Thank you for standing by, and welcome to Autodesk First Quarter Fiscal 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's call may be recorded. Should you require any further assistance, please press star zero. I would now like to hand the call over to your host, VP, Investor Relations, Simon Mays-Smith. Please go ahead. Thanks operator, and good afternoon. Thank you for joining our conference call to discuss the first quarter results of our fiscal 2023. On the line with me are Andrew Anagnost, our CEO, and Debbie Clifford, our CFO. Today's conference call is being broadcast live via webcast. In addition, a replay of the call will be available at autodesk.com/investor. You can find the earnings, press release, slide presentation, and transcript of today's opening commentary on our investor relations website following this call. During this call, we may make forward-looking statements about our outlook, future results and related assumptions, acquisitions, products, and product capabilities and strategies. These statements reflect our best judgment based on currently known factors. Actual events or results could d iffer materially. Please refer to our SEC filings, including our most recent Form 10-K and the Form 8-K filed with today's press release for important risks and other factors that may cause our actual results to differ from those in our forward-looking statements. Forward-looking statements made during the call are being made as of today. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Autodesk disclaims any obligation to update or revise any forward-looking statements. During the call, we will quote several numeric or growth changes as we discuss our financial performance. Unless otherwise noted, each such reference represents a year-on-year change. All non-GAAP numbers referenced in today's call are reconciled in our press release or Excel financials and other supplemental materials available on our investor relations website. Now, I will turn the call over to Andrew. Thank you, Simon, and welcome everyone to the call. Today we reported record first quarter revenue, non-GAAP operating margin and free cash flow, fueled by strong demand and a robust competitive performance. The structural growth drivers for our business that were critical to our performance during the pandemic, such as flexibility and agility, continue to support and propel us during elevated macroeconomic, geopolitical, and uncertainty. These growth drivers further cement the important role we play in our customers' digital transformation and increase our confidence in our strategy. Our steady strategy, industry-leading products, platform and business model innovation, sustained and focused investment, and strong execution are creating additional opportunities for Autodesk. By accelerating the convergence of workflows within and between the industries we serve, we create broader and deeper partnerships with existing customers and bring new customers into our ecosystem. A prime example of this is infrastructure. The combination of Revit, Civil 3D, Navisworks, Autodesk BIM Collaborate Pro, InfraWorks, and more recently, Autodesk Construction Cloud and Innovyze, delivers industry-leading end-to-end capabilities in transportation and water, from planning and design to construction and operations. Our customers can extend those capabilities through our partnerships with Aurigo in capital planning and Esri in geospatial mapping. This is important because governments and asset owners across the globe are investing growing amounts in next-generation infrastructure to meet the societal and environmental needs of the next century and are retooling now to do it. That equals opportunity for Autodesk. For example, in the first quarter, we signed our second-largest EBA ever with a large global infrastructure company in a deal that included Innovyze and Autodesk Build for the first time. Across Autodesk, we are focused on unifying more common data and fluidly connecting more workflows in the cloud in ways that delight our customers and lead them to new, more efficient, and more sustainable ways of working. By doing that, we will move beyond carbon neutrality for ourselves to transform our customers' carbon footprint. Together, we can design and make a better world for all that advances equitable access to the in-demand skills of the future. Before I turn the call over to Debbie to take you through the details of our financial performance and outlook, I want to update you on important decisions we made about our business in Russia. You will recall that the invasion of Ukraine occurred hours before our last earnings call. In light of the conflict, we halted all of our new and renewal business in Russia on 3 March 2023. We strongly believe this decision was the right thing to do, and that it is in our long-term interest, even though it comes at a cost, which Debbie will detail in a moment. Of course, our immediate focus remains on the safety and well-being of our employees in the region, and we continue to monitor the situation closely. Beyond the immediate impact in Russia, other leading indicators trend positive. For example, usage remained steady in Europe during the quarter and grew in America and Asia Pacific region. BuildingConnected bid activity again hit record levels, and our partner channel remains optimistic. This strong momentum sets us up well for the remainder of the year. Debbie, now over to you to take everyone through the details of our quarterly financial performance and guidance for the year. I'll come back afterwards to provide an update on our strategic growth initiatives. Thanks, Andrew. first quarter was a strong quarter, driven by broad-based strength across products and regions. If we compare the revenue result versus guidance, the outperformance was due to that strength as well as the upfront revenue in a large EBA, which we had forecasted would close later in the year. Total revenue grew 18% and 17% in constant currency. By product, AutoCAD and AutoCAD LT revenue grew 21%, AEC revenue grew 17%, manufacturing revenue grew 14%, and M&E revenue grew 24%. By region, revenue grew 24% in the Americas, 17% in EMEA, and 10% in APAC. Direct revenue increased 22% and represented 34% of total revenue, up 1 percentage point from last year due to strength in both enterprise and e-commerce. Our product subscription renewal rates remained at record highs, and our net revenue retention rate was comfortably within our 100% to 110% target range. Billings increased 16% to $1.1 billion, reflecting robust underlying demand. Total deferred revenue grew 12% to $3.7 billion. Total RPO of $4.7 billion and current RPO of $3.1 billion grew 11% and 10% respectively, reflecting strong billings growth and, as I flagged last quarter, the timing and volume of multiyear contracts, which are typically on a three-year cycle. Turning to