saying on start the trade and current Now been impact of economic their geopolitical their to global state view and that impact

environments a to there, the impact due Central regarding have While slowdown not in seen business, taking due U.K. our we material to we stance industry manufacturing Brexit, the headwinds, any and adjustment, customer now prudent know are views about are which in aggregate not the trade spending we China what a individually to environment today. in on due items material current based to for guidance tensions. our are our reflects Europe responsible These but

Our strong these noticing in in we remains began areas toward regions, July. pipeline including of demand globally, in these some environments end the changes

for year. expectations for to feel our of the areas, it's the adjust these As rest such, affected we appropriate

you'll hear even fairly products in spending customers increase are areas renewal As their soon Andrew, our steady. on continue rates these our and to from

remainder of now assuming the more quarter in billings are will we occur year. the the Additionally, later for

growth normal ARR of midpoint of the which prior our for the we're we're speaks model XX% updated to XX% approximately result over second-half of greater guidance, range full-year and our respectively, and a to The the cycles. At be revenue of wider of expecting is the uncertainty year. the guidance resiliency calling versus our the

to now beginning the revenues versus of million about Additionally, at headwind our of $XX neutral full-year currency the a being offers year.

low-end constant at outlook slight with of line our reflects potential in it and low-end level. shared a of deterioration with As we the our guidance initial environment the such, updated the also the you of the current beginning from the currency year, the in for is

or are XX% of still $XX expected come adjusting after our for This has of view guidance XXX the in environments. even billings XX% strong for to uncertain million, grow ASC our While demand last about approximately our supports down year. products adoption by billings by

to our billings of Regarding view timing. of $XX free $X.X a updated cash primarily million the and adjustments billion flow, result their is

Construction give flow first margins. fiscal growing have America, expanding AEC, We North visibility Central by we're continue from target more strides $X.XX to to you revenues, remains to Europe to and it's our to well expect users. performing very free we the we what early quarter our of to in months too trailing as and free a fiscal also while we make while and cash where supported and flows our XXXX, customers, cash continue within expect China. continue achieve seeing detailed XXXX, of pipeline business increase we XX billings, into our we're our non-paying capturing and is This billion with in on revenue especially bringing value is the original strong color during

in be the EPS non-GAAP to of to $XXX total to the for quarter, million expect we range guidance our at revenue expect $X.XX. and million Looking $X.XX $XXX of we third

free The our the expected slide as earnings on well modestly modeling for has quarter. be to above as details, cash assumptions deck of Third second is more Investor section site Relations quarter flow fiscal 'XX. Web

we when want a generates less very business that selling we that steady licenses. to much a to business model of macro swings I exposed remind our than that resilient summary, moved since In stream model were is have shift, everyone to revenue perpetual more

So while targets. we're delivering 'XX we for on about of are points, our fiscal of revenue 'XX XX adjusting margin expansion still slightly, of guidance expecting we're year, fiscal growth and XX% our the percentage confident

Now to it like to I'd turn back Andrew.

Andrew Anagnost

Scott. Thanks,

As seeing we are and manufacturing, the headlines our you heard strong first-half performance delivered in me, we demand from despite of negative the and year, Europe solutions. very still strong for

also large the flexibility for representing the EBA their portfolio, industry. recently despite and competition. while Agreement a example, contract the and products from Maya, this stay innovation company an view provide to value and The new to they EBA the Max, For increase Enterprise design a as challenging product needed manufacturing as European Autodesk access a in such ahead signed them a than XXX% They counting is annual entire market three-year agency for for in see of time us as at Business us. agreement or backdrop area same innovative a to XDs more Alias, new including leader investment offers design. to ranging more Walt, automobile They design, know collections solutions our new and a generative macro

change. to will maximum them remain is leader We to in they partner undergoing and ensure our get value with an that significant a of products that out continue industry

in when technology latest cycle, that the our is an macro underscores at don't the technology if throughout disadvantage This Our environment end as they as distinct returns. ahead downturn and innovate of they growth as regardless stay every investing and to well our to competitors. of a use customers continue products tools to customer's the upturn, importance at the the commitment be will of know

cloud in primary Build. gains are in key Now, we organic was non-paying focused the both our base. traction drivers our leveraging driver user our some on are capture our by In the on, let growth strategic BIM an XXX you continued long-term growth opportunity me construction, initiatives construction, and within update These to transformation Design specifically near key & led initiatives, with give of our manufacturing, of XXX and business. BIM digital

this are offering, Our value in to the PlanGrid strong continually team finding see customers and momentum. continues

the largest U.S. team For key to documentation XXX the and example, contractors some the two up-to-date PlanGrid in used for projects. field. over for general firm, an Senior to Tutor before one management offerings two plans these at Perini, demonstrate and this provided wanted of plan selected projects. competitor for these provide different to capabilities opportunity million PlanGrid had a for projects The real-time relationship its

