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Autodesk (NASDAQ: ADSK)
Q3 2025 Earnings Call
Nov 26, 2024, 5:00 p.m. ET

Key Insights from Autodesk’s Q3 Earnings Call

• Opening Statements
• Discussion and Questions
• Participants in the Call

Opening Statements:

Operator

Thank you for joining Autodesk’s third quarter and fiscal year 2025 financial results conference call. We will begin with a presentation and follow that with a question-and-answer session. I now hand the call over to Simon Mays-Smith, VP of Investor Relations.

Simon Mays-Smith — Vice President, Investor Relations

Thank you, operator, and good afternoon. Welcome to our call discussing Autodesk’s Q3 fiscal ’25 results. With me are Andrew Anagnost, our CEO, and Betsy Rafael, our interim CFO. Please note that forward-looking statements may be discussed during this call, and actual results could differ significantly. Refer to our SEC filings for details on risks and factors affecting our forecasts.

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Autodesk does not commit to updating forward-looking statements. Note that any numerical or growth references mentioned will compare year-on-year. Non-GAAP figures discussed today are available through our press release or on our Investor Relations website.

Now, I will turn the call over to Andrew.

Andrew Anagnost — President and Chief Executive Officer, and Director

Thank you, Simon, and welcome to everyone on the call. We completed Q3 strongly, posting a 12% revenue growth in constant currency and raised our full-year guidance once again. This reflects our ongoing business momentum and effective execution of our strategies, particularly with the new transaction model rollout in Western Europe. Our performance is founded on opportunity, resilience, and discipline.

Last month at Autodesk University in San Diego, we welcomed 12,000 attendees and another 30,000 online. We demonstrated how our cloud solutions can organize data models and connect with various systems, enhancing value for customers. Conversations with attendees suggest a steady optimism about their businesses, aligning with our growing product adoption and BuildingConnected bid activities in previous quarters.

In the last earnings call, I laid out our growth opportunities and the strategies in place to exploit them. Autodesk has been ahead of others in investing in cloud technology, platform enhancements, and AI. Our commitment to modernizing our approach began a few years ago with the transition to subscription models and continues with initiatives for greater customer engagement and efficiency.

Recent efforts have bolstered direct relationships with customers, allowing us to serve them more efficiently. Expectations are high that we will achieve our target of 38% to 40% non-GAAP operating margin for fiscal ’25, ahead of schedule. Continued improvements are anticipated for fiscal ’26 on the same basis.

This new transaction model fosters improved partnerships by reducing redundant efforts and enhancing digital services, ultimately improving customer satisfaction and productivity. It will also grant partners better opportunities for earnings with a focus on value rather than just transaction share. Our aim is to enhance sales and marketing efficiency, achieving industry-leading margins while solidifying our market position.

Disciplined operations and capital use have driven faster revenue and cash flow growth. Even as we navigate through fiscal ’24, we continue to repurchase shares to reduce diluted impacts, aiming to sustain shareholder value over the long term.

In conclusion, I am excited to formally welcome Janesh to Autodesk. We are looking forward to the contributions he will make…

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Autodesk Reports Strong Q3 Results and Raises 2025 Financial Guidance

Leadership Transition and Initial Comments

Andrew Anagnost, CEO of Autodesk, acknowledged the new CFO’s experience, highlighting its role in supporting Autodesk’s growth. He extended gratitude to Betsy Rafael, who served as interim CFO during a critical phase for the company. Anagnost expressed enthusiasm about collaborating with Rafael in her capacity as an Autodesk Board member.

Next, Anagnost handed the call to Betsy for a look at the quarterly financial performance, followed by updates on Autodesk’s growth strategies.

Q3 Financial Performance: A Strong Quarter

Betsy Rafael — Interim Chief Financial Officer

Thanks, Andrew. Q3 has shown another strong quarter with growth across various products and regions. An increase in revenue resulted from our new transaction model and mergers & acquisitions (M&A). However, we did experience a setback due to the lack of enterprise business agreement true-ups from last year’s Q3, as well as foreign exchange (FX) challenges.