the P&L, non-GAAP gross margin remained broadly level at 92%, while non-GAAP operating margin increased by 6 percentage points to approximately 34%, reflecting strong revenue growth and ongoing cost discipline. GAAP operating margins increased by 4 percentage points to approximately 18%. As Andrew mentioned, we delivered record first quarter free cash flow of $422 million, up 34% year-over-year, reflecting strong billings growth in both fourth quarter and first quarter. With the broad equity market pullback in first quarter and our strong cash position, we again accelerated our share repurchasing during the quarter. We purchased 2.1 million shares for $436 million at an average price of approximately $212 per share, which contributed to a reduction in our weighted average shares outstanding of approximately 2 million. While our capital allocation strategy remains unchanged, you can expect that we will continue to invest organically and inorganically to drive growth. Over the last two quarters, we've proactively used our strong liquidity to accelerate repurchasing and will continue to be opportunistic in doing so when market conditions allow for it. Now, let me finish with guidance. The overall headline is that the underlying business conditions that we've been seeing are unchanged, save for Russia and the continued strengthening of the US dollar. Our business continues to perform well and to post top-line growth ahead of our peers. As you can imagine, we're keeping a close eye on the geopolitical, macroeconomic, and policy environments. Against that backdrop in first quarter, renewal rates remained strong, multiyear billings were in line with our expectations, and we exited the quarter with strong momentum. As we look ahead, and as with previous quarters, we're assuming that market conditions in fiscal 2023 are consistent with recent quarters. The decision to halt our new and renewal business in Russia had a direct impact on our outlook. Billings decreased by approximately $115 million, revenue by $40 million, and free cash flow by $80 million. Of course, we're not satisfied with that outcome, and we'll work hard to mitigate the impact by accelerating our channel evolution, customer retention, and digital growth initiatives, and by doubling down on early successes from recent acquisitions like Innovyze. Beyond Russia, the US dollar continued to strengthen during first quarter. While we benefit from a robust hedging program, the pace of FX volatility has been incredibly rapid, and it's having an impact on our fiscal 2023 outlook, reducing billings, revenue, and free cash flow by approximately $80 million, $20 million, and $50 million, respectively. Bringing these factors together, we expect fiscal 2023 revenue to be between $4.96 billion and $5.06 billion. We expect non-GAAP operating margin to increase 400- basis points year-over-year to approximately 36%, reflecting one point of impact from removing Russia from our forecast. We expect free cash flow to be between $2.0 billion and $2.08 billion. The slide deck on our website has more details on modeling assumptions for second quarter and full year fiscal 2023. The volatile global environment has reinforced the structural growth drivers underpinning our strategy, give us confidence in our long-term growth potential. We continue to target double-digit revenue growth, non-GAAP operating margins in the 38% to 40% range, and double-digit free cash flow growth on a compound annual basis. These metrics are intended to provide a floor to our revenue growth ambitions and a ceiling to our spend growth expectations. Andrew, back to you. Thank you, Debbie. Our strategy is to transform the industries we serve with end-to-end cloud-based solutions that drive efficiency and sustainability for our customers. Our business is scalable and extensible into adjacent verticals, from architecture and engineering to construction and owners, from product engineering to product data management and product manufacturing. It is also scalable and extensible between verticals with industrialized construction and into new workflows like XR. By accelerating the convergence of workflows within and between the industries we serve, we are also creating broader and deeper partnerships with existing customers and bringing new customers into our ecosystem. For example, in AEC, AECOM is the world's most trusted infrastructure consulting firm that delivers professional services throughout the project lifecycle, from planning, design and engineering to program and construction management. With growing investment in infrastructure, customers are increasingly seeking both efficiency and sustainability to meet ESG goals such as net zero carbon, resiliency, quality of life, social impact and safety. This aligns AECOM and its customers closely with Autodesk's values and capabilities. In first quarter, AECOM renewed and increased its EBA with Autodesk. The renewal promotes further platform standardization and now extends from design further into build with the addition of Autodesk Construction Cloud and from bridges and tunnels to water with the addition of Innovyze. Across the globe, our customers are seeking to connect and streamline their workflows. As we enable our partner network to distribute Autodesk Construction Cloud, we serve more of that growing demand. For example, Bravida, which is based in Sweden, is a leading provider of technical end-to-end consulting, design, installation, and service solutions across the Nordic region, focusing on efficiency and sustainability. It is responsible for the installation of fire sprinklers, ventilation, electrics, and safety systems in the tunnels of the Stockholm Bypass project, the largest infrastructure project in Sweden's history. Having adopted Autodesk's AEC Collection and realizing 50% cost savings and a significant reduction in carbon dioxide using Revit in the design phase of the project, Bravida was looking for a complementary system to seamlessly connect the build phase. Adopting Autodesk Build enabled it to connect office and field data and workflows in the cloud, standardize and track projects accurately, and manage procurement and logistics, health and safety, and cost more effectively and efficiently. With the launch of Autodesk Build, the introduction of an account-based pricing business model, distribution through our channel partners, and giving subcontractors the ability to have their own instance of their data, we are connecting more workflows both within construction and between adjacent workflows of design, pre-construction, and operations and maintenance. After evaluating various project management solutions for more than a year, Donohoe Construction Company, a top mid-market GC in Washington, D.C., chose Autodesk Build to seamlessly connect project, site, and cost management workflows. Autodesk's industry-leading cost management