All right. I was about to start telling jokes, but I don't know. We have a built-in joke. We have a built-in joke. My partner in crime left his credit card at a restaurant last night and had to race over and pick it up. I'm like, "What a rookie mistake." Well, we've, you guys have killed four minutes of the presentation, so, it's, it's a new form of, playing out the clock. He will be joining us on that. Okay. Great. I, by the way, I just read the safe harbor, so we're. Oh, thank you. We're out of the way on that. You're allowed to make forward-looking statements now. Especially since I'm unchaperoned by the industry. Yeah. Let's how's the quarter? No, just kidding. So we have Jeff Kinder from Autodesk. Jeff runs the manufacturing side here or VP product development of what's the official title here? I'm the EVP of Design and Manufacturing. Design and manufacturing. Okay. Great. So we're gonna talk all about manufacturing software here. So, maybe if you could start to very topical at this conference, how are you guys integrating AI into what you do, and how is that playing out, you know, how does that differentiate you from your competitors? Sure. I love when the AI question comes up, by the way. It's all about AI. I mean, as an industrial analyst, it's really all I think about. I mean, I love it because it allows me a chance to remind everybody that Autodesk introduced AI into manufacturing more than 10 years ago with Generative Design. So we rolled out Generative Design in the early days of Fusion, under the kind of premise that the machine should be able to create more options and designs than a team of 5 or 10 people will be able to come up with. And so that was our early kind of foray into it. We set up an AI team in our research group 7 or 8 years ago. We were early in our industry to move to the cloud, which, as many of you know, like, having data in the cloud is critical to be able to train AI models. We introduced a consumption model. In addition to subscription, you know, we migrated to subscription. We also introduced a consumption model, which is also critically important. Many of the AI services we can provide will drive compute costs, and there we wanna we need to be able to charge for that, that consumption. If you try to how would Simon say this? If you try to use a fixed-price subscription and run this variable compute cost through that, it's a quick way to hurt your margins. So the fact that we've invested in building a consumption model and by the way, this stuff takes years. This is not stuff that you just fix in quarters. So we invested in that probably four or five years ago. And then we've been working for the last four years on granularizing our data, so taking data out of files, putting it into a cloud database. The net effect of that is it actually lowers our data extraction costs for training AI models. So, I like to tell my team, while we didn't, you know, predict the exact date that ChatGPT was going to take off, we've been actually marching in that direction for almost 10 years. It's like, Let's we had a plan. Right. What inning do you think we're in on this in the more broad, you know, adoption by your customers? Early. Or, I mean, or well, those are two different questions. What inning are we in? Very early innings. In fact, we're still in that. I mean, you live and breathe it. We're in the hype cycle more than anything right now. In fact, a lot of folks can talk about AI. They can talk about, well, how they might leverage off-the-shelf AI tools. But actually, in terms of driving productivity improvements for customers, that's gonna take them a while to show up. But we actually have AI in products already. So we have our Construction IQ products, you know, helps brings AI to the construction site. We do some work with generative scheduling, to help align projects, and tasks in a project. And in manufacturing, in my world specifically, where we talked about at our customer conference last fall, automated drawings and automated tooling. So 30%-40% of a skilled engineer's time is typically used on very low-value-added tasks, such as taking a 3D model and converting that to 2D and then putting the dimensions on there or manually generating tool path strategies. All that can be done by AI. And if we can take that, those productivity gains or, you know, solve for that, customers can then use that for whatever outcome they want. They can use it for more creativity, more throughput, faster time to market, or in some cases or maybe in all cases, dropping some of those savings to the bottom line. So let's take a step back, because there are, you know, I'm an industrial analyst who covers a bunch of industrial software companies, and it's, it's a lot of fun learning about all this stuff. There may be some people in the room who don't know exactly where you fit into the equation here. Autodesk has thought of it with on the construction side, the bigger business. So when you look at the CAD and PLM space and the big players like PTC, Siemens, Dassault, where do your solutions bump up against those guys, and how do you differentiate versus them? Great question. So we think about the four of us, right? Dassault, you nail it. Dassault, Siemens, us, and PTC. At Investor Day, our Investor Day last year, I kinda laid out a framework where we broke the market into mid-market and