Autodesk(US:ADSK)2024-08-30 00:10Financial Data and Key Metrics Changes - Autodesk reported a 12% revenue growth and 13% growth in constant currency for Q2 2025, with a strong performance in both the second quarter and the first half of the year [6][20] - Total deferred revenue decreased by 13% to $3.7 billion, impacted by the transition from upfront to annual billings for multi-year contracts [21] - Free cash flow for the quarter was $203 million, with some channel partners booking business earlier in the quarter [22] Business Line Data and Key Metrics Changes - AEC revenue grew by 15%, manufacturing revenue increased by 17%, while media and entertainment (M&E) revenue grew by 5% [20][13] - Direct revenue increased by 21%, representing 40% of total revenue, up 3 percentage points from the previous year [20] - The new transaction model did not materially contribute to Q2 results but is expected to provide a tailwind in the future [13][24] Market Data and Key Metrics Changes - The company experienced strong renewal rates but faced softness in new business in China and Korea [13] - Revenue grew by 13% in all regions on a constant currency basis, indicating broad-based growth across products and regions [20] - The underlying momentum of the business remains consistent, with increased product usage and record bid activity [9] Company Strategy and Development Direction - Autodesk is aggressively pursuing growth opportunities through investments in cloud, platform, and AI technologies [8] - The company aims to modernize its go-to-market approach to create more durable and direct relationships with customers [9] - The transition to the new transaction model is expected to enhance sales and marketing efficiency and deliver industry-leading GAAP margins [10][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to create shareholder value despite macroeconomic challenges [46] - The company raised its guidance for billings, revenue, earnings per share, and free cash flow for the full year, reflecting sustained momentum [25][26] - Management noted that the transition to annual billing for multi-year contracts will provide a natural tailwind to revenue and free cash flow over the next few years [29] Other Important Information - Autodesk's construction business is seeing strong momentum, particularly in infrastructure and construction sectors [31] - The company has been named the Official Design and Make platform for the LA28 Olympic and Paralympic Games, highlighting its role in significant projects [43][44] - The search for a new CFO is progressing well, with excellent candidates being considered [44] Q&A Session Summary Question: Thoughts on Starboard Value's recent letters - Management acknowledged alignment with Starboard on the potential for creating more shareholder value and highlighted the strong results delivered in a tough environment [46][49] Question: Insights on Autodesk Construction Cloud - Management noted strong momentum in the construction business, driven by a large backlog and a competitive value proposition [50][52] Question: Division of labor under the new model - Management discussed opportunities for efficiencies and productivity improvements in sales and marketing under the new transaction model [56][57] Question: Impact of co-terming on billings - Management explained that co-terming creates efficiencies in the renewal process, which is beneficial despite some short-term impacts on billings [58][59] Question: Confidence in the rollout of the new transaction model - Management expressed confidence in the successful rollout of the new transaction model in Europe and Japan, based on positive experiences in North America [61][62] Question: Demand environment ahead of US elections - Management indicated that the issues affecting customers are bipartisan, suggesting little impact on decision-making processes [66] Question: Performance and margin improvements - Management confirmed that underlying margin improvements were intentional, despite absorbing headwinds from transitions [70][71] Question: Pricing environment and discounting behavior - Management stated that the new transaction model allows for better control over pricing and discounting, benefiting partners [74][75] Question: New business trends in the quarter - Management noted resilience in the business, with AEC and manufacturing performing well, while media and entertainment faced challenges [78][79]