Our Make products fueled growth, particularly in construction and Fusion software. Overall, the economic and geopolitical landscape remained consistent with previous quarters, characterized by solid renewal rates but challenges in new business growth. Total revenue increased by 11%, and by 12% when adjusted for constant currency. In constant currency, AutoCAD and AutoCAD LT revenues grew by 8%.

Revenue Breakdown: By Sector and Region

AEC revenue, affected significantly by the absence of true-up revenues, rose by 12%. Manufacturing revenue also showed robust growth at 16%, remaining firmly in double digits even after excluding upfront revenue. Meanwhile, M&E revenue increased by 15%, aided by the PIX acquisition and integration adjustments. Regionally, revenue growth was 11% in the Americas, 13% in EMEA, and 14% in APAC when considering constant currency. Our new transaction model contributed $17 million to revenue in Q3 and $25 million year-to-date.

Direct Revenue and Billing Insights

Direct revenue climbed by 23%, now accounting for 42% of total revenue, moving up 4 percentage points from the previous year. This growth resulted from an increase in enterprise business agreements (EBAs) and activities on the Autodesk store, as well as advantages from our transition to a new transaction model. The net revenue retention rate remained stable, between 100% and 110%, when evaluated at constant exchange rates. Billings surged by 28% in the quarter due to a prior shift to annual billings for most multiyear contracts, early renewals, and the beneficial effects of the new transaction model.

However, as seen last quarter, co-terming negatively affected billing ahead of the new transaction model launch in Western Europe. The new transaction model contributed $72 million to billing this quarter and $108 million year-to-date. Total deferred revenue declined by 9% to $3.7 billion due to the shift from upfront to annual billings for multiyear contracts. Both total RPO and current RPO saw increases of 17% and 14%, respectively, benefiting from early renewals and the new transaction model.

Margins, Cash Flow, and Capital Management

Looking at margins, both GAAP and non-GAAP gross margins showed broad declines. With Autodesk University moving back to Q3 from Q4, GAAP and non-GAAP operating margins decreased by 2 and 3 percentage points, respectively. The adjustment from AU will smooth out over the year.

This quarter’s free cash flow amounted to $199 million, supported by early bookings from some channel partners in Western Europe ahead of the new transaction model transition. However, this was partly balanced by the anticipated negative effects of co-terming in that region.

Buybacks and Future Guidance

Regarding capital allocation, Autodesk remains committed to responsibly managing its resources to generate long-term shareholder value. The pace of stock buybacks increased, with 1.2 million shares repurchased for $319 million at an average price of approximately $269 per share. Over the past three years, this strategy has reduced the share count by about 5 million shares, resulting in an average annual reduction of approximately 70 basis points. Autodesk also raised its share repurchase program by an additional $5 billion, bringing the total authorization to approximately $9 billion.

Guidance for the Future

Moving into guidance, Autodesk recognizes that the rollout of its new transaction model may create fluctuations in billings and financial performance. Free cash flow serves as a reliable measure of strategic performance. Momentum in business remains consistent with the company’s expectations for the year, maintaining strong renewal rates despite challenges in new business growth. With the successful Q3 and smooth operation of the new transaction model in Western Europe, Autodesk is optimistic about its forecasts.

Revisions for fiscal ’25 include an increase of $10 million in billing guidance to a range of $5.90 billion to $5.98 billion, and a hike in revenue guidance by $18 million to between $6.12 billion and $6.13 billion. Autodesk also raised guidance for GAAP and non-GAAP margins by 25 basis points while adjusting for expected headwinds from new transactions and related investments.

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Autodesk’s Strong Growth Outlook Propped by Cash Flow and Client Expansions

The company’s free cash flow remains robust, with recent strategic shifts leading to an increase in guidance for fiscal year 2025. Executive leadership notes that factors such as early renewals and expedited collections are countering challenges from currency fluctuations and billing changes.

Autodesk raised the midpoint of its fiscal ’25 free cash flow target by $10 million, tightening the expected range to $1.47 billion to $1.5 billion. The leadership anticipates strong growth in free cash flow for fiscal ’26, buoyed by the return of its largest multi-year renewal cohort and an increase in contracts billed annually.