below to small and medium-sized businesses and then enterprise. We think that market breaks out into roughly half of the TAM is in the mid-market down to the small, medium-sized business, and half is in the enterprise. How do you define SMB versus enterprise? Our definition within Autodesk is 5,000 employees. Okay. So, but it varies. You know, we talk to different companies, and they have different they draw a line differently. It was a two-by-two. You can tell at one point, I was a consultant. I'm now reformed. So we had the, you know, enterprise and the mid-market SMB, and then design and make were the two columns. And, you know, look, we play in the mid-market. And really, in the mid-market, it's just us and SolidWorks, which is a division of Dassault. And, you know, we think there's a tremendous opportunity that's gonna be there for a long time for us to continue taking share from SolidWorks. Let me talk a little bit, though, about the differences in those segments 'cause this actually gets to the full competitive set. In the enterprise space, which is largely Siemens, Dassault, and PTC, it's characterized by large, highly customized on-premise solutions, very expensive, and you have to kinda maintain those. It's hard to keep up. The The data's on-premise, and it's actually hard to keep up when you're highly customized with changes in the underlying technical capabilities. What we're working to solve is I would describe as a harder problem, and that is building scalable cloud-based solutions that serve the mid-market, and, and also serve design and make, so both sides. That's the that's the vision we've had for years is when you bring design and make together, you can actually achieve more breakthrough productivity gains than if you just had a bunch of point solutions. You're talking about the design of a product and then when it goes on the manufacturing floor and how what while it's being made, you also wanna participate at that level, right? Right. That's the vision for. That's the stack. That's the vision for Fusion is, like, end-to-end design and make processes that come together in the cloud and with connected teams as well as connected data. And it's, I say it's a harder problem because it's, you're trying to take something that is inherently complex and make it simple. What gets us, what motivates us and examples we look to in the market that are exciting, we look at, close to us, Salesforce, right? I mean, do you know, we think they were competing with, you know, Oracle. Think back 20 years. They're competing with Oracle, largely on-premise, highly customized solutions. And they came out with a cloud-based solution, and it was frankly, you know, Oracle dismissed it as, you know, that's only for small customers. Like, that's not; that's never gonna take off. And Salesforce has proven that, you know, proven that hypothesis wrong. Another one, not even in our space but near and dear to my heart, 'cause I worked at Yahoo at one point, you know, Yahoo focused on building these, you know, high-profile, flashy ad, you know, ad campaigns. Google came along and said, "You know, we're gonna do something simpler. We're gonna create AdWords, and it's gonna be easy for everybody. And it's gonna and once it gets that momentum, it's gonna be unstoppable," which actually proved to be the case. So we look at things like that for inspiration and our belief that building that scalable cloud-based solution, it will then start to move up market. It'll start to disrupt the path of disruption goes upward. It's much harder to take an enterprise solution and bring that down market, and serve the large customer base. And so, when you're competing with SolidWorks, what, how do you win? How do you, what is kind of the key reason why a customer would say, you know, "I'm gonna pivot over to you guys"? I mean, what are you seeing out there day to day on that front? Yeah. A couple things. One is, we, we have a modern kind of easy-to-use interface. A lot of, you know, some of our legacy products, but a lot of our competitor products, including SolidWorks, they're really cumbersome. I mean, they feel like, you know, you step back in time, and you're looking for the DOS prompts, you know, to make it operate. So we've focused on modern and easy to use. Another difference is we're design and make. So SolidWorks is design. And so you end up paying for and not only do you would you need SolidWorks to do everything Fusion does, but you need some sort of CAM solution, like Mastercam. So you're paying for those two solutions. And Fusion can actually more. So you might be paying for multiple solutions. So it's a simpler, seamless integration into one industry cloud. Another thing is, Fusion is consciously priced at a disruptive point. So when we rolled out Fusion, we priced it low. You know, we kind of had this product-led growth mindset where we wanted to price it low. We wanted to have a freemium model. We wanted to use a lot of e-commerce and wanted to build a strong community that would both support each other, train each other, as well as be advocates. That has paid off. It's, you know, even Fusion versus SolidWorks alone is a price advantage. When you start taking those other solutions, it's even a greater price advantage. When you break down the market here, you talked about the mid-market being a focus. As far as the