Welcome back everyone and thank you for joining us. My name is Simon May Smith and I'm the VP of Investor Relations at Autodesk. We're delighted to have you with us today. In this session, we have a presentation from and Q and A with Jim Lynch, our SVP and General Manager of Autodesk Construction Solutions. We will then have a short break, followed by a presentation and Q and A session with Scott Fries, our EVP of Product Development and Manufacturing Solutions.
In all of our sessions today, please enter your questions any time during the webcast in the client, and we will get to as many as possible. Before we kick it off, let me share our Safe Harbor statement with you. I'll let you read through it, but basically, we may make forward looking statements during the course of this presentation. Please refer to our SEC filings for information on risks and other factors that may cause our actual results to differ materially from these statements. With that, let me hand it over to Jim to kick it off.
Jim?
Hello, everyone, and thank you for joining. Hopefully, you had a chance to listen to our construction keynote. Today, I'll be sharing with you some of the announcements made during our keynote and how Autodesk will continue to win globally in construction. Over the years, I've talked a lot about how construction was one of the least digitized industries, but that's changed and now using technology on the job site is a given. Continued industry wide pressure like low productivity and a shortage of skilled labor along with the global pandemic have only accelerated this digitization effort.
Now construction firms are actively reviewing their technology procurement strategies to remove data silos and gain meaningful insights into projects. A move away from point solutions to an integrated platform is needed to achieve connected teams, data and workflows. I've spoken to many customers who've outgrown their point solutions and are looking for a long term technology partner who can connect the entire construction lifecycle, while also delivering the capabilities they need to get the job done. This is the strength of Autodesk Construction Cloud. At Autodesk, we're connecting stakeholders across all phases of construction, so the right people have access to the right information at the right time.
Before I go into our construction strategy, let's take a minute to review the tremendous growth we're seeing in our construction products. We've seen more than 2,000,000 projects to date with more than 11,000 projects on our newest product Autodesk build in just the last 6 months. We see 5,000,000 bid invites are sent each month, a more than 35% increase year over year in monthly active users and a 2x increase in enterprise usage of construction products. Finally, we have customers in more than 140 countries. Our R and D team has put out more than 250 enhancements to Autodesk Construction Cloud this year, and we have an approximately 6x increase in the number of customers using multiple construction products since last year.
These are impressive numbers and I'm confident that we're positioned to see continued strong growth as we finish the second half of FY twenty twenty two. Now as we look at FY twenty twenty two, our construction strategy has been guided by 3 key objectives: strengthen and scale Autodesk Construction Cloud, global expansion and retention and optimize the customer experience. These should look familiar as our strategy from last year to become the global construction industry's preferred cloud solution remains intact. 1st, strengthen and scale Autodesk Construction Cloud. In February, we delivered the 1st phase of our product unification efforts and brought Autodesk Build, Takeoff and BIM Collaborate into the unified Autodesk Construction Cloud.
This year, we are expanding on this success with more customization, more integration and more data collaboration. We know how to engineer new capabilities and integrate existing tools to deliver a robust, seamless experience that serves all parts of construction, not just one phase. Over the last 12 months, we've delivered hundreds of new features and updates to our solutions, including design and model collaboration, document management, field management, project management and cost management. These capabilities are aimed at helping customers improve decision making and drive better outcomes not only on the job site, but during the critical pre construction planning process. And this year at Autodesk University, we announced that pipe will be accessible through Autodesk Construction Cloud's unified solution.
We're also integrating Assemble with Autodesk Docs. At Autodesk, we build resilient systems that are engineered from the ground up, systems that allow all stakeholders to access, manage and control exactly the parts they need to get the job done. Project stakeholders need to trust that they're working with accurate data and feel confident their work will stay private when it needs to. Earlier this week, we announced Bridge in Autodesk Build. Bridge creates a way to share key project data between firms without sharing the whole project.
A general contractor can share only the required sheets and its updates throughout the project with each subcontractor. Subcontractors will be able to add annotations, issues and more to their versions of the sheet and retain control of what it's shared back to the GC. Bridge opens up a new era for collaboration in construction. It allows more users to not just access and manage, but also control their part of the same project data, supporting how the industry actually works, all captured with Autodesk Construction Cloud. For owners, this data can be leveraged to operate and maximize their investment.