PlanGrid title drawings Perini. hyper-looking an X,XXX with an the hour. This block drawings call-outs projects tag the time set and up detail under was out by savings and processing the Tutor information for drawings categorizing immediate for pulling in

and easy-to-use away, field access and Additionally, drawings, teams right middles RFIs, have new to interface. the changes, an some

to of Perini partner products Tutor subsidiaries. and Going opportunities forward, with their look continue for all we across to

well integrating these focus continue BuildingConnected Assemble also and on performed to as offerings. we

quarter, received bid from that launch push are the PlanGrid PlanGrid, integrated and first regarding the building the and quarter tremendously The technology, BuildingConnected's time, savings integrated These and the associated BuildingConnected with with pre-construction towards being using by BIM integrations XXX trailer, projects we integration product quarter steady have design from managers construction as customers. used In with of is the steps And solution saving and XXX with its feedback process. more recall, Revit to both also files project release, workflows cost pre-construction errors providing transfer reducing you enhancing management further connect customers we PlanGrid customers seamless the During of from with over to automatically the than after platforms. integrated to Autodesk allows enabling last in PlanGrid construction update. the office, the positive field. data

cross-selling acquisitions. with to outstanding recent construction are We also see continuing our

past and existing locations. as a customer we during area we to have construction expanded reminder, the the by new Autodesk well to relationship updates macro-related focus And [indiscernible], and BuildingConnected that its in this downtime quarter, during time Assemble performed the open efforts For area. to example, in and locations the an solutions is infrastructure an slowdowns, existing adding and continue reduce seen to

design team considers new Fleming partnership Enterprise distinct the and Gannett The Gannett Gannett This quarter to a engineering we competitive firm global advantage. XX on a ENR Autodesk Business is Number a top with Agreement secured Fleming architecture leading with XXX Fleming. strategic list. ranked be Executive a

range With Autodesk and to EBA, and not market growth their help now has expansion Gannett the achieve also corporate Fleming access will direct a expertise but technology, only the Autodesk services full wide goals. of that to of them portfolio

continue differentiated grew Europe. competitive manufacturing in we Customers in the a market more this seeing second the are solution, and challenging front, space. benefits despite On in displacing revenue manufacturing while environment of our quarter, to the share, gain XX% offerings

flexibility SolidWorks, second the and during given example, a replace design For the to collection watchmaker Swiss by quarter, offered selected manufacturing leading Autodesk solutions.

displacements also CAM in and only have lower market, vendors. to our Aided design CAD Computer in space Fusion our competitive in investments but resulted In Manufacturing the in with not XXX switching or addition, the general barrier

attractive its result, we compatibility CAD/CAM pick competitors competitive see those As embedded displacements to once Mastercam, a customer's CAD activities offerings integrated and accounts. and processes, within design functionality, same we over pricing Customers ease-of-use, of its we're are other those like due increasingly tools, Fusion downstream penetrating in with model.

that we base. Now our of key with transformation. transformation digital this non-compliant of progress have part on user let's you will insight about increase talk the Many our recall a

additions. software usage our us Since has year, long of last analyze sales we our including they ways downloading use this them, users, on the One in-product journey this significant year analyzed to these non-compliant how and different the we messaging inside convert accomplish free data and ability their student to usage to leveraging trials amount of how users. across traverses data, we last started can initiatives using team. or of test including non-compliant With the have given patterns undertook and to

actions we While take still convert pool amount have data customers. conversion early of potential allows this to necessary in the that process, of to us increasing an large

expanded In and regions, including in as to campaigns. resulted in-product which using the two China. quarter, our well messaging initiatives many license in over These a being email $X multiple pilot compliance for cases we our our sales teams international enhanced conversions deals, million, of one as was

billings base. versus Our up compliance from on a although year, license were initiatives XX% small by approximately last

us this that heard, finish progress you've great enabled the as of So, first-half quarter we the made strong. year to

We remains continue construction, spending where in to IT execute strong. well

the users are and strides competitive inroads with converting current and our making innovative non-paying subscribers. manufacturing XX We are in making million into solutions

confident and 'XX delivering our to capitalize on are ability are fiscal committed goals. opportunity, Autodesk's We market in our highly large to

that, now With Operator, we'd call open the questions. for to like

Operator

first [Operator Our question Thank of Saket comes of line Instructions] Kalia you, from sir. the Barclays.

Your line is open.

Saket Kalia

for Thanks guys. taking Hi, my questions here.

Andrew Anagnost

Hi, Saket.

Saket Kalia

economy, whether just it but slightly for think to a into, manufacturing was to of maybe part manufacturing levered about Autodesk's Europe, sells Autodesk or Andrew. Andrew, the there that's that or the the Hey, regional to of example, auto to items Scott. from space, Clearly a of sits give sub-segments just business where different color a all get with for whether kind as on can regards aerospace is for sort we Autodesk know, that sense manufacturing and specifically? you of us I about that spoke about we've but Central the verticals not the some Hey, some is, we the lens. with U.K., to Hey, seen, macro lot of start higher of China question on want concern maybe the macro, just know different I the level you, out

Scott Herren

Saket. Hi,

there's the like release guidance in something. We've into footnotes. clear out metrics our press jump some we confusion that, that I'd to heard Before from

flow free current million get 'XX $X.XX we flow $XX cash is fiscal guidance or our be net cash for to to flow free get for saying what out and free cash of operations there billion, you'd by from flow $X.X will billion, cash $X.X billion. -- So,

netted footnote $X.X So, already that I the billion confusion wasn't It CapEx. think is. the created for

CapEx free billion $X.XX year. guide billion cash it's flow cash ops, before for the as from So the $X.X flow is

ahead. Okay, go

Saket Kalia

That's helpful. Thanks, Scott.