end-market verticals you're serving, what, how does that break down between things like it seems like the industry is, you know, some collection of 25% Aero, 25% high-tech, 25% auto, and then a lot of different, you know, little ones. At least that's how Ansys gives us good visibility in that every quarter as a bellwether. So is that, you know, how does your pie chart, you know, compare to that kinda breakout? Or are you looking at in the mid-market, it's a bit more fragmented, maybe? Well, it probably is more fragmented than mentioned. But we don't break out our kind of percentages. Unlike Ansys, we don't break out our percentages by sector. Our biggest sectors, though, are industrial machinery, building products, and fabricators, and automotive, including supply chain. And we see emerging strength in verticals like consumer products and factories. Got it. You guys talk about your data model, the manufacturing data model. How is that different than others, and why is that a, you know, an advantage to you? Yeah. I mean, again, we were as I said earlier, we were early to the cloud. And then, and then we've embarked about starting four years ago on a manufacturing data model, which is taking the data out of what are massive files, right? I mean, they're, they're bigger than spreadsheets, in terms of, you know, the overall size and, I mean, contain all kinds of metadata and geometric data. And, we pull all of that out. We put it into this cloud data model. So the advantage to that advantage to that are, one, from just sheer storage. Like, if you typically, when you build a product, you'll have version one, two, three, four. And then you also, you know many customers have configurations, so slight variations on any one product. Every one of those are massive files. So you're now lugging around these cumbersome files. They're hard to keep track of. You know, version control becomes an issue. Data fidelity or model fidelity starts to become an issue. And so we think this is, you know, frankly, when I imagine if you're doing a configuration, and you say, "Okay. I wanna change this one aspect of a product," all we do is, like, we track that that one aspect changed. You don't have to recreate the file. It's just one aspect of it that, that changed. So that's one piece. Second is our cloud data models are open, and API accessible. So you're not necessarily dependent on a format and, and other partners that a customer might have can start to tap into it. We see this with ERP systems. Like, they'll wanna send their data out to an ERP system, easily done through through APIs. And then it lowers data extraction cost. I guess that's the other advantage, you know, to our cloud data model. By putting all our data in the cloud, it lowers that extraction cost. You know, when you invest in AI, there's, you know, two really big costs. One is the data extraction, and the second one is the compute for training a model. The compute is, you know, making the folks at Microsoft and Amazon very happy. The data extraction is something that we can control and help to, you know, lower the cost there. Where are you, when it comes to converging your products into Fusion 360? I think there were some end-of-life products that were coming along. That's right. Where are you in that process? Yeah. So for those of you that aren't as familiar, you know, what we've done over time is we bought a series of products and companies, and they may have had different products. We're unifying those into our Fusion Industry Cloud. So we're integrating those capabilities. So and manufacturing was the first area. So within CAD and CAM, bringing those together. And we have best, you know, we now have best-in-class kind of CAM capabilities. But that means, like, products that had been standalone products like PowerMill or FeatureCAM - I'm sure you guys all use these all the time - PowerMill, FeatureCAM, EAGLE, which is for electronics, you know, we integrated those into or unified those into the Fusion cloud. So now, not only are they standalone products, but we've actually brought them into the cloud, and so effectively, the same capabilities are available when you get Fusion. Our plan is then to end-of-life those standalone products, and you just get that when you subscribe to Fusion, you get those capabilities. What we've seen thus far, which has actually been exciting, is we're kind of in a, you know, back to your innings question. We're maybe in a sixth or seventh inning on this front, and 'cause we've announced the end of sale of some of our products. We're seeing really strong renewal rates in all of those standalone products, yet we're expanding the people that are signing up for Fusion manufacturing. It's bringing new customers into Fusion and expanding that manufacturing extension that we offer. So, thus far, it's actually going quite well. That's the same playbook, by the way, we're gonna follow in data management. We're gonna follow as we buy more factory capabilities, like, you know, factory planning, factory simulation, as we bring some of those MES, manufacturing execution systems. As we bring all of those in-house, we'll fold those also into Fusion over time. How do you manage such a to such a disruptive price point? I mean, you know, there's a reason why things are priced the way they are. You guys have, it's pretty staggering