Facility managers get the information they need to confidently operate the building from day 1. We've made significant strides this year, building on the power of a single construction management solution to give every project stakeholder the data they need when they need it. Now let's talk about global expansion and retention. 1st, international growth. This past year, we continued our investment in building out our go to market teams in both EMEA and APAC and the teams are focused on expansion opportunities.
With our recently launched ISO 19,650 related workflows, we are now focusing on bringing these customers on to other construction cloud platform offerings such as build and takeoff to satisfy their field collaboration and quantity takeoff needs. In APAC, we're extending our leadership and brand recognition beyond design into construction. Next, our construction specialized partners. In addition to investing in teams on the ground, we're also looking to the Autodesk channel to extend our reach in countries where we have a smaller footprint. To do that, we're going to utilize our construction specialized partners, a subset of partners with dedicated staff for sales, pre sales and technical support and that have been certified on the applicable construction offerings.
In FY 2022, we've increased our construction specialized partners by more than 20% and we'll continue to add strategic partners around the globe where we see the most opportunities in construction. We've also enabled construction specialized partners to sell the entire construction portfolio, including Autodesk build, takeoff, assemble, BIM 360 build, cost and plan. Finally, innovative business models. The industry is demanding flexibility in how they purchase and deploy software. They want more options beyond a single business model based on annual construction volume pricing.
Autodesk Construction Cloud offers the most flexible business model available in construction management, creating opportunity in every single account. This is a true differentiator for Autodesk against other construction solutions. Our final strategic priority is to optimize the customer experience. Autodesk is more than just a technology provider. We're a technology partner invested in the success of our customers.
First, our teams want to make sure all customers have a seamless onboarding experience, Whether 1 on 1 or providing on demand training, our goal is to help customers plot a plan that enables their success. Our customer success teams can have immediate impact on how a team works by helping to streamline a customer's technology experience. By looking at all of the solutions a customer is managing, we're able to help simplify and create processes that are easy for teams to adopt and execute. A streamlined technology experience brings together data so it can be used in a meaningful way. Finally, our team ensures that customers are focused on the outcomes they want to achieve.
Autodesk Construction Cloud provides the capabilities that deliver project teams desired business outcomes and our customer success team works closely with customers to achieve those goals. Over the past year, we've worked with almost 20,000 customers around the globe to help streamline, discern and enable a new path. As you look out across these three strategic priorities, strengthen and scale Autodesk Construction Cloud, global expansion and retention and optimize the customer experience, I'm confident that we will capture the massive opportunity in the construction market. And the way we do that is through 3 key differentiators that set us apart from the competition. 1st, Autodesk Construction Cloud.
Autodesk Construction Cloud spans the construction lifecycle, offering best in class pre construction planning and construction management capabilities. Couple that with our forward looking data strategy and our leadership in building information modeling and offering tools such as Revit and AutoCAD, and we have all the pieces that customers want in a connected construction platform. 2nd, our go to market strategy offers 1 of the most flexible business models in the industry, a robust team of global construction professionals and a construction specialized global partner network that expands Autodesk's reach to new customers and new markets daily. Finally, beyond today's current need for digitization, the industry is looking for innovative ways to drive more predictability and safety in the construction process. Builders are looking to pre fabrication, off-site construction and modular construction to better manage costs, materials and the safety of their workforce.
This is industrialized construction, the convergence of construction and manufacturing. With our compelling construction portfolio and our powerful manufacturing solutions, Autodesk is uniquely qualified to help the industry capitalize on the projects. We're looking at construction in a more connected way than ever before, bridging information across teams, across workflows, throughout the entire project lifecycle. This is where the industry is headed. Data driving faster decisions, data driving results.
This is Autodesk Construction Cloud. Let's build the future together. Thank you.
So just a reminder, we're going to start the Q and A session now. If you have questions, please put them in the clients, and you can submit those on the webcast side in the bottom right hand corner of your screen. We'll keep going for as long as we have time and questions to fill it. So let's do the first question from Jay Bleshard, actually just finishing off starting where Jim finished off there on industrialized construction. Are you seeing or would you anticipate that Revit Inventor integration and the forge API for Revit would accelerate industrialized construction adoption.
Jim, let's start there. Jim, you're on mute.
Okay. I thought I took care of that. Okay. Yes. Hi, Jay, and thanks for the question.