Andrew Anagnost

clarify. good to it's Yes,

verticals your All just particular. in So, things. off, address about just let in question me right, let me manufacturing frame a few first

the That pretty has than business manufacturing our competitors. XX%, the the we're actually a cost people, price reduced with has due of are also with the diversified. portfolio CAM do seeing our also better integrates offerings and way to of any It points attractive did and a and -- Our do lot capability. We a in upfront to a lot XXX the to we're pretty lot of the upfront CAM with it to well. generative grew the the and way acceleration Fusion along design space lot

automotive which So, do you to and manufacturing, It's single wrap biggest machines see it's to exposed, in is we we're any verticals manner biggest in type. pretty our or toys, that but is or of manner seeing machinery we inside factories, make call what to machines about your cereal you'll are performance manufacturing see It's large strong paper, machinery, this industrial point and package machines. our also but of all industrial vertical and segment. things,

skyscrapers components if for buildings, manufacturers, things the of so that think what's and build into understand called segment that manufacturers go wall and are and buildings, hang windows us things the big that people is doors they're that manufacturers, also conditioner think think building on prefabricate product and you buildings these curtain how made. build air really manufacturers, are people Another

processes. level where aero actually in the exposure terms auto in competitors exposure have deeper of the smallest is and space, engineering Our other

aspects the are of forward-looking definitely of some big in in the auto more industry. We auto

several is. the production of embedded deep departments, years current some are and the workflows. ahead working And closely generation design of production we're volume and So where also is lot we're their of which in where a next with autos production

part. of the things about parts talking of automotives in of you've work, some some into a of work and to we multipart that's been that hierarchy engaged help seen to definitely printed And assemblies consolidated exposure done of with sense? other we've Make we're of single of some the we've kind multiple GM manufacturing. regards some in think some with I the with the but XD generative have

Saket Kalia

but Scott, continues profile range. about maintenance for helpful. last we year maintenance of the XX% talk maintenance that coming that remaining last remaining to speak That with the customers. of maybe bit to sort the your for price you've of of do does. decline in increase guess That's little mentioned of different And ARR that before. quarters? just about to you increases, And I MXS is start sort little XX% in should of the this a there that up sort step love price kind it really maintenance helpful. Obviously about I'd has of the along in base Any as business. a you my think of a decline How follow-up, decline be sort high see way maybe a kind chugging topic, or far. we think would so to should bit color it

Scott Herren

Yes, sure, Saket.

-- going had The for renewal you'd what came that the QX. the first conversion -- XX% been But to quarter rate price of those quarter. on up the this had years from is some beginning that This it actually quarter the increase way, year with three increase, that, that is is third the that at into rates it's what for XX%. of about effect come for in price first ago, up actually is expect something range we full third the the which renewal up that QX XX%, interesting with we high our increased, maintenance of a a results. maintenance announced XX% and converting staying went not So by

So expected. as increased, conversion rate

ticked I maybe up not slightly rate increase that maintenance the expected those stay those some on moderately, renewal it do, ticked in or the for did in the actually, quarter. maintenance, would've the it with to up. but that ticked rate price actually convert and did actually elect stay flat for for decline, Interestingly even renewal to it

laid the overlap have So seeing we it'll -- -- more we three go, before into same out it's next of at And when this first exact the expected year actually the it's we program. finished. the MXS point behavior to quarter we're quarters

Saket Kalia

Very it. Thanks. helpful, Got guys.

Scott Herren

Thanks, Saket.

Andrew Anagnost

Thank you.

Operator

Thank you.

of Phil comes question from next Fargo. Our Wells Winslow

please. question, Your

Phil Winslow

question. give color Hey, in wondered if I commentary on and thanks, more the the of you're you'd guys just Thanks Asia-Pacific by is what quarter for seeing taking the vertical, for particularly my be there, helpful. terms Thanks. very Europe. that'd on the U.S., and into and particularly pipeline in

Andrew Anagnost

Americas the the U.S., grew XX%. so and Yes, in particular, were strong. We

Our the pipeline solid Americas. U.S.; the is in whole solid it's across

Our We're all pretty broad strength segments. the good. visibility is seeing across

seeing of So types any in by kind we're not any weakening or vertical. segment of any

and So solid. And the to it continues we until to looking But something solid the now our saw in U.S. in the pipeline a look environment. visibility U.S. is changes great right business

Scott Herren

those but that our you the of the on site, the XX%. have of markets you some see Phil, dig -- actually to have markets the and to -- there chunk And north there's underperformed actually quarter, is, are it's that our into worth can other that's emerging emerging slides during obviously a I we adding as on markets comment in appendix of Americas was think Web concern emerging well. posted that might grew

the the strength see, we that exceptions out, of we we across So geographically continue to with continue areas pointed board. three

Phil Winslow

When and internationally verticals. of inside those Got within multiple verticals, construction it. think of sort manufacturing entertainment, say, saying, your was multiple about of breakdown, towards manufacturing? terms your in one business the Any versus versus, your sort color weighed construction matrix that's one then geography of then just you the… sub-verticals is and also obviously of exposure a by say, like as more is media And towards there Saket let's commercial sort of commercial more, sort and let's and in

Andrew Anagnost

Yes, absolutely.

easy an place, color. that's some So Phil, give to

successful manufacturing more competition So, more more there's construction, about no in towards We've doubt we're leaned U.S., On the in Europe it. Europe. than we're to historically U.S. definitely definitely the relative towards leaned been

business. our in see it down slows manufacturing So when down slow you Germany manufacturing overall

we're But where more The of definitely definitely Europe the is high-level So of exposed as kind where now, internationally in right is the for growing quickly well. the manufacturing. we're breakdown. business U.S. side on pretty though construction construction is bulk that's

Phil Winslow

Thanks, Okay, great. guys.