system, which is integrated into and included with Autodesk Build, is anticipated to enable Donohoe to control change order management and reporting much more seamlessly with its project and site management workflows. We're excited to partner with Donohoe to build a sustainable future together. We're investing in Autodesk Construction Cloud to do even more. For example, we launched Bridge to enable subcontractors to have their own instance of their data, a critical factor in improving their business processes. We're also rapidly integrating ProEst so that estimates can be pushed to the cost module in Autodesk Build, enabling it to automatically create a budget. With strong growth from Autodesk Build and the benefit of recently launched ACC bundles for pre-construction and construction operations, Autodesk Construction Cloud reported its best-ever new business growth quarter, with an increasing proportion of that growth coming from EMEA and APAC and growing contract size and renewal rates. Turning to manufacturing, we sustained strong momentum in our manufacturing portfolio this quarter as we connected more workflows beyond the design studio, developed more on-ramps to our manufacturing platform, and delivered new powerful tools and functionality through Fusion 360 extensions. As we connect and develop new workflows in the cloud and provide more ways for customers to use our products, we have the opportunity to renew engagement with some of our legacy customers. For example, a high-tech manufacturer in Germany, which has been using Autodesk software since 1991, was using Inventor software purchased in 2018. By updating from a perpetual license to a Product Design & Manufacturing Collection subscription in first quarter, the team will benefit from significant process and performance improvements, which alleviate mechanical engineering bottlenecks and better serve its high-demand periods. Because of its familiarity with Autodesk, the customer enabled these improvements immediately and leveraged its existing IP without migration. We are happy to have them back on our latest and most secure software. In automotive, we continue to grow our footprint beyond the design studio into manufacturing as automotive OEMs seek to break down work silos and shorten handoff and design cycles. NIO, an electric vehicle manufacturer in China, added Product Design & Manufacturing Collections on top of its Alias and VRED subscriptions to achieve a seamless digital workflow across design and manufacturing. NIO will be able to build higher-quality cars more efficiently by connecting workflows in the cloud that enable more collaboration and better data integrity. Our Fusion 360 platform approach enables customers to seamlessly connect workflows while also delivering powerful tools and functionality to those that need it through extensions. For example, an educational toy manufacturer based in the US started using Fusion 360 about a year ago and quickly recognized the impact working on the cloud would have on its ability to collaborate across sites between product design and product engineering. engineering. It was able to seamlessly activate, manage, nesting, and product design extensions within the Fusion 360 user interface, giving access to even more powerful tools and functionality to those that needed it. For example, the Fusion 360 Manage extension unlocks additional data management functionality to manage design changes at any stage of production with the click of a button using pre-built workflows. Fusion 360's commercial subscribers grew steadily, ending the quarter with 198,000 subscribers, with demand for our new extensions, including machining, generative design, and nesting and fabrication, continuing to grow at an exceptional pace. Outside of commercial use, our education partnerships are helping students learn the in-demand skills of the future. For example, Government Tool Room & Training Centre, or GTTC, is a premier vocational institution in India with 6,000 students across 28 campuses. first quarter, GTTC adopted Fusion 360 and its tool and die-making courses because it was easy for students to learn, spanned the entire course from conceptual design to simulation to fabrication, and gave students hands-on experience with next-generation workflows such as generative design, 3D printing for additive manufacturing, and digital simulation and generation of G-code outputs. Finally, we continue to bring more users into our ecosystem through business model innovation and license compliance initiatives. BESIX is a multidisciplinary firm whose contracts in construction, infrastructure, and marine works often have a high level of complexity. To support its standardization effort across all projects and regions, the BESIX Group uses BIM Collaborate Pro and Docs to collaborate on Revit projects in a secure, common data environment. For additional security and efficiency, it now leverages our premium plan and Flex. By better understanding its usage through the enhanced reporting functions within our premium plan, it can provide access to occasional users through Flex while realizing the additional security benefits of single sign-on across its global employee base. We continue to work with our customers to maximize their access to current and secure versions of our software. For example, an international research institution in Europe, which has both students and employees, was mistakenly using education subscriptions for commercial use cases. By partnering with their leadership, we ensured the relevant departments had access to the necessary tools by combining subscriptions to our industry collections with Flex tokens. The collaborative approach resulted in a compliance deal of over EUR 1 million. During the quarter, we closed eight deals over $500 thousand with our license compliance initiatives, two of which were over $1 million. Let me finish with a story. I recently visited the FUTURES Exhibition at the Smithsonian Institution in Washington, DC. I highly recommend visiting if you are in the area this summer before it closes in mid-July. It is the Smithsonian's first building-wide exploration of the future. Autodesk partnered with the Smithsonian to create an interactive experience called Future Communities that brings visitors together to build a sustainable community block using analytics and goal-driven design with Autodesk generative design technology. Guests collaborate both with each other and AI, adjusting the inputs they deem most important. Each guest takes on a different persona with specific goals and input factors, which include social, ecological, and economic considerations, ranging from availability of green space and low-carbon transportation to the reach of public services and employment opportunities. The evolving community block is displayed in real time, and the technology showcases the types of