It's a great question. As you know, I'm really passionate about industrialized construction. And I think now more than ever, the industry is really waking up to the opportunity that doing more things off-site, doing more things in a controlled environment, things ideas like prefab, modular. These things are growing in momentum and are definitely going to grow in importance for the industry. And I think Autodesk is really well positioned there because not only of our construction portfolio, but as you pointed out because of Revit and because of our manufacturing portfolio, both Inventor and Fusion.
And so the answer is yes. I think it's the ability for an industry player to like Autodesk to be able to offer not just one part of the solution, but the entire solution from design out to the manufacturing floor, out to the job site for installation is going to be critically important. And of course, because of the nuances in these workflows, the ability to customize is critically important. And that's where the Forge API will come in and it's going to play a really important part for our customers. Because as you look at these customers that are going down the path of industrialized construction, there's a lot of customization to their workflows.
There's a lot of specific IP that they like to add and I think Forge really plays a key role there. So Revit, Inventor, Fusion and of course Autodesk Construction Cloud all built on Forge really opens the door to accelerating adoption of IC. Great question.
Great. Thank you, Jim. So let's move on. So just another one from Jay. What are your expectations for ESRI's new ArcGIS GeoVIM and other additional new products in the partnership pipeline?
Yes. I mean, listen, I think the partnership between Esri and Autodesk is something that is critically important to the industry and something the industry really has been waiting for. So I think ArcGIS and Geo BIM and our partnership is going to really help the industry move forward. And I think you're going to see wide adoption of that. In terms of their additional new products in the partnership pipeline, can't really talk about that right now, but I would suffice to say that
I don't think we're done yet.
Brilliant. Thank you, Jim. So next one from I think it's Adam Borg. Can you talk about the competitive environment in ACC? Just sort of giving a bit more color on what you said at the end of your presentation, Jim, why you win and lose against competitive solutions, perhaps a bit more detail on build and the business models and the channel, etcetera?
Yes. Yes. This will be
a long answer. It's a I love this question. Listen, construction is a super competitive environment today. There are some of the larger players out there, the Oracles, the Trimble's, the Procore here in the U. S, there are regional players.
If you go across Europe, you find these regional players. And then there's a whole startup environment. There is incredible amounts of investing going into the startup community around the construction sector. What's interesting is if you look at all these players, they really provide point solutions and they really address one part of the workflow for the most part. And I think that leads to the competitive environment, why we win against the competition.
And I'll talk about why we lose against the competition. But let me talk about why we win first. The reason there are several reasons why we win. 1st and foremost, the breadth and depth of Autodesk Construction Cloud is unmatched in the industry. It really is.
There is no other solution that embraces, that connects tightly to design, that embraces pre construction planning and really drives the best tools for collaboration on the project site and also pushes out to digital twin technology like Tandem. So the breadth and depth of Autodesk Construction Cloud is 1st and foremost why we win. And that product is only getting better. You heard earlier that 250 enhancements already this year. We continue to unify.
And the other reason why we win is because we are building on a platform. We are building a platform. A lot of companies out there talk about a platform, but let's stop and talk about what platform really is, right? A platform is something that's built on the same technology, on the same data bridge, if you will. That is Autodesk Construction Cloud.
A consistent experience for the user, whether they're entering an issue on the job site or whether they're in pre construction planning trying to do take off. So a consistent experience and an openness. Those are the things that define a platform. Autodesk Construction Cloud is really the platform for the construction industry. That's the other reason we win.
The other reason we are winning is because of our flexible business model. We have, I think, the most flexible business model in the industry against our competitors. And I think we're already seeing great results because of our flexibility. Next, our global reach. We have incredible global reach as part of Autodesk, right?
So we're not just a U. S.-based company trying to break in to Europe or trying to break into Asia Pacific. We are well established as a company and that helps us really, really win globally. Then finally, the last thing I would say is, we're helping the industry solve today's business challenges, right? We're making sure they can collaborate more effectively on the job site.
We're helping them drive better predictability during pre construction planning. We're tying back to design, so that information is accurate and consistent throughout the pipeline. And we're looking forward to where the industry is going. Jay just asked a question about industrialized construction. Autodesk is uniquely positioned to deliver on the promise of industrialized construction because of our leadership in design, because of the breadth and depth of Autodesk Construction Cloud and because of our strong offering in manufacturing with both Inventor and Fusion.