Scott Herren

Thanks, Phil.

Operator

Thank you.

Our next Jay question Griffin Vleeschhouwer from Securities. of comes

please. question, Your

Jay Vleeschhouwer

Thank interesting infrastructure manufacturing, the U.S. it signals then oriented that pursue regarding a customer talking on context and thus question far have the that integration. the question. cross-segment some on a that what you. longer-term forth. of in made system construction ACS the you're engagements between made you roadmap call to earlier is this a digital technology the team. is And and are some have or with so helping what to going secondly, industrialization terms What your was telling about ago, comments key you you your Good far and your roadmap and of remarks you're you? acquisitions that giving however warning other and if in metrics. for the you system, set Revit, globally I that or usage system integrations AEC you is, and BIM about were quarter call, early evening. Andrew, of it The in is metrics about some calling it's of terms And the up thus

much, perhaps you You but really about about spoken can haven't talk that it roadmap?

Andrew Anagnost

very good Jay. Okay, questions, all

So, first, what early let system me it's talk about the warning us. telling and

all so products, to of direct So slowdown also And a of It do we multiple grow to can scores and about renewals. go that high is our take right. And one at verticals. in in at predictor risk What all things that to a types is with is in I usage across renewals intended the products fact, level of multiple regards -- tells geographically. action tell it's give us there's what and no at-risk you usage of products are continues telling manner is us broad geographies. us it it's

[indiscernible]. seeing So activity or systematic any usage usage we're not in declines

other risk product access Our activations, watch watch which do and allow like things [ph] any accounts go up to teams renewal. usage, of for robustly, products kind continues our that system in part our us watch we like these to globally. the at core support it's changes one seeing understand like are as usage of of continue but use help to designed and trends, risk, and we in global, our pirates subscribers, right, our we're usage most terms yes, you're that things is to paying that customers but of And we score the things to not remember

the to behind Now and for do area, with a the the actually components curtain scenes, important well you're wall it's earlier, the of manufacturers, the with to pointing I buildings. of to includes, some of things inside as integration construction, think building focusing creating one regard like as on really that go it that very product and said has workflows I which we're

we've slated fabrication Revit, curtain So between Inventor, well. do to that update walls inside the environment can world in take so and changes that and of account into go the of for you working in interlope low-precision -- expand that other and of so back as Inventor, revenue inside low-precision Revit them prep types model you like an high-precision actually Inventor of models actually so way, Revit into move back then from move is manufacturing been what the happen do the and can get components, them the things

behind continuously those We've been integrations improving scenes. the

a QX, you next have making You're to purposes. between and to year. workflows see so or construction, actually some it's modeling a a for in good improvements solid interactions It's but roadmap more a fully building industrialized complex going model can more do these to of integrations not sure completing those continuing for in information manufacturing manufacturing XD prerequisite model BIM a you that and workflows, XD

you'll Inventor see to integrations, acceleration and those work Revit on and area. in continue we that So,

Jay Vleeschhouwer

Okay. Thanks, Andrew.

Andrew Anagnost

Thanks.

Operator

comes of question Bellini from Goldman Heather Next Sachs.

open. is line Your

Heather Bellini

Great, thank you.

think your churn know out slowdown I to questions comments. of should Just you great. that but to did conservatism, fact here, confirm questions you're just you here, I perspective your after of into want last then make like loaded, And that of you just see where give deployed want being us a weakness see assuming industry? how you conservative I the the from be a the trending, actually quarter linearity just some other came speak, in you. people we as and may back was is guys then, one precursor it you more are there, a seeing and just reading can couple Andrew, to, you're backend more we of? your said year, it that's follow-up products the outlook. be If there as how be bit color this linearity in your the a last little be a to would growth to your would from guess deployment increased sure And and which that seems tone the growth, if that'd guess that when I so were that are going I linearity QX year Thank same hired not be

Andrew Anagnost

right. All

So, answer what your I'll answer I'll question, the I'll I'll okay? Scott do first middle and second, then is third, your let answer first, question

Heather Bellini

you. Thank

Andrew Anagnost

right. all growth kind okay, rates see see ensuring, the We're seeing are improvements. In places, solid. renewal of we it's So, where change, growth, your our are some no seeing middle -- same

fairly it's percentage. that's a is business, $X with but missed a emerging up China easily small to quarters, a million small enterprises to the there simply pressure on going trends them, we lead Even in China, some Over expectations, and certain markets. state-owned to cautious, of you cannot right a noise. to little in our a lot be are in we with consistent expectations bit relative particularly more earlier, markets add U.K. we Like couple in of part manufacturing, those our though we've now environment. a and could specific and Brexit, engage Germany steady of seen that us said put all and is So, indications those know, of

all can all you change it's checking it, there's Twitter feed. is You hear have something all do to on, going new is right, all every day, there --

we to noise, and took So, and you guidance did is of high-end there're all want what sorts sure us context. our doing, in put see down. this the What of make I we we

is narrowed currency of on The unchanged. the low-end we our So, constant a basis range. guide

the reflect prudent this kind this to So, the narrowing seeing is system. a range in noise of of we're

now. I to think right thing right do the it's

case ago. the the worst we're of case set four out I scenario, worst of that, if scenario you on at at appropriate, numbers think look even it's XX%, years in case all worst coming we but at there

