Autodesk, Inc. (ADSK) Earnings Call Transcript & Summary

Thank you so much for joining us here for day 1 of the Stifel Cross-Sector Insight Conference. My name is Adam Borg. I'm an analyst on the software team here at Stifel. We're excited to have Autodesk here with us. We have Srinath Jonnalagadda, who is VP for Industry Strategy for Design and Manufacturing business unit; Simon Mays-Smith, Head of IR. So gentlemen, thank you much for being here. I do want this to be really as interactive as possible. So we'd love for any and all of your questions. So I'll kick it off with some questions with the fireside chat. Would love to get as many questions that you guys have answered as possible. And with all that, gentlemen, thank you so much for being here.

All right. Welcome. Good to be here. Good job with Srinath on as well.

Yes, exactly.

I think you want to start with the safe harbor.

I do, and I apologize for that. So we may make forward-looking statements during the course of this presentation. Please refer to our SEC filings for information on risks and other factors that may cause our actual results to differ. Okay, done.

Easy enough. Given your background, Srinath, we're going to focus a lot of the time on Fusion 360 and the manufacturing opportunity. But before we do that, just given the state of the world and the fact that you guys just had recent earnings, and just for those who may be a little bit newer to the story in the room, maybe just spend a minute or 2, Simon, just on brief back on the company and big opportunities that you're going after and a recap of the quarter.

Yes. So Autodesk is in the design and make business, software business in architecture, engineering and construction and increasingly, the owners market in manufacturing and in media and entertainment. And what we're trying to do is connect workflows that historically have been siloed and run sequentially to each other to enable them to be connected together in the cloud to run concurrently. And the reason we want to do that is if you can do that, you can dramatically increase the efficiency and sustainability in construction and manufacturing. And we need to do that to save the world. Literally, you can't reduce carbon in the world unless you reduce it in construction manufacturing. And at the same time, we can make the companies more efficient. And although we face lots of competitors in each of the different verticals in which we operate, there are relatively few people who are trying to connect those siloes together in the cloud. So that is what makes us unique. And as we add adjacent workflows into our business, we not only add new customers into our ecosystem, which gives us new growth opportunity, but we also bring additional value to our existing customer base by connecting those new workflows to our existing customer base. So that's what we're trying to do. We'll talk about that in a lot more detail if you want. In terms of the current quarter, we reported our Q1 results or 10 days ago now or so. Generally, like a lot of our peers, demand environment has been good. Supply environment remains constrained as it has done for quite some time now by a combination of supply chain, COVID ebb and flow and labor shortages. The 2 incremental pieces of headwind that we had in the quarter were, firstly, from Russia, we reported our Q4 results. Overnight, Russia had invaded Ukraine, so that wasn't embedded in our guidance, so we put it into our guidance in Q1. And secondly, we have a large global business, and therefore, we have exposure to the strengthening dollar. So we adjusted guidance for that. But underlying the business, there was no change to our guidance for the year. What's helping us is just the breadth and depth of the growth opportunity ahead of us. Our key growth drivers in construction, in manufacturing, our direct sales in the eStore are all firing and doing well. We signed our second-largest enterprise business agreement contract during the quarter. So generally, things are going pretty well. In terms of the cycle, what we've said is that we have within the business a very large and robust subscription and renewal business. If you look at our business during the pandemic, it's carried on growing double digits relentlessly through the pandemic, a very, very different business from the one it was back in the 2000s, the reason being is that we made a transition to a subscription business model a few years ago, which makes us much more resilient. That's not to say we're immune from the cycle. The smaller bit of the business, which is where we're generating new business, is more prone to the cycle. And it would show up as it did in the pandemic if the macro deteriorates in 3 ways. Firstly, you'd see a deceleration in our new sub growth. So new subs accelerate in good times, decelerates in bad times. The second way it shows up is in the rate of upgrade to premium products. So in good times, people upgrade to premium products more. And in slower macro times, they upgrade less. And the third way cycle turns up in our business is around duration, is that when times are good, people sign longer-term contracts and buy 3-year contracts upfront. And in tougher times, they might want to conserve cash, and they'll buy annual contracts. There is a sort of good and bad about that. The silver lining to that cloud is if they buy annual contracts, they pay -- they don't get a discount for paying 3 years upfront, so they pay a higher price. And also the customers will come back the following year and pay it again, whereas if they're signing multiyear contracts, they pay us 3 years in year 1, but then don't pay us anything in year 2 and year 3. So there is a silver lining if they switch to annual contracts, then we get paid again the next year and the following year. So I'll stop there as a quick state of the nation.

