David Giannarelli.
Good morning, everybody. Thanks for coming back to the NASDAQ side again this morning for a meeting with Autodesk Management. We're going to have 4 presentations today. Carl Bass is going to kick things off. Andrew Anagnas, who is our Senior VP of Strategy and Marketing, is going to go next, followed by Steve Blum, our Senior VP of Worldwide Sales and Mark Hawkins, our CFO, will wrap things up.
So we're going to do those 4 presentations and then do one large Q and A session after that. So in all, in total, we're going to have about 2 hours of content and questions. And with that, we'll kick things off.
Design has a unique power to solve problems. And the better our power to design solutions, the bigger the problems we can solve. The challenges we face today are complex and global. That's why one 3 d software company focused
Ladies and gentlemen, please welcome President and CEO, Carl Bass.
Good morning, everybody. So let me just give you an outline of what we're going to do today. Dave gave you a little bit. I'm just going to give you a brief overview and a recap of what's gone on over the last year, try to provide little color commentary. We're going to hear from Andrew, who's going to talk about both our product and service initiatives, what's going on with our changing business model and how it's evolving.
Then you'll hear from Steve Blum, who's going to talk about all our go to market activities. And then finally, you're going to hear from Mark Hawkins. So just a brief recap about last year. So last year revenue growth was 14%. One of the things we did and you'll hear a lot about is we continue to make investments for the future.
We believe we're on the cusp of the biggest platform transition in the company's history in terms of moving to I think when people talk about the cloud, they kind of miss the point of it. We're moving to a new platform, a distributed computing platform that includes cloud, social, mobile. You may have heard me talk last year about infinite computing and what we think that means to our customers. And so really, this is just a whole new way of working for our customers. And that's what we've invested profitability.
We had an operating margin expansion of 2 60 basis points and non GAAP EPS growth of 32%. So it was a good year despite of 32%. So it was a good year despite the economic backdrop, particularly around Europe, which continues to exist. And as someone said, it's the elephant in the room today. I have no better insights than any of you do on Europe.
I read The Economist on the plane down from Boston yesterday. So I'm happy to quote from it, but I really don't have much more insight into Europe than you do, but I'm happy to answer any questions that you guys have about it. One of the things we did this year is we realigned how our go to market activities work in particular around 4 industries. So this is all around customer industry segments. It's similar to how you probably think of our business and with one slight wrinkle in there.
So one is the traditional AEC business, Architecture, Engineering and Construction that you understand and we've served for many years. The second is the broad based and broadly defined manufacturing industry. The one thing we broke out was the engineering, natural resources and infrastructure. And while it has aspects that are related to manufacturing and it has aspects related to AEC, we found the nature of the customers in that segment different enough in terms of their needs and their desires about how they want to buy and how they want to be served that we separated it out. And then the last one is the media and entertainment.
So the thing that we did this year is we reorganized around serving those particular market segments and bringing all of our offerings to those customers. And you'll hear more about it a little bit from Andrew and a lot from Steve. When you look at the addressable market for us, we pen it and this is sourced from Kombashi at around $19,000,000,000 So if you look at this as slightly more than 2 $1,000,000,000 so somewhere in the low double digits of market share. When you share. When you step back and you look at really what our strategy has been is there are 2 things going on.
1 is the big force in moving to mobile, social and cloud. Really what's going on is this enormous platform shift and moving our customers there. In the short term, what we're selling our customers is suites. And we started about a year ago our movement to suites. The year before that, we had done a couple of kind of pilots.
You might remember in the summer and leading into the fall, we had introduced a couple of suites to test out the concept, learn a little bit more about it. We introduced them in full in the spring of last year and they've been enormously successful. And Andrew is going to detail a bunch of the metrics about what's going on with suites. Bunch of the metrics about what's going on with suites. Customers are finding increasing value in the suites.
As we move forward, because you have what customers are doing today with suites and in the future, what they will do with cloud services and what we'll watch is this transition from suites with cloud services to where we believe the cloud will become central and they'll have some the the big thing is the cloud. And like I said, for those who somehow think the cloud is another form of mainframe computing or something about client server, I think they miss the point entirely. They miss what the essence of it is. And I think there are 2 really important aspects of this new computing architecture that surrounds all of us. One is this idea about the infinite computing, this idea that you have this infinitely scalable resource to do computing.
And for many of the things that our customers do, having more computing power is incredibly important. Now that's different than the rest of the industry where people say, all my PC does is e mail and browse the web. For our customers, having access to more computing power means they can understand the things they're going to design and build better and as a result, build better things. They will produce better products, bring better projects to market as a result. So one is this high powered computing that's essential to what all of our customers do.
The second aspect that you've seen in many cases and certainly on the personal level is the community based collaborative aspect of having centralized computing. Now it's every bit as important in that all of the projects that our customers do are done with groups of people. So the idea of sharing information and having the right information at the right place mobile, it's this combination of social, mobile and cloud that will be the new way that our customers work. Now I'm often asked how long is this going to take? And I would say within 3 years, I think the primary way our customers will work is through based services.
And we'll spend some time today kind of backing up our assertion about that and what we're doing to manage the transition to a world in which our customers work that way. Now this is becoming one of my hit slides. I think this is the 3rd or 4th year I'm showing it. It continues to be true and it continues to be the way that we think about our business. And I think it's a good backdrop and we always use it to frame it because people we're a little bit like people touch one part of the elephant and they're trying to figure out what's the animal in the middle.
This is a good way to do it when you look at lots of what we do around our go to market activities, around the products and services we're building, what's going on in our various sales channels. It's important to understand this. So the top three segments in the pyramid, very understandable. The top part of it is our enterprise customers. It accounts for almost customers accounts for that much of our revenue.
There's those are the customers we also go to in a programs, many of the sales programs are tailored for our biggest and best customers. There's then also the next two categories, small and medium business, which is really the part of the business that you should most associate with our VARs. So our value added resellers, what you think of as the traditional business, is a very important part, but certainly not the whole part. And then there's the other one, which we have an incredibly long tail in which we have 100 of thousands of customers that generally have a seat or 2 of our software. So all the way from people who have 10,000 seats in the enterprise accounts accounting for lots of revenue, about the same amount of revenue in the lowest tier category, but it's single users with 1 or 2 seats each.
So the way we go to market for those are completely different. We have volume channels to serve at the bottom. We have value channels in the middle. We have our direct sales force at the top. And everything about how we serve those customers is different.
However, the offerings themselves are really the same. And then the last thing is all about consumers. And our consumer has been like 1 big petri dish. It's been an experiment for us in which we've learned a tremendous amount about where we think the world is going. And just as we've seen in the rest of the world, it used to be that innovation started at the top.
You'd see things that started in the military, went to large corporations and it came down and it would eventually get down to folks like you and me. We're seeing the opposite nowadays. Things are starting as this whole consumerization of IT. Innovation is starting with the consumer and working its way into large companies. And so we're incredibly excited about the stuff we're seeing with our consumer business, but we've also used it as a great laboratory to learn a tremendous amount about what's possible in cloud and social and mobile and what's going on there.
We've also expanded the number of customers we serve. It's now tens of millions of consumers that we've reached with these applications and learned a tremendous amount of what we're able to do and how well we can serve them. So you won't hear much about this today. This will be it unless people ask questions. I just want to tell you, we're being very successful here.
People have seen tens of millions of users, whether it's in AutoCAD WS. So these are professional customers using AutoCAD in a mobile in a create drawings and paintings and sketches, as well as our photo editing software and an entire range of products made for the consumer to design and make things. So this has been an incredibly valuable learning ground, and we've taken a lot of what we've learned there and applied it to our professional offerings. So with that, what I'd like to do is Andrew Anagnost, who is the SVP of Industry Strategy and Marketing and let Andrew describe this transition that we're going through from what we're offering today in terms of suites and the background on suites, the genesis of it, some of the economics of it and then the transition to cloud based services.
Thank you, Carl. Good morning, everybody. It's a pleasure to be talking to you for the first time. Like Carl said, I'm going to expand on exactly what we're doing to ignite growth in our markets, and I'm going to be specifically using the word offerings instead of products because more and more as we move forward, what we offer to our customers are going to be aggregates of some of the products we offer and some of the services that we offer, and not just individual products. Some of them will be individual products, but more often, we're going to be emphasizing access over buying an individual product.
So we're starting out focusing on expanding our desktop business. You've heard a lot about the Design and Creation Suite. I'm going to give you a little bit more data on how we're doing with those. Those are essentially expanding what we're already good at in the desktop, and we're going to wrap around those offerings some additional services and tools that help us reach out and grab more opportunity in our existing TAM. But as you see us expand the kind of offerings we're delivering, we're going to be going after brand new TAMs and opening up new markets and exploiting places where we really haven't had a a Design Suites and Autodesk 360.
Now you're going to hear us more and more talk about Design Suites and Autodesk 360 together. Autodesk 360 is the brand we're going to be using to talk about our online services. And there's a component of those online services we're entangling with these design suite offerings. And these are all about building the desktop business and blending the desktop workflows at the cloud. But as we move forward, we're going to go to pure cloud based offerings that address whole different types of needs.
So just yesterday, you probably heard us announce the BIM360 initiative. And this is all about taking the expertise we have in BIM and bringing the next generation of BIM to market by using the cloud and the cloud platform to get there. We've also started rolling out pieces of a new offering called SIM360. And this is something we're going to use to take what was
us get there. And earlier this year, we announced PLM
360, which is a pure cloud based offering for addressing PLM and life cycle problems in the manufacturing industry. Now all of these initiatives have certain unique business model characteristics. Right now, the Suite and Autodesk 360 initiative is really expanding off our current perpetual and maintenance license model. People buy the software, they own it, and then they pay us maintenance for it on a continual basis. We've entangled online services with that maintenance contract.
