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

Welcome to day 1 of the Barclays Tech Conference. Honored to have with us the team here from Autodesk. We've got Amy Bunszel, EVP of the AEC Solutions Business at Autodesk. And we've also got Simon Mays-Smith, Head of Investor Relations. We've got about 30 minutes together. So I'm just going to take about 28 minutes to read an investor disclaimer. So we're going to spend about 20 or 25 minutes doing some fireside chat, which I know is going to be fun to this team. And then we'd love to make this interactive. So if anyone's got a question, just pop up your hand, we've got a mic runner in the back. So maybe with all of that as a framework, thanks so much guys for being with us here and take it away, Simon.

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 materially from these statements. Okay. There we go.

All right. Let's get on to some forward-looking statements here. Simon and maybe just to start. Before we dive in with Amy, can you just recap a few of the more important points that you just wanted to take away from the last earnings call, so we're just all on the same page, just to level set.

Yes. I mean I think the bottom line is the business is in good shape. You can see that up and down the P&L, balance sheet and cash flow, we raised guidance, so that was good at the midpoint. The momentum of the business, while still being held back as it has for many quarters from a new business continues to be -- grow at a decent clip. We're executing well on the new transaction model and some of our longer-term strategic initiatives to drive growth with things like AI, et cetera, we're making good progress on. and also some of our optimization initiatives as well, we're sort of making good progress on. So all in all, in good shape in an uncertain world, we're fitting in decent shape.

Yes, absolutely. And I'm sure we're going to dig into a lot of components of that against your point raised guide. So Amy, maybe I'll do some more fun stuff with you. I really want to dig into the A, the E and the C kind of separately, right, because I think each of them has got some really interesting drivers, maybe starting with the A, right, with architecture with really the industry-leading tool Revit. So maybe the question is, as we think about the health of the underlying market here and given all the time that you spend with customers, what are you sort of hearing about the health of the end market in terms of their own businesses, their willingness to hire and therefore, willingness to invest in more seats of Revit?

So the health of the underlying business is still very good. I think one of the -- a couple of important things that are driving that is infrastructure projects are still very well supported. And a lot of architects have to work on those projects as well. And when we think about the mix of projects changing, there may not be new office towers going up in some cities like San Francisco, but there's certainly lots of work still happening around renovation and retrofit to make the existing real estate more palatable to future concerns and then also hospitals, stadiums, lots of other projects. So our customers are really resilient in their ability to kind of move around. Where they are struggling the most is to get enough people to really work on some of the backlog that they do have.

You're not the first to say that.

No. I mean it's an interesting one, but it does drive more innovation and more investments in digital technology. So they can't afford to have some of the productivity gaps that you have when you don't have fully integrated processes and people working together off of common data stored in the cloud. So that's driven actually more investments to keep their current people as productive as possible so they can get the work done.

That's interesting. I mean, seats is obviously one part of the growth formula, right, that we talked about. But I'm curious, there's always been additional value added to the tool over the years that Revit has been a leader in the space. I mean -- can you just talk about how you've been able to drive more value for Revit customers as well? And how much more room there could be?

Yes. So it's a question I get a lot because it's been quite a while with Revit and there is still a lot of space. It's been a little while, but the last time we had an investor conference, we talked about even the most mature markets, hovering like just above 50% with their BIM adoption. So there's still a tremendous opportunity for people to move off of traditional 2D workflows and into BIM. And some of that is driven by governments. There's a couple of new mandates Spain and Ireland, new BIM mandates, so that will mean more public projects being done using Revit, which will drive more knowledge in the ecosystem about that, which will mean the private projects also start adopting Revit. So I didn't answer your question about value, but let me do that. So there's a couple of ways we add value. One, there's things like our collaboration tools, which add a ton of value, but we also do charge extra for those. So that's kind of -- but they're so valuable, customers are quite willing to pay.

Nice cross-selling.

It is. It is. And the other we're doing is just really making -- we continue to make the product faster, work on the kind of standard customer wish list, but the big investment we're working right now is on data. So how do we take the Revit data, which has typically kind of been locked up inside of Revit and publish it into docs and make it really usable in a very granular way across the customer's ecosystem. So if you think about connecting that with all the data they have stored in SharePoint or Teams, most of our customers have those environments. And also across the life cycle, so this is where them investing and getting value there helps us build AI capabilities and continue that sort of virtuous cycle of adding value.