That's great. And maybe just one more question, and Srinath, we'll get going. Just on the Autodesk Construction Cloud, this is an area that's been seeing a lot of momentum in recent quarters consistent with what we are hearing from our checks, both from a product perspective and a go-to-market alignment perspective. Maybe talk a little bit there in terms of like why right now? What's happening in the product in the go-to-market? Why is the success accelerating? And how should we think about this part of the business even in a slowing macro?

Yes. So I'll talk a bit broadly. So what we've -- Autodesk Construction Cloud is our move -- we've had a position a long time in architecture and engineering. Few years ago, we decided to add an adjacent vertical, as I was talking about earlier, in construction, so moving downstream into construction. So you move into preconstruction and construction. We put it together with some cornerstone acquisitions over the last few years. We've then integrated that into a unified product called Autodesk Build, which we launched last year and then sort of going to market, starting with our largest customers, the enterprise business agreement customers where we have existing architecture and engineering relationships, but they also operate in the construction world. So extending our relationships in construction at the sort of large end of the market. And then following the launch of Autodesk Build with a pricing model called account-based pricing, and I can talk about that if you'd like and also by adding channel partners for distribution, both in the U.S. and globally. We've now begun -- just begun to move a bit more into the mid-market across the globe as well. So making great progress there. In terms of the market itself, as we talked about on the call, there's a huge backlog built up from the pandemic. We can see that activity beginning to come into the Construction phase through our bidding platform called BuildingConnected, which is where general contractors are subcontractors to bid for specific work when construction is starting. And we said in Q1 that, that reached record levels of bid activity. There's lots of signs that there's -- that backlog is coming into the market. And as we said, demand remains good. Supply is still constrained by COVID supply chain and labor, et cetera, but demand as of the end of Q1 remained good.

That's great. So Srinath, maybe let's talk about Fusion 360. Obviously, much of the focus of investors is on the AEC side. But manufacturing is an important part of the story, and CAD will take even a greater part of the story beyond fiscal '23. So maybe even before Fusion 360, talk a little bit what are the unique assets that Autodesk brings to the table on the manufacturing world and where are you seeing the success?

Yes. So let's start with the core DNA of Autodesk. Autodesk has historically been all about democratizing technology. Going back to Autodesk's roots, if you go back to 40 years, we brought digital to the world in AutoCAD. It was prior -- before AutoCAD was paper-based drawing and documentation, and then AutoCAD came online. And after that, we continue to innovate with 3D parametric modeling, Inventor. Inventor is a flagship product, which does 3D parametric modeling. And since then, they have kind of branched off, and we have started to build additional expertise and competence in the manufacturing side as in the make side. So we have strengthened design, and now we have started to build strength in manufacturing as well. And the strength in manufacturing is after a decade-plus investment in manufacturing, I think, up to $1 billion-plus intellectual property now with Autodesk in the manufacturing side. In addition to this, we have been investing steadily for the last decade in building cloud infrastructure and SaaS expertise with Fusion 360. And now we'll get into Fusion 360. I just wanted to make sure that everybody understood. We saw the big trends playing out on the horizon, and we deliberately invested well ahead of time. And we are now ready for the current opportunities that are now available to Fusion 360. We are absolutely the front runner in this space. And then in addition to that, we also have a lot of competency at the company in digital infrastructure and e-commerce. You heard Simon talk about e-commerce. So we are pulling all this together. And again, you'll see this in performance of Fusion 360. It's not just the technology, it's also the business model innovation, all of that is coming together. And this is actually unlocking a whole lot of benefits to the market that we're not seeing before.