trade-offs necessary to achieve various outcomes. The exhibit structure was generally designed to be strong and lightweight, using sustainable materials and modular space frame components that can be easily assembled and disassembled for minimum construction waste. The exhibit not only represents Autodesk's vision of the future, that of collaborative and connected workflows and data in the cloud that designs and makes a better world for all, that meets the challenges posed by carbon, water, and waste, and that advances equity and access to the in-demand skills of the future. In addition, the exhibit represents a very diverse set of visions for how the future may unfold. The one thing they share is an unwavering sense of optimism about what we can all accomplish together. Every day, our goal is to empower innovators with design and make technology that turns their visions into reality, helping them to achieve the new possible. I share this story because it gives me great confidence in the future of Autodesk and our vision of a better world designed and made for all. Operator, we would now like to open the call for questions. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Phil Winslow of Credit Suisse. Your line is open. Thanks for taking my question, and congrats on a great strong start to the year. Now, Construction Cloud delivered its best new business growth quarter ever. You signed your second-largest EBA ever with an infrastructure company, and I loved, obviously, the example of a manufacturing vendor getting current, moving to subscription from a lapsed perpetual license. When you think about this, investors have been concerned about Autodesk exposure, specifically to these cyclical, you know, end markets and the potential impact to your business. However, the numbers you just reported, those, the large deals that you highlighted clearly don't show this. My questions are, what are you hearing from customers about why Autodesk is seeing sustained demand, and what gives you confidence in the durability of these drivers? Yeah. Phil, I think somebody wrote a report about us not being a cyclical business anymore. I can't remember who it was. A very astute analyst probably... [crosstalk] Yes. Yeah. Probably an incredibly bright analyst. Look, you know, a couple of things happened in the quarter and, you know, we're projecting those forward through the year just consistently. I think it's important to kind of just talk about this notion of diversification not only of geographical spread of our business, but discipline spread and also business model spread. Then, I'll talk about that on a couple of vectors. First off, let's just talk about what kind of highlighted our resiliency around our business. Throughout the quarter, the monthly active usage that we track regularly continued to strengthen throughout the entire quarter. It continued to strengthen right up to the end. Yes, we absolutely saw a pullback during the early part of the invasion of Ukraine in Europe, but that rebounded as the quarter progressed. One, we have a strong demand environment, and we're selling into that demand environment from multiple vectors, construction, infrastructure, and general building design, as well as manufacturing. We're working across these things. What was happening at the same time, and I think this is an important point about the underlying kind of health and resilience in our business, is even when we saw dips in our new business growth in Europe during, you know, just as the invasion in Ukraine started, which by the way recovered as the quarter progressed, renewal rates strengthened broadly. We saw broad strengthening in renewal rates. That broad strengthening in renewal rates actually was able to offset some of the slowness in the new businesses. All of these things are things that we expect to see continue throughout the year and provide durability and stability for our business. Now, the US was strong during the year as well. We did see some softness early on in APAC because it was most sensitive to the currency effects. If you take out some of the COVID-affected regions like Japan and China or just Japan specifically, we saw much higher growth rates in APAC than are indicated by the overall results. All of this is a balance between new business and offsetting impacts from renewal businesses. Between the diversity of our geographic diversity, where we're kind of distributed across multiple spaces, the vectors of diversity we have around selling into infrastructure, construction, core design, core manufacturing, and the offsetting of really strong renewal rates, increasing renewal rates, even in areas of weaker or at least some weakness in new business, that gives us confidence in terms of the durability for the rest of the year. Awesome. Thanks. Keep up the great work. Thank you, Phil. Thank you. Our next question comes from Jay Vleeschhouwer of Griffin Securities. Your question, please. Good evening. Looking ahead into next year first, fiscal 2024 cash flow, a question as to how you're going to work with the channel to get through that. Five or six years ago, when you went through your first multi-phase transition in the model, you were very conscientious about making sure you got the channel through all the changes in terms of upfront upgrades, maintenance, and so forth. When you look into next year and beyond, how are you thinking about preserving or managing channel margins, their cash flow, their recurring revenue streams, as you go through that valley of your own cash flow next year and then look to a rebound in fiscal 2025? That's the first question. Yeah. All right. Okay. Let's start with that, Jay. First off, let's just back up and talk about the high-level principle that we're working towards here, right? We're trying to move away from these upfront multi-year deals to annualized billings. None of us want this. We don't like the way it creates a lumpiness in our cash flow. Frankly, our partners don't like the way it creates a lumpiness in their cash flow as well, and they don't like discounting to get multi-year upfront deals closed. You look at this, we're trying to create a more stable, reliable, and predictable cash flow build-out beyond fiscal year 2024 and beyond, okay? Yes, fiscal year 2024 will be the trough, but after that, we're gonna grow much more consistently double digits out and predictably moving forward, which is what we want, which what you want. We can't get there fast enough. Frankly, our partners can't get there fast enough. We do integrate programs to help them get there. One of the core programs here right now is we're encouraging them to work with us on conserving some of that upfront cash they're gonna be collecting cause, you know, that's cash flow directly into the partner's pockets, all right? We do adjust for early on some of their back-end incentives to ensure