Yes. Interesting. Maybe just to put a bow on the architectural side, Simon, maybe for you. I mean, a lot of the investors here in the audience, and I mean, even me, we look at the U.S. metric that disclose the Architectural Billings Index, or ABI. Curious, I mean, what do you think about that metric in terms of its usefulness as we think about the health of your end markets?

I mean, generally, there's no 1 metric that kind of encapsulates Autodesk. So it's one of a bunch of metrics. And remember, we've got a big business outside the U.S. which ABI is sort of less useful for. But the -- so yes, it's for itself, but as you can see from the performance of our business, if you map against the ABI, it doesn't track it very closely. So yes, it's an input and it's sort of really a function. And also the other thing is the subscription business model is that even if things get -- people love subscription business models when things slow down because they slow down slowly. The same thing is true when things speed up, though, which is when things speed up, the subscription business model speed up slightly as well, right? So we have enormous breadth and depth of diversity of the business and Amy just mentioned one, yes, fewer downtown off with blocks, but more infrastructure, more data centers offsetting it. The only thing we really care about is stuff getting built. But yes, ABI is one of a large number of inputs. There's no one thing that will magically tell you how we're doing.

Absolutely. Amy maybe we can move over to the E, right? And in terms of Engineering, right, really specifically civil engineering. And maybe a similar question, I mean, Autodesk has its Civil 3D offering, has had it, right? But I think this market is just a little bit more competitive than the architectural side. So maybe the question is which vendors do you see here the most and what do you feel like Autodesk is doing to differentiate itself from that competition?

Yes. So certainly here in the U.S., Bentley has been a player in this space for a very long time. And globally, it's much more fragmented. There isn't kind of that sort of more non-English-speaking countries, I'd say there's not that single -- that one vendor that can serve them all. So in many ways, what we're doing is we're taking -- we have amazing engineering tools, we have had for a long time, and now we're combining them with our Construction Cloud, and we're able to provide a modern data environment for these customers that helps understand both design and construction and operations to some extent, which is really what the DOTs are, right? They're the owner. And so they get involved in all aspects of the project. And in Pennsylvania, where we had a very significant win against Bentley. That was an investment in data and investment in a modern data management solution with Autodesk Docs and Build.

Yes. Yes, absolutely. I think one topic that comes up often when talking about the engineering side of AEC, right, is infrastructure spending from governments. And Simon, please feel free to chime in here because I know you get this question a lot as well. Maybe we could focus on just sort of the U.S. side of that, just given the upcoming change in administration. Can we just talk about how important infrastructure spending is for your AEC business? And how do you feel about that looking forward?

Yes. I mean, so the truth answer is it's tough to precisely measure because if you have a customer say like AECOM, they will do a bunch of stuff across infrastructure, but relatively commercial and so they'll do hospitals and stuff like that. And they don't say, "Oh, yes, we're using Revit today to do infrastructure" and tomorrow -- so it's tough to sort of precisely measure is the answer. And in terms of sort of the administration, the structural reasons why more stuff needs to be spent on infrastructure is because it's all falling down. And so most of the stuff that's there was designed to last 50 years, and it's 80 years into a 50-year life span. And that problem is becoming more acute because of climate change because the wind is blowing harder, you're getting dryer, hotter, wetter, whatever it is than it was designed for. So that's the sort of problem, and that's not going to change. Typically, voters tend to be quite happy when the bridge gets repaired and they can stop having delays getting to work every day. So it tends to have a broad sort of bipartisan support for sort of infrastructure spend. And then on the sort of climate change side, I mean, I think you can either spend a very large amount of money, but less to reduce carbon going into the atmosphere today or you're going to have to spend a lot more than that retrofitting the entire estate and the entire estate is much, much bigger than the new estate being built. And so if you don't put less carbon in the atmosphere today, you're going to have to rebuild and reinforce the entire infrastructure that currently exists, and that's a far bigger number. So in net present value terms for us, obviously, that's going to be better for us in the long term. I think as a human being, I'd prefer to take the cheaper option and as a taxpayer to take the cheaper option to spend a bit less now.

And what's been interesting too, though, is even before the spending -- any of the spending was released, the business has been growing. So the infrastructure bill is icing kind of help the industry grow faster, do better. One of the great things about the bill is it insists in many cases, on digitization, so that it's the water treatment plants or other infrastructure projects, so we don't want to get in the same situation 50 years from now where we haven't had the digital tools to do the predictive maintenance and all those things. So it's kind of a -- it's a win-win. It's -- yes, we need to rebuild, but you need to rebuild in a modern way. And so it just gives more momentum to an already growing business.