not to I to sure and confidence really few to asked since think that some drivers It's stuff. see in just ability of track FY the just great this the a good. reinforce make it's looking kind terms question, modeling. I of execution gives in pretty actually things you great around and of important we're business flexible 'XX, want that are of that That's adaptive a I out what that's to fidelity in execution, to of want and that lot kind us

what First unnatural that stated off, last comment, flow just could in number one call. some acts do hit free side we the to previously at cash easily we

want business, do not direction, simply and wouldn't I it. the an that. prospects for for attention going and long-term not do good good interest for to prospects we're pushing in just we in the the the It's the of us of pay business, the business. and to that no have it's You health not to have to agenda long-term long-term

going any we the flow got the 'XX, and of complete an So point. impact that's look currency total the and natural guide at the cash important to is that into the okay, done, just FX, FY due try the out in because half midpoint look to But is short-term model do we're that how our to free we've year I of resilience not business. changed, a on drive up, us but as the model remember, think to move next things model, a resilience transition number to in

us I and thing in pipeline historically in guiding looks we've looking where other of had of pipeline the having with wanted of we're be good visibility you what's more The to out got problems. terms countries at solid, to we're aware business ever the before, conservatism, pipelines, we're we've kind than our

year you great. a doing ago Japan, we might a about is think lot Japan talked I remember

look IT is more well. that, construction into we things, to seeing grow during some but time. things believe importantly, doing like We we're us. is the as do last for Revit the the 'XX going grow to So, the out well beyond really guide continue In the 'XX, FY 'XX of construction 'XX spending continued continue FY during to downturn to construction and downturn,

thing, think better was a going protracted our I users and getting same is downturn. see better, performance and on say that you're to non-compliant also, just there let's

happens design gotten to done products things spend partners the good construction portfolio and in of business. downturns, to our we're interesting Something tends that We've ensure infrastructure in to go that. front in core our some up. those infrastructure We've

So, out infrastructure downturn. a we intend to of spend capitalize any protracted come on that could

those it's adjustment, all for have that in still expectations higher make all places. we time some kind they there So, the you're because of very think FY right, We of in weakness robustly short-term, I those and correct. can we do we are expectation, system of the being what was because simply places, about just noise confident where have our being conservative the in it's impact on and in 'XX. prudent, out right we're the We're we're places, and can growing and saw to but

Scott Herren

And I Heather, the think other…

Heather Bellini

Scott. Yes,

Scott Herren

and that QX, a the more bit second-half in was your triple in think are fiscal than thing 'XX. seeing was again our around quarter are in was in questions, the QX Yes, that the part of we in linearity, consistent in linearity, with other experienced happening what little expectations and we which of later sales I had

the the our of and traditional the linearity 'XX, into of that forecast So, it's for in that's this like year. second-half now fiscal first-half we more had built

the has billings pushes holding linearity our effects talked when of as aside, is in end is in on the and layer little couple quarter, kind billings, all that those about this you following do during Andrew guidance adjusted a of chunk tied a FX, So on bit, and up some the collecting to a of obviously, a effect you it current billings and has it big covered quarter. quarter then out of but where has an

effect points the little the think but is there's flow on as about of guide of the So implementation at well a XX% of and and expansion. beginning effect midpoint the on billings way even the guide margin growth, The cash an of to XX for billings that's of is revenue an midpoint is XXX growth bit of year, the the it. last from free XX% midpoint linearity, normalized guide

a it's So year. strong

feel to momentum good continue business. in about We the the

Heather Bellini

you so much. thank Great,

Scott Herren

Thanks, Heather.

Operator

Thank you.

Gal Munda from Berenberg of comes question next Capital Our Management.

Your line is open.

Gal Munda

my for Hi, thank taking you questions.

XXX market taking that or the whether manufacturing strongly, growing kind I'm the new and Fusion mentioned the shift Inventor, the potentially headwind XXX the mentioned made wondering revenue if by share you something I which macro-related in that is We like to you market have was the is share, just is older from and is gaining is going there? Fusion is comments got with provide Fusion just very maybe one of might side. market you some very, the first solutions, short-term below the share taking part XXX they also it of business, see around The to manufacturing do to AEC it's platform, wondering

Andrew Anagnost

All right.

let kind me me answer let So, Gal, of cover that and that.

any First right, the than market. off, all our better manufacturing than of XX% competitors, better grew we

is and be and to in mandates well. was an being Japan particular BIM acceleration seeing mandated actually we're very the where robustly, What is and The it's in being mandated, very in in Revit slow see countries more is that to for interesting projects. performance up in to manufacturing showing and the starting being relative between place, only AEC is AEC you're adoption, performance more is fact AEC is manufacturing more or adopted in as and strong. is our of more So, stronger. BIM seeing and difference actually an BIM historically due simply Japan it's not adopted,

relative sure things, and competitors performance make So that our market. in between two performance to those the we the to difference I want relative understand overall

one is reasons cannibalization all they Inventor related Now, both every Fusion Inventor why collection Fusion, so one actually because to getting to it, no with right, that's the customer there products. your of about gets Fusion is to get point the

design do you buy get Inventor does. if you things subscribe all actually to and the that Fusion you are and can't Fusion well, get collection, app, all at things the collection, is So, as that a

the several competitive applications really two design well, you're between We growth space given swaps. CAM seen The overlap little of of actually well, very in just cross points as those actually where that as coming attractive. more displacements, and in other -- growth and terms of in Fusion there's things. is integrated kind like complete price always So really, from are examples SolidWorks the this always placements solution we've we've end-to-end the seeing

is we're that want difference AEC because relative I our any manufacturing to BIM cannibalization do between seeing of business. color Inventor core So, just from sure in Fusion BIM and with better, doing manufacturers we the the and mandates AEC on that momentum, not fact put doing doing make it's great, and better to that, and has

Gal Munda

going things, and you helpful. how very a performance between on as own some also then you that's basically bit wins, had and maybe And side just comment a comment follow-up, the basically the direct force, the significant the EBA channel mentioned could direct your more is Perfect, that performance about a sales of indirect, the bit you e-commerce so there?