that they can transition smoothly from a cash flow basis and continue to work and support our business the way they have. It's not that different from what we've done previously. You're right, we have to support them through this dip. Once we're all through this dip, it's this nice, predictable cash flow build up that we all want and is gonna create a stronger and more reliable business and more durable business. Okay... [crosstalk] They like it, we like it, and we're helping them through it. Okay. Thank you for that. Shorter term question, you mentioned a couple of times so far on the call, usage rates, which is always useful to hear about. Could you speak about that, Andrew, in terms of vertical or end market? You spoke about it by geo and generally, but could you speak about it in terms of, AEC, including in particular ACC, manufacturing, and perhaps even what are you seeing in terms of standalone apps versus collection usage? Yeah. Yeah, here's what's interesting, all right? This is another one of these things that's just, you know, really great about our portfolio is the increase in monthly active usage was broad-based. There wasn't any particular place that was stronger or weaker than the other. All right? We saw increases in monthly active usage of AutoCAD, Revit, Inventor, Fusion, and, you know, in fact, in Construction Cloud, we saw a 30% year-over-year increase in monthly active usage, which is a, you know, a really nice surge on the Construction Cloud side. There wasn't any particular standout or holdout in those monthly active usage numbers. They really were broad across the spectrum. Now, when you talk about collection usage, we don't really look at it that way. I mean, we just look at adoption with, you know, you know, adoption of the individual products. We don't necessarily flag it according to a collection. One thing we have consistently saw is multi-product usage continues to be robust in the collection environment. Actually, we've been slicing that data differently over time so that we got a better sense for how multi-product usage was moving forward, and it looks pretty solid. The people who buy collections really are engaged in multi-product usage, but no hotspots or cold spots in terms of this monthly active usage growth. Okay. Geographic or industry-wise. Remember, there was a slowdown when Russia invaded Ukraine, but it came back as the quarter progressed. Understood. Thank you, Andrew. Thank you, Jay. Thank you. Our next question comes from Saket Kalia of Barclays. Your line is open. Okay, great. Hey, guys. Thanks for taking my questions here. Debbie, maybe I'll start with you. You know, Autodesk did 34% operating margin this quarter. Great to see. The guide is for 36% for the year. I know we're taking a point out of that for Russia. It's not a huge ramp through the year, but it's a question that we get nonetheless. I'm just wondering if for everyone's benefit, you could just go one level deeper into some of the moving parts around the margin expansion this year, particularly in this inflationary environment. Sure. Thanks, Saket. Before I say anything, I want to let all of you guys know that I have a terrible cold. I say this now, because I know my voice sounds gravelly, so I just figured I'd be upfront about it, so there weren't any questions. I also, I don't want you to interpret my unusual sounding voice as a lack of enthusiasm. Unfortunately, it's just a garden variety cold, not COVID, that I'm struggling with. All good... [crosstalk] Anyway, just wanted to be upfront about it. I appreciate that. On to your question. At the end of the day, the biggest driver of margin improvement over time is gonna be revenue growth. It's that revenue growth combined with our continued discipline with spend that's going to deliver that leverage. For this year's guide, the ramp to 36% is a little less steep, because of the impact to the top line that we saw from Russia, and we had that impact flow through to the margin. We think it's important to continue to invest to further our strategy. We don't want to be doing any kind of knee-jerk reaction on spend because of Russia. Yes, the inflationary pressures that you mentioned are there. We're monitoring them closely, but right now we feel it's all manageable. I'd also point out that the margin target at 36% represents a 4 percentage point improvement year-over-year. We're delivering considerable operating margin leverage at our scale. As we progress through fiscal 2023, we're assuming a gradual improvement in margin as the revenue grows and as we continue to tightly manage our spend. That's a similar pattern to what we saw in fiscal 2022. Got it. Very helpful. Andrew, maybe for you for my follow-up. Thanks a bunch for the macro commentary. Great to see the consistent renewal rates and the increase in monthly active users. I was wondering if you would just look at it from a different lens and wondered if you could just talk about your new business, sort of how that trended in first quarter qualitatively, of course, and how you're thinking about that as part of the full year guide. Yeah. The new business trended pretty consistently in the US throughout the quarter. It trended fairly consistently in APAC throughout the quarter. There was a slowdown during the Russian invasion at the beginning that recovered as the quarter progressed. What we're doing right now is we're looking at those new business trends, and we're essentially carrying them forward into the year, expecting them to continue at kind of similar levels as we go through the year. Obviously, we saw, you know, a complete evaporation of new business in Russia and some impact in Belarus. But like I said, Europe recovered shortly after the invasion progressed. That's the way we're viewing these. That's the way they played out throughout the quarter, and we're assuming similar performance throughout the year. Got it. Very helpful, guys. Thank you. Thank you, Saket. Have a good one. Thank you. Our next question comes from Adam Borg of Stifel. Your line is open. Great, thank you much for taking the questions. Maybe just for Andrew, you spent a good amount of time in your prepared remarks talking about infrastructure, including the largest EBA deal and just the breadth of your portfolio. I'd love to just get an update, and you know, in your conversations with the industry, how you're thinking about the upcoming or the existing infrastructure bill, latest thoughts on the impact to the industry and ultimately the impact to Autodesk and any such timing there. Yeah. You probably read recently that, you know, not a lot of money's made it out yet. This is what we told you when the bill originally passed. It takes time for these things to make their way into the system. Most of our customers are in proposal mode right now. Departments of Transportation and other places are in proposal mode. Some