Yes, absolutely. So we talked about A, E, move to the C, which has been a really fun segment to talk about, right, over the last few quarters. And specifically because, Amy, I think it's been a segment that everybody has been impressed to see faster than average growth, right? You're really faster than some of your peers. And so a lot of us remember when Autodesk acquisition of PlanGrid to really double down on this market, others like BuildingConnected as well. Maybe the question for you is how has that construction portfolio sort of evolved over the last couple of years versus the competition?

Yes. So we've matured a lot over the last couple of years. We bought -- we've purchased quite a bunch of different tools plus we had some organic investment. And with the introduction of Autodesk Construction Cloud and Autodesk Build, we've done a couple of things. We've established really a very strong brand for Autodesk in construction. We used to be the design company, right now we're the design and make construction company. And we've also matured that platform quite a bit. And so what we hear consistently from our customers here is that we've been very steadily progressing on their needs, and so they have a lot of confidence in the product. And you're seeing that in a bunch of competitive wins that we've had lately. So there were 2 top construction firms in the U.S. in the top 100 of the ENR 500 who in very detailed evaluations picked Autodesk. So Power Construction was one of those. And one of the reasons why they picked Autodesk was the connectivity across the life cycle. So being able to connect with design. And by doing that, that helps them ensure better cost and schedule outcomes and sustainable outcomes for their projects. And so that was why they felt really confident in investing in Autodesk. And then in France, we had Bouygues which is a top 10 construction firm in Europe. They're already a big design customer of ours, but expanding their investment to do more in construction as well.

That's great. Those are some great wins and I mean the way that I read that is we've got a rising tide type of market, but we've also got better execution, right, in that Autodesk Construction Cloud or ACC. Maybe just a follow-on to that line of questioning. I mean a lot of folks have again noticed that difference in growth of ACC versus other players in the space. And I speculated -- we've speculated that it's because of Autodesk's global reach, right? I mean we're over a 40-year-old company. We've been kind of working internationally for the better part of those 40 years. Also maybe there's some flexibility in pricing there as well compared to competitors. How do you think about some of the factors that are setting Autodesk apart from your competitors? Do those kind of play into that mix at all in your view?

Yes, so our construction momentum has been very good and very consistent all year. We haven't seen deceleration in the revenues of our business. And as we also said is that in terms of new logos, we doubled in Q3, it was doubled year-over-year. So just in terms of relative momentum compared to certain other peers, obviously, the wind -- we have the wind at our back. I don't think we feel it's kind of -- the reasons why we're making momentum is not new news. It just may be showing up away from us is that the business has been growing and continues to grow very nicely for the reason Amy said is that we've been investing, consolidating into a unified stack with Build. And then doing what we intended to do, which was starting with our largest integrated design build customers, extending our relationship, building out our pre-construction portfolio, which is the connected tissue between design and construction and then using our channel partners, which we lit up about 2 years ago to start moving into the low end of the market. And what that allows us to do is then to squeeze into the mid bit of the market where certain of our peers are. And so what you're seeing us now is seeing the success of us beginning, which we weren't really able to do before the launch of Build. We only launched Build 2 years ago. And so the interesting thing about those 2 wins that Amy said is that 3 years ago, we wouldn't be able to win them. And so -- but now we can. So the fact that the 2 big bits of business, we won both of them and they were direct head-to-head is pretty significant.

Yes, absolutely. I want to pivot a little bit to the reseller to agency model shift, right, which I think is very topical right now, certainly from a financial perspective. And Simon, I know we're going to talk about the mechanics of that here in a second. But Amy, maybe for you, I mean, just as a business leader, how important is that ability to have a more direct connection with your end customer as opposed to kind of through the reseller, right? Because that's really the fundamental reason why we're doing this shift, right? So I'm curious how you think about that before we talk about some of the mechanics.

Well, I mean, our whole goal is to serve the customers better, right? And we do that when we have better information. And obviously, we have really close relationships with all of these named accounts, but we also have a very long tail of the business that has been kind of opaque to us. And so this allows the product teams and of course, the rest of the company to have in this day and age, have much better fidelity on information about what the customers are doing, what they might not be doing, where we can support more growth and adoption of our solutions within the product, as we think about certain parts of our business, we're trying to drive product-led growth, like a lot of that involves really being in touch with the customer and what they're doing and being able to offer in-product guidance, self-serve guidance on other systems. And so I'm really excited because it will give like all of our customers kind of a voice in what's happening because they'll be known to us in a way they haven't been in the past.