Current projections suggest a midpoint free cash flow of approximately $2.05 billion for fiscal ’26. For those interested in further details, the slide deck on the company’s website outlines the assumptions made for Q3 and the entire fiscal year 2025. As this may be my last earnings call for Autodesk, I want to express my gratitude to everyone at the company and the many investors and analysts with whom I’ve engaged over recent quarters.

Despite some noise in billing due to the transition to annual billings for multi-year contracts, Autodesk’s new transaction model is anticipated to provide a natural boost to revenue and free cash flow growth. This confidence stems from the company’s resilient business model and its ability to navigate uncertainties, leading me to resign from my interim CFO role with optimism for the future. Andrew, I’ll hand it back to you now.

Andrew Anagnost — President and Chief Executive Officer, and Director

Thank you, Betsy. I’d like to wrap up by highlighting our significant achievements in the third quarter. We see strong growth in the architecture, engineering, and construction (AEC) sector, especially in infrastructure and construction. Customers are increasingly drawn to our solutions that integrate and streamline previously separate workflows using cloud technology.

This growing interest is tied to our comprehensive solutions that support all phases of project execution, from design to operations. As a result, our construction division has experienced substantial growth, with the number of new customers doubling year over year. Renewals and expansions among existing clients are also strong. For instance, Power Construction, ranked No. 79 on the Engineering News Record (ENR) Top 400 U.S. contractor list, selected Autodesk’s unified construction platform after a competitive evaluation.

By adopting Autodesk Construction Cloud, Power aims to standardize project data and enhance collaboration across their operations. In Europe, Bouygues, a top-10 contractor on the ENR 250 list, recently renewed and expanded its enterprise business agreement (EBA) with Autodesk, further integrating our solutions into their workflow.

Based in Singapore, Surbana Jurong, which ranks No. 23 among ENR’s top 225 international design firms, also renewed its third EBA in the quarter, increasing its investment in Autodesk’s tools to enhance efficiency across its water infrastructure projects.

These examples reflect a common theme: effectively managing people and processes is essential to improve efficiency and sustainability while mitigating risks. We believe that adopting our industry cloud will be crucial for future project management trends.

Turning to the manufacturing sector, Autodesk has made meaningful strides in executing strategic initiatives. Customers are increasingly investing in digital transformation, leading to the consolidation of our Design and Make platform. One of our fastest-growing products, Fusion, continues to enhance its uptake among customers eager to foster innovation while reducing costs.

For example, a major global manufacturer in the semiconductor sector chose Fusion Manage and Vault PLM to enhance collaboration and operational efficiency. They anticipate saving 105,000 hours annually through improved data integration. In the U.K., Playdale Playground adopted Fusion to streamline and digitize their workflow surrounding the design and manufacturing of playgrounds.

A long-time customer, a leader in precision engineering solutions, expanded its EBA this quarter to include Fusion’s generative design features, which help in reducing material waste. Meanwhile, in academia, the University of Stuttgart has decided to use Fusion across six courses starting this winter, citing its user-friendly platform and collaborative capabilities as key decision factors.

Lastly, we continue to engage with customers to ensure compliance with the latest software versions, recently completing one of our most significant license compliance agreements with a multinational company in APAC as they work towards better alignment across their global teams.

The long-term growth potential for these markets is promising, and our focused strategy only strengthens our position.

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Autodesk Reports Steady Growth Amid Leadership Changes

Strong Business Momentum and Future Outlook

Autodesk is experiencing robust momentum in its business, both in absolute terms and compared to its peers. The company’s disciplined execution and strategic capital deployment are enhancing operational efficiency. Autodesk aims to deliver long-term sustainable shareholder value, reflecting a strong commitment to its customers and the business landscape. The CEO, Andrew Anagnost, expressed optimism regarding the ingenuity and resilience of their clients as well as future prospects. The call is now open for questions.

Leadership Transition: Janesh’s Upcoming Role

Operator

Thank you. [Operator instructions] Please wait while we arrange the Q&A lineup. Our first question comes from Jason Celino of KeyBanc Capital Markets. Please go ahead.

Jason Celino — Analyst

Thank you for taking my questions. I have two. First, Andrew, some of us are not very familiar with Janesh. Could you provide more details about him and what he adds to Autodesk?