Why we lose? I think, listen, we're losing less and less. I think as Autodesk Construction Cloud gets better and better, There's no longer the argument that we don't do XYZ, so we can't compete on the job site. I think the reason when we do lose the reason why we lose companies are focused on a particular technology on a given project. So not a lot of companies will switch project management tools or solutions in the middle of a project.
But as they start up new projects, that's when they say, hey, what else is out there? And that's when we win. So that's really it. And like I say, we are seeing great momentum out there. Sorry, Simon, that was a long answer, but there's a lot to talk about there.
And the enthusiasm is good too. So I love listening to it. So let's move on. So we've got 2 questions that I think are related to each other in my mind, Jim. So I'll ask them sort of both together.
I think one was from Ken Wong and one was from Adam Borg. You highlighted a goal to increase construction partners by 20%. Can you give us an example of what these partners look like? And how might this model differ from what your current VAR model looks like? Yes.
And then should we do that one first and then we'll Okay.
Keep going. Keep going.
And then the sort of second one, which may be related to that is if I heard you correctly, it sounded like you're only getting channel partners involved for ACC and select geographies where you don't have a direct reach, why not get the channel involved for ACC even in markets where you have direct reach? So it's really sort of the shape of how we're using the
channel, I think, both those questions.
Yes. So, great questions. The channel is an important part of our growth strategy. Let me start with the second question first, Simon, because I think it's important to clarify. To be sure, we are not just engaging channel partners in countries where we don't have a direct reach.
We're engaging channel partners across the globe here in North America, across Europe and across APAC. What we are doing is that we're making sure that we're working with the partners that can help our customers adopt and really help them embrace the technology. So we're not just making Autodesk Construction Cloud available to all channel partners. Why? Because not all channel partners are equipped to help our customers on their technology journey.
What we are doing is we're partnering with our construction specialized partners across the globe to make sure that they have the tools they need, the skills they need, the capabilities they need to really help our customers adopt. We don't want to just provide software. We want to make sure that we are ready and our channel partners are ready to help our customers adopt, successfully adopt and embrace the technology. So that's why we're working with select partners now, those partners going to the 20%. We've already embraced 20%.
We're going to continue to increase the number of channel partners out there. But we're going to be thoughtful about how we do that because we want to make sure, 1st and foremost, that they've made the investment and have the skill sets they need and that we are spending the time with them to enable them to really understand and embrace Autodesk Construction Cloud so that they can then deliver those services, if you will, those adoption capabilities, those adoption services to their customers. So definitely not just focused on channel partners in countries that we're not in, we are going broad with our channel because listen, they have great reach. They can help us reach deep into the market and they're already doing that. And I am we really embrace them.
We started engaging with them at the beginning of this year and we've already seen tremendous traction through our channel partners. So that really is a competitive differentiator going back to the previous question because it gives us the reach. Hopefully, I covered all of that, Simon.
Yes. I think that was great, Jim. Thank you. Let's move on to another area, which is interesting, I think, on preconstruction,
Jim,
because I think we have an interesting story to tell here. Preconstruction needs to receive second billing with a lot of GC orgs in terms of time, talent attention. Fair to say this is changing given the magnitude of ADSK investments and that's how some of your peers are investing and acquiring and maybe sort of talk to sort of design build and sort of shifts in the industry, etcetera?
Yes, sure. Yes, happy to talk about that. Listen, it's really interesting to see that the second billing statement
within a
lot of GCU are that. I think it was I don't know if I'd say second billing, but I think the activity on the job site got all the attention.
I mean, listen, GCs
that are winning, GCs that are successful, that are growing their businesses, that are improving their margins understand that it all starts in preconstruction, right? It all starts with making sure that your quantities are accurate, making sure that your quantities are driving accurate estimates, making sure that your bidding process is making sure that the GC or the subcontractors that you're pulling into the projects are the right subcontractors and not just the subcontractor you've used on the last 10 projects. So GCs understand that it isn't it can't be second billing, because that's where you drive the predictability. That's where you drive the cost management. That's where you drive the budget management during that pre construction planning process.
And that's why we've invested so much in pre construction and not just with the new take off tool that we've built, not just with BuildingConnected, but think about Assemble, think about Navisworks, think about our collaboration tools, right? Those things are all about making sure the project team is planning and errors are being found in the pre construction process, not on the job site. In terms of our peers out there investing and acquiring, I mean, there's been some there's been some, I'd say, small investments. We don't hear our peers, if you call them peers or competitors, we just don't hear them talk much about pre construction. And I think the reason why that is, let's face it, the preconstruction process is better.