That's really helpful. And maybe just going deeper into the cloud side for a minute. This is -- what's been fascinating to me is that design software in general has been an area that's been a laggard to adopting the cloud. You've seen the cloud adoption almost throughout all areas of software, but design seems to be behind the April. And for years, we've been talking about, well, it's coming. Obviously, part of it is a product side, which we'll talk about Fusion 360. Part of it is customer demand. So why has the move to cloud-based CAD been slower than other areas? And why is now the right time for this to see this accelerating adoption?

Yes. Yes, this is important because ultimately, it's all about timing, but the disruption is only relevant when the timing works out nicely. If you think about the benefit of cloud, and I have to go back to a quote from Andy Grove, a technocrat that I love. He was the -- one of the leading technocrats at Intel. And he talks about a thumb rule. He says for disruptions to take root, the new technology, the innovations need to have 10x benefits than status quo. And if you think about CAD in the browser, it's like pouring old wine into a new bottle or whatever metaphor you want to use. So CAD, the same on-premise CAD showing up in a browser. It's not very interesting. It's the same technology that's in a new format. It doesn't offer any additional benefit. And that's why the market has been very skeptical. But then if you fast-forward and think about the times, it's important to think about what's on the manufacturing customers' minds. They're seeing increasing product complexity. It's no longer just about building mechanical products. Every product is a mechanical product, a software product, electronics. And then you have additional things like optics also. So lots of disciplines, lots of complexity going into building these products. Second, there is increasing pressure on time to market. The innovation cycles are getting shorter and shorter, right? And this is mainly because the customer expectations are increasing, so growing customer expectations, shorter innovation cycles and as I said, product complexity. All of these things are putting a lot of pressure on our customers. And our customers are now saying, "Autodesk, what can you do to help us to be competitive in the case of disruption?" And the 3 things that they're asking us to do is, how can you help us collaborate better? How can you help us get shorter product development life cycle? And more importantly, they want us to be able to help them with more expansive innovation exploration. And by this, I mean, when you think about a new design, every design has a lot of concepts and iterations before the final design gets to market. So the technologies that you see in the market are really the ones that were born out of, let's say, 10,000 experiments and the 9,999 failed, and the one finally succeeded. So manufacturers are asking, okay, how can you help us get to 10,000, 100,000 iterations, right? So all of these factors is why we built Fusion 360. We want to put Fusion 360 in the hands of the manufacturers. So the collaboration is front end center. The data is the fundamental thing that Fusion provides, data in the cloud. It connects the entire organization, connects the entire manufacturing organization. I'm not talking about just the 4 walls of the company. I'm talking about the entire ecosystem. And beyond that, there is also the convergence of disciplines. The products are getting complex, as I said. That means that you have to have a mechanical engineer, an electronics engineer, a software engineer, procurement person, supply chain person and so on and so forth. Everybody working together, always in sync, and that's why Fusion is focused on convergence. Now if you put these 2 things together, you have the data at the center, you have convergence of disciplines, then you get the next big benefit, which is automation. Automation is now going to be the next big frontier for productivity on the manufacturing side. Thus far, when we think about CAD, CAD has been talked about as computer-aided design. But our ex CEO, he actually correctly said, it's not computer-aided design. It's actually computer-assisted documentation. The computer is quite dumb. All it's doing is it's just following the instructions from the keyboard and the mouse and replicating it with pixels on the screen. The future that we see is computer-augmented design, computer as a collaborator, and this is why automation is super important. We've been investing in next gen algorithms like generative design, which unlocks the power of automation and help manufacturers go through the 100,000 iterations that I was talking about. So that's Fusion 360 in a nutshell.

