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    ADSK
    Earnings call· Jan 2025(Q4 FY25)

    Autodesk, Inc. ADSK

    Feb 27, 2025 Source

    Executive summary

    Autodesk Q4 FY25 — Strong Results, GTM Optimization & Margin Expansion

    Autodesk delivered strong Q4 and FY25 results, exceeding expectations for revenue, billings, margins, and free cash flow. The company announced a restructuring and go-to-market optimization plan aimed at accelerating strategic priorities and strengthening resilience, which is expected to drive significant margin expansion. While acknowledging ongoing macro uncertainty and underlying growth at the lower end of prior targets, management expressed confidence in future growth from new business and Make segment momentum.

    Highlights

    4

    • Billings and revenue topped the higher end of expected range despite new foreign exchange headwinds (Q4 revenue grew 12% as reported and CC; Q4 billings increased 24% CC).

    • Margins and free cash flow exceeded expectations (Q4 non-GAAP operating margin 37%, up 160 basis points YoY; FY25 FCF $1.57 billion, ahead of high end).

    • Strong momentum in growth businesses like Construction and Fusion (Construction revenue growth accelerated in Q4, adding almost 400 net new logos).

    • Significant share buyback planned for FY26 ($1.1 billion to $1.2 billion, a 30% to 40% increase compared to FY25).

    Concerns

    3

    • Restructuring announcement and CRO transition may cause disruption, which is reflected in the FY26 guidance.

    • Underlying growth has been hovering around the bottom end of the previous 10% to 15% revenue growth framework, leading to its discontinuation.

    • Continued headwinds to new business growth and ongoing macroeconomic uncertainty.

    Guidance & targets

    12
    CategoryTargetConfidence
    Constant Currency Billings Growth (excluding new transaction model impact)
    17% to 19%
    high materiality
    Medium
    Constant Currency Revenue Growth (excluding new transaction model impact)
    8% to 9%
    high materiality
    Medium
    GAAP Operating Margin
    21% to 22%
    high materiality
    Medium
    Non-GAAP Operating Margin (excluding new transaction model impact and currency movements)
    39% to 40%
    high materiality
    Medium
    Free Cash Flow
    $2.075 billion and $2.175 billion
    high materiality
    Medium
    Share Buyback
    $1.1 billion and $1.2 billion
    high materiality
    Medium
    GAAP Margins
    among the best in the industry
    high materiality
    High
    Underlying Operating Margin Expansion
    further margin expansion
    high materiality
    High
    Free Cash Flow Cash Outflows (Restructuring)
    $110 million to $120 million
    medium materiality
    High
    Free Cash Flow Discrete Cash Benefit (Deferred Tax Assets)
    $130 million to $150 million
    medium materiality
    High
    Total Spending Growth (excluding new transaction model impact and constant currency)
    4%
    medium materiality
    Medium
    GAAP Operating Margin (as-reported)
    36% to 37%
    high materiality
    Medium

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    AutoCAD and AutoCAD LT
    Revenue growth in constant currency.
    		—9%——
    AECO
    Revenue growth in constant currency. Includes strong performance in Construction.
    		—15%——
    Manufacturing
    Revenue growth in constant currency. Grew in the low teens excluding upfront revenue.
    		—10%——
    M&E
    Revenue growth in constant currency.
    		—10%——
    Americas
    Revenue growth in constant currency.
    		—11%——
    EMEA
    Revenue growth in constant currency.
    		—13%——
    APAC
    Revenue growth in constant currency.
    		—11%——

    Operational metrics

    16
    Revenue Growth
    12%YoY
    Q4 FY25

    Total revenue grew 12% as reported and in constant currency.

    Direct Revenue Growth
    35%YoY
    Q4 FY25

    Direct revenue increased 35% in constant currency and represented 47% of total revenue, up 8 percentage points from last year.

    New Transaction Model Revenue Contribution
    $46 million
    Q4 FY25

    The contribution from the new transaction model to revenue was $46 million in the fourth quarter.

    New Transaction Model Revenue Contribution
    $71 million
    FY25

    The contribution from the new transaction model to revenue was $71 million for the year.

    Billings Growth
    24%YoY
    Q4 FY25

    Billings increased 24% in the quarter at constant currency, reflecting the shift to annual billings for most multiyear contracts and the transition to the new transaction model.

    New Transaction Model Billings Contribution
    $155 million
    Q4 FY25

    The contribution from the new transaction model to billings was $155 million in the fourth quarter.

    New Transaction Model Billings Contribution
    $262 million
    FY25

    The contribution from the new transaction model to billings was $262 million for the full year.