They turn off when they're not when the customer isn't paying us. But these other services are much more about pure subscriptions, per user subscriptions and usage based metering applications. So they're a very different business model. And as we move forward, you're gonna see us layer that same business model onto our core business as well. We'll be offering options or offerings that allow people to get access to our desktop portfolio in subscription and usage based ways as well.
But before we fly off into all the clouds and talk about some of these things and what we're doing, I want to step back and look at how we're doing with the Design and Creation Suites, and how the strategic initiative is going and how some of our metrics are going relative to our original expectations. So the first thing and really the most important thing is customers are seeing the value and they're buying the suites. And there's a couple of events that are labeled here. Karl alluded to them earlier. In 2011, we rolled out a set of pilot suites that we use to test the value proposition, test our go to market, test some of our new delivery mechanisms because we had a whole bunch of systems that we put in place to get the suites to market.
Customers started buying. As we released the whole portfolio last year, customers started to buy even more. So you can see the 2 events, and they're continuing to buy now. And what's important about this is not only are they buying, but they're seeing the value, and they're buying at higher per seat prices. Now you may have heard us historically say we were targeting a 20% uplift relative to our stand alone products and our legacy suite products.
We're actually seeing a little bit more than that 20% uplift, but that's really kind of a short term effect from the way we're going to market. What we've seen is a few more Ultimate suites sold than we expected. We still sell mostly premium, but we sold a few more Ultimates. And in the emerging markets, we're seeing a larger price premium these suites and the stand alone products. Over time, we expect to settle down to that 20% target that we were seeking out in the initial strategy when we did this.
But so far, so good. We're seeing a premium for these offerings. What we're also doing very deliberately and we're focusing on is that if we do not continue to add value to these offerings, the customers are not going to continue to buy, and they're not going to continue to attach or renew subscription. So we're paying a lot of attention to making sure the value is there. And a couple of ways we're doing that is we're adding new products, new desktop offerings to the suites every year, and we've done that with this new release, and we did it with the release before, but from the pilots to the full portfolio until today.
We're stitching some of these products together, so we're providing workflows that help the customers use the various products together. And we're also attaching services to the A360 brand, the Autodesk 360 brand, to these maintenance programs for the suites. All of this is designed to drive the value for the customers. And what's happening is it's working. The customers are seeing the and they're attaching subscription at higher rates than they are at desktop products.
And the good news is, is not only are they attaching at higher rates, they're renewing at about the same rates as they renew the regular desktop products. So we attach higher, and we renew at about the same rates. So we're delivering value. The customers are seeing the value. And we're also watching very closely how the customers use the various applications.
So since we rolled out the suites, obviously, when we first rolled them out, customers were using single product. As time has gone on since we've rolled them out over the last 12 months, we've seen a gradual increase in the number of customers using 2 or more products and the number of customers using 3 or more products. The trend continues to shift. Those pie charts continue to grow, and we expect more and more of them to dominate the green over there. What's important moving forward is you'll hear us talking not just about desktop products, but the number of services they're using in conjunction with their suite offering.
And there's going to be a whole plethora of services available for them for use. And we're going to start tracking those as well because that's going to be an important part of the value proposition moving forward. Now the last piece of all of this is that we've barely started to penetrate the opportunity here for the suites. And is using a very conservative way of looking at what the opportunity is. We're looking purely at our subscription install base.
And the blue wedge right there is our penetration into that subscription install base. So we still have quite a bit of head room in terms of penetrating that subscription install base. So when you look back at suites, customers are buying, they see the value, they're buying at higher ASPs, higher right now than our current targets, but we very much expect to settle down to our targets. We're adding focusing on adding value. They're attaching at higher rates, and they're using multiple products.
And like I said earlier, a lot of that value we want to deliver is going to be showing up in the cloud moving forward. And I think that's a good segue for talking about what we're doing with our Autodesk 360 portfolio and how we're going to move forward with that. Now strategically, what we're doing initially is we're extending what they're on the desktop to the cloud. So right now, we're adding services around the desktop, helping them do more with their desktop offerings and get more value out of what we deliver on the desktop. Long term, that's not what we're going to do.
You heard Carl say very, very directly that the platform shift is not just about servers and client server, it's about changing the way the customers work. So all of the access to project files anytime, anywhere, the ability to collaborate across the life cycle and the access to the computing power that is unique to the cloud is going to allow us to change the way the customers work. So today, focusing on extending, in the future, offering whole new ways for the customers to work and whole new ways for the customers to solve their design problems. So how are we doing with this core piece, this A360 piece that we've entangled with subscription for suites? I have a few statistics here that will help you understand what we're doing.
So to date, there's been 9,000,000 downloads of the mobile applications, AutoCAD WS, Design Review Mobile, that are focused on the extended design team and the people that want to use design data beyond the initial design process. Of those downloads, we're seeing 4,600,000 unique users. So there's a lot of unique users out there that are banging on these tools in that extended design team, trying to use design data in an extended way. And really, all we're doing right now is simple viewing and editing of the design information. We haven't yet dipped deeper into their design process.
Now when you look at some of the compute intensive tools that we've delivered, and the main one and the most popular one we've delivered into the core Autodesk 360 offering is this rendering application online. These are some of the examples of some of the things that customers are doing online with the renderers. And so far, today, 375,000 roughly jobs have been submitted. 200,000 files are being uploaded every week to the rendering environment. And we've done about 3,500,000 hours of rendering.
That's a lot of usage, and it continues to ramp up. So we're seeing real traction and real interest in using the cloud to extend their desktop and do things they weren't able to do before. Matter of fact, a lot of people who didn't do renderings and who didn't do these kind of visualizations before are doing them because we've made it that simple for them to do it. But this isn't where we're going to stop. We're going to expand this offering to those unique cloud based offerings I talked about earlier, and let's drill into those a little bit.
The first one was we announced yesterday, Autodesk BING 360. And we really are calling this the next generation of BIM. We're trying to change the way people do BIM. We're already recognized as an expert in the BIM space, and we've got lots of expertise of important is the amount of money people are spending on BIM software and services is going to go from about $2,000,000,000 today to about $6,000,000,000 by 2020. And a lot of that is going to be driven by companies and municipalities making BIM a requirement of how they how designs are submitted and managed throughout the construction process.
So our initial focus with this BIM three sixty effort is going to be on that construction opportunity, particularly in the building space and in the civil infrastructure space. So you probably heard a while back, we did an acquisition of Horizontal Glue, and we recently announced an acquisition of Bella Systems. Both of these are squarely targeted at the construction piece of the BIM workflow. And that's where we're going to build out this next generation BIM from, construction first, total BIM lifecycle in the cloud later. The next piece is very interesting in that what it's going to do is disrupt a high end market that we participate in, in a small way right now, and it's the simulation space.
Today's simulation software is dominated by high cost software, expert driven work paradigms and user interfaces. What we're going to do is we're going release a series of applications that bring most of this workflow to the cloud and allow the user to get access, either for over long term or over short terms, to simulation software that can use the full power of the cloud to do many simulations quickly, to make it easier for non experts to use the software in the environment, but also do it at significantly lower price points. This is going to be pretty disruptive to the simulation software business, and we're pretty excited about this. And you're going to see us rolling out a larger portfolio here very soon. Now, I'm I'm going to spend a little bit more time on this particular piece because we rolled this out at the beginning of the year, and we've got some customer feedback and some stats on how we're doing that I'd like to talk about.
This is the Autodesk PLM 360 piece. This is all about a new way of doing PLM that makes it easy for a customer to experiment and dive in without engaging in a large consulting operation or a large initial software purchase to manage a particular piece of their problem or their life cycle. It's up and running in days, and there's no hardware environment for their install. There's a large underserved piece of the PLM opportunity that this application is perfect for, and the cloud enables it. So let's look at how we're doing since we've launched this and rolled this out.
We've got about 100 companies that are evaluating and testing the solution in production environments. Inside those 100 companies, there's about 5,000 users, and they've created about 9,000 workspaces. Now, a workspace is something somebody uses to manage a process, be it quality control, be it engineering change or something related. And inside those workspaces, they have over 1,500,000 items. So they're actually managing real things in their processes.
And we also have a large community of reason the engagers are important is we're trying to build awareness for this and a community of people talking about it. And the engagers is the classic social definition. This is someone that has pursued information about PLM360 and has taken some action on it, either to request a trial, talk to a salesperson or forward a video or something on to somebody else. So we've got active pilot customers, active using customers in production, and we've got lots of people interested in trying to understand what we're doing. And here's a couple of examples of some of those customers.
And I'll talk a little bit about them and what's in common between these various customers. They're in the food service business. They do a lot of high end kitchens for restaurants, and they do some they're in the food service business. They do a lot of high end kitchens for restaurants, and they do some very high end work for homes as well. Roland's a However, they've never been able to automate certain things in their process without somebody pitching them a pretty large consultative effort or a pretty large initial project to try to explore something.
They both have in common a desire and a need for a self-service, self paced way to get up and running on some of these things. Is doing site survey work with PLM 360, where they're enabling the people in the field to go to the site and understand what the kitchen requirements are, the restaurant requirements are for the kitchen installation, to document and capture information. So they're taking their site survey cycle down from days hours with the application. And Rollins is actually managing a global engineering change process and using PLM 360 to provide self-service access to their customers for the design information they're currently working on. Like I said, both have in common a lot of spreadsheet driven processes and a real desire for getting up and running with little or no help from the vendor that's providing the software.
And that's what we're delivering with PLM 360 in this environment. And all of those all of these companies here have that in common, and that is the space where there is a really underserved population in the PON market. So to summarize what we're talking about with our offerings today and moving forward, and kind of the highlights of what I said in this presentation. Today, we're using Design Suites and Autodesk 360 to bring a lot more value to the customer and a lot more value back to Autodesk, primarily through increased revenue per customer. You already saw the evidence of that in some of the information I presented to you.