That's great. And I'd love to talk a little bit about general design later in our chat. So you've already had some products in the design and manufacturing space, especially with Inventor, right? So how is Fusion 360 different? Why would a customer want one over the other? And is this cannibalistic in some way to your existing assets on the design and manufacturing side?

Yes. So let me start with the cannibalistic thing. First of all, every Inventor customer gets access to Fusion 360, right? So we made sure that the best and latest technology is available to all our customers, the Inventor customers. So there's no such thing as the Inventor customers are considering one versus another. They get both. And by the way, Inventor and Fusion 360 work together. There is an enhancement of functionality in Inventor to Fusion 360. Now coming to your first question, which is how is Fusion 360 different from Inventor, our focus is first and foremost on convergence of disciplines and focus on manufacturing. One of the things that we hear consistently from customers is, look, help me make things. Our job at Autodesk is not about painting pixels on the screen. Our job is to help our customers make things. That's why it's important for us to display our competency in manufacturing front end center when we think about our software. And as I said, the $1 billion IP that we have in manufacturing, that's all coming together inside Fusion 360. So that's the first and foremost differentiation between Inventor and Fusion. They focus on manufacturing. The second is, as I said, the trends in the market, these trends about increasing product complexity, shorter product life cycles and changing customer expectations, they are playing out very clearly in a few segments like consumer products. And I say consumer products, I'm talking about consumer electronics, everything from a mouse that you use or a smartphone or any of the electronic devices or tools and appliances. These are the kind of companies that are saying, okay, what you're building with Fusion 360 is spot on for me. And by the way, Inventor doesn't play in the consumer products segment. Inventor is very much about the industrial machinery segment. So it's a very complementary type of business right now for us in Fusion, focusing on make and focusing on consumer products.

Got it. Maybe one more question and then I'd love to start getting Q&A from the audience. So just on the pricing front, what did I think the other interesting things about Fusion 360 is just a disruptive pricing model with a low base price, you have extensions, you have consumption-based pricing. Maybe just walk through this for the audience about how it's priced? And what kind of advantage that provides?

Yes. So one of the things that we were very clear from the get-go, as I said, Autodesk DNA is all about democratizing technology. And what we saw in the market is not just the technology trends. We also saw an undercurrent of frustration for lack of viable alternatives. When we were looking at the CAD market, people felt like they were locked into whatever they were using today. And one of the things that we wanted to do is we wanted to make sure that the overall value that we provide with Fusion is unprecedented. And for us, the business model is one facet of the value. The technology is, of course, an important facet, but business model is an other important facet. And this is where Autodesk's core competency in its digital infrastructure, especially with business models and e-commerce, comes into play. So what we did is we took it all together, and we created a price point, which is very attractive for the broad market. It's USD 500, right? So that's the entry level price point for Fusion. And at this price point, you get a taste for all the value inside Fusion 360, everything from design to manufacturing. You can exercise all kinds of workflows in this big spectrum. Now the value -- the entry level value that Fusion provides is not going to be sufficient for a lot of people who are specializing in a specific activity. For example, a person is on the machine shop and he's operating, let's say, $1 million simultaneous 5-axis machine by Mazak, right, built by Mazak. But this person, the kind of functionality that we provide inside the $500 Fusion is not going to be sufficient because this person is saying, I need to build some really complex surfaces. And for them, we give them extensions, which is an add-on, additional functionality that they can layer on top. And why did they build extensions? The reason is because it comes back to the under the current of frustration. What we are noticing is that majority of the customers are feeling overserved. They get these softwares that are massive, very complex, difficult to use. And they feel like they're paying only for 10% of the things that they use. And that's why extensions are great for these kind of specialized personas because they get to pay for what they use. And they can pay as and when they need it, right? So it's not all the time like this ongoing subscriptions. And this is actually, again, become a really good way for us to listen to the market and iterate on our business model as well as technology in the spectrum of extensions we offer and the way in which we allow extensions to be used in the market.