It's more successful when there's a tight connection back to the design and engineering team. And again, given our leadership in design with Revit and AutoCAD, we're in a really great position to be able to pull those disciplines together. And I think you're going to Simon, you talked about design build. I think these new structures, these new project structures, not that design build is new, but these various project structures, whether it's integrated project delivery, design build, these things are all driving a change in the way teams, design teams, engineering teams, construction teams work together. I think that coupled with the role that the owner is playing in terms of demanding a different approach to projects, right?
They want to be involved earlier on. They want insight into projects earlier on. And that's why the importance in preconstruction should not be understated. I think that's why you don't hear our peers talk about it much because they just don't have that they don't have the investments, 1st of all, in preconstruction and they don't have those strong ties back to the beginning of the process around design and engineering.
Yes. So underappreciated part of the market pre disruption. Thank you for that question. So moving on to topic of on topic, how are, Jim, your customers managing supply chain headwinds?
Yes. Listen, it's a real challenge for them. And they've faced a number of challenges over the past almost 2 years, year and a half through COVID. So when I talk to our customers about their challenges, they talk about a couple of things. Certainly, they talk about the workforce that it's the workforce is retiring.
How do they find the enough folks to work on that next project and supply chain headwinds always comes up, right? So what we're seeing is they're really trying to better understand how to get projects specked early to understand what they need from their supply chain. In the past, it was not it was they could make decisions later in the process and still get access to the materials, to the components that they need. Now it's much harder. And so that's another reason why you're seeing a heavier reliance, if you will, on the preconstruction process, so that they can start ordering the things they need earlier in the process and not wait until 2 weeks before or 2 months before, if you will.
So, I think that's what's happening. I think they're really trying to understand the project at a greater level of detail earlier on, so that they can get the supplies on-site when they need it. But it is a challenge. It is a challenge for the industry.
Right. Yes. So it's a theme of the day, probably that, but hopefully that will resolve sooner rather than later for our customers. So Jim, moving on now to something you talked about in your presentation and just to sort of dig down because I think it's an important topic around the sort of business model sort of seat based versus project value and how, particularly in the mid market, our approach differs from the likes of Procore and others in the industry? And maybe sort of dig into how we don't increase the price in the middle of the project, how we don't charge you extra for additional modules, it's all the core functionality is included in build and all that sort of stuff and how we're sort of bringing more value to our customers.
Yes. So to be sure, we have the most flexible business model in the industry in the construction tech segment. As you suggested in the question, some of our competitors offer one business model, a business model that is based on percentage of project value. Now the challenge with that is companies, general contractors can get almost penalized for growing their business, right, as their project value increases, so do their costs. So now to be sure, some of the industry wants to purchase based on percentage of construction value, if you will.
But others want other flexible models. So that's why we offer seat based. That's why we offer project based. That's why we offer you the ability, if you will, to move between, right? So what we've seen happen is a team on a project site will see Autodesk build.
They'll be interested in trying it. They'll buy a number of licenses based on users, number of users and they like it. And then others see what they're doing. And so they too want to get in on that. So then we can actually bump that account up from individual users to a project based approach.
As more and more projects across the company start to use that technology, we can then actually move that account up to our enterprise and our token based approach. So the flexibility is critical because not everybody wants to buy one single way. Not everybody wants to buy just based on individual users or individual seats and certainly not everybody wants to just buy based on annual construction value.
Brilliant. Thank you, Jim. So next one is about the sort of future, maybe sort of lean into some of the stuff we've been talking about at AU this week, Jim. What is the functionality you're most excited about expanding in the future? There's a few examples, but I won't limit you.
So maybe talk about what you drew out maybe from AU or something else?
Yes. So there's a lot to be excited about when I look at the work that our product teams are doing. I mentioned earlier, I mentioned in the video, over 250 enhancements over the last year. I won't go through the details of those, but I think some of the things that excite me, 1st and foremost, is I do believe a lot of our competitors in the industry do acquisitions and they leave these acquisitions separate from their core technology. I've always believed in the acquisitions that I've done with construction and previously at my time at Autodesk is, you deliver the most value to your customers when you really take the time to take that acquired asset and integrate it into the company, into your other products, if you will.