how, you know, attractive that is. How is that? How does that work out, you know, on the bottom line? Yeah. I mean, it's like, like, look, Fusion's an earlier, you know, it's not as mature as AutoCAD or Inventor or some of our other products. So, we're still very much in an invest mode. Got it. What you would expect from a margin might be a little bit less. That said, I mean, you know, it's priced where it is in part to drive penetration. But as you gain scale and the kinda scale that we're gaining, you know, scale will make it as profitable as, you know, as, as our other products. Is that a five to 10-year journey, or is that, like, a three to five-year journey? The growth that we are seeing. Well, I'm not gonna get into it. The, you know. A target? Yes. I'm not gonna get into a target or, I think I hear Simon's voice in the back of my head. I can't hear yet. It's on everyone. It's ongoing. And it's actually, I mean, if you've seen, we report out, we've been reporting out our commercial subscription numbers for Fusion. And it's growing dramatically. Think about every one of those is amortizing every investment that we do. Right. When it comes to the smart factory side, and you said, you know, on the make front, you know, and mentioned MES, I get the design side, CAD, PLM, you know, all those products. So what, what exactly what types of applications on the floor are you talking about? So yeah, MES is a place that, you know, you wanna prioritize? MES is one of those areas. We bought a company there a couple years ago. We bought a company called FlexSim that does factory discrete event simulation in a factory. So imagine modeling people, products, processes moving around, machines moving, in your factory. Helps with factory layout. Helps to simulate jobs themselves. Look, Fusion was designed to or was didn't shouldn't use that term. It was created to connect the design-make processes all the way end to end. It'd take things that you learn on the shop floor, feed those back into the design process, kind of, you know. Sure. Circulate that through. So the more we add in the factory in smart factories, the more we bring that data back and help to optimize the design process as well. So who are you bumping up against there? I mean, that's a pretty fragmented space, right? Yes. It's very fragmented. Rockwell bought Plex, and, you know, you're—it's, it's not a place where you see your traditional peers, you know, going, that, that far down. They have PLM, obviously. Yeah. As the overlay. But who, you know. We see some because thing PTC bought ServiceMax last year, and then they bought ThingWorx before that. You know, some of those are hard. Like, you know, our. Yeah. I'm not sure ThingWorx was the. Well, it's a great example, right? It's a great example of, you know, for those, you know, ThingWorx does IoT, you know, or did, maybe, in the past. Yeah. IoT. Like, some of those pieces are hard. You have to be smart about the bets that you're gonna make. We like to play in areas that are gonna bring data back to inform the overall process. Yep. So there is merit. I mean, that's the ServiceMax deal for PTC. Obviously, they're trying to, you know, connect that loop a bit from a services perspective. Yes. But less on the plant floor. Yes. And also less on the, well, I mean, the software side versus services side is a question there, I think. Right. Yeah. That's the challenge. I've seen a lot of my traditional companies—I cover these capital goods companies—that make the control systems had all these ideas of, you know, shop floor to the top floor, you know, data. And it's just so fragmented, the manufacturing environment is so fragmented. How have you guys overcome or are you still overcoming that where, I mean, every plant, even in the same verticals, can be different? And, you know, varying degrees of risk aversion at customers—it's been a challenge to penetration and scale. So how are you guys? Or are you not seeing that, you know? Well, no. The product is different? We see it. The way we've combated it is, again, Fusion was created at the outset to connect design and make process. So the manufacturing processes were always intended to be part of Fusion. Got it. And so we have a lot of integrations on the shop floor. Can pull that data back in. Are you know, is it 100% coverage yet? No. Yeah. I mean, but, you know, it's, you know, we would say we're in the lead. What do you make of the consolidation activity that's going on out there, whether it's, you know, Synopsys and Ansys or Cadence, you know, buying a smaller simulation company? It seems like there's a lot going on, Lots of excitement. What does this influence you guys at all? I know you have a, you know, a partnership, or you know Ansys is a big supplier of yours. Yeah. How do you look at all this that's happening? We're partners with both Ansys and with Cadence. Okay. which we've announced in the last 15 months, and, you know, talk to them regularly. Like, we, you know, we like the excitement. We have our vision. Our vision doesn't change with consolidation. We'll continue to execute against that, you know. Ansys has already reached out and said, you know, they, you know, we wanna stay your partner. Okay. We wanna work closely together. We don't really compete with Synopsys, so I think that's probably easy. You know, we're increasingly doing more