Yes, absolutely. Maybe the follow-on for that for you, Simon, is, can you just maybe -- I mean we started in the Americas, it's been a very phased approach geographically. We started in the Americas, then we've gone to Europe. I think relatively recently, we started in Japan. You correct me there if I'm wrong. But I guess maybe how those transitions going from your perspective? And should this transition be largely done from an income statement perspective by this time next year?

The short answer is no with an asterisk but the -- to that last question but the -- essentially, what we've done is we have sales and marketing inefficiency, we know that. And -- but we -- and we're going after it in a way, as Amy was just talking about, in a way that grows revenue. So by lighting up our customers in 2/3 of our business, where we have no visibility, we can serve them better, i.e., improve renewal rates, and we can sell them more stuff because there's going to be pockets of stuff where we can -- where we're not servicing them. So we will have bigger, deeper, broader, more strategic relationships with our customers. And then on the sort of cost side, at the same time, because we can walk and chew going at the same time, we can service that revenue with lower unit costs. And there's really sort of -- but you have to do that in a structured way. So firstly, you have a build phase, which is what we've been doing for the last 3 years, which is we've been building our own billing platform. You then have an implementation phase, which is what we've been doing, talking about for the last year, where you're transitioning to the customers of that billing platform. And then you have what we call the sort of optimization phase where you then start realizing those benefits in terms of -- and some of those things is sort of stock and flow. Some of these things happen at a given point, and some of those things happen naturally over time. On the cost side, we sort of talked about sort of two buckets of things, and we talked about this in our Q3 opening commentary. One is around the sort of number of human touch points to get **** done basically. So we talk about things like self-serve and co-terming and using automation to enable stuff to happen more quickly. The benefit of that is you have happier customers because they get to where they want, benefit for us is -- sorry, is that we have fewer human touch points to get to that point. And then the other side is around able to take -- remove some of the and sort of insurance that we put in place during transitions. So we've done a bunch of transitions, to subscription, to annual billing, to now direct billing -- sorry, annual payments from multi-annual payments. All of which individually could have sunk the company if we got them wrong. If we tripped up, we would have had a massive business continuity issue. And so we put in processes to make sure that we didn't screw it up. And to be honest, it's gone pretty well. Now that we have direct sight at the end of the customer, we can start removing some of those insurance policies because we can see what's going on with the end customer, and we can remove it with less risk, some of those insurance policies. So really, those are the sort of 2 buckets of opportunities that we see ahead of us.

The other thing I'll add is the channel partners are still really, really important to us. And by automating a lot of this and doing that ourselves, it frees up capacity for them to add more value also to the customers and for them to get money doing ERP integrations, which makes the whole portfolio stickier to help the customers figure out how to leverage the granular data that we're producing to do more deployments of Docs or Build or Revit collaboration tools. So there's a big opportunity for them. The other one is they often build custom solutions on top of our platform. That's 1 of the great things about having an open platform is it allows people to fill certain niches that we might not fill. And that, again, makes the whole ecosystem kind of more stickier as well.

So this is a really important point. I just want to tag on that thread because it's important. And so this is what we talk about on sort of marketplace ecosystem is your customers and channel partners building on top of you, which is what Amy was talking about. There's 2 key power cords of that. One is how money flows around the system. That's why the new transaction model is important. The second one is data. And that's why the work that we're doing on the data granularity that Amy was talking about earlier is important. But just to give you an example -- a specific example of why it's important is that the -- we talked a couple of years ago about a customer who built a custom application on top of Fusion, not [indiscernible] business, but the logic applies, and they use that customer application for their sales teams to go out to the customer to agree customizations with the customer. And then they use Autodesk Platform Services to beam those specific unique products back to the factory floor to get them printed. So for the customer, what it allowed them to do is to do mass customization, so charge more, but keep the efficiency of scale. What it meant for us is that the paying customer in that example was the sales team, not a traditional Autodesk customer. So when you unlock the data and customers build applications on top of that, it opens up more opportunity for us within the customer base.