    GAAP Operating Margin
    22%up 90 basis points YoY
    Q4 FY25

    Fourth quarter GAAP operating margin was 22%, reflecting a year-over-year increase of 90 basis points.

    Non-GAAP Operating Margin
    37%up 160 basis points YoY
    Q4 FY25

    Fourth quarter non-GAAP operating margin was 37%, reflecting a year-over-year increase of 160 basis points.

    GAAP Operating Margin Increase (excluding NTM and currency)
    approximately 220 basis pointsYoY
    FY25

    For fiscal '25, GAAP operating margin increased approximately 220 basis points year-over-year, excluding the impact of the new transaction model and currency movements.

    Non-GAAP Operating Margin Increase (excluding NTM and currency)
    approximately 140 basis pointsYoY
    FY25

    For fiscal '25, non-GAAP operating margin increased approximately 140 basis points year-over-year, excluding the impact of the new transaction model and currency movements.

    Shares Purchased
    1.4 million
    Q4 FY25

    In the fourth quarter, we purchased approximately 1.4 million shares for $414 million at an average price of approximately $299 per share.

    Shares Purchased
    3.1 million
    FY25

    For the full year, we purchased approximately 3.1 million shares for $858 million at an average price of approximately $279 per share.

    Net New Logos
    almost 400added
    Q4 FY25

    Construction revenue growth accelerated in the fourth quarter, and we added almost 400 net new logos.

    AI product / copilot adoption
    50%
    Q4 FY25

    Our recently launched AutoConstrain tool in Fusion, which leverages AI to simplify the process of defining sketch geometry, has a roughly 50% acceptance rate on suggested geometry.

    Net Retention Rate
    100% to 110%
    FY25 and FY26

    The net retention rate is expected to be in the range of 100% to 110% for both FY25 and FY26.

    Industry KPIs

    8
    MetricValueDetails
    Free cash flow$1.57BUSD
    Operating margin22% GAAP; 37% non-GAAP%
    Operating expenses4%%
    Revenue growth rate12%%
    Customer account count400net new logos
    Rpo backlog bookings orders$6.9BUSD
    Share buyback capital return$414MUSD
    Segment end market revenue mixAECO revenue grew 15%; Manufacturing revenue grew 10%; M&E revenue grew 10%; AutoCAD and AutoCAD LT revenue grew 9%%

    Orderbook & backlog

    2
    Remaining Performance Obligations (RPO)$6.9 billionQ4 FY25

    grew 14%

    Current Remaining Performance Obligations (cRPO)$4.5 billionQ4 FY25

    grew 12%

    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 multiyear and EBA cohorts ahead of renewal in fiscal '26.

    Product announcements

    1
    ProductTypeDetails
    AutoConstrain toollaunch

    Deals & partnerships

    7
    Mott MacDonaldRenewal of Enterprise Business Agreement (EBA) and expansion of partnership.

    Renewed its sixth EBA, expanding usage of Revit, Civil 3D, Autodesk Build, and Autodesk Water. Plans to leverage additional capabilities to increase project productivity and workflows for optimized design.

    Power DesignSelection of Autodesk Build as an essential construction technology link.

    Selected Autodesk Build to enhance coordination between design and construction, ensuring seamless collaboration across teams and systems. Aims to unify project data from concept to completion to protect design integrity, optimize workflows, and drive efficiency.

    Cleveland ConstructionReplacement of a competitive solution with Autodesk Construction Cloud.

    Replacing a competitive solution with Autodesk Construction Cloud to support its growth, leveraging the end-to-end solution from preconstruction to cost management and payments with GCPay. An Autodesk platinum partner assisted with implementation and data migration.

    BuhlerRenewal and expansion of Enterprise Business Agreement (EBA).

    Renewed and expanded its EBA. Autodesk will be a key strategic partner in the development and execution of Buhler's digital strategy, optimizing for outcomes by connecting data and workflows from product and plant design to project delivery.

    MSC Industrial SupplyLeveraging Autodesk Fusion's capabilities to enhance metalworking application optimization program.

    MSC Industrial Supply will leverage Autodesk Fusion's connected supply chain capabilities and all-in-one cloud CAD, CAM, CAE, and PCB platform to enhance its AP OP program. MSC's metalworking specialists will optimize toolpaths and validate cutting parameters more efficiently through enhanced virtual testing.

    Indian Institute of Technology BombayMemorandum of Understanding (MOU) to integrate Autodesk solutions into education and research.

    Signed an MOU to integrate Autodesk's industry-leading solutions into IIT Bombay's innovative education and research programs, aiming to equip the next generation of engineers and designers with industry-ready skills.