Scott Herren

talked Scott, of mix Gal. about XX% year. being direct QX the in compared It's We is through XX% Yes. the last direct, which XX% to channel,

grown it's points. couple a So,

year-on-year. business actually direct Our grew XX%

year. to Within in of EBAs direct. and most we the the the second-half as them of of our year, continue strength within in of in most the do good seeing and that, EBA, fourth the we're So quarter second-half

really nicely growing digital try to and it's off of sales year-on-year, just store but a base, approach, business it. growing nicely and while QX. right, up quarters year-on-year, QX actually late businesses through EBAs growing had and in to part business very lot in a to smaller the that's EBA the again, traction The a is start or drive EBA we with people not our QX, more So put where we very good then see e-commerce e-store overall

backend the e-store sales as our inside We the also of transaction a engine for lot use teams.

to revenue Autodesk. to content So, nice higher sales at whole growth we're which us comes that net seeing very through channel, digital

performing actually well. it's So, quite

Gal Munda

my Thank you. Thanks taking for questions.

Scott Herren

Thanks.

Andrew Anagnost

Thanks, Gal.

Operator

Thank you.

next of Our the ISI. comes ahead. of Talanian Ken Evercore from question line Please go

Ken Talanian

in think the if last? and at impact Thanks second-half, could as about renewal linearity us uncertainty all And a customers the related how think ones? how the Yes, type this those give for along volume-oriented differ smaller and between should the for we see the you versus demand the to patterns back-half billings EBA the question. about larger the you related year EBA taking opportunity to sense of you lines,

Scott Herren

Yes. do of have just quarter always second-half year of -- we than -- in any of those and That we have the was insight year. transactions in we up when renewal, we I know happening of particular, in EBA. coming as the for mentioned, always the in fourth the are the with best and more first-half EBAs on Ken, have we EBAs our the the what's

are around The U.K. strictly roughly than we than when $XX that in three Brexit, around of all, concerns reflected the greater about, in million that's full-year So, midpoint in more half a than and is the then in it's China. the billings, adjustment the a the areas on of of first sense talked billings is a always more the we good that pretty X% going over a we million close. it's with so saw said, localized enterprises What $XX adjustment really little much right, accurately our with those we adjustment two FX. the actually of at with that in and in of the see manufacturing months context, number July base so the slowdown quarter; billion, did a same of in state-owned terms in Germany, remainder to in have million in the $XX adjustment as That it's been $X outlook. you first in billings,

a in is just Autodesk. I localized those So really that think FX, everyone's effects reflection three then kind of and billings feeling, of the not adjustment

Ken Talanian

the year, Understood, may, the given targeting I about now? already thinking $XXX your you of reached in you've if how to million you're year million $XX I ARR think and acquisitions, from kind that the and contribution about for are

Scott Herren

I'm to what referred well PlanGrid. I'll integration super the this $XXX about that with talking way with the you the as and Andrew, Yes, on comment talked has and we the about million numbers. super that, let pleased you gone, the happy was really

BuildingConnected lost that -- not a happy of really have to those. significant it'd like two be quarter, we when higher you the I'm way feel so in -- one pull-in track. at far, the I of So same those well. and we're haven't really bit to are it's with on either momentum those add performed slightly as transactions

done products, have the Cloud before good acquired off an feeling about we of of about now is construction the XXX So BIM we XX% the quarter, has have Andrew, big only XXX, ARR hand business updraft well maybe construction is the and the talked interesting you, created the one breadth at for overall, and I not portfolio that. we of with our point organic drivers for our Cloud, growth BIM in to

construction with portfolio continue halo products. of of assets, we the that product effect, a the XXX breadth So, success see acquired on bit because but in to of organic our not just a BIM

Andrew Anagnost

my all points. took interesting You

Scott Herren

Oh, I'm sorry.

Andrew Anagnost

construction that. Yes, portfolio like We're of happy. kind to look, is the first performing this That out performance of acquisitions first-half, is quarter two really know, unusual well. very you big get

inside leaders the side, On senior the integration solutions construction are the team. positions senior taking from acquired companies

organizations. better So, better we're those alignment between seeing and

of going confidence these we're a with have in We things. lot where

You of integrations. continuing see stream product

us customers they saying, acting in customers roadmap. Our the is all their BIM The with XXX of accelerated doing, reason ways. they comfortable basically our right see getting because -- are and purchasing just

sign excellent how into that's to down an doubling is this for going So, grow and but next they're at business year. nothing, Autodesk,

Ken Talanian

Great, thanks very much.

Andrew Anagnost

Thanks, Ken.