grants have been awarded, and the money will start flowing soon. We expect to see projects related to some of the infrastructure bill spending to show up. We're particularly interested in the $100 million that's being targeted to help departments of transportation drive digital technologies into their processes. We've been talking to the Department of Transportation, the US Department of Transportation, on how best to kind of drive that into the DOTs, so that they can actually utilize that money to change their processes. You know, we haven't seen a lot yet. What we are seeing is customers, like for instance, what we saw with AECOM, when an EBA renewal is coming on, they're layering in Construction Cloud and infrastructure capabilities, specifically Innovyze in the AECOM deal to get ahead of some of this. Water is gonna be a big deal in the infrastructure spending, and it's showing up to be a big deal in a lot of places. I expect we're going to see that trend continue as we head into some of the contracts actually getting awarded and the money actually flowing out of Washington. That people will buy, for instance, Innovyze on some of their renewals and some of their kind of deal discussions with us to get ahead of some of the things that they're probably gonna be bidding on. That's really helpful. Maybe just a real quick follow-up on the macro. Obviously, you guys are very clear about the diversity of the strength that you've seen. Maybe I'll just ask the diversity question slightly differently. You know, you've talked about in the past, you know, the small end of the market, the mid end, and the larger end by different customer sizes, by employees or seats. I'm just curious, any differentiation you saw across the installed base when looking that way in terms of macro, both the installed base and new business there. Thanks again. Yeah, no significant differentiation, actually. The low end of the business held up quite well, actually, you know. You know, we have a standard clip of new customer acquisition that we see just about every quarter as a percentage of our business. It didn't change. It held steady. The new quote customer acquisition, generally speaking, you know, you know, customers that have never been in our database before, generally come from the low end of our business. The low end held up well. You saw the high end held up well. There was some pressure with regards to people kind of growing their installs, net revenue retention rates. You know, new inside of existing accounts saw some pressure, but not a lot. Actually, that improved as well. No discernible strong difference worth noting between the various segments. Excellent. Thanks again for the time. Thank you. Our next question comes from Matt Hedberg of RBC Capital Markets. Please go ahead. Great. Thanks, guys. Hey, Andrew, maybe for you first. Obviously, I think we all understand at least that this business is not as cyclical as Autodesk of old. I think that's clear through the subscription transition here. Now, if the global economy were to slow, I just wanted to double-click on really the value of your subscriptions and why these renewal rates could be better than a lot of investors perceive, even if there is a slowing. Well, you know, first off and foremost, you know, they need these subscriptions to do their jobs, all right? You know, they need the software to do their book of business, all right? If you look at our customers and you talk to our customers, and I'm sure you looked at some of the indicators and some of the things that are out there, our customers have a fairly robust book of business. In fact, most of our customers are building up a backlog. If you have a conversation with them, their biggest challenge right now is, I can't hire. I'm having trouble hiring. Materials aren't showing up on time. Like I told you last year, they were likely to price inflationary pressure into their bids. It's not so much that they're dealing with cost compression between bid price and cost price. It has a lot more to do with labor and access to the materials for delivery. None of them are talking about pulling back anytime soon because of the backlog they're seeing in their business. They need this software. They need it. They need it now. They're gonna continue to renew this software in order to keep using it. They're looking to hire more people. They just can't find them right now. That is, that's super helpful. Thank you for that. Debbie, we'll see if your voice can hold up here. Obviously a big year for multi-year renewals that ramps throughout the year. I'm wondering, was there anything that surprised you about billings duration in first quarter? Maybe how might that progress, as the year unfolds? Thanks, Matt. Nothing surprising. We continue, of course, to track the multi-year cohort closely. The proportional volume that we've been seeing from multi-year was in line with our expectations for all of fiscal 2022 and also in through first quarter of fiscal 2023. That gives us confidence in our fiscal 2023 outlook. Got it. Well done, guys. Our next question comes from Joe Vruwink of Baird. Your line is open. Great. Hi, everyone. One thing that stood out this quarter was the accelerating growth from the partner channel. How much would you credit some of the recent initiatives like opening up Construction Cloud or being able to get in front of customers with some of the new commercial formats as opposed to just kind of the general trends in the business that you've been talking about? Yeah, that's an excellent question. I can't give you a particularly deep answer there. You know, however, we did see significant growth in the partner channel with Construction Cloud, and we're starting to light up Construction Cloud in the channel, which is really important for us in terms of our mid-market expansion of that business. So, it probably had an effect on certain key partners. But to give you the exact detail about how much of that was related to new business within the channel versus t he traditional business they're turning over, I can't really give you an exact breakdown on that. Debbie, do we have any fidelity on that at all with regards to the channel business? Not at this point, I would say. I mean, we saw broad-based strengths through the channel, through our channel partners during the quarter, outside, of course, of Russia. Then that immediate slowdown that we talked about in Europe that then picked back up as we exited first quarter. We did see that momentum as we exited first quarter. I wouldn't highlight anything specific. Certainly, the success that we're seeing in construction is helping. Remember, construction, while it's an explosive growth area for us on the whole, it's still a smaller part of our business. That strength... [crosstalk] Mm-hmm. Is contributing to overall partner strength, but we're also seeing just broad-based