    European railway infrastructure administratorWorking to ensure compliance and support digital transformation.

    Working with an administrator of European railway infrastructure, who is adopting BIM, to identify and address gaps in compliance while supporting their digital transformation.

    Risks & headwinds

    4
    New foreign exchange headwindsQ4 FY25

    Despite new foreign exchange headwinds, billings and revenue topped the higher end of expected range.

    Broader economic environment and underlying momentum consistent with prior quartersQ4 FY25 and FY26 outlook

    Continuing strong renewal rates and headwinds to new business growth.

    Mitigation: Business model is resilient; strong momentum in growth businesses like Construction and Fusion.

    Restructuring plans and CRO transition may cause disruptionFY26

    Guidance reflects this potential disruption.

    Mitigation: Mitigation plans and actions are in place.

    Macro uncertaintyOngoing

    Uncertainty is fueling customer angst.

    Mitigation: Autodesk's diversified business can navigate policy changes once certainty is established; focus on what is in control (channel productivity, Make business growth).

    What to watch in Q1 FY26

    5

    Channel productivity

    Multi-year, initial phases focused on marketing, moving to partner integration.
    CurrentImpacted by past changes, 'some work to do to help the partners manage these systems effectively.'
    TargetEnhanced productivity, more focus on new business growth.

    Why it matters

    Critical for driving new business growth and reinforcing long-term revenue growth.

    The first thing, if we look at the things we don't have control, we don't have control of the macro uncertainty🌐. That's going to continue, and that will definitely impact some of our customers' thinking. But what we do have control of is in 2 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, we are on a journey of go-to-market optimization right now, and that is going to enhance the productivity of our channel.

    Q&A highlights

    7

    What drives new business growth higher, given the 10-15% framework is no longer appropriate due to slow new business?

    Andrew explained that past new business growth was impacted by Autodesk's internal changes and macro uncertainty. Future growth will be driven by enhancing channel productivity through GTM optimization and continued investment in high-growth Make businesses (Construction, Fusion, AI, cloud platform).

    “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 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.”

    asked by Saket Kalia · answered by Andrew Anagnost

    2 min read5 chapters

    Detailed Narrative

    01

    Go-to-Market Optimization and Restructuring

    Autodesk initiated an optimization phase for its sales and marketing, consolidating teams into centers of excellence and investing in systems for efficiency. This restructuring, which also involves reallocating internal resources to strategic priorities like cloud, platform, and AI, is expected to drive operating profit improvement and eventually lead to GAAP margins among the best in the industry. The company views this as a deliberate, multi-year effort planned since the new transaction model's introduction, with initial phases focused on marketing efficiency and future phases on tighter channel partnerships and self-service.

    02

    Strategic Focus on Convergence

    The company is focused on the convergence of design and make in the cloud, enabled by platform, industry cloud, and AI. Investments are being accelerated in these areas to provide valuable and connected solutions, support a broader ecosystem, and maintain leadership. Examples include simulation reducing rework during construction, offsite manufacturing for components, and universal AI models for better inferences. This strategy aims to drive growth by providing increasingly valuable and connected solutions to customers.

    03

    Strong Performance in Make Businesses

    The Make products, particularly Construction and Fusion, continue to drive growth. Construction revenue growth accelerated in Q4, adding nearly 400 net new logos. Fusion is seeing increasing extension attach rates and delivering productivity gains through AI features like AutoConstrain, which has a ~50% acceptance rate on suggested geometry. These businesses are key to Autodesk's long-term growth, with ongoing investments to enhance their momentum and expand market penetration.

    04

    Customer Success Stories and Ecosystem Expansion

    Several customer examples highlight the value proposition, including Mott MacDonald expanding its EBA for digital delivery, Power Design selecting Autodesk Build for coordination, and Cleveland Construction replacing a competitive solution with Autodesk Construction Cloud. Partnerships with MSC Industrial Supply for Fusion's capabilities and an MOU with IIT Bombay for education demonstrate efforts to expand the ecosystem and equip future engineers. These stories emphasize converging people, processes, and data for efficiency and sustainability.

    05

    Long-Term Growth Framework Adjustment

    Management acknowledged that the previous 10%-15% revenue growth framework is no longer appropriate, given underlying growth has hovered at the lower end for the past couple of years. The focus is now on driving sustainable growth through new business, Make segment momentum, and enhanced channel productivity. The company remains confident in its long-term growth potential, with an Investor Day planned in Q3 to provide more details on the path to further margin expansion.

    AI-generated summary of the company’s earnings call. Not investment advice.