Yes. Really helpful. So do you want to open up for questions? I want to hear what you guys have for Srinath and Simon.

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So generally, renewal rates have been ticking up over time and remained very resilient during the pandemic. I wouldn't want to sort of overemphasize it. And it's -- so it happens a little bit. It's not like a sort of wholesale shift. And actually, the trends have been very consistent. The renewal rates of our multiyear customers for multiple quarters have been very consistent as they were during Q1. So we're seeing no sign of that transition. I just want to sort of flag it just so people have the sort of full picture. So no, renewal rates have been strong and resilient across both cohorts.

Okay. One last question on extensions, and then I'd love to talk a little bit about competition. So we talked that -- you just kind of finished talking about how there's -- you get to provide value to those who need it for some very specialized functionality. And as we talked about, those extensions do come at a much higher price point than the $500 base price. How should we think about the penetration today of these extensions? I don't know if this is a question more for Simon. But how should we think about the penetration today and how that could evolve over time? You've been talking about a machining and generative design seeing greater uplift.

Yes. So I'll take that one. So it's early days, so it's still low is the answer, but growing very rapidly from a low base. But the -- just sort of add to Srinath's comments and put it in sort of Econ 101 terms. The reason why Fusion and then extensions are important is that we've essentially disaggregated the platform from the vertical functionality and the pricing. And what that allows us to do on the sort of opportunity side is to penetrate the new market in these adjacent verticals very rapidly with a low-priced point product. In Econ 101 terms, what we're doing is we're pushing out the demand curve. And then what the extensions allow us to do is to capture the value very precisely under that expanded demand curve for the vertical functionality that each individual user requires. That allows us to populate and then capture the value from the new opportunity as we're expanding into adjacent verticals. On the other side, what it also does is it gives us a path to migration for our Inventor customer base as well because a Fusion base plus the design extension would allow us to maintain value from our traditional design customers as well. So it's about opportunity, and it's also about migration. But the third thing is that compared to our peers who have a sort of vertically integrated stack, it's enormously disruptive because it makes it very hard for them to respond. The only way they can respond is by cutting price on their full vertically integrated stack, and that is commercially difficult for them, should we say. So it's a very, very disruptive model as well.

So let's just talk competition then, right? So historically, a lot of that strength has been on the AEC side. It's been more of a late comer even though it's been a number of years you've been on the design and manufacturing side. But a lot of your larger peers have been strongholds in the design space, right? And things like Inventor and Fusion 360, you've been gaining share. And obviously, with the move to the cloud, it's like this potential generational shift happening to help disrupt the legacy installed base from some of your peers. So I'd love to hear a little bit more about how you compete against others in design and manufacturing space, especially Fusion 360. One of your competitors based in Boston has a browser-based cloud product for the CAD market, and so they talked about their competitive deflation. So I'd love to hear broadly how you think about competition in the space in general and why you went against Onshape in particular?

So I'll just make a general and then Srinath can continue. But the reason why the position in design is important is because in the design phase, it's the source data of structured data, which then flows down the process. So the product you end up with, the data originates in the design phase. And the reason that's important is if you have the source data and then you can connect the source data through the different workflows, which is what we're talking about. That's why. And so -- and then that's particularly important is that when you take that structured data and move it into the cloud and then start applying AI machine learning to it, you can then -- and then apply it across the value chain, you can then make it multiples more valuable. That's why the position in design is so important and becomes more important as you start connecting a decent workflow. Do you want to talk about our sort of competitive.