Andrew Anagnost — President and Chief Executive Officer, and Director

Of course. First, I want to express gratitude to Betsy for her contributions during this interim period. Now, we’re excited about Janesh joining us. One of my main goals was to find someone who can efficiently drive optimization within Autodesk.

We sought a person focused on maximizing our investments to yield the best returns for both the company and shareholders. While prior experience as a CFO was desirable, the main goal was driving optimization at scale. Janesh has excelled in this area for seven years at Elastic, navigating significant changes. His experience includes notable positions at both VMware and Cisco, companies that have historically added value to Autodesk.

Additionally, Janesh has knowledge of our industry from his time at PTC, including a role on their board. This background will enable him to quickly acclimate to our environment. His primary objective will be to ensure we maximize returns on our investments. I’m enthusiastic about his contribution when he joins us in December.

Investor Day Speculations

Jason Celino — Analyst

That sounds promising. For my second question, now that you have appointed a CFO, do you have thoughts on holding the next Investor Day? In the past, it’s typically been in March. Is that timeframe still on the table?

Andrew Anagnost — President and Chief Executive Officer, and Director

Janesh will start in December, and it’s important to give him time to settle in and prepare for the next fiscal year. Therefore, I think it’s unlikely we will have the Investor Day in spring but will keep you updated once Janesh is ready to discuss it.

Current RPO Performance Insights

Operator

Thank you. Our next question comes from Jay Vleeschhouwer of Griffin Securities. Please proceed.

Jay Vleeschhouwer — Analyst

Thank you. Andrew, as of the third quarter, your three-year CAGR for current RPO stands at about 12%. How do you view the sustainability or growth potential of that CAGR moving forward? Historically, your overall unit volume growth across all brands is around 6% to 7%. How might you enhance the recent trends in current RPO?

Betsy Rafael — Interim Chief Financial Officer

Hi, Jay. The current dynamics around the CRPO numbers reveal a mix of headwinds and tailwinds consistent with the previous quarter. As I mentioned earlier, early renewals and our new transaction model are benefiting growth. However, we also face challenges from the reduced contribution of deferred revenue and upcoming large multiyear contracts set to renew in fiscal ’26. This mirrors patterns we observed before fiscal ’23 renewals.

Chief Revenue Officer Position Discussion

Jay Vleeschhouwer — Analyst

Given the management transition, can you elaborate on the chief revenue officer (CRO) position? Would it be better to keep this role separate, or consider merging it with the COO position?

Andrew Anagnost — President and Chief Executive Officer, and Director

We plan to maintain a separate CRO position to oversee functions collaborating under the COO division, such as IT and infrastructure. The ideal candidate will understand customer engagement and analyze usage patterns, facilitating cross-selling and upselling opportunities. This role will evolve from a transactional focus to providing comprehensive lifecycle solutions for our clients.

Jay Vleeschhouwer — Analyst

Thank you very much.

New Transaction Model Insights

Operator

Thank you. The next question comes from Adam Borg of Stifel. Your line is open.

Adam Borg — Analyst

Thank you for taking my questions, and congratulations to Betsy and Janesh. Regarding the new transaction model, it may still be early, but are you noticing any trends among customers engaging with the new model that highlight opportunities for better adoption of Autodesk technology, especially in upselling and cross-selling?

Autodesk CEO Discusses Customer Relationships and Future Outlook

Andrew Anagnost — President and Chief Executive Officer, and Director

During our early evaluations, it’s difficult to draw any firm conclusions. However, we are noticing shifts in how customers interact with Autodesk. Traditionally, many have engaged with us on a purely transactional basis, but this is changing. Regarding cross-selling and upselling, it’s still too soon to determine the full impact. You can look at our experience with Enterprise Business Agreements (EBAs) for insight into how relationships might develop. Over time, we found that understanding customer usage patterns significantly enhances our ability to drive cross-sell and upsell opportunities, even in collaboration with our partners.

Adam Borg — Analyst

As we anticipate the new administration, has there been any noticeable change in the optimism levels among your clients regarding expanding new projects? Are they pausing their plans, or are they proceeding with full momentum?

Andrew Anagnost — President and Chief Executive Officer, and Director

In terms of what truly impacts our customers, we observe bipartisan support for key issues. Both parties prioritize infrastructure development, domestic manufacturing, and supply chain stability. These ongoing concerns will likely remain central to our customers’ strategies, regardless of changes in administration.