We're trying to increase subscription attach and renewal rates. And one of the ways we're going to do that is entangle the cloud with these desktop offerings. And not only is that great in terms of creating the stickiness of the offerings, it's also introducing our customers to these cloud based workflows and how the cloud is going to change the way they work. So as build up from that, we have this whole other universe of initiatives that are going to extend things we're capable of. BIM three 60, we're already leaders in BIM.
We're going to extend BIM in the cloud to construction, ultimately replace BIM with a next generation BIM solution in the cloud. PLM 360, I mean, Sim 360, we're going to disrupt the high end simulation market and capture new users to Autodesk and really, really change the way people buy and use simulation software. And PLM 360 allows us, as Autodesk, to reach whole new users in the manufacturing life cycle. So all of these offerings are pretty exciting tools for igniting growth. And in order to hear about how we're going to turn these offerings into growth, I'd like to invite Steve Ploem up to talk.
Thank you, Andrew. Good morning, everybody. It's great to be here to give you an update on our go to market implementation and our focus on our growth initiatives. We're going to continue to refine our go to market strategies to ensure a few things. We want to ensure that we're best positioned to meet the needs of our customers.
We want to capitalize on technology trends as they continue to evolve and of course, we want to position ourselves for the growth opportunities that we have in front of us. So let's talk about these growth opportunities. Carl has already teed up a few things here. We see significant opportunities in driving growth by driving deeper penetration within our existing customer base while we continue to find new customers. We're going to do that by focusing on industries and driving penetration through industries and through the ecosystems and supply chains, supply chains that support those industries.
We've been investing in named accounts and we're going to continue to invest in focusing on key strategic influential firms within each of these industries. The emerging markets have tremendous opportunities for growth. We've been investing there in the past and we're going to continue to invest based upon the long term prospects that they bring for us. And as Andrew just mentioned, we've enabled our partners to sell the entire portfolio, and we're leading with suites and subscription. We're very excited about rolling on top of that our Autodesk 360 opportunities and capabilities as we continue to introduce that functionality into the marketplace.
So Karl actually already has shown you this slide. He talked about the fact that we have a $19,000,000,000 TAM. What I want to do is kind of summarize again where the opportunities exist because I'm later going to show you how we're going to market with each of the types of channels that we have. So as Carl mentioned, the enterprise customers our largest customers. These are companies that have more than 500 seats of software.
There aren't many of them overall, they're in the 100. In fact, less than 1% of our entire customer base is in the enterprise space, but it accounts with 30% of our revenue. So it's a very important segment, although very, very small in customer penetration. In fact, what Carl did mention, I just wanted to highlight the whole yellow section is really our penetration into the total TAM, but also within the customer base that exists in each of these segments. Now the small and medium segment, these are for customers that have between 5500 seats of software.
This is where we get the most revenue. About 50% of our revenue comes from the SMB space. Interestingly, it's still only about 15% of our total customers. So the top two segments, which account for about 80% of our revenue, are less than 20% of total customers that are using Autodesk software, which means that the professional space, the hundreds of thousands of companies that have between 1 5 seats, that's over 80% of our users, customers, but they account for about 20% of revenues overall. So it's important to understand how bifurcated the market is and how we need to have different approaches to different segments in order to service the needs of customers across all of these elements.
But the key point is, we have the same offerings that we leverage and sell into all of these segments. And I'm not going to talk much about the space, just to highlight the fact that that's a segment that we measure in the millions and tens of millions, and that's a very exciting area. And in fact, it has impacts on the rest of the business because it's introducing Autodesk to millions and millions of people. And I'll share it with you, in discussions with customers in the professional and medium sized space, we talk about our consumer applications because we do see them bringing our consumer applications into their environment. That's very, very exciting.
Okay, so we've realigned our go to market and we restructured. We used to focus on geos. We were really geographically focused with a predominant focus on selling specific parts of our portfolio into those geographies. So sales teams were segmented by geography, and we've changed that. We've realigned the focus on customers in specific by the targeted industries that we're focused on.
We also want to sell the entire portfolio that's appropriate to customers in those segments. We've recognized that there is significant opportunity for growth just within our existing customer base by selling more of our entire portfolio. And of course, suites have opened up the doors to going after those new opportunities. Now, this is a very important area for us because not only do we want to go and focus on the key ecosystems and the supply chains because this is how we can drive broad and deep adoption into each of the industries. So Carl showed you this slide already, which are the 4 industries that we've selected.
What I want to do is take you one level deeper and actually share with you what are the sub segments within each of these industries and give you a couple of customers that fit into each one of them. So most of you are familiar with the architecture, engineering and construction space. This is where we have all of our architecture and construction service providers. We have utilities and telecommunications firms in this space. Example customers that you've heard us talk about in the past are Stantec or Balfour Beatty or AECOM.
Manufacturing, manufacturing by the way is the single largest industry that we have and it's quite broad. It includes sub segments such as consumer products, industrial machinery, automotive and transportation, even aerospace and defense. So this is where we actually have a focus on the government entities focused on defense and the commercial supply chains that support them. Example customers are Joy Global, Tesla Motors, or Parker Hannifin. What I want to do is make sure you understand engineering, natural resources and infrastructure.
We use 3 letter acronyms a lot. So if you hear us talking about ENI, it stands for Engineering, Natural Resources and Infrastructure. Within this segment, we have engineering service providers, all the civil infrastructure firms, including the government entities that are driving investments in civil infrastructure, oil and gas and minerals and mining. Example customers are Parsons Bringerhof. Now down here we have the Wisconsin DOT, it's hard to read that I know, but transportation as an example are in this space.
In fact, you're going to find a large amount of government entities fit within the E and I part of our business. And we have GHD, GHD, which is a global engineering services firm. This is an interesting segment by the way, because this segment was kind of buried within AEC, but as we've evaluated it, we've recognized there's not just significant opportunities for AEC offerings, but also manufacturing offerings. And we have an opportunity to go much deeper and broader with customers in that segment. In the 4th segment, our 4th industry is media and entertainment.
This is where we have film and TV and games firms and example customers are BBC, Pixar or Electronic Arts. So one of the key changes in order to help us drive broad and deep penetration into the industries is that we've enabled sales teams and our channel partners to sell the entire portfolio. Now you may be sitting there thinking, weren't they doing that in the past? Our channel partners, some of them had the opportunity to sell all of our products, but many of them were only authorized for portions of our portfolio. So they weren't unable to meet the needs and demands of some customers they were serving, and we've removed that problem.
We've enabled all of our partners and all of our sales teams to represent and sell the entire portfolio. This enables us to actually solve more of our customers' business problems. We become more relevant We about our partners for a second. Most of our business still comes from channel partners and will continue to come from our channel partners. As I mentioned, we've enabled them to sell the entire portfolio.
And for any of you who have talked with our partners, I can share with you, I talk with them a lot. They are loving the fact that they represent the entire portfolio today. We've implemented a global channel framework, we call it the Autodesk Partner Advantage. And within that framework, we've included recognition and incentive programs. So we have volume incentive rebates, we have tiered benefits.
Tiered benefits is a tremendous value to our partners. It recognizes the partners that have invested deepest to support Autodesk solutions. It means they've specialized in key areas. They can use this externally to represent themselves as the best of the best with customers. So it's a benefit they're leveraging and enjoying to position themselves in the market place.
We have numerous specializations and certifications and we'll be adding more. If you're wondering what's the difference between the 2, a firm, a partner would specialize in a particular area. And it's a workflow area, so it may be focusing on a consulting best practice or factory design as an example. Certifications are what the individuals within our partner community apply for and earn themselves. So for a partner to become a specialized partner, they need to have a certain number of employees that have become certified in that area.
So we're ensuring that we have great capabilities amongst our partners to deliver a world class experience to our customers. Our partner framework also includes consistent our partners. So we want to ensure again that we are giving a consistent experience around the world to our customers. And of course, we have deal registration. Our partners leveraging deal registration to create demand and close demand, and this is also where we have an opportunity as Autodesk employees to help our partners close those opportunities.
So here's now the same representation of our customer base by size, enterprise, small, medium sized business and professionals. And here's how we go to market. So within the enterprise space, as Carl mentioned, our predominant go to market is with our direct sales folks, and we've been investing in that area. I'm going to talk a little bit about that in a few minutes. We do sometimes leverage VARs to help us, to give us global reach and span.
And we've also been adding some system integrator partners to help us with implementation and adoption of our solutions once customers have bought them. Within the small and medium sized business space, our VARs take the predominant role, but I do want to highlight that as we've been adding our own sales resources, helping our partners close deals with the largest SMBs. So when you hear direct led, that means Autodesk salespeople are teaming 80 percent of our customers fit in this bucket, 1 to 5 seats. VARs provide some value here, but the predominant method of helping those customers acquire our products is through our volume channels or our e store or other e partners. We want to make sure we have numerous different ways for customers in this space to acquire our products.
And while I'm not really focusing on the consumer space, I do want to highlight that the way we are getting to tens of millions of customers are through app stores and through the web. Now since most of our business shows you that we continue each year to do 2 things very effectively. 1 is increasing the number of total channel partners that represent Autodesk each and every day around world. And also, we focus on increasing the number of feet on the street that represent our offering. So this is the number of sales and technical people that are represented by our partner community that are out there every day selling Autodesk solutions.
This is critical that we increase capacity to support our growth expectations. Okay. So let's talk a little bit more about named accounts. So we've identified specific named accounts within the 4 industries that we're targeting. And our goal is to have key large strategic firms that also provide influence and drive standardization within those industries.
We've grown our dedicated resources, our sales people within Autodesk to help us continue to drive area of investment for us from a resource perspective within the worldwide sales and services organization. But what I want to highlight is that our folks actually serve in both the direct and direct led engagements. So they're focused on those enterprise customers, but they're also focused on teaming up with our partners for the SMBs, as I mentioned before. That combination is truly working and helping us drive many, many more large transactions. And in fact, you can see that in FY 'twelve, our last fiscal year, the number of transactions that were $1,000,000 or larger grew 24%.