strength through the core of our business as well. Okay, great. I'll ask another macro question. Can you maybe contrast the business environment we've been in late February onward? It sounds like ultimately trends have been, you know, good and stable. Contrast that with last fall, obviously inflationary pressures still around, they haven't abated. We're layering on some incremental macro things. It's stability now as opposed to, you know, some moderation last fall. Maybe differences or what you see as contributing to, you know, the stability more recently. Yeah. Well, if you remember back in the fall, I talked a lot about some of our customers being caught off guard by the rapid inflation and supply chain difficulties. Some of our customers were on fixed bid contracts. Fixed bid contracts, when your cost of goods are going up, are really, you know, a serious issue for their businesses. Their businesses were feeling a lot of pinch. Manufacturers were able to pass the cost through to their customers directly. AEC customers less so manufacturers suffered more from some of the supply chain things. What you're seeing now is customers, you know, they're not surprised by this. They know how to bid the contract. There's a general kind of bidding parity out there, and people are building in inflationary impacts into their bids and into their projects. That creates a much more stable environment for them with regards to having a book of projects that, you know, are having their margins deteriorate rapidly and some that you want to get to that have better margins. What they're seeing better now is it's just a better spectrum of margins across their projects. That's one key thing that contributes to the stability. Does that make sense? It does, yeah. Thank you. We fully expected them to do that. Thank you. Our next question comes from Keith Weiss of Morgan Stanley. Your line is open. Hi, gentlemen, and thank you for taking the question. Very nice quarter. Maybe following on that last question, really a two-parter. One, Debbie, when you talk to us about the full year guidance, it seems like we're adjusting for currency. That's just about it. It doesn't sound like we are adjusting the forecast down or anticipation of any macro weakness or any further weakening of demand trends. One, just wanted to clarify that side of the equation. Then two, if demand does weaken and you do see the macro impacts kind of catching up with all of us in software land, what's the reaction on sort of the spending side of the equation? Is the philosophy that we're looking to protect free cash flows, or is it the market opportunity is too big, and we really need to keep investing for growth, and we're gonna look to sustain and take advantage of your balance sheet to be able to sustain that investment and get ahead of your competitors? I'm just trying to understand kind of your philosophy on how you view potential demand slo wdowns. Thank you. Thanks, Keith. Lots to unpack there, so if I get lost a little bit as I go, please keep me honest. Let's start with the guidance. The impact to the guidance that we are talking about today relates to FX and Russia. You said FX, but it also includes Russia. There's no change to the underlying business assumptions for the rest of our business, and that's because we haven't seen a change in the demand environment for the rest of our business. As a matter of fact, although we saw a bit of a slowdown focused mostly on Europe at the onset of the invasion of Ukraine, we saw a bounce back, and we really exited first quarter with momentum. That gives us confidence as we look to the rest of this year. We've built into our guidance assumptions that reflect the demand that we saw as we exited first quarter. When we think about margin, remember that with the subscription business model, we have a very resilient business model. Even with the adjustment to revenue for Russia, it was only about 1% of our total revenue. We let that flow through to operating margin, because we want to make sure that we're not doing any kind of knee-jerk reaction on spend. We think it's important to continue to invest, to make sure that we can further our strategy. I don't see a scenario at this point, where if the world or the economy were to deteriorate even further, that we would see substantial further pressure on operating margins, because of that resilient business model. Of course, we're gonna manage our business in the best way possible. You know, this is absolutely the right time to invest in the business. When you're a business of our size with our resilience and our footprint, and you're up against smaller, less resilient, more challenged competitors, you invest. You invest, you pull ahead of the competition, you keep focused on the things you're trying to do, you expand your category leadership, you solidify category leadership in other places. We've got category leadership in 3D for BIM, which is very important growth segment in AEC. We've got category leadership for design through construction in the construction space, deals like Bravida, AECOM, BESIX. These are all people trying to buy into this connected AI-driven cloud-based design through construction environment. That's the category we're in, and we're kind of already the king. This is the perfect time to continue to invest. It helps you lap the competition. The competition won't be able to invest to the same degree. I think this is not the time you pull back, all right? Especially given the underlying strength of our business. It's solid, you can see it. We've got the multiple vectors of resiliency here and the kind of nice portfolio of options that we can leverage. I'm definitely in a mindset that investment's good for us right now. Got it. That's super clear. Long- term, I think that makes a ton of sense. Thank you. Our next question comes from Steve Koenig of SMBC Nikko. Your line is open. Hey, Andrew. Hey, Debbie. Thanks for taking my question. Debbie, I have a cold too, and it's not COVID, so we're in the same boat, so I hope you get better soon here. I wanted to. I may have missed it, and apologies if I did, but can you give us a little more specifics on how, you know, when you saw business start to bounce back in EMEA? Was it right at the end of the quarter? Was it a week after? Was it a little before? I've got one more for you, Debbie. Yeah. Actually, it was fairly short term after the initial invasion. It was within weeks. All right? It wasn't like this long thing. It fell off, it slowed down a bit, as the invasion started, and then within a few weeks, it was rising back up again and back up to where it had started. Mm-hmm. It didn't take that long. It surprised us, honestly. I was trying to parse your earlier statements. Was it kind of balanced between new business and renewals, or was it kind of more one or the other? Renewal stayed strong throughout