Adam Borg — Analyst

Thank you for that insight.

Operator

Our next question comes from Joe Vruwink of Baird. Please proceed, Joe.

Joe Vruwink — Analyst

Looking ahead to next year, Autodesk has set a projection of $2.050 billion in free cash flow. This outlook has remained consistent over the past year. With an increase in co-term contracts recently, could this potentially lead to better outcomes, thus allowing you to present $2.050 billion as a midpoint estimate?

Betsy Rafael — Interim Chief Financial Officer

Our guidance for free cash flow in fiscal 2026 remains unchanged at $2.05 billion as the midpoint.

Joe Vruwink — Analyst

Understood. Regarding the M&A environment, Autodesk has focused on smaller, strategic acquisitions recently. For instance, an asset in the CFD simulation space was announced during the Autodesk University event last quarter. Is this acquisition strategy the best approach at this time considering your advancements in cloud technology and data models?

Andrew Anagnost — President and Chief Executive Officer, and Director

Consolidation in our industry is to be expected. While I won’t comment on specific transactions, Autodesk has a history of strategic acquisitions, and we will continue to explore opportunities that align with our goals, both strategically and financially.

Joe Vruwink — Analyst

Thank you.

Andrew Anagnost — President and Chief Executive Officer, and Director

Thank you, Joe.

Operator

Now we will hear from Elizabeth Porter of Morgan Stanley. Please go ahead, Elizabeth.

Elizabeth Porter — Analyst

Thanks for taking my question. As partners start to onboard customers to the new transaction model, they seem to be dedicating more resources to existing customers. Has this affected demand for new business? Also, are there any notable changes in new business trends compared to the last quarter?

Betsy Rafael — Interim Chief Financial Officer

Overall, we are still experiencing growth, though at a slower pace due to several factors: macroeconomic conditions, the impact of the pandemic, exiting the Russian market, and upcoming elections. These issues have influenced our guidance.

Elizabeth Porter — Analyst

For my follow-up on billings, I understand there is volatility due to the transition to the new transaction model. However, the guidance seems to indicate a bigger decline in growth for Q4, even with an easier year-over-year comparison.

Betsy Rafael — Interim Chief Financial Officer

From a fiscal 2025 perspective, there will be tailwinds from the transition to annual billings and new transaction models, along with early renewals. However, we also face headwinds from co-terming and FX impacts. Despite these challenges, we believe our performance through Q3 has set a solid groundwork for Q4.

Elizabeth Porter — Analyst

Thank you.

Operator

Next, we have Bhavin Shah of Deutsche Bank. Your question, please, Bhavin.

Bhavin Shah — Analyst

Thanks for taking my question, and congratulations on the quarter. Andrew, during the recent university events, there was a significant increase in attendance focused on owners and operators. What factors are driving this interest? Is it largely due to product enhancements or a more strategic approach in the go-to-market tactics? How soon might we see this segment contribute significantly to your financial results?

Andrew Anagnost — President and Chief Executive Officer, and Director

This is a compelling question, Bhavin. Our focus encompasses the entire lifecycle from design to operations. The interest in our product, Tandem, a digital twin solution, has significantly driven engagement, reflecting a rising adoption of our offerings in this space.

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Autodesk’s Strategic Shift Yields Positive Results Amid Challenging Market

Key Insights from Autodesk’s Leadership on Financial Improvements and Future Growth

Recent discussions from Autodesk’s executive team highlight an uptick in product development that aligns with owner interests. This indicates a promising trend towards enhanced solutions in various sectors, extending beyond just vertical buildings to include factories and water solutions. As Andrew Anagnost, President and CEO, noted, “owners matter,” signaling a commitment to this key market segment.

Betsy Rafael Responds to Analyst Inquiries on Margins

Bhavin Shah — Analyst

Can you elaborate on the margins improvement related to foreign exchange (FX) and the transaction model?

Betsy Rafael — Interim Chief Financial Officer

Providing specifics on this right now is tricky, especially with the transition to a new CFO. Expect more detailed analysis by the end of February.

Bhavin Shah — Analyst

I understand. Thanks for your insights.