Yes. Before I get started on the competitive side, I want to add to the points that Simon earlier made on the extensions and the progress with extension as well as Fusion 360. We covered this at Investor Day. We have a lot of rapid growth with Fusion 360 subscriptions, 53% CAGR over the last 5 years on the subscription side. And the monetization with extensions and also with Fusion has been working nicely as well. The billings CAGR, the equivalent billings CAGR is 100%, right? So 100% over the same time period. So that kind of gives you a sense for where we are right now in the journey of both disruption at the bottom end with subscriptions as well as monetization with extensions, right? So now coming to the question about competition, I want to go back to the point I made earlier. I will remind everybody the quote from Andy Grove. He talks about the benefits from innovations have to be 10x or greater in order for disruption to happen, 10x or greater compared to status quo in order for disruption to happen. With all respect to our competitors, CAD in the browser is great as a technology, but it is not the 10x improvement from status quo. It's the same CAD that you saw on-prem that's now in the form of a browser form factor. And that's not what the market wants right now. As I said right now, the pain points from our customers are all about bridging the data silos, bringing the disciplines together. And they want, of course, the collaboration in the centers. And more importantly, they want us to take the code of the system, all the nonvalue-add work out of the system. They want automations that can speed up innovation cycles. This is why Fusion stands out because we've been investing in all of these 3 factors, right? And generative design is the prime example of automation. And there will be more and more of those kind of automations that do make computer the collaborators, right, not the assistant.

Yes. Love that. What questions you guys have? Yes, please.

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Yes. Maybe just to repeat the question for the webcast. Just the pricing methodology for extensions and how does that compare to, let's say, other bundling like that Microsoft does with E1 and E3 and E5 suites.

Thank you. Right. So the extension price points right now are $1,600 to $2,000 in addition to the $500. So that's the range. As we introduce more and more specialized functionality, naturally, the price points will vary. But we don't want to get the price points to be too high where it tries to become more -- it becomes more like the traditional subscription software. So we'll continue to be, let's say, much more aggressive in how we think about pricing the extensions because our intention is to target the specialized usage and on-demand usage and extensions are co-termed with subscription. So to your other question about how should we think about extensions usage, so if you're using Fusion 360, $500 subscription for 1 year, usually you purchase the same extension for 1 year. You have the choice to purchase extensions month-by-month as well. But if you were purchasing annual, it will be co-termed with the underlying subscription, right? So the whole idea is you have flexibility and usage. You can either use it for a project or you can use it just like your underlying subscription. Now in addition to this, the generative design, we're also introducing what we call as outcome-based business model where a customer says, "I want to do a lot of iterations on a design." And they don't know when they're ready to progress forward with a particular design. So that's more of an open-ended kind of problem solving. So what we have done there is instead of making it pay as you go as in every time they click, we ask them for a payment, he said, okay, run the generative design algorithm. Let it give you the range of options. And once you're satisfied with an option and you want to move forward with the adoption for rest of the design, that's when you can submit the additional payment. So that's another way in which we are actually starting to make sure that the workflow is commensurate with the value we are delivering virtually.

Anything else? So I'd love to talk more about generative design. So I guess I've been covering Autodesk for over 3.5 years. And I remember my first Autodesk University, everyone was really jazzed up about generative design. Partners and the company is up. And it seems like adoption of generative design has really gone slower than I think all of us would have expected back in December or November of 2018, when I started covering the name. So I'd love to hear a little bit more about why has the adoption of generative design been slower than the promise because the promising is really powerful. And what are the things that you're doing today to help improve that? Again, I know you've made a lot of progress from both a capability perspective, supporting -- subtractive manufacturing, additive manufacturing. So I know there's product improvement, but what needs to happen to really get this to accelerate adoption in the installed base?

Yes. So I'll refer to another thumb rule. This is a thumb rule in technology. If you want to introduce very disruptive technology which is likely to become a smash hit, you want to introduce a lot of new technology, lots of technology change but very minimal to 0 behavioral change. That's when you get that magical combination where you've got a really big hit. And with generative design, I believe -- I firmly believe that we have checked the box on fundamentally innovative technology, but they are not quite there yet on the behavioral change part. I think they've moved the cheese too much, the generative design. There's a lot of new learning required for people to pick up generative design. And it's also not for the mainstream audience just yet. So this is an area where we're continuing to invest. We are investing in improving the experience, making it more accessible for the mainstream person. So right now, generative design is for the specialized people who understand simulation, for example, what we call as the advanced math geeks, right? So it's for those kind of disciplines. What we have done with generative design is they've started to lower the barrier. They're introducing new ways in which you can use generative design instead of going through all the bells and whistles of like setting up the generative design problem. While you're doing the design, the generative design works in the background and starts to give you suggestions in real time. And that I think is one example of how we are starting to bring it closer and closer to mainstream. So more work is required on this. And so stay tuned. At this AU, you'll see a lot of great progress, but this will be a multiyear journey.