the entire cycle. All right? Mm-hmm. Renewal kept building as the quarter progressed. There was never a slowdown in renewal momentum. As a matter of fact, if anything, it just kept strengthening and strengthening. Right? Mm-hmm. It was only in the new business part that we saw a slowdown post-invasion that recovered. No... [crosstalk] I see. Renewal just kept building. Yeah. Got it. Okay, great. Then for my follow-up, and actually either of you are welcome to answer this as you see fit. So you raised prices at the end of March, and you know, I'm sure that's all embedded in your guidance, and it allows you to invest appropriately and get to the margins you want. How do you think about, you know, in this inflationary environment, your internal compensation trajectory and also what you're doing with partners, and how does inflation, you know, affect your plans there? What do you have to tweak or finesse, you know? You have very high employee retention, very good rates. You know, how do you maintain that? Thanks, and I appreciate you taking my questions. Yeah. Let me. Because there's two questions there. First, let me comment on the price increases so that we're all on the same page here. Mm-hmm. The price increases were highly targeted to certain parts of the world where we had artificially suppressed the price below our long-term goal of having standard euro, US, and yen-denominated pricing. What you're seeing is in certain places, we are raising prices to equalize so that we can get to this kind of standard-based pricing that simplifies some of our go-to-market practices. We had some artificially suppressed prices in regions, and that's what was going on there, okay? There's no change in our standard pricing policy. In fact, places like Europe did not see a price increase, all right? I just want to be clear we're all on the same page with regards to pricing and the things associated with that. Now, with regards to inflationary pressures in EO and certainly in employment areas, look, we're no different. All right? We see pressure in terms of employee compensation and trying to help our employees navigate an increasingly inflationary environment. We increased our raise pool. We increased our bonus this year, and equally important, we're increasing our stock-based compensation. You'll probably see us continue to increase our stock-based compensation for our employee base. These moves were made and baked into the year well ahead of the start of the year to ensure that we were able to meet our employees or at least try to meet our employees where they were at. We will certainly continue to look at our pay position. We'll probably continue to see some pressure there in terms of staying competitive. We are retaining employees at high rates. We'll also continue to use stock-based compensation more robustly and more broadly within the organization, which we think is good for the company, good for investors, and good for employees. Sounds good. Great. Thanks very much, Andrew. You're welcome. Thank you. Our next question comes from Bhavin Shah of Deutsche Bank. Your line is open. Great. Thanks for taking my questions, and I'll focus my question to Andrew unless Debbie's still on. Andrew, just at the beginning of the call, you noted the robust competitive performance during the quarter. Can you maybe just elaborate on this? What verticals or products are seeing better success or even improved win rates, and what's driving some of this? Yeah, well, you know, it's basically every sector. I mean, every one of our industries we're growing faster than our competitors. All right? We're taking shares, we're selling more seats in some highly competitive industries. You're seeing us doing well in AEC. You're seeing us doing well in manufacturing, both on seat counts and revenue counts, which I think is really important because you want to watch both of those performances. You know, we even did quite nicely in media and entertainment year-over-year. We are absolutely seeing broad-based competitive performance. I mean, obviously one of the places that we all watch is construction too. In construction, if you look at the raw make numbers, we grew 24% year-over-year. You got to remember some of that construction, that make opportunity is actually in the EBAs, which are counted as design. When you look at our total make performance, and taking those EBA impacts where we kind of put make components into the EBAs, we grew into the mid-30%. Construction Cloud's monthly active usage grew, you know, slightly north of 30%. This is all great, solid, competitive performance. AEC, Construction Cloud had its best new business growth quarter. International growth for Construction Cloud was significantly higher than its regular growth. We're lighting up the channel in the mid-market. We're kind of solidifying our category leader position in this design through construction position. You know, essentially anybody else in this space is kind of outside that category. They're very niche, or they're a zombie, waiting for the industry to move on and move past them. I think we're in a very strong competitive position right now. It's our job to continue to maintain that, but it was across all the industries we served. Super helpful, and thanks for that color. Just one quick follow-up. It was really interesting to see that large EBA deal include Innovyze, and we've heard good things there as well. Where are you on your innovation plans just with this solution, and where are you in terms of evolving the product set here? How do we just think about the pipeline of customers who are looking to leverage some of your water-based products? Yeah, look, we've made really great progress integrating Innovyze in. The company was fairly similar to us when we bought them. There's a lot of things that are rapidly getting integrated. Of course, there's some product integration pieces and some back-office systems that are still kind of working through some of the integrations. In terms of integration, that's not a barrier right now to where we're at with Innovyze. One of the things that's exciting about what Innovyze does is it's already kind of fulfilled the end-to-end vision for water that we have for construction and manufacturing. It goes everywhere from design all the way to operate, and it has some fairly sophisticated cloud-based tools for water infrastructure operators, sewage treatment operators, other water infrastructure operators that allow them to actually manage the facilities once they've been put into operations. It's a very robust solution. It covers a very broad piece of it, and it fits incredibly nicely into our portfolio, both story-wise, strategy-wise, and frankly, sales motion wise. Ladies and gentlemen, that is all the time we have for Q&A today. This concludes today's conference call. 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