And so, I really when we started Autodesk Construction Cloud and we did the acquisitions of Assemble, of PlanGrid, of BuildingConnected, most recently of Pipe. We did those acquisitions from the start knowing that we were going to unify them into a single environment onto a single platform because that's how you get a real platform. You unify and you have a common data layer. So I'm super excited about the work we continue to unify. You heard Sameer hopefully you heard Sameer yesterday talk about how Pipe is now joining the unified solution.
So I'm super excited about the unified solution. I'm really excited about Pipe. I've been excited about Pipe since we did the acquisition and we're seeing great traction with Pipe. It is just it really demonstrates the power of machine learning. And so I'm super excited about that.
I think Bridge is great technology. I think the work we've done to and that Sameer announced to Connect, Assemble and Docs is really great stuff. So I think the feedback we've gotten from customers, in fact, I actually got a number of emails overnight. In fact, some from Australia that watched our keynote and we're so excited about what they heard and what they see is coming. So there's a lot to be excited about and our customers are definitely noticing taking notice and taking action.
Brilliant, Jim. So next question, I think is from Adam Borg and I'll ask it in an expansive way. As you continue to build out the breadth of the ACC portfolio, how far does the platform expand? He sort of then sort of cites a couple of examples, thoughts on financial management disciplines or even payments. I can't think why he's asking those questions.
But I wouldn't limit yourself to those, Jim.
Yes. Listen, I think we still have a lot of runway in terms of Autodesk Construction Cloud and where we can and will take it. I think there are more things you will see us do, more tasks, more disciplines you'll see us tackle on the job site. You'll also see us continue to invest and make pre construction planning better, right? What we ultimately want is for our customers to be able to exit the pre construction planning part of the process of the pre construction planning cycle with high confidence that their quantities are right, that their costs are right, that they've captured or they've removed any clashes or any issues before it gets out to the job site, because that's when it gets super excited.
So we know we need to do more in the pre construction phase to make that even stronger. We also know by the way that we need to do a better job, an even better job connecting back to design. So that closed loop between design and pre con, it needs to get tighter and stronger and that's exactly what we're going to do. In terms of things like payments, first of all, I want to remind everybody that Autodesk Construction Cloud already offers a really robust cost management offering, which is part of Autodesk Build. We don't charge separate for it like some of our competitors.
It is part of Autodesk Build. And we've heard great feedback from our customers on this capability. Now, I would also say that we're already helping to facilitate payment transaction and we'll continue to evaluate how we can really best serve the needs of owners, GCs and subcontractors as it comes to facilitating payment transactions. And again, remember, our cost management capabilities, which we're getting great feedback on, is already part of Autodesk build. You don't pay separate for it.
And the last thing I would say, our cost management capabilities are integrated with the major ERP players. You heard us talk about Sage at Autodesk University. And there's more and they'll continue we'll continue to build out these integrations based on our customer needs. So I think we have a lot of runway left in terms of making preconstruction even better, more predictable and then making sure that when you're out on the job site, you have the best collaboration capabilities and when you do find an issue, that issue makes its way back to the cost, to the preconstruction team and if necessary back to the design and engineering
team. Thank you, Jim. So moving on to maybe sort of forge and sort of what capabilities sort of coming down the pipe, sort of a question from Matt Broome, what construction functionality do you expect to surface through forge? Again, some of the stuff we may be talking about we've been talking about this week at AU.
Yes. So Autodesk Construction Cloud, of course, is built on forge. And as we continue to unify the acquired assets, they are being really built right directly on top of forge, which allows us to really expose a lot of capabilities for our customers and allows them to push information in and pull information out. But when I think about what functionalities will surface first, I think you can imagine issues, assets. I think some of our machine learning and the ability to tap into some of those capabilities, I think those are the things you'll see us really make available.
Certainly, the document management, Autodesk, docs.com and data environment will make sure that that's open so that our customers can push and pull in, by the way, 3rd parties can push and pull information into that environment.
Brilliant. So sort of related to that, again, another one from Matt Burns, so let's ask them together. How do you expect that Tandem will affect your construction strategy? For instance, would owners be able to leverage Tandem to track construction projects?
So, we're working closely with the Tandem team. I mean, I think that is the promise of a digital twin, right, is that you actually we provide an environment for owners. I mentioned earlier, recall I mentioned earlier how owners are really engaging much earlier in the construction process. Certainly, they've been engaged early on before, but they want more visibility. They want more visibility throughout the project lifecycle.