Really helpful.

Sorry, one other thing on the generative design. Another aspect of generative design that needs to change as well is the final output from generative design needs to become more accessible for volume production. Right now, the shapes that come out of generative design are, let's say, organic shapes or very soupy type of intricate designs. And they're usually set up for 3D printing type of operations. So what we've been doing is we're investing in improving the generative design so that the final shapes are shapes that can be used for injection molding or for subtractive machining. And that's when you can get to the actual volume production that the mainstream manufacturers care about. And again, that will be one more way in which we can move generative design closer to midstream.

Super helpful. Maybe just on Upchain for a minute. So this is an acquisition you guys made about a year ago. It's a cloud-based PLM solution. Help me understand why we acquired this. And because you did have assets with your existing Autodesk PLM and PDM solutions with Vault and Fusion 360. So what's the strategy to why? And what's the integration strategy going forward?

Right. So first and foremost, the thing that our customers are asking us is collaboration in the centers. They want us to put data at the center so that they can connect their entire organization. And when I say organization, I mean the entire value chain. And what we find in our customers' environment is they're working with a lot of heterogeneous systems. They're working with not just Autodesk products but a lot of competitive products, and they want a system that just works and puts data at the center. We have Fusion 360, we have Vault, but we were lacking this kind of collaboration capability that works in a heterogeneous environment. And that's where Upchain comes in. Now Upchain also gave us an additional technology benefit, which is the underpinnings of tomorrow's data infrastructure. Today, if you think about our cloud data, it is still sitting in files. And we are in the process of disaggregating all the data and making it more and more fine grade so that we can create that open and extensible system for third parties to start building on top of what we have in Fusion 360. And this is also very important for this coexist strategy that I was talking about. The customers that we speak to are saying very clearly, "Do not give us yet another system that we have to rip and replace." They are tired of vendors coming to them and saying, "Look, you have to invest with us, standardize on us." And that means that we have to take over everything that we have. What they want is a system that just plugs and plays and can coexist within the current systems and also interop with current systems. And that's where granular data is going to be very, very important, right, granular open and extensible data that can give us the -- interop with the existing systems is going to be very important.

Really helpful. We have under a minute left. I don't know, Simon or Srinath, if you have any final points you want to leave us with today?

So I have one final point. I think we covered a lot of ground, right? But one thing that we didn't talk about is what does the future look like? And the future for us is all about creating the bidirectional loop between humans and machines and of course, all the activities that are adding between all this. And the bidirectional loop is going to unlock the next big frontier, which is all about autonomous activities, right? So today, if you think about the journey, as I said, we are in that phase where we have the computer-assisted type of work. And as we introduce more and more automation, these automations are going to remove more and more nonvalue-add work, and that's still not enough. We need to build enough intelligence in the systems with whatever activity is happening in the real world, and what's happening with the software is always in sync. And that's what the industry calls is digital twin. And for us, the holy grail of digital twin is this complete autonomy. First step is, of course, to be able to predict any kind of failures. And once you're able to treat failures, then you're going to autonomous system, which is able to self-correct based on whatever is the badness that you're seeing in the system. So that's what you can expect. You can expect to continue seeing progress with Fusion 360 on this path from where we are to predictive and from predictive to autonomous finally.

Srinath, Simon, thanks so much for your time. Everybody, thanks so much for your time today. Have a great rest of the conference.