So, I'm really pleased that we're getting great representation from the investment of sales people in growing total users within each of the existing customers that we have. Large transactions represent broader adoption and implementation Autodesk solutions within our existing customer base. All right, so emerging markets, we've all talked about emerging markets in the past. We hear about them a lot. First, want to remind you, why do we even focus on emerging markets?
Why are they important to us? And there's some key reasons. Over the long term, but it's happening now, there's a tremendous urbanization movement. People are moving from the rural areas to the large cities. This is creating an incredible need for infrastructure build out.
And for any of you who have been traveling in any of these countries, you know infrastructure is in demand. I was just in Turkey last week. There's only 2 bridges that go over the river in Istanbul, and at the wrong time of the day, you can spend hours trying to get across a bridge. So, it's no surprise that they're looking at adding a 3rd bridge. In fact, it's no surprise they're looking to add another canal.
These are incredible investments in infrastructure, and I see this everywhere I go in the emerging markets. Now, what's interesting is more people move into the cities, the consumer base is growing and the economies are becoming more consumer oriented. That creates tremendous opportunities for growth as well. And all of these countries have higher macro and industry growth rates. Now for long term opportunities, there's also some short term challenges.
We've all been hearing about the fact that growth rates within the economies in China and India have been slowing. Now, they're slowing. They're still much faster than the mature markets, but they're slowing from where they were perhaps a year ago. We've seen that in many of these countries, there's volatility in the exchange rates. And that volatility then creates some the opportunity or the chance there's some geopolitical uncertainty.
So, there's the opportunity or the chance there's some geopolitical uncertainty. So going after these opportunities is critical, but there's challenges, of course, with any big opportunity worth going after. So here's our approach. Last year, we built out 3 year strategic plans for the 4 BRIC countries, and this year, we're actually adding 3 more. We're building plans for Indonesia, Turkey and Mexico.
What's interesting about these plans is that there's elements of the plans that are similar. Each one of our plans includes a specific focus on government, because government's focusing on all the investments on infrastructure, and it's driving standardization requirements across their ecosystem. So having a focus on government is key. We focus on education, that's also very important. There are more students graduating from universities within the emerging markets than there are coming out of the mature markets.
So it's very important that we have them using Autodesk software and they're getting educated on the latest and greatest design flows and methodologies. So when they come out into the commercial space or the government space, they're prepared to take advantage of those technologies. We certainly are focusing on named accounts, because named accounts come in 2 flavors in emerging countries. There's multinational or global firms that we're already calling on in the mature markets that are investing in these countries, and we need to provide great service and support to them there. And there's also large companies that are established within the emerging markets that we need to make sure we're focused on.
Now, we also sometimes need to tailor our offerings or pricing to meet the specific needs of the markets. And by having a focus explicitly on emerging markets, it gives us the opportunity to have some flexibility to dial in the right offerings and right pricing for those markets. And of course, we have a focus on license compliance. There's high piracy rates around the world, but some of the highest piracy rates are within the emerging markets. Our focus within license compliance is to turn non paying users into paying customers with an ongoing relationship.
We feel like we have a good model there. It's a key focus for us and something we're continuing to invest in. So to summarize, we've re architected and re aligned our go to market to focus on customers in specific industries and emerging markets. And what's critical to driving deep penetration into those segments is that we've enabled our sales teams and our channel partners to represent the entire portfolio. They're leading with suites, they're leveraging subscription.
Suites again are the best way to start representing a much larger portion of our portfolio and of course, we'll be rolling in Autodesk 360 over time. By focusing on customers, in particular industries and emerging markets, our goal is to become a mission critical partner to those customers to truly establish trusted advisor relationships. By having those relationships and by having a very clear focus on customers, industries and emerging markets, we are absolutely positioning ourselves for long term sustainable growth. So thank you very much, and it's my pleasure to introduce to you, Mark Hawkins.
Okay. It's great to be back. I'll give you an update, my outline. Again, we're going to be talking about driving shareholder value, both in terms of the progress we've made and we're also going to talk about our plans. So we'll jump right into it here.
I really have four things I want to cover in my outline and we'll just kind of keep digging deeper into each one of these. These will be familiar topics to you. 1 are the financial tenets that we embrace as we pursue our long term business model. And so I want to just outline those and talk a little bit about that. The second thing is I want to talk about FY 'twelve performance.
We had a strong performance in FY 'twelve. We'll get into that. We'll delve into that a little bit, make sure you see all those different attributes. Bit, make sure you see all those different attributes. Capital allocation is a pertinent topic.
Of course, today, you saw a press release on the share buyback authorization. We're going to click deeper into that as well. And then, of course, the guidance, which you're all wanting to hear about. So let's about that a little bit more. So these financial tenets, I think about these five points and when you think about us embracing our long term business model, again, we'll delve into each one of these.
But the fact that we're fostering growth, we talked about growing 12% to 14% compounded annual growth rate over our 5 year plan and we started during a started during a period in the economy when it was hard to think about growth. And we've been progressing. We're in the 3rd year of that plan. We'll get more into that around the financial tenant. Growing our expenses, lessen our revenue, this is our opportunity to shape our structure on our walk as we continue to walk toward that 30% plus operating margin goal that we have in our 5 year plan.
You've seen our progress to date. We'll talk more about that. Maintaining a strong balance sheet, this is a strategic asset for us as a company. We have a rock solid balance sheet. We'll go into that and show you some of the attributes to make sure you're seeing that.
We want to continue to embrace that as we walk through this 5 year plan. Optimizing our our capital allocation, we'll get more into the details behind the prioritization and including articulating a little bit more on our share buyback announcement and our intentions in that regard. And then also as part of that, we're talking about covering dilution, which is something we're well familiar with and our company has done for years years and also over time reducing the share count. And so we'll look at that as an opportunity and a financial tenant as we go to optimize our capital allocation long term. So let's get into it.
If you look at FY '12, there's three numbers that pop and you guys are well familiar with that. The first thing is the 14% revenue growth. You heard a lot from the team, Karl, Steve, Andrew, you can see some of the things that drove that. I'll go a little bit deeper on that. Again, that's 14% revenue growth on top of a year prior that was 14% revenue growth.
So we'll go deeper there. The operating margin, we expanded 2 60 basis points. You remember at the onset of the year, we talked about expanding approximately 200 basis points. We actually did 260 basis points. We started the beginning of the year in FY 'twelve at 10% growth as a guidance, we delivered the 14%.
And then we delivered 32% EPS growth on a flat share count. That's the software industry. So we were pleased to see some of that progress. So let's take a look at a chart that you're well familiar with. We look at again this in terms of progressing on our 5 year journey.
And you look at 2010, you can see the blue and the golden bar is the revenue being tracked and the green trend lines are operating margin. And of course, the golden bar is our guidance that we've given for FY 'thirteen. And so you can see that 14% revenue growth in FY11, you can see the 14% revenue growth in FY12, you can see the operating margin stepping up 4.80 basis points in FY 'eleven, another 2 60 basis points in FY 'twelve and you know our guidance of approximately 200 basis points in FY 'thirteen. And so that's our progression within the 3rd year of our 5 year plan and we're tracking. So let's as I said, we'll keep clicking deeper into a couple of these different attributes.
And when you look at revenue, one of the things that's nice and you heard about it, nice articulation of the different end user markets that we serve. And this is a slice by product group, which starts to approximate some of the go to market activity that Steve outlined. And fundamentally, you can see a nice different portfolio there from that standpoint. Now, if I think about the growth rates, we look at PSCB in FY 'twelve, grew 16 percent, our horizontal products, they fundamentally sell into all the different industries. The other thing is manufacturing, did a really nice job in that respect.
Also strong growth for the year at 15%. And again, we talked about that leading the way in FY 'thirteen. You saw in Q1 of 'thirteen, it came in at a strong 18%. In Q1 of 'thirteen, we saw AEC come in at a strong 16%. So nice attributes in our diversified portfolio.
Let's talk another lens of our revenue and let's think about suites, a very well set up approach that Andrew talked about in terms of suites. It's an important part of our business. It's important part of our revenue. We said it wasn't going to be a light switch, it was going to bloom over time, it's blooming. And so let's look at the pie chart.
The pie chart takes a look at our total revenue for the company. You can see that 27% of the total company are suites. Now that pie is bigger than the prior year, which was 23%. And over time, that green part of the is going to be the majority of the pie. And this is something that we've talked to you about and just watch that unfold over the years.
1 of the nice parts about that and Andrew called out very aptly is we're getting ASP expansion and we're tracking what we had talked to you that we would. We're seeing really nice attach rate, which a number of you have asked about and Andrew has addressed that and renewal rates that are on par with the rest of our business. So this is a good thing, not only because of the economics behind it, but the relationship and the value being delivered to our customer. We're always super focused, as Andrew pointed out, on delivering more and more value to our customer. But if you step way, way from the the message that suites in total grew 31% year on year in FY 'twelve, okay?
And in Q1, it grew 34%. So this is a nice attribute. It's another layer of our revenue that we're pleased to be able to address. And so if we get into another aspect of our business, let's shift to commercial new license revenue. These are new licenses.
Revenue
side.
A good dynamic for our business in the revenue side. If you look at maintenance revenue, I think this chart is particularly interesting. We know that maintenance is a really an important part of our value proposition. We know our customers find it to be very attractive with the value being delivered. We know it's a chance for us to continue to satisfy them long after the initial commercial license is sold.
And so we continue to do that. But what I like about this chart is in 2010, our maintenance revenue growth year on year was 3% 2011, it was 6% year on year. In 2012, it's 10%. And in Q1 'thirteen, it was 11%. So these are good attributes for an important part of our value proposition.