and more with Cadence, for example, so. Got it. It's exciting, though. I mean, I think it you know, I've seen, seen a movement in the space. It is. It's interesting. A lot, lot going on. These are big deals, too. I mean, these are. It's a lot of debt. Huge deals. It's a lot of debt to take on. And stock. So, on just a little bit more along the near-term trends, you know, one of the things we're seeing out there, obviously, is the funnels are good. Conversations are there. The close rates are just not when it comes to some of this more design, some of these more design software verticals. Your revenue growth that has been actually, you know, pretty good, accelerated a bit here in the last quarter. What are you guys seeing out there as far as how would you describe, you know, the macro environment for you as far as funnel and close rates and what you're s and I know your subs growth's been pretty good, too. Yeah. The, like, we watched all the manufacturing indices. Some of them have kinda been a little jumpy. Yeah. Bouncing around. We have not seen, though, really an impact on our close rates. And so I don't know if it's different in the enterprise space. Yeah. But I would say we have not seen discernible kind of change in close rates, for the customers, at least the target markets that we're going after in those, in those segments. Got it. Welcome, Simon. Everybody said you have to show your credit card. You have to raise your hand and show your credit card. Yeah. So yes. Our close rates. We're proud of that. We were just talking about trends in the last week. Very strong. I've already given guidance. Sure. I've already, [Uncertain] sir. Yeah. So I don't think we've seen really discernible. And And then, you know, people have asked, you know, between other, you know, different parts of the business, CAD, CAM, or what do you see differently there? Look, data is one of the fastest-growing areas. We see that. Our competitors report that out, too. I think the importance of data in manufacturing is just continues to be a highlight. Right. And the revenue has accelerated pretty nicely. I mean, what has been the driver there, of the revenue acceleration? The revenue acceleration in manufacturing? Yeah. In the manufacturing side. Yeah. Yeah. We, like, well, we've been driving more subs growth, so that's always helps. Yep. And then with Fusion, I'll just give you, you know, a case study in Fusion. So I said earlier, Fusion was disruptively priced right out the gate to kind of drive to build momentum. That's actually worked quite well. But we're getting to a point where Fusion is, you know, the capabilities within Fusion are increasing. And, you know, we look a lot at value for price, and we've increased price. So we've increased price in Fusion, I think, 38% in the last 18 months. And, you know, we have a really strong and passionate community out there. And the interesting thing is, they have been supportive. In fact, you know, if you get one person who says, "Hey, I think the price just went up," you get four other people that say, "Do you realize how much of a great value this is?" and so they've actually been advocates. Our philosophy is, we just wanna keep value aligned with price and keep it disruptive so that we can maintain momentum but realize increased price. The other thing that we do is, you know, we offer extensions. So you subscribe to the base Fusion Cloud. And then if you need more sophisticated capabilities in any certain area, you could add extensions. So let's say somebody has 100 Fusion subscriptions. They might say, "Okay. I need 20 manufacturing extensions." So we've tried to create a flexible business model that allows customers not to overpay for things that they don't need but to pay for, "Here's what I need from a basic and then from a subscription, and then here's the extensions that I need that add to it." That's great flexibility for customers, way more flexibility than they would get with any of our competitors. But it also increases our price realization. So when we have increased the base price, we've actually increased these attachments of these extensions, and all of that is driving up our price. What penetration do you think, you know, you are? What's the penetration rate of customers with those extensions, do you think? It's early, I would say. Okay. So it's a low penetration rate. I mean, the growth numbers are astronomical. But as one of my old bosses said, "Happiness is a low base," right? So you know, the growth numbers are probably not artificial to look at. Expectations are everything. The subs growth you mentioned has been pretty strong. I know that, you know, you guys don't disclose manufacturing specifically. We do disclose subscriptions, and those are up really strongly. Where do you land in that, in that data? I think it's up, like, 20% or something. We disclose Fusion subs, so you can. Yeah. You can tell what that is. Yep. They're up in the sort of teams, as you can see. Nice. The AEC growth includes the largest cohort growth, which is Autodesk Construction Cloud. You've also got Fusion in there. And you've got things like ShotGrid and other things when we do entertainment in there. There is a methodological driver of that growth, which is that within Autodesk Build, which is our construction unified product, we count subscribers based on MAUs because it's