Andrew Anagnost — President and Chief Executive Officer, and Director

I appreciate the question.

Tyler Radke Offers Further Questions on Company Efficiency

Tyler Radke — Analyst

Good afternoon, everyone. I want to touch on next year’s guidance, but I won’t dwell on that. Andrew, you mentioned efficiency, particularly with Janesh’s experience from larger firms like VMware and Cisco. Having rolled out the transaction model, where do you see potential efficiencies?

Andrew Anagnost — President and Chief Executive Officer, and Director

Great question. Efficiency is ingrained in Autodesk’s culture. This year, our non-GAAP margins are meeting our targets early. As we refine our transaction model, we anticipate further margin growth. Self-service for customers is a significant area impacting engagement and efficiency. Also, by understanding our customers better, we can leverage automation for upsell and cross-sell opportunities, driving efficiencies through removing unnecessary steps in the sales process.

Tyler Radke — Analyst

Solid insights. Regarding your strong growth in Construction Cloud, do you believe this acceleration is sustainable? What’s driving your new customer additions?

Andrew Anagnost — President and Chief Executive Officer, and Director

The growth in the make revenue is indeed strong, contributing significantly to our overall success. Our construction solutions remain robust, showcasing consistent organic growth. Furthermore, our successful integration of acquisitions like Payapps is contributing to this upward trend. Notably, we’ve doubled our new customer additions year-over-year. Our distribution channels are optimized for both U.S. and international markets, enhancing our ability to capture new clients.

In summary, Autodesk is positioned to maintain its growth trajectory by focusing on efficiency, customer relationships, and effective use of technology, promising an exciting outlook for stakeholders.

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Autodesk Drives International Growth with Focus on Comprehensive Solutions

CEO Andrew Anagnost highlights the company’s commitment to providing end-to-end solutions for customers, emphasizing a growing market demand for cloud-based licensed versions. Autodesk’s strategy aims to integrate design, construction, and operations over the next decade, further enhancing its market appeal.

Operator

Thank you. Our next question comes from the line of Michael Turrin of Wells Fargo. Your question, please.

Michael Turrin — Analyst

Hey, thanks very much. I appreciate you taking the questions. The commentary on the call sounded consistent, but I would like to know if you can provide additional details on the current spending environment and its trends across different product segments or regions. Are there any signs of improvement or is it generally stable compared to previous quarters?

Thanks.

Andrew Anagnost — President and Chief Executive Officer, and Director

Michael, the fundamental answer is that things remain consistent. We’re observing trends similar to what we have in previous quarters. As a large and diverse business, there are always fluctuations, but the overall sentiment remains steady.

Betsy Rafael — Interim Chief Financial Officer

I’d like to add that this year has been filled with distractions, including the new transaction model and the upcoming elections. This makes it challenging to pinpoint specific behaviors. Therefore, as Andrew mentioned, we label the trends as consistent.

Michael Turrin — Analyst

Absolutely, it’s tough for us too, which is why we keep asking. Betsy, congrats on transitioning back, especially since you’re on the board too. Could you share insights on the hiring of Janesh and how you’ll ensure a smooth transition while maintaining progress on the key initiatives the company is working on?

Thanks.

Betsy Rafael — Interim Chief Financial Officer

I was directly involved in the extensive recruitment process for Janesh, and we’re thrilled to have him join. My experience on the board for 11 years, coupled with my immersion in the business over the past six months, positions me to assist in a seamless transition. I aim to support Janesh through the end of the fiscal year, and I’m confident he’ll integrate well with our strong finance team.

Michael Turrin — Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of Matthew Hedberg of RBC Capital Markets. Your question, please, Matthew.

Mike Richards — Analyst

Hi, this is Mike Richards standing in for Matt. I wanted to get an update on Project Bernini, particularly on customer feedback and the development of other foundational models and their monetization potential. Thanks.

Andrew Anagnost — President and Chief Executive Officer, and Director

Before discussing Bernini, it’s important to note that AI is now deeply integrated into all our offerings, as discussed at AU. We’ve also introduced new foundational models capable of automated drawing creation and sketch generation. Bernini represents a different approach; we’re collaborating with selected customers to refine its effectiveness. While it is not yet available commercially, we’re gathering valuable insights to enhance its capabilities, specifically in understanding 3D geometry.