Operator

Thank you.

from comes Bernstein Zane of question Chrane next Our Research.

open. is line Your

Zane Chrane

I it on the the in in in into I revenue ACV last QX it to value of XX% $X ARR by million really taking the added more. at in QX. end to driven based wanted The question. days quarter, year. was If revenue looks manufacturing of it's for thanks the growth dig like $X manufacturing at annualized and bit little compared of was of what number down just manufacturing Hi, about million QX look or the

that with strong or or existing So, revenue the Thank macro fiscal in to just a due expansion increased adoption incremental uncertainty? and revenue in 'XX, that's you. in on and quarter customers, manufacturing the pause to manufacturing lower growth is pretty incremental due contrast to first-half churn each that of added? Is weakness

Scott Herren

it's Yes, Zane. neither,

having So, to be clear, we've growth the about, double-digit the talked localized of manufacturing-based we or seen in Germany, even a impact, that in is -- economy… strong is two talked over in last that we with markets the we're historically three not three markets the in quarters, manufacturing we're in which growth even growth about XX% that line showing the manufacturing seeing course

Andrew Anagnost

ACV. In

Scott Herren

In ACV.

any sure kind I'm rates So, did strong -- -- we're look that not there, seeing or the the can not on Renewal side. up offline, not the acceleration exactly manufacturing of math not that you and pick we're deceleration, board. we deceleration across seeing significant seeing it we're

in New higher prior what one line to actually and that product seen the up of -- back with came questions in earlier growth the of couple slightly quarters. subscription is was we've

that at of to that are look well, growth our the relative and I space more manufacturing-focused a you rate. a standout perform peers So, it's when manufacturing continues to think bit far

Andrew Anagnost

end were Germany, high on Germany was double-digit, about from What we comment saw just growth. expectations, to even just was headed growth and and pure quarter. talk of we'll into ACV standpoint. between our seeing growth still in the Yes, we it gap double-digit we as The a the the a ACV

quarters, and but across market, not expectations We kind in same is we manufacturing. have growing high for that in would the of pattern board ACV met that expectations the those past were expected have getting

something So, the right got there. and I be we think that would make sure it's follow-up maybe good on math to absolutely

Zane Chrane

is potential quick expansion customers? gap next Okay. versus lower or going more results you the Then a between just the expected less gap driven -- in, question the than expectations on your from new the adoption high by

Andrew Anagnost

Yes.

end a EBAs. the we bit, as you slowing I'll out in more up-sell example subscription the mostly are of into the versus some So look expected -- the to where give is one down it cross-sell conversions going European like know, to looking a the see countries be sales EBA and little accounts of opportunity we second-half,

the EBA up-sell that's expect of So really behavior triggering what at a And is terms saw of what's little level at a our we quarter, but and and as the we took the great certain caution. during the and we in the seeing see change an in in towards level, the we didn't uptick cross-sell in slowness. uptick and manufacturing to uptick what in level the of in ACV the bit of see. some quarter, of We for want ACV. end we Germany, see particular, towards numbers we didn't indicator growing, as expected We're doing get the that we still that we're

Zane Chrane

thank Very helpful, you.

Operator

you. Thank

of Our next of Bank from Rangan question comes America. Kash

Your open. line is

Kash Rangan

scrub potential you've model saw might do or quarter with all the Hey, enough you guys, are okay from account you the was transparent given be is should for you've July that based uncover is in seen estimates, that what thanks turn you so the revisions confident have being far, how onwards? on in I -- we've whatever and you it curious, meaningful completely not that rather point feel to for or enough that levels that the in detailed we it also seen at potential and this disclosures. -- and any the no business we

Andrew Anagnost

Yes.

confident sure at field, got mean, confident got but feel a we feel prudent same, to our pipeline visibility a changes numbers. to what the action the again and one range from what in the obviously from will bottom We we looking something scrubbed know, comment… tweet something set look, there. this we out and down, it constant scrubbing macro obviously did something do it the the Scott, spent we've feel guiding there the comes we've making we're we unless pretty we're changing, So I in were we we radical narrowed think and our now, seeing what time and right, the top-end to lot the environment reiterate that given if we've right, like from at come of away relative stayed way. right something looking numbers want out this you guide, We our measured from right that that we I you to we're and right, is want field, just currency prudent

Scott Herren

would Kash, of we you it's and can to the started -- and Yes, overall it, talk we in question analyze, same it basis so if that add volume rates becoming Renewal great as part the I we're and our just -- of on is retention stayed rates, the the pipeline Net thing on to in a with where headed that, renewal in call, range. strength the course appreciate not our the ticked about asking that I our strength rate the and which business. anything slightly revenue picked renewal up up bigger a modestly bigger sequentially. a is of only

I Obligations, revenue but RPO, and in about into the they're we talked So, the business, good even to right? XX year-on-year. we current turn Who Performance the feel XX% what -- core going So are about those Remaining like we've the next we months, can at this knows feel that Tweet built the growing in say, see and next will everything point. Yes.

Kash Rangan

much the Thanks transparency. appreciate so and again,

Scott Herren

Kash. Thanks, Yes.