sold using account-based pricing. So it's a single subscription point for a general contractor. But then all of the general contractors' employees on that project and the subs use that. So we don't think it makes sense to count that as one. So we count it based on MAUs. And as Build has grown, that gives a tailwind, a methodological tailwind, to the subs growth. The subs growth is still growing nicely. It's not quite as fast, though, on an underlying basis, as the headline number would suggest. Got it. When you think about the differences between the go-to-market models, versus the other parts of the Autodesk portfolio, is there any major difference in the transaction models that you're using or, how is it different or the same? Yeah. I don't think it's their major differences in our go-to-market models. Our go-to-market teams are not structured by industry. Now, there's a couple exceptions to that. You know, when we were incubating construction and really growing it, we had a dedicated sales force. And so they, you know, they had probably some of their own methods. But now we've actually brought that back into our larger Autodesk sales force. Yep. It's their methodologies are all consistent. The only other thing I would say that could be, you know, a little bit different or an exception is, you know, Fusion, as I said earlier, really its growth started through product-led growth. So we had a high degree of e-commerce and marketing-driven, bringing leads in, you know, through marketing and closing them in e-commerce. And product-led growth is something that we like. And as we nurture new parts of our business, we wanna emulate that. Got it. And then the new transaction model, I mean, are you guys a part of it? Were you already there, or are you part of that transition? Where do you sit in that continuum of how you guys are changing the, you know, the new model that's rolling out? We're a big in manufacturing, we're absolutely part of that. Yeah. It's in the same way that all the other parts of the company are. It's really that's more of a cross for all the go-to-market teams. Yep. Okay. And frankly, a very exciting change. Yeah. And we'll benefit from the same things across the company, which is greater visibility and data on the customers and better customer experience, which drive volume opportunity for us within the customer as it lights up as opportunities, which we can't currently see. It also drives pricing opportunities as we will be setting the price to the customer rather than the channel partner setting the price to the customer. So that helps raise average pricing for us. And on the cost side, we will have, for the first time, all of our sales and marketing in one place, which is quite exciting. And we think that will drive operational efficiencies for us over time. And also because we've insourced the distribution and the billing platform specifically in-house, we will be paying gross less to the distributors, obviously, net of the cost of setting up and running our own platform. But that still will be savings from that as well. Yep. So that cuts across the whole Autodesk portfolio is the point. Right. All right. Any questions out there? We've time for a question. Are you seeing any, you know, with these big mega project with all this mega project activity that's happening in the U.S., how does that influence your business, in any way when you see, you know, semiconductor plants coming here and, EV facilities being put up? How is that kinda making its way into your, into your domain? It feeds into two trends that we've noticed. One is the shift to EVs in the automotive sector. As the second one is, we see customers, and we hear a lot from customers who are trying to rebalance their offshore, onshore, nearshore. That's all music to our ears because every time a new factory is planned, it has to be designed. We should use our Revit products. It has to be constructed, our Autodesk Construction Cloud. Often, they'll simulate how the factory will work on the inside. That's FlexSim, the product we bought last year or the company we bought last year. And it has to be populated with software like Fusion. So, we love when we see those. It, the per what we might do on the inside of the factory will vary by what sector it's in. Right. So, you know, if it's in semiconductors, you know, we could certainly do some things in there, but not, you know, we're not the only provider. Right. Okay. Did I have one more thing? Yeah. Absolutely. There's also an adjacent thing happening with the infrastructure bill, which is the federal government is incentivizing federal and state departments of transportation to become more digital and move their workflows to the cloud. As they do that and also adopt Building Information Modeling, that means that more of the infrastructure dollars are becoming addressable for us. You know, good example of that, last quarter, was the Pennsylvania Department of Transportation adopting Autodesk Construction Cloud as its future platform, cloud-based platform for all of its future projects in the state. As that happens, that will open up more of the infrastructure market in the U.S. as it has already done outside the U.S. That's a market relatively where we're underpenetrated. Got it. Great. Thanks, guys. Appreciate it. Thank you. Thanks for coming in. Thank you. [Umcertain]