That's interesting. That's really interesting. I thought you had some really interesting points there just on sort of the -- some of the costs that you've built up, right, as you've gone through these multiple transitions and some of the efficiency that you can see going forward. So I think that's just a natural segue into the discussion on margins. I think that Andrew talked about a couple of quarters ago, really reaching that 30% to 40% target operating margin, I think a year earlier than expected, if we sort of adjust for some of the impacts of the agency transition. And I think, again, you touched on this, but I just want to make sure the question is asked. Is there anything that you want us to think about when we model margins next year as you have potentially more efficient cross-sell, right, which we talked about, but also a bigger impact from that model shift.

Yes. And it's really -- and by the way, the reason we haven't given -- well, we've given cash flow guidance, obviously, but we didn't give revenue guidance. So we can't give part revenue guidance without giving it all because if we've given you just the tailwind for the new transaction model to revenue, then it was likely that people would apply the wrong margin percent of that and profit dollar estimates would end up in the wrong place and we back down to rabbit hole. So we either give all of it or none of it. And because I've been doing this for some time, typically, you don't give entire guidance in the previous year for the next year. So the -- but we will give you more, obviously, in February what we're expecting the year to look like. But the sort of math is on the sort of margins is the way I'd like to think about it is sort of old money and new money. So old money is essentially the view that we put on Slide 6 in our deck, which shows you what's going on, excluding the impact of FX and the new transaction model. So the underlying margin improvement that we're driving in the business. And you can see that we've made good progress on that, as you said, hitting our fiscal '26 targets a year early this year. And on that basis, we've said that margins would improve on that basis at constant FX on well, '23 FX rates and excluding the new transaction model. So that's what's going under the hood and in real -- in the real economy, should we say, to margin and profit dollars. And then you have to overlay that on top of that a model for the new transaction model because the new transaction model shifts an accounting change, where pre-revenue cost, what's called contra revenue is shifting and there's about $600 million of it in total is shifting from pre-revenue cost into sales and marketing. And so as that cost shift down, that has an effect. So you get higher revenue, higher cost, all else being equal before you optimize, profit dollars are the same and cash flow dollars are the same, but it obviously has an impact on the margin percent. So you need to -- when you're thinking about the margin percent, you need to overlay so you haven't need to have an underlying thought of what's going on underlying and then overlay that modeling effect of just geography effect of where that cost is being recognized.

Yes. No, absolutely, absolutely. I mean, Simon, to your point, I mean, the new transaction model has definitely brought focus right to the margin potential of Autodesk. But I mean, one of the comments that the team has made is the target here is to get to some of the GAAP margins that are among the best in the industry. Expand on that to the extent that you can.

So I'm not going to sort of precisely answer. I mean I guess that's our shorthand of really saying a couple of things. One is that we know that our sales and marketing costs are not as efficient as they could and should be but we have been -- we didn't suddenly realize that 6 months ago to pick a random date. We realized it 3 or 4 years ago, and you know that because that's when we started building the new billing platform to go after that inefficiency. So this has been in flight, but we're doing it in a way, as we talked about earlier, that allows us to grow revenue and lower the unit cost. So it's a higher NPV. So it takes a bit longer, but it's a higher NPV sort of process. So I think we feel sort of good about the sort of progress that we're making on that. The second thing to sort of think about is that we are sort of communicating when we're talking about GAAP margins, the other thing is that our stock-based compensation has been too high. There's a bunch of reasons which I'm not going to bore you with here. Why -- mechanically why it's gone over the last 3 years, which are also now resulting in mechanically coming back down again. So it's on a good path. As you can see, if you compare the guidance for this year versus last year, it's coming down pretty rapidly to a much more sensible level. So we're making good progress on that, but it's really just a signal that we have heard feedback from investors on stock-based compensation and that we're making progress on that as well. And then the final thing, just to sort of flag is that the -- and this is obvious, I guess, as different companies have different go-to-market motions. So to pick a few, Cadence and Synopsis, wonderful businesses, but they have very few customers relative to us. So that means they just have a different sales and marketing intensity. Again, Adobe, wonderful business, but they have a very big self-service business, direct business that has very little sales and marketing attached to it whereas our business is much more of a sort of technical sale. So you really -- all scale sort of software businesses, different go-to-market motions, which means they just naturally have different sales and marketing intensity that some of the investors need to think about that you're comparing apples with apples.