And so an environment like Tandem allows them to do exactly that, stop tapping in during the design, through construction, out to operations and maintenance. To be sure, Tandem ultimately will not just be about what happens after the asset is completed. In terms of how it's changing will affect our construction strategy, I think it strengthens our construction strategy, right? I mean, we already do a lot of things in terms of turnover. Tandem is going to make that even better because it's going to give owners visibility throughout the construction process.
And that's again the value of building on Forge. With Tandem built on Forge, with Autodesk construction tile built on Forge and a common link between them, we're able to pass information back and forth. I think you'll see our construction strategy get stronger because we can really expand that lifecycle story.
Brilliant. So a question from Matthew Perron, Jim, and maybe sort of history lesson here and just sort of going back to what you were saying about putting Autodesk Construction Cloud together and the sort of how we sort of started off as director and moving into channel. And the question is, how does your move towards more partners' construction cloud fit with ADF move more towards direct sales? And it's really the starting point is different. So maybe you want to sort of talk to the history of that, where how we started and why we're now moving into a channel process?
Yes. So recall, when we did the acquisitions, particularly the acquisition of PlanGrid, one of the drivers behind the acquisition, as I said at the time, certainly the technology and the team were priority 1, but also their sales motion was really important to us. Their ability to land and expand in accounts, their ability to go to the job sites, sell to a single project team and continue to grow from there, that direct sale, if you will. And so that is something that is near and dear to our hearts. It's something that we continue and will continue to do.
Of course, if you look at Autodesk and our direct motion as a company, particularly at the mid market and the named accounts, our enterprise accounts that is we're seeing great traction there with our construction offering. But we want to expand our listen, there's a lot of opportunity out there when you consider the long tail of the market. And that's really where our channel partners can really help us reach the subcontractors, the general contractors, the specialty contractors that are looking for technology. And so that's why we're embracing our channel partners to help us get to all parts of the market. And I think we're building some great partnerships with our channel partners.
And as I mentioned earlier, we're already seeing the fruits of that labor. And I know we're going to see more. And that's I'm super excited about it.
So just to remind everyone, we've got sort of 50 more minutes, I think, but if you have questions, please put them in the Q and A client in the Zoom. And we'll keep going for a few more left, but if you want to have more questions, please ask them. So Jim, probably not being too specific on this question from Saket because we haven't disclosed it, but just sort of qualitatively, how much of your business comes from general contractors versus subcontractors? And how do you think about the opportunity with the latter?
And then
you can sort of reconstructing is important.
Yes. So we don't typically share the percentage between the two. But I can tell you, again, the acquisition of PlanGrid really accelerated our reach into the subcontract community. Now if you step back, I just want to remind everybody, in terms of the Autodesk business, our business, it's hard to find a subcontractor that isn't using AutoCAD. Many are using Revit, certainly general contractors.
It's hard to find one that's not using AutoCAD. Most of them many of them are using Revit. And so we already have that established base as a company. And so now what we're doing is we're making sure that we're sharing our construction offerings with the general contractors and absolutely the subcontractors. As I said, PlanGrid really opened the door for us to accelerate our presence at the subcontractor level and the subcontractor community.
And we're going to continue to play there. I think, listen, our goal and what we're doing really is making sure that we're serving the needs of all stakeholders, not just general contractors, but general contractors, subcontractors and owners, right? We want to make sure that we're building technology that really serves all key stakeholders of the construction lifecycle. So you'll continue to see us build out capabilities that are really targeted at the subcontractor community, not just the general contractor community. And by the way, when you even think about business model, right, that I talked about earlier, we have a really flexible business model.
So if I'm a general contractor and I want to give licenses to subcontractors that are working on my project, I can do that today. If I'm a subcontractor and I say, you know what, I see great value in these tools, I want to purchase these tools and use them on these projects, they can do that today. So again, the flexibility of the business model further enables us to reach that subcontractor community.
Brilliant. Thank you, Jim. So we now have a question from who was it? I think it was oops, hang on a second. I'm going to zoom a moment.
It was from Adam Bald. Which and I don't know whether you want to precisely answer this, Jim, but I'll leave it up to you. What international locations for ACC are you focusing on first? I'm guessing in terms of channel partners
that was in relation to Okay.