Well, renewal rates are an important indicator. Now we don't disclose the exact renewal rates, but we want you to know, we've talked about these in terms of certain directions on them. Our renewal rate for maintenance continues to increase, which is just a favorable attribute and speaks volumes about how our customers view this value. And when we see that it's higher than pre recessionary levels, we're doing well here and we have headroom to grow. So let's go on to now taking a look at different aspects of our model, shifting away from revenue and gross margin.
This chart to show the consistency of our non GAAP gross margin at 92% is a kind of a mark of our business model. The reason this is so important is we're able to deliver value, get 92% gross margin, we're able to invest where we need to, to perpetuate our future. Karl talked about making investments, profitability. We have the ability to invest and deliver profitability. So this is a key part of our business model.
It's performing well and we're glad to see that. So we've come kind of through the revenue discussion. We've kind of come through a little bit of the P and L with the gross margins and such. Let's talk about the balance sheet. I talked about why that was a strategic asset for our company.
And again, I'm going regard, strong cash generation you're familiar with and even in the deepest darkest hour of the recession cash flow positive, again speaks well for the business model. I think the record cash balance, we're going to talk a little bit more about that things we need to do to grow our business long term from a company standpoint. So this, I think you'll agree, is a good case for a strong balance sheet. Now as we look at deferred revenue, I know a lot of you talk about this and it doesn't miss your attention that it grew 20 2% in FY 'twelve. Dollars 719,000,000 it's rapidly approaching $1,000,000,000 This is revenue waiting to happen.
This is revenue that we have the cash already collected. This is a good attribute from our business. The next thing that I talked about is days sales outstanding and for a global company, this is Q1 of 'thirteen, they have 46 days DSO is actually quite a healthy collection cycle. It just again speaks to the quality of the balance sheet. If you look at the cash generation, you can see a strong uptick in our cash flow from operations.
Again, there'll be a continued growth in this over time. We're pleased to see that progressing and more opportunity. Talk to a number of you about cash flow margin. You take your cash flow from operations divided by your revenue. I think when you can show a cash flow margin in FY 'twelve, it's even higher than your operating margin.
That's a nice attribute in terms of the quality of the income. We can see the cash and that's a good attribute. Speaking of cash, our cash and marketable securities were at 1 $800,000,000 in Q1 of 'thirteen. Again, I think you know the majority, the vast majority
the location of our cash.
We look at low channel inventory. This is yet another attribute around our business. And the fact that our whole ecosystem has very low channel inventory is a nice fact pattern. I think you get that and understand why that is. And we've been consciously driving that down over time as we continue to do a number of different attributes to make our ecosystem even more efficient and scalable.
Okay. Now I said we'd talk about capital allocation. I'd like to get into that. We've had 3 priorities that we have focused on as a company very consistently. And the single best use of our cash and our capital is to fund our business.
It's about funding our business for innovation and things that are going allow this business to grow not only this year or next year, but for years years to come to take our franchise to work and go long term and the opportunities that we have to capitalize on those. So that's priority 1, no change. Priority 2 is to have select talked about the M and A that we did in FY 'twelve. We spent about a little over $200,000,000 and about 22 small kind of tuck in acquisitions. But we picked up really interesting opportunities in acquisitions.
But we picked up really interesting opportunities for our company long term, things like Blue Ridge Numerics in the area of simulation, very strategic for us. Scaleform in the middleware area of our M and E business and a variety of other small tuck in technologies that we get to leverage with our global sales team that Steve leads and just is a good attribute for us, including we also purchased intellectual property. These are good, well spent dollars that are going to help us in years to come. And then the third way that we think is critical for capital allocation is the share buyback. And of course, we had a big announcement today about our share repurchase authorization.
We'll go into that a little bit deeper. When you look at the shares outstanding, we've put this out for years and not unlike a lot of companies, we have been trying to hold our share count pretty stable and have been successful in doing that over the years, whether it's fully diluted or basic shares outstanding, tiny, tiny downward tilt, but basically flat. And that's the case. And at the same time, we talked about the repurchase authorization today. As announced, 30,000,000 shares were authorized.
That's in addition to 12,000,000 approximately that were available for share repurchase as of the end of Q1, which gets us to the $42,000,000 available times the market share or market price yesterday rather gets us to about $1,400,000,000 in share buyback authorization for our company. And I think the key thing that we're communicating to you is, yes, we will continue to cover dilution and offset dilution and we will reduce shares over time as the cash affords itself and we'll make sure to look at things appropriately. But over time, we look at reducing our share count. So that's for the capital allocation topic. Let's shift now into operational efficiencies and improving those.
This mission is never done. And I think you guys know I have a passion around this. To scale a company, you're always looking for opportunities and it's important because it creates flexibility to fund other things, including expanding your operating profit and funding the other strategic things that allow us to have fuel to grow our business long term. These are just a few examples. Well, let me start out even before going into the examples.
These are a few that we've accomplished. We have an operating council, which I chair. There's a number, both Steve and Andrew are part of this. And we our full mission is to look at how to scale and drive efficiency in the company across the company. And there's lots of ideas that are constantly being attended to.
We won't go into all those details, but that's an important point for you to know because we know that creating goodness here creates fuel for the future in terms of funding our growth and profit. We also do extensive benchmarking. I think you know just one of the benefits of being an experienced person, companies under non at the operational level, at every level in the companies under non disclosure. We know where there's gems for improvement. We pursue those vigorously.
So let me talk through a couple of these particular items. Electronic software delivery, a lot of you have heard about that. This is a huge win for our customers. They get the product quicker. It's more efficient for the ecosystem.
It's more efficient from a green standpoint. We're not shipping boxes around and freight and that type of thing, but there's this opportunity that we've been driving on, and you'll see more improvement over time. We've improved our commercial sophistication in terms of our procurement areas. This has has again delivered goodness in the prior years and we'll continue to work that. We have a good playbook and our sophistication levels advanced substantially.
We found opportunities to localize our products in a way that was even more scalable and that's delivered good benefit. And the last just example, one of many, is we modernized our computing environment last year. And this not only provided better capacity, just core capacity to run our company, but better security, better speed. And we saved money, substantial money on this. And what's interesting also you might find is we were also able to actually reduce our energy costs substantially.
There was a real friendly green effect about this and a bit of a unique company because we look at it from
2 vantage points. We're a
bit of a unique company because we look at it from 2 vantage points. 1, we operate our company with sustainability in mind. Any of you that have come to our major buildings, a lot of them are LEED's platinum certified. We've embraced this as a way we do business. There's something about preserving things that are valuable and eliminating waste that just makes a lot of common sense and that's some of the cores of sustainability.
We embrace that operationally. But that's not all. Kind of the bigger opportunity for us is we help people with our software to help them imagine, design, visualize and deploy better sustainable designs in all the industries that they pursue. And that's a revenue opportunity for us. So we have an operational aspect that we do and then there's the revenue aspect.
And so it's not a surprise that we get called out in a number of these different indices from that standpoint. So the next thing that I want to talk about is best places to work recognition. And you can look at this chart and I don't know if you can see all the detail. You can look at Fortune's 100 best companies to work for. You can look at in the United States, some people like to do that when we go around the world.
Some people like to call out the one that's from China on this chart. Some people like to call out the one in Switzerland, Germany, the U. K, Canada. You pick the one that you like to look at. But why is this important to us?
Why is from a shareholder standpoint important to us? We are in one of the most fiercely competitive industries in the world to compete for talent. You know the names of companies. We're in Silicon Valley and then all over the world in the hot centers. We need to compete to be able to attract and retain talent.
This is a nice attribute in our company and we're able to do that to lower attritions, attract and retain the right people. So that's another attribute of our company. So let's now shift to the last part of my discussion, which is around guidance. You saw the press release, we reiterated our guidance for Q2, the revenue range of $580,000,000 to $600,000,000 You saw the non GAAP EPS between the $0.46 $0.51 reiteration. And then for FY 'thirteen, we also reaffirmed our plan for the year.
We talked about revenue growth at 10% plus, at least 10%. And then our operating margins at approximately another 200 basis points improvement on top of the 4.80% and 11%, the 2.60% and 12%. And so we're tracking in the 3rd year of our 5 year model and that's the guidance reiteration. So speaking of the model, we like to land on this one. We've been driving this 12% to 14% compounded annual growth rate.
You've seen the 3 2 years in the current year in
terms of how we're progressing.
At the end of this year, hitting our then plus operating margin. So I think we're tracking that well. And so that's our update from a long term business model standpoint. So that too wraps up my presentation. And so without any further ado, I'd like to invite the rest of the leadership team up here and we'll take questions.
Of course, that's a key part of the discussions today. And what I might want to call out just during the setup here is there will be microphones. This is webcast. So if you don't mind, just raise your hand, let everybody get set up, just give us a minute, if you will, and then we'll jump into it. We'll take questions and glad to engage in that way.
Okay?
Great. Steve Ashley from Robert Baird. A couple questions. My first question is, the go to market change with respect to the channel, they now can sell all of the products. Any sense of what kind of benefit you might be seeing from just opening that up and allowing them to sell all the products?
So, yes, first, our partners are now able to engage in a full discussion with our customers as opposed to only talking about pieces the discussion. So it's enabled them to actually go in with more confidence to actually talk about more of the business problems for our customers as opposed to just specific pieces of those problems. So it's empowered them to actually invest further in the business and add more value to customers overall. Interestingly, we've also made ourselves easier to do business with. For partners in the past to gain access to different pieces of the portfolio, they needed to work through an authorization process.
There was a cost to them associated with doing that. There was some administrative burden even on us for that. So we've simplified the business empowering them to go and sell more. So we've removed some costs from the business and empowered our partners to be able to go and become a little bit more engaging with the customer discussions having.
But
do you think there was incremental revenue to Autodesk from that chain?
There has and there will continue to be, especially as our partners gain more knowledge and comfort in selling all portions of the portfolio. But the goal is to be able to penetrate deeper into each customer that we engage with and our partners' engagement. And as a result, it should empower them to be able to sell more than they did in the past.