Yes, absolutely. Absolutely. We've got about 5 minutes left, and I think this is an important topic. So just before I move on to the last couple of questions, any questions here from the audience? From a -- I mean, a very big player in sort of the future financials of the business, of course, will be the CFO. And congrats, you hired Janesh Moorjani as Autodesk's next CFO and certainly look forward to having him here at this conference next time -- this time next year. And I think that based on everything that both of you have said, right, I mean, operational rigor and profitability, I think, are very much top of mind for Autodesk right now. Maybe talk to us about what Janesh brings to the table to help further those. I mean, both as a member of the finance organization and maybe as a member of the business.

Yes. I mean, so I haven't met him. So I can't give you any sort of personal outlays. But what I can tell you is this is that as Andrew said right at the start of this process is that we're hiring, looking for somebody who has experience of driving efficiency at scale. And so if you look at -- and this is something we dug into during the interview process. If you look at his experience, improving margins at Elastic and also driving efficiency at some of his previous roles, he just has a lot of experience doing that. So that was kind of the sort of key thing we're looking for. What he also has is I would say, sort of side order benefits is he has worked out and has sat on the board of PTC. So he kind of knows our industry. So it's not going to be completely unfamiliar territory to him. And he also has -- and has the skills to prove it, experiences of consumption models. And I think we sit there looking at Elastic and going from 10% to 50% consumption is really f****** hard as an operator because consumption is hard to predict. And so -- but the truth is that with AI workloads, particularly high compute AI workloads, if you try and put those through a subscription price point, you're going to blow a hole on your margins. So you're going to have to do more consumption as you have more workloads. So we're hoping that some of those scars and learning points that Janesh has had and that experience will prove a useful sort of guide point for us into the future.

That's interesting.

And for me, as a person is going to build these potential consumption offerings. Having a partner who kind of understands that business and can work with my team on when and how, and because we are going to continue to build some high value, high compute things. And we need to make sure that we're getting fairly compensated for that value as well.

Yes, absolutely. Maybe last couple of questions here, Amy, maybe just to go back to you, just again, knowing that you spend a lot of time with customers. We talked about ABI before, we're talking about rates. I mean there's just so much sort of debate about what the macro will be like in 2025, what do you hear from the ground with customers? How are they feeling about their willingness to invest? To hire? Just putting aside everything that we talked about in terms of the model, what is the underlying sort of feeling on the ground that you sense?

I think it's very optimistic. And the thing that excites me, and we didn't get to talk about AI, which is completely fine. But they want the benefits of what AI can bring to them, and they're really willing to collaborate with Autodesk to figure that out. And so for me, I'm really excited, and that's going to help them get the productivity they need and enable them to innovate more. And so they wouldn't have to be as dependent on some of the workforce challenges that they have today. So it's pretty exciting in that regard. And data, they're very, very, very excited about better access to data and using the data in more effective ways. So that makes me very happy.

Is your question a macro question? I mean I guess if it's a macro question, no change from what it's been for some time, which is they've got good backlogs. They've got a bunch of stuff they're working on. Labor shortages, still sort of pockets of weakness, there's not a lot of downtown, office blocks being built. So it's kind of -- it's not 1 and it's not a 10 in terms of sentiment, sentiment is somewhere in between, and it's been pretty consistent for many quarters.

Yes, absolutely. Simon, maybe the last question for you in the last 30 seconds. Is the question I always like to ask on our callbacks, which is anything that we didn't ask that we should have? Any other last message is that you want to make sure this audience walks away with?

So depending on how long I've got, I mean, a couple of things. One is just -- in an uncertain world, there are a bunch of things either mechanical or in our control that Autodesk is working on. So you've got a mechanical tailwind from the new transaction model to revenue that's going to turn up, whether we like it or not. You've got a mechanical rebuild in the free cash flow from the transition from multiyear upfront to multiyear billed, annual which is happening and it's going to turn up whether we like it or not.

To be clear, we like it.

Yes. Yes. Well, you didn't like it before you like it -- we're in the phase of like it -- and we also have a bunch of work we're doing to improve the efficiency, not just in the new transaction model, but also in terms of the platform efficiency, in terms of our technical debt, in terms of our back office systems and stuff to drive the efficiency of the company while also allowing us to invest for the exciting stuff for the future in AI and stuff like that. So in an uncertain world, and it seems to be getting more uncertain given the certain administrative changes that are going on rather than less. Autodesk is a good place to be.

I couldn't think of a better way to end. Amy, Simon, thanks so much for being with us here today.