Concerning monetization, while no one knows precisely how it will unfold, we have a few key strategies. First, we aim to stay ahead of our competitors by investing in innovation. Our position allows us to charge for enhanced features as they demonstrate value. There are also possibilities for licensing technologies tailored to specific consumer needs. Though it’s still early, we remain optimistic about Autodesk’s leading role in AI-driven 3D design.

Operator

Thank you. Our next question comes from the line of Steve Tusa of J.P. Morgan. Your question, please, Steve.

Stephen Tusa — Analyst

Good afternoon. I had a specific question regarding the contribution from the new transaction model. Could you clarify the revenue impact from shifting from 5% to 6% down to 5% to 5.5%?

Simon Mays-Smith — Vice President, Investor Relations

The decrease is primarily due to higher buy/sell activity ahead of the European launch. It’s important to remember that we initially guided 5% to 6% with the European rollout, but increased buy/sell activity means the new model’s impact wasn’t as robust. However, the underlying growth in our billings guidance is stronger than it appears at first glance.

Stephen Tusa — Analyst

Great, thank you for the clarification.

Operator

Thank you. Our next question comes from the line of Joshua Tilton of Wolfe Research. Your line is open.

Joshua Tilton — Analyst

Hey, can you hear me?

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Future Growth Prospects Examined as New CFO Steps In

Revenue Growth Outlook Remains Steady Amid Challenges

Andrew Anagnost — President and Chief Executive Officer, and Director

In response to a high-level inquiry regarding revenue predictions under the new CFO, Andrew Anagnost discussed the company’s anticipated growth. Currently, the revenue growth forecast is between 10% and 15%, with the organization near the lower end of this range. Notably, various factors over the past two years have hindered new business development.

Anagnost cited challenges such as the pandemic, inflation, the exit from the Russian market, a writers’ strike, and ongoing trade disputes in specific regions as contributors to their current situation. These elements have gradually weighed on the business’s performance, and in a subscription model, setbacks and recoveries can take time. “It takes time for us to build out of that,” he explained, indicating a period of adjustment is necessary. The expectation is to remain close to the lower bound of the growth forecast in the short term, but the long-term goal of 10% to 15% growth remains valid.

Operating Leverage Insights and Future Guidance

Siti Panigrahi — Analyst

During a follow-up, Siti Panigrahi from Mizuho raised questions about potential operating leverage absent the noise created by the new business model. Interim CFO Betsy Rafael noted that historical data from the last three years has been clarified, with a focus on expansion initiatives, though further predictions for next year were not disclosed.

Andrew Anagnost reinforced their previous insights, remarking on expectations for continued improvement based on underlying trends.

Renewal Opportunities and Cost Structure Queries

Michael Funk — Analyst

Michael Funk of Bank of America examined the implications of significant multi-year client renewals coming up. He sought to understand the potential outcomes of these renewals, specifically regarding upselling or the risk of downsizing. Betsy Rafael acknowledged it as the largest cohort renewal but declined to provide specific projections for fiscal 2026, indicating more details would be available during their February earnings report.

Funk also asked about the impact of their transition to a new transaction model on fixed versus variable costs. Simon Mays-Smith directed him to a slide in their earnings deck that could aid in financial modeling.

Closing Remarks and Future Engagements

Simon Mays-Smith — Vice President, Investor Relations

In concluding the call, Simon Mays-Smith expressed gratitude to participants and noted a busy schedule ahead. He encouraged attendees to reach out with questions, also extending wishes for a happy Thanksgiving to North American colleagues.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Simon Mays-Smith — Vice President, Investor Relations

Andrew Anagnost — President and Chief Executive Officer, and Director

Betsy Rafael — Interim Chief Financial Officer

— Additional analysts participated in the discussion as well.

This article has been produced for The Motley Fool. Please note that while we aim for accuracy, there may be errors in the transcript. We encourage readers to conduct their own research and review the company’s SEC filings for comprehensive information.

The Motley Fool has positions in and recommends Autodesk. The Motley Fool has a disclosure policy.

The views and opinions in this article are those of the author and do not necessarily reflect those of Nasdaq, Inc.