I just wanted to talk about emerging markets a little bit because just because we all know that China and India seem like it's slowed. And if you think about last 3 years, my guess is emerging markets, they were growing like north of 20% and a large contributor to your revenue growth. And I'm just thinking like 3 years, is it 15% like is it the new normal or how do you think about emerging markets and the contribution? Thanks.
I mean, one of the things over the last couple of years is the emerging markets have been incredibly volatile. So we're our biggest growers during the downturn. I mean, it was the I mean, it went negative the fastest. So it continues to be the most volatile. I don't think that dynamic is going to change at all.
I think it will continue to be really volatile. We saw a period where Russia was growing really quickly. It wasn't. And now it is again. Brazil has been on fire until the last quarter.
Last quarter, it was down. So we've seen that, and we've not come to depend too much on the emerging markets. There are some long term trends I like about the emerging markets. One of the things that we certainly hope as we move stuff online is it gives us a better ability to combat piracy. So that helps.
The other thing in emerging markets, I think what you have to separate is what's going on in the emerging market per se versus the work that multinationals are doing in the emerging countries. And we don't have a great breakdown, but some of that business is relatively stable from because of the multinationals and some is more local dependent.
Absolutely. We gain benefits in our mature markets because some of our largest firms or customers in the mature countries are actually driving tremendous business growth and opportunities in those emerging countries. So, as Karl said, it's a volatile area. The prospects though over the long term still look very positive and certainly are worth continuing to invest in that area over time.
Yes. And to the extent that you think it's good, I'm not sure it will go down. There's as much upside there. It's just much less predictable and harder to capture and harder to quantify or at least forecast quantify than any other part of our business.
Dave. Taking.
Dave is all powerful.
Chief Weiss from Morgan Stanley. It definitely is clear evidence that the Suite strategy is working, that you're seeing greater adoption of the Suite. Cloud service is obviously adding on to that creating a nice virtuous cycle. And you're seeing and you gave us some good detail around uplift and seat prices and whatnot. One of the other impacts that we were expecting to happen is increased maintenance attach rates, increased maintenance that go along with those suites.
But maintenance billings have been relatively or the growth has been relatively muted under the growth of the overall company. Even if you average out the last two quarters. Why wouldn't we be seeing stronger than company average growth in terms of maintenance billings given all the traction you're seeing in suites and given the high renewal rates to high attach rates that are going along with the suite strategy?
So why don't I take a jump at that and then anybody else can add in here. I think, Keith, you amply touched on that. If you look at the maintenance billings basically in Q1, basically one of the things we talked about is when we went and deployed our channel partner framework, it basically harmonized some of the things in terms of how we actually have people sell maintenance, for example, around the world. The one area that was harmonizing was Europe was adopting to the approach that we were doing both in Asia and the U. S.
And so one of the things we find looking back is it turned out it incented people a little bit to actually pull in some of the maintenance billings from Q4 into Q1 and billings in Europe in particular. But what that did is if you take a look at the billings in Q1 and you take a look at the maintenance billings in Q4 and you average those out, you actually get a nice it's a double digit number. It kind of mutes it out little bit. So I think one of the things that you should look for is take a look at the maintenance billings in future quarters as you're assessing this calculation. That's one thing I would say.
Steve, I don't know if you have any other additives, but that's probably the key point.
Yes. Well, I'll add something. I think Andrew wants to add something as well. You do have to take a look at our subscription billings over time as opposed to any particular quarter. I could share with you that our sales teams, our partners are fully engaged and focused on selling subscription.
It's part of their core. The suites are adding value, not taking value away. The discussion on the value of subscription with suites is a very productive. It's an easy discussion overall. We continue to add more value to our subscription offering.
So I think over the long term, you just have to keep evaluating it, wouldn't look at any one particular quarter and it's trending in the right direction.
I was going to say, the suites are still relatively new. The whole family has been out there for a year. So the compounding effect of the suites on our maintenance billings is not being it's not visible yet, but you're going to see it start to show more and more visibility as it continues to get traction. Perhaps
if I could sneak in one follow-up. Last year at the Analyst Day, you guys talked about feet on the street as well. I think Karl made a comment that channel partners are expecting to expand their feet on the street by, I think you gave a number about 27% in the forward year. Just as an indication of how healthy the channel is and sort of how they're investing, do you think they met that target? Do you think they actually expanded feet on the street to that 27% type level?
Do you have any indication of what the plans for investment would be on the going forward year?
We don't have a projection for the growth. They actually have continued to invest overall as I showed in the chart. I don't recall what the exact growth rate ended up being, but our partners have continued to invest and grow overall. Giving them access to the entire portfolio has been a greater incentive for them to invest further because they can actually get more. They're anticipating and seeing more sales per sales call.
They can sell more on each particular sales call, which gives them more dollars to invest in. And of course, by rewarding them with the different Street, it actually gives them a double return. So, we're not providing a projection on that growth right now, but they're continuing to invest and grow.
Thanks, Chief. Lisa, Howard, a couple of things. Maybe start with Andrew on suites and the industry orientation, particularly in an industry context since one of your close competitors, Dassault Systemes at their meeting on Friday in Paris, also spoke in great detail about their industry solutions, their case 12, you targeted 4. And so my Are you suggesting that in the future as you evolve beyond the desktop that you will still have suites, but services to back it up for the various industries and no longer rely as much on these preconfigured offerings?
Well, first off, there's a lot of benefit in the preconfigured offerings because it makes it very simple to deliver the solution to the customer and move forward. But you're absolutely right. We are definitely looking at offerings in the future that allow the customers to decide how they deploy these applications either in the cloud or on the desktop. We
there is assuming that a single customer only buys one type of suite. So a suite is large ones, like Andrew said, in which they customize the entire offering, even in large ones, like Andrew said, in which they customize the entire offering, even in a medium sized business in which, let's say, they have 50 seats, 10 of them could be on Building Design Suite and 40 could be on Product Design Suite.
The follow-up on PLM is I know it's still new, of course, since you launched it at AU just a few months ago. But your premise was that the existing suppliers were either overserving or underserving the market. Or worse. Or worse, okay. Your words.
The question is, from what you've seen so far in the evals and the piloting, are the customers using your apps in the way that you thought they would to supplant or overcome the issues that you presumed with the existing offerings?
I think these so it's still relatively early. We announced this at the very end of February. What I would say is the use of PLM360 has been much broader than we expected. So even some of the examples that Andrew pointed out, I mean, we went to market with an idea that will concentrate on number of very specific kinds of workflow. Our customers have seen the tool and the flexibility of it and decided to take it much broader.
And that surprised us, both the types of companies that are interested in it as well as the workflows they're tending to employ is much broader. And that's kind of surprised me. The rest of it is kind of in keeping. We're seeing companies that were either chose not to spend or couldn't afford to spend what kind of the legacy PLM guys did as well as we're seeing lots of installations and trials alongside many of the customers already have what they would consider an existing PLM system, and they're we kind of guessed.
Heather Bellini from Goldman Sachs. I had a follow-up to that question. In particular, in the BIM and the PLM segments, you guys talked about the cloud offerings as being a growth opportunity. I'm wondering if you could share with us how your efforts here in the cloud compared to what your competitors are doing? And also given as you just mentioned, a lot of them already consider themselves as having a solution, do you think we can see, over time, cloud adoption leading to a rip and replace strategy similar to we've seen in other SaaS based markets, which might open the door for you more than maybe they were open 2 years ago?
Yes. I mean, Heather, it's a good question. And to kind of back up in many ways, if you look at our competitors, both in BIM and PLM, broadly based the entire CAD, CAM, CAE market. I mean, we always served one part of the market and most of our competitors served a different part of the market. Over time, the offerings themselves became virtually identical.
And in many ways, it was a classic disruptive innovator's dilemma strategy in which our products at what was the so called low end became better than the high end offerings. We just delivered them differently at different price points. But essentially, there was nothing that you could model or build in one that you couldn't do in the other system. Right now, what I see is probably the most dramatic break in strategy and difference amongst the competitors than I've ever seen. We've decided and we did about 2 and a half years ago, that this basis of infinite computing was leading to a whole new way that people were going to work.
And most of our competitors, and certainly the ones in MCAD have taken the idea that this is not an important platform shift, that things are going to continue the way they are, that customers don't want it. I think there's lots of rationalization out there for why not to move forward. We've taken the approach that 5 years from now, it will be as different as pre PC, post PC. And we see the entire market changing and creating enormous opportunity, one for the customers to be able to solve problems they could and a business opportunity for us. So we've kind of doubled down on cloud and social and mobile.
With it, I think right now what you're seeing is the same thing that you saw at the beginning of lots of other SaaS business models, which was this, put the toe in the water, try it, install it along side. I mean, we were classic just as Autodesk, the company. We had Salesforce and we had Siebel. We had lots of secondary offerings that we put alongside until we started to replace the legacy ones. And now we're investing all of our IT in cloud based ones.
So when you look at what we've done with BIM 360, PLM 360 and SIM 360, everything about it is cloud and mobile. And we think this is where the future is. And so and I have no reason to believe that you won't see the same disruption go on in the next few years where people realize that the old way is no longer the best way. It's a conservative industry and it will take some time, but people are already starting to see the benefits of this. And we're seeing it either in SIM360 where people are realizing they can now solve simulation timing cost that it took to do in a traditional way.
And so I would wholly imagine that you'll get the rip and replace, but over a period of
time. Yes, Matt Hedberg from RBC. Thanks, Carl, for those clearly, everything's moving
to the cloud. And like
you said, it's going to take time and it's a slow progression and Andrew made the comment that eventually desktop solutions will be transitioned to a subscription model. So I guess my question is whether or not it's cloud or subscription. Is there a point in time where your entire license revenue or a good chunk of it will eventually transition to more of a subscription offering whether it's cloud or traditional desktop, but subscription based pricing?
