[ADSK] Summary of Autodesk 2023Q1 Earning Call

ADSK participants

Simon Mays-Smith - VP, Investor Relations
Andrew Anagnost - Chief Executive Officer
Debbie Clifford - Chief Financial Officer

Business Highlights

1. Resilience, Discipline, and Opportunity:

Autodesk reported strong financial and competitive performance in the first quarter of fiscal 2024. Despite a challenging macroeconomic, policy, and geopolitical environment, Autodesk delivered 12% revenue growth in constant currency, healthy margins, and record first-quarter free cash flow. The company's geographic, product, and customer diversification enabled it to remain resilient. Autodesk's customers remain committed to transformation and leveraging automation, which is reflected in larger, broader, and more strategic partnerships, improving renewal rates, consistent net revenue retention, and growing adoption and usage of its products within EBAs.

2. Growth in Manufacturing and Construction:

Autodesk's Design and Make Platform continues to grow, with more customers consolidating their workflows on a single platform to drive efficiency, sustainability, and resilience. The company's Fusion platform ended the quarter with 231,000 subscribers, and more customers are connecting more workflows in the cloud to drive efficiency. Autodesk's construction platform, Autodesk Construction Cloud, has expanded its partnership with DPR, one of the top 10 largest general contractors and construction management firms in the US, to connect all workflows, centralize communications, and improve project management and operations across the office and job site. The company also saw significant opportunities to grow its construction platform outside the US, benefiting from its strong international presence and reputation.

Financial Status:

1. Revenue Growth:

Autodesk's revenue grew 8%, and 12% in constant currency, with AutoCAD and AutoCAD LT revenue growing 10%, AEC revenue growing 11%, manufacturing revenue growing 13%, and M&E revenue growing 9%. By region in constant currency, revenue grew 14% in the Americas, 11% in EMEA, and 8% in APAC. The company's revenue growth decelerated in Q1 due to the end of sale of multi-year upfront contracts, which impacted the demand pattern. However, the company expects demand to bounce back in Q2 and accelerate in the back half of the year, driven by the historical seasonal patterns for Autodesk.

2. Free Cash Flow:

Autodesk's Q1 free cash flow was strong due to cash collections from the last month of billings in fiscal '23, favorable linearity and early renewals in Q1, and a federal tax payment extension for the third quarter. The company expects to generate about half of its free cash flow in the second half of the year, with heavier weighting to Q4. The company's VP of Investor Relations, Simon Mays-Smith, stated that the company would have a negative in Q3 due to the tax payment extension to Q3.

Overall, Autodesk's performance in 2023Q1 was consistent with their general expectations for the year, and they have continued those expectations as they think about their outlook for the rest of the year. The company has a range for its guidance in its 7% to 9% range for revenue, and they have the ability to address whatever macroeconomic situation they see. Autodesk's transformation from products to capabilities will enable it to forge broader, trusted, and more durable partnerships with more customers, give Autodesk a longer runway of growth and free cash flow generation, and enable a better world designed and built for all.