Operator

Thank you.

of Davis comes question from Canaccord. Our next Richard

please. question, Your

Richard Davis

think would the of share functionality, XXX,XXX, work can you a left, bit said I on on of some PlanGrid that? quick up two that? you one, on questions, rationalizing Two and is accelerate that, the far repurchase, and you little surge kind features kind Thanks. Those between are you much or second of had how Thanks. can be you And question preexisting how that, then are simple what's questions. of overlapping

Andrew Anagnost

around PlanGrid strategy both the and and as be and industry. focus first building I Common PlanGrid some there very XXX-docs execution other pre-construction them project part is that a -- BIM teams well, to but Environment being that. about port on, that's right, integrating one We've field This progress that portfolio. with our We've and foundation of things workflow. CDE. multiple and of with off, the team projects customers the core the position And going both start generation in of associated field to function for the really BIM PlanGrid, are the called finish, the focus something our from PlanGrid Common Like going all docs into into and Data is into the Data we've XXX field management and let's us integration exciting integrated AEC project-centric things integrating is we're communicating rapidly. you how I environment. the BuildingConnected execution the things so, that the on workflows, the of the products out and to specked management the we to management, also all is it's is the our seen BIM XXX made also on of going more thank that up BIM XXX next integrated BIM integration. working the satisfy functionality information solution not fronts. so Data position made products PlanGrid and some what Richard, Common the foundation we that's we global clear on breadth that earlier, which platform, on built requirements said capturing bid but PlanGrid only back together steppingstone, the all Yes, the to managing around pretty associated and bring execution into and Environment. BIM a of call great and into BIM to in Environment, All have to talk portfolio as it gives project complicated It's information

are of together, from in to year the see do. to year, the in the first-half how get coming going of because what buying we're this about you're said going portfolios us customers next us solution it, of but they of hear in a lot we are they in our things our acting they more So, second-half and to these direction understand,

Scott Herren

year-to-date $XXX on no $XX on, spent stance we allocation. we in during change stock you're question, Richard, is spot our There the million. on your so And quarter, buyback spent million cap

the effectively pattern. of offset took continue that plans to opportunistic buying more We've growth core from we'll offset doing with a been equity then cash shareholders. pretty to the and So our support first, the dilution excess the company return

of So, course do. under the our price modeling grid plan. is trading we based to during XXbX-X have Monte blackout window, we some And on Carlo trade that

volatility. in most trading recent the July, blackout before early window right began market Our

up that the At point, buying round had set be reflect to in we market experiencing. volatility we us grid this didn't expect definitely stock. should that think up the the So you necessarily back I back

Richard Davis

you much. Thank so

Scott Herren

Richard. Yes. Thanks,

Operator

you. Thank

question from line next Our comes of Radke Citi. of Tyler the

Your is open. line

Tyler Radke

squeezing thanks in me Hey, for here.

issues, talked to in So, is your Thanks. you gives only these on from then fair macro of guess about some the reduction manufacturing, confidence any about temporary AEC? there you what your you as I view a all there are lowered thing, think thing a short-term or how say there, and coming it or you expectations, is it's think

Andrew Anagnost

that me of right, first the us let give the change again, confidence off, half currency a effect, so impacts. guide about okay. Yes. of in is just All One, the clarify midpoint things short-term few the

just we're that's visibility. think important. really lot confidence sure is all let's I currency of effect, remember, level that make set pipeline a it's thing us that, The So, on only our gives

in way quite see of with changes all some have robust the we our also beyond mid-market the and and visibility some of we pipeline, we of direct our year, the programs models visibility, pipeline, the can to of market of rise that. into of visibility a more see through visibility the have of have because programs, have terms end and pipeline, We the model into our bit we go-to in that our our we

So that these pretty some effects. we right. short-term feel of things All are good

In addition, to conversion work. with our regards regards construction anything see down don't with slowing we and to piracy

So, all impacts kind if short-term we at high-level, our look things on -- of if business. just just are we those

the All confidence right, you of was thought your me clarifying part short-term? I second asked what about on what because another question, and gave thing the

Tyler Radke

kind confident Yes, it answered a in AEC? you part, it, all just the reduction I and on a on macro short-term that of that was any manufacturing, reduction guidance, the there only around think the -- was then it's but was

Andrew Anagnost

China softness view really the in impacts manufacturing our of key in the and effects in execute on. is softness FX in view are No. those Germany, the in the potential The saw incremental in we AEC. gap the drivers. guidance from what the came we to able actually no and saw we're Yes, U.K. and our there change between of Those

Tyler Radke

the more to of back just I just you place? Okay, profitability expense sneak see think or you cash softness, on great. hiring, as some maybe flow in free your kind willingness being could keep to of in have continue levers if more And you for Scott, to about if you conservatives, or pull one have of more what's kind targets

Scott Herren

a great Tyler. question, it's Yes,

over think last I four effectively graphically discipline. pretty sound, spend, we've the years, demonstrated

years. sound, We've four acquisitions kept We demonstrate ex discipline. the effectively for flat spend consecutive spend spend, to to total show for total continue flat in we QX -- have

increasing a an of the take up for opportunity same be us at we're will time to spend margins. bit there So,

this pent-up look margin and at XX fiscal expect of percentage year-on-year. you margin been If flat to demand growth some having expand again demand. year, years of talk we X% some growth spend for into 'XX, points is of pent-up margin four I or percent there about consecutive although

environment different little in will fiscal increase macro speed, overall spending spending course barring a something will in the happening of current again bit an increase of significantly So, see 'XX.

Tyler Radke

Thank you.

Operator

Thank to At to like management any I'd back for call turn closing remarks. you. time, the this over

Abhey Lamba

conference joining us. This concludes for today. for Thanks call our

feel have you. free If to questions, any contact Thank us. you

Operator

for concludes and have this Thank Thank participation, and you, wonderful Ladies today's a gentlemen, conference. you day. sir. your

your at may disconnect time. You lines this

Autodesk (ADSK) 27 Aug 192020 Q2 Earnings call transcript