Yes. I think what you'll see is, term based, as Andrew alluded to, there'll be a number of different business models, but they will all be much less perpetual license. I think the perpetual license will go away and will be a combination of various kinds of subscription models. And I think there'll be some alacarte stuff as well. So for example, capacity based pricing.
So that, for example, you may sign up for a service, but you may have peak demand that requires more usage of compute capability and you pay for that. And so that would be the non ratable part. But
Rahul Gauravar from Mitsubishi Advisors. I just want to ask if you can elaborate a little bit on how the cloud offering works to combat piracy, specifically while you're still putting out the desktop solution. I imagine it would take you to eventually and to just have the cloud offering to really see piracy go away. Is that right? Or are you seeing a big shift
right now? Well, the one no, we're not seeing a big shift yet. One of the things is we're not going to be offering 2 versions, an online version and an offline version. What we're doing is taking our desktop products and we're complementing with a bunch cloud services. None of those cloud services are available in a desktop format.
So anything that you get, so whether Andrew was talking about the visualizations that are done online, simulation that's done online, PLM, there is no way to access their desktop analog. And so you will continue to see piracy of the traditional products as long as we release them. I don't desktop products or just stand alone services that are cloud based, there will be no way to access them.
Hi. Saket from JPMorgan. Two questions for you, Mark. Can you talk about how aggressive you think you'll be on the buyback program? And then secondly, can you just talk about how we should think about the growth in Suite revenue as compared to kind of the fall off in flagship revenue?
Sure. So in terms of the share buyback, we're going to again, we announced the intention to cover more than dilution. We're not going to give a target out in terms of the percent or anything like that. We're going to take a look at the situation. We're going to look at the actual cash balances in the various geographies.
We'll look at the there's times when there's even times when we look at the price and think that this is just in the best interest of the shareholders. There's a whole cadre of considerations, some of which we noted in the press release, but we will be reducing shares over time. So just hopefully give you a little bit of color. That's the intention. That's the notion that we want to make sure we're clear on without giving a specific percent.
And then your second question is in regards to thinking about suites in the flagship. I think one of things that you're making a good point on when we grew our suites 31% last period, obviously, flagship was much less. It was more like in the 9% to 10% range. And when you start to look at that, one of the things we expect is that our suites will be more than 50% of our business. So we would expect some of these point solutions that are bundled into our suites to grow at a lesser rate over time.
So that is the right expectation to be thinking about. We don't guide by category. The most important thing is if we can keep driving the suites in the way that we have, we're going to get all the favorable attributes that Andrew talked about. And most importantly, our customers' value got the right trending on that. You should continue to see that over time with the net benefit being the kind of double digit growth that we're looking for.
But that's the right vectoring that you're thinking about. Okay?
It's Blair Abernethy with Stifel Nicolaus. Two questions. On the industry focus, can you just expand a little bit more on your plans to become more experts? Does this mean you're going to eventually shift from suites to solutions? Or is this are you thinking about adding more services to your business model?
So let me start by saying, I hate the solutions, Wirtz. I don't kind of get it. We to the store and I want a toothbrush and they tell me they're selling me a teeth cleaning solution or a hair brushing solution, it's like it's a really over done phrase. If you want to more specifically know about the offering, we have been building our services, consulting services capability over time. Certainly, our largest customers have come to expect it, and it's an important part of the engagement with them.
So continue to do that. At the end of the day, I still believe our customers buy products and services. They very specifically choose about the best thing to get their job done. For certain customers that involve services, we seen it both with PLM, we've seen it with our BIM stuff that customers require a level of consulting in order to succeed. But slap me every time you hear the word solution come out of my mouth or you see it on our website.
I want to add something, I agree with Carl. But there was a notion that maybe you were bringing up, I just wanted to highlight. Focusing on industries has another meaning to it. Forget solutions or offerings, understanding customers in particular industries, truly understanding their business challenges and requirements, positions us and our partners to be able to help them solve their problems better than we did in the past. I've traveled around the world and talked with lots of customers and found that we're helping them solve portions of their problem.
When they explain their overall challenges, I sit there thinking, we can help them solve these problems, but we may not have educated and prepared our sales teams or partners most effectively to solve the bigger picture, the real issues they're trying to face. So, I'm excited about the teamwork we have between my organization and Andrew's organization because what we're doing is we're architecting the key requirements and challenges by industry and sub industry, so those sub segments, and then preparing the sales teams to go off and have the right discussions, the right dialogues to engage in helping them solve those problems. So we become more relevant because we can help our customers be effective in serving their needs and their customer needs and that's going to be one of the most explicit benefits of focusing on industries.
Okay. Thank you. And one other quick one, Carl, just on the consumer market. Maybe you can blue sky it for us. Is this going to be an evolution or is potentially a big bang that will really drive this for you?
There's potentially a real I mean, what we've seen as the numbers have started to grow is that there's real potential for a sizable business. Compared just to kind of gauge it, I think there's a real opportunity, probability of success is lower. In the other businesses we talk about, with a high degree of confidence, I can sit here and tell you what's going to happen with our simulation business or our PLM business. And that's why we're willing to kind of stake out 5 year growth rates and stuff. When you get to the consumer business, it is one, it's a little bit the Wild West in terms of what's going on there.
It's a much more rowdy and volatile market. I think there's huge upside there, but much less guarantee that we will be successful in that market. We're starting to see revenue from it. We're starting to see business models emerge. They're different than the traditional ones.
So it's also requiring some learning and retraining on our part for how to go about it. Many more of the business models in the consumer space are either around advertising or commerce. And historically, we've had 0 revenue from that. So it's a very different business. And I don't think the right thing is to take our existing business and impose it in that market.
It's much more adjusting to what that market expects and trying to tap into it. But there really is a big opportunity. Just to put it in perspective, by various measures, we have 75,000,000 users in this consumer business. In 30 years of Autodesk's history, we had 12,000,000 users. So you're almost an order of magnitude larger in a fraction of the time.
But it is a very different business and price points are different. But I would love to see it turn into a really big business. Even without it, I go back to my assertion that it's been a wonderful experimentation for us. I think back to Heather's question about the difference between us and the competition, I think it's given us the confidence to move forward. We were maybe not just the Petri dishes like the fruit fly experiment.
Generations of consumer software come so quickly that we've been able to go through generation to generation stuff really quickly, tap into new technology, understand what customers want. And like I said, nobody in the corporate enterprise is really willing to tolerate answers to that problem worse than what they have at home. And we're seeing that, although some of you guys I saw with all the Blackberries, we had a good discussion. I don't know why you still tolerate it. But generally speaking, people are not willing to tolerate forward with what we're doing.
And we've been able to try out in a broad way. And so we know we have the scale to make many of these cloud based offerings available to our commercial customers. So it's been good from that standpoint alone. I still do hope it turns into a real business.
Carl, from the mainstream side of the business, I think one of the things that's been very interesting about the consumer side is it's been one of the most successful brand building campaigns Autodesk has ever done. And I know from a personal standpoint, trying to explain to people who are not involved in our industry that I know or meet, what we do is sometimes challenging. Now my 8 year old daughter knows who Autodesk is and is constantly badgering me on when the next app comes out. So it's definitely been a revolution in terms of helping people understand the potential of design software and touching the next generation of people that are going be using our products.
Yes, we started with a fairly extreme first offerings. Our professional ones were over here, and we had things like Sketchbook and Pixlr way on the other side. But now we've started to do things like the mechanical engineering games like Tinker Box. Actually brought real engineering apps to tablets and phones, things like the force effect, which is having a great impact in places like education. So I think it's brand building, it's awareness, but it's also showing a generation of people what's possible there.
I have been totally surprised by even some of our most traditional customers' willingness to adopt the new technology. I thought they would be slower. I went to a meeting at one of biggest multi industry customers the other day. There was not a laptop in the room. It was all tablets.
They were talking about a large construction project they were doing where they had bought 1,000 tablets. They bought 1,000 iPads and deployed them. So I'm just watching just a huge shift go on. I mean, it's not understated to talk about the post PC era. There will still be a role for traditional PCs, but it's going to become diminished over time in a significant way.
Thank you. Dan Cummins, ThinkEquity. I thought last year we saw a slide that described the number of technical certifications technical certifications is way up perhaps as a result of the industry intensity and go to market. Can you give us some indication or moment that the industry intensity is really working and showing up in the numbers?
Yes. So we're not providing targets and goals in specific numbers. What we are doing is this. I mentioned that the way we've architected our channel framework is based upon tiered benefits. So there's benefits to our partners to get as many of their folks certified and for them to apply for certifications.
And the certifications, we have 7 of them that are available. We're going to be doubling that number over the next 12 to 18 months as we focus on the specific workflows that we really do want our partners to specialize in. So you're going to see our partners continue to invest how to best implement solutions, sorry for that word, but a customer based offering so they can really solve the customer problem most effectively. And it's up to us at Autodesk to put those certifications and specialization programs in place so that we can help our partners learn as quickly as possible and they're hungry for it.
Richard Davis, Canaccord, maybe Carl or something like that. What do you view as the gating issues in your simulation effort? Is it features? Is it reference customers? Is it one of the challenges you have, especially if you try to move to the cloud is just the size of the files are really big and sometimes porting them back and forth can be a challenge.
I mean, when you think about this over the next few years, what are the things you have to accomplish to get to where you need to be?
I think the simulation market, if you look at it, there are different customers. There are ones who change our market position, what we have to do is go to relatively conservative customers and have them be willing to try something new. What we found most successful are those parts of the industry where they're not saying, look, I have to keep these results around for 50 years and I got to compare it to the older results. If that's the kind of account, it's not that interesting. So in some places, like for example, our mold flow product, which is computational fluid dynamics related to plastics, putting that online has been absolutely fantastic.
I've had a bunch of customers come to me and say, we've had these problems that we've not been able to solve because we have not had machines big enough to do it, or the number of times to do it has been there. So what we look to do, and I think the other more traditional competitors will continue to do well. I think we're going at the margins. We're going for the engineers who have not taken themselves who have not taken enough advantage of it. We're going what we're trying to do is really do the problem of optimization rather than serial simulation, one after another.
We're trying to say, think about your problem differently early in the design process. So a wholesale rethinking of how you're going to do simulation is good for us. Places where there's fast cycle times, where the market moves quickly are also good for us. If what you want to do is just take something that you computed on your desktop and move it online, that's a little bit less interesting for us and I'm not sure nearly as compelling for the customer. We can ask the rocket scientist.
These large file simulations too. These are classic examples of automotive crash tests and these kind of things. You know what, that's not the market we're going after. There's a lot that can be done with by the way, a 50 megabyte file, nobody blinks at that moving back and forth anymore. And that covers a large gamut of what people are trying to do.
And I think Carl's point about making optimization a big discussion out there and not I'm a simulation expert, I'm going to keep simulating and simulating until I find the right answer, but rather out a bunch of options and letting people use that information, something classically called design by experiments, is going to be a big part of how we change the market, changing the dialogue more to that so that's away from that.
Yes, the typical trade off, I'm looking at things like, let's say, cost and strength and material. So how do I explore that space and come up with the best alternatives? So there are things like that. I mean, so far, I'm very encouraged by what I'm seeing. But I'm not sure you'll see it necessarily reflected in others.
I think there's still a strong traditional business out there for others.
Sarah Holmes, Gilder Gagnon. Way back when the story was you were going from 2 d to 3 d, I think the idea was that not only 3 d was more per seat, but that it was going to drag on a number of other seats per seat. Where are we in that evolution? And does the cloud, the move to the cloud and mobile and etcetera sort of potentially sort of accelerate or broaden that
trend? Yes. I mean, I think it clearly I mean, so I think it's already happened to some degree and it clearly continues that. But if you look at a number of the things that we talked about, so for example, simulation, which we were just talking about, simulation only comes about because you have model based design that you have an actual 3 d model. In a 2 d schematic representation, we wouldn't have been able to do that analysis.
The visualization comes from 3 d models. When you look at things like BIM 360, in particular the acquisition we did with Vela, is doing construction management at the point of the job. So it's job site management. It's a much broader audience than just the people who are designing and engineering. If you look at the PLM and the workflows that have even been implemented to date, that's reaching out to parts of the company that are historically not our traditional customers.
So I stick by what we said is that the first step was moving people from 2 d to 3 d. So they started to have models. Models really are just the foundation for simulation, visualization, analysis, as well as all the other business process workflows that come along with that. So it really, really is reaching lots more parts of the organization than ever before.
I wouldn't add that. I had a discussion with a customer last week, which shows how this is driving some expansion. It's a company that actually builds airports, but they've evolved their business model to not just do the construction and design of the airports, but they also now have a business where they operate and manage those airports after they've been implemented. So they've evolved their business model. We are talking to them about BIM and the fact that they've implemented BIM and they brought the different business unit leaders in.
And what was interesting is, in the past, we would have just had the discussion with the design people, maybe we would have talked to the construction folks as well. Now we're having a discussion with leaders of design, the heads of construction because they were leveraging the models during the construction process, but we also had the person responsible for driving the manage and operate part of their business afterwards. And interestingly, that person actually was arguing amongst the peers model was in one specific discussion how models have changed the entire discussion and landscape with our customers.
Hi, Steve Ashley, Robert Baird. Just a follow-up question and it's on the future evolution of the product and today you could offer this hybrid approach of a desktop but then some SaaS goodies that are connected to it in the cloud. As we move that forward, do you foresee taking some of the feature functions that are currently in the desktop and moving those to the cloud as you go forward? Or do you just see one day a full feature desktop showing up as an
So our offerings will we will have all things along the spectrum. I think our customers will choose to adopt it differently. So we already have full featured versions of some of our most sophisticated design others who are others who are very comfortable and have invested heavily in desktop products, and we will continue to provide them so that they can move at a pace that they find appropriate. And as you said, mix in some of the SaaS goodies. So if they want to reach out for SIM 360 or PLM 360, it's available to them, but they still run-in a traditional way.
I think more and more of our customers and more and more of our development efforts are going to purely cloud based offerings. And you will our initiatives there. We've already demonstrated 2 different ways of delivering full functionality in the cloud to the desktop. 1 is through a kind of a video compression of remoting technology. The other is by rewriting applications that are on a new foundation that are entirely designed to be run-in the cloud and from all types of devices.
And I think it's incredibly exciting when you see this full featured in, I think it was certainly at AU, we showed some of that, where we showed a mechanical design application, something that typically ran on a desktop. It was running it on the cloud. You're accessing it from the mobile a mobile device with multi touch. And you're sitting there pushing and pulling and designing mechanical devices that's running in the cloud. For the most part, it is not going to be a technical limitation.
It's going to be a cultural limitation in terms of the rate of adoption of our customers. I think we've just about passed every hurdle. I had this questions about latency. We were demonstrating delivering frames with 20 milliseconds of latency. It's imperceptible by people.
At that rate, you could be watching a movie. And I think it's good. You can certainly be interacting with an engineering who and organizations who have issues around security and reasons for not putting stuff in the cloud. And for them, they will continue to be desktop offerings, but the bulk of our business will move increasingly to online offerings.
Ken Wong from Citi. Mark, on the buyback, you guys talked about going beyond simply offsetting dilution. What's the company's philosophy and perhaps approaching the debt market to try to fuel that initiative?
Well, I think the approach that we're taking right now is we've got $1,800,000,000 in cash and marketable securities. I think the approach that we're looking at is using our excess cash to do that as opposed to looking at the debt market. I mean, every time people look at facts and circumstances and revisit that, but that's our philosophy, Ken.
And Carl, you guys didn't touch much on the media and entertainment business. Could you perhaps give us just a quick thoughts on your outlook there?
Yes. I mean, I think there is a continuation of what we've seen in media and entertainment is that the high end of the business continues to be sluggish in this economy. Be good. It's fueled not only by the traditional customers, but increasingly by all the attention in things like mobile gaming. So I see a lot going on in more mobile gaming, more casual gaming, driving the use of our tools and the software part of that business seems to be on par the rest of our business.
The high end creative finishing business is still suffering because the overall industry, I think, is going through some pain. One of the other things I was just going to add to the first question on the buybacks. We certainly will look at the cash that we have available first. But remember where the money is located and the vast majority of the money is offshore. We as somebody said to me the other day, the way to get it back is through synthetic repatriation.
Couple of
A couple of unrelated questions. First, perhaps for Andrew, does the concept of segmentation make sense on the cloud that is the standard premium ultimate notion that you have in packaged software? Does that have any role at all on the cloud? And number 2, over the last year, you've announced relationships with companies as different as Pitney Bowes in the mapping area, for example, and Nintendo, I think, in the gaming area. Perhaps for Carl, could you talk about what you think the future of these and other relationships might be in terms of helping you with market development and the like?
So I'll answer that. I do believe that the standard premium and ultimate tiering methodology does have applicability to the cloud offerings. I think most of the commercial offerings out there we see around the clouds have shown that. It will be different. It will present itself differently, but the concept is completely portable.
But you want to do it in a way that makes sense. So functionality according to standard premium and ultimate is clearly something we're going
to look at. On the partnership question, I mean, partnerships have played an increasingly important role. It's another one of, interestingly enough, some of the side benefit that's actually come from our consumer business has been increased kind of media attention and people have recognized us. So whether it's partnerships we've done with Apple or Pibbose, it's increasingly important. And given how diverse our portfolio is, we're finding all kinds of places where good cooperation makes a lot of sense.
And we're going to a much more traditional view of partnerships that were more around platform providers to us. That's turned out to be less interesting. But out in the market, somewhat in response to our customers have asked us to say, you have great stuff, it would be really wonderful if you guys could work together, so we would have a better answer. And so partnerships will be an important and increasingly important role.
Thank you. This one is for Mark. Maybe one on the reiterated guidance for the full year. One of the questions I've gotten from investors is, if you look at at least 10% growth for the full year in terms of revenues in relation to a couple of aspects, the 2Q guide being below 10% at the midpoint, backlog coming down in Q1, FX currency benefits, which likely get smaller as we get into the year. Are we looking for a re acceleration of core demand of underlying demand into the second half of the year?
So that's the first question. Does the guidance imply that? And 2, if it does, are there elements in the model that should enable you guys to have better strength
big, big shifts. I think the guidance for the year talks about 10% plus. Let's start with Q1. We grew 11%. Now some of the backlog adjustments, as we guided earlier in quarters earlier in terms of the ecosystem with the electronic fulfillment, some of the other changes that were going on, we've kind of covered some of that ground in the past.
But 11% revenue growth in Q1 bodes well for thinking about our growth of 10% plus for the year with 3 quarters to go. I think the things that why we're reaffirming it today. So those are some of the attributes about what's going on. But hopefully, that squares away. So I don't know, Karl, if you have any added points.
No. I think that's the basic coverage of it. There is no I mean, we're not blind to what's going on in Europe. As I said on the call, the earnings call, Q1 was one of the most unusual quarters that I've seen in our history that if I would have told you that our AEC and manufacturing business would do really well, Germany, Japan and the United States would do really well. And we would kind of it would just be a so so quarter.
I could never have imagined that scenario. When AEC manufacturing well, when the 3 biggest when our 3 biggest countries are doing well, so it was definitely more unusual. And we're somewhat prepared for a more unusual conclusion to the year. I mean, there's no doubt there is a lot of noise in Europe right now with some amount of spillover effect. And so as we gave guidance, it's fully aware, but I won't be shocked to wake up one morning and say some kind of news out of Europe that certainly sent the markets in the wrong direction.
Any more questions? All right, I think we're going to wrap there. Thanks again for coming. The PDFs of all the
coming.