In terms of so let me just talk globally what we're doing. So in APAC, we're really focused on Australia, New Zealand, Singapore and Japan. Now we're extending our reach in those countries, but also in other countries that we don't have feet on the ground, if you will, with our channel partners. So, we will engage channel partners, again, construction specialized that have the skills needed in other places in other countries around APAC, be it Vietnam, be it India, so on and so forth. So that's what we're doing in APAC.
In Europe, we're much more broadly diverse, right? We're deeply engaged in the UK and Ireland. We're deeply engaged in the Nordics. We're engaged in France. We're engaged in Germany.
We're engaged in Italy. And that is both through direct and indirect channels. And as I said earlier, we're going to continue to enable more and more of our partners. But I really stress the construction specialized aspect of it because we want to make sure that our customers are getting the best experience and getting the best support they can from our channel partners. So I hope I answered the question, Simon.
I think so. Yes, I think you did. That was perfect, Jim. Thank you. And then just sort of more of a sort of 101, and I'm sort of amending slightly a question from Wyatt here, because he was asking for all the specific growth rates, which we won't answer.
But just to sort of lay out the sort of construction value chain. So where does it start? And what are the different through preconstruction and takeoff and then through construction, what the different bits are to handover? Just so that people can understand the sort of flow as information flows from architecture and engineering through construction and then into the owners market. Yes.
So
the market starts, the project starts, if you will, in the design phase, it starts early on around conceptual and agreement. Typically, it depends by the way, it depends on the structure, right? If it's integrated project delivery, it's typically a 3 party agreement between the owner, the architect and the general contractor, right? And it's a risk reward model. So it depends on the structure, who gets involved early on.
What you're starting to see, what you'll continue to see, the general contact construction team getting involved much earlier in the process and that's something that we are supporting and enabling with our technology. But for sure, there are some structures in the industry that need to change to support that as well. But it really starts with design and engineering. And then it really goes into preconstruction. And by the way, it's not I don't mean to make it sound like design and engineering start and stop and preconstruction starts and stop and what happens on the job site then starts and stop and then handover operations starts and continues on forever.
Because those things, preconstruction planning overlaps when design is taking place, right? And that's the iterative nature of that process. That's why we put so much stake in tying our pre construction offering to the design process because it is iterative. It's not like the design gets finished, gets thrown over the wall, the preconstruction team takes it and then throws it over the wall. It's super iterative and it's only going to get more so.
And then construction starts, of course, again, it's not like they wait till the whole pre construction process is completed to start work on the job site. That is happening simultaneously as well. That's why it's so important to have the integration and the tight links between these life cycles. And that's why it's important to have something like our common data environment built on docs that moves data bidirectionally across that life cycle. So then you get to the construction lifecycle.
And yes, at some point, that project is then handed over to the owner officially for operations and maintenance. And what's going to happen is in the future, that owner is going to say early on, by the way, when you deliver the building to me, when you deliver the asset, whether it's a building or it's an infrastructure project, I want the digital twin representation, so that I have visibility into what happens throughout the process and that I can more effectively manage the asset through the life of the asset.
So I just got a late one coming in, Jim, from Ken Wong. So how should we think about the puts and takes of the current labor shortages on adoption? And this is a problem 30 years in the making, but maybe you could talk to that. On the one hand, lack of labor has raised costs of potentially those projects. On the other hand, it also highlights the need to drive more efficient processes.
What are you hearing and seeing from customers?
Yes. It's a great question, Ken. And this is something I mentioned earlier. When I talk to our customers around the globe, and I honestly, I talk to our customers almost every day. The number one concern they have, while the supply chain is a big issue for them, the number one concern they have is getting the resources, having the teams to be able to do that next project.
And so they're all keenly focused on that. And they're being careful not to accept work if they don't think they can staff it. The good news is that this is where they see technology playing a key role for them. They see technology playing a key part in helping to make that team as effective as possible, right? That team making sure that team has the information they need to get the job done in a timely manner, on track, on budget, so that they can move on to the next project, if you will.
So, but yes, it is listen, it's a problem. It's an aging workforce and it's not just here in the U. S, it's around the globe. The other thing they all talk about is the good news is as they hire construction managers, for example, out of construction programs around the globe, those construction managers are actually coming out of school with technology insight and technology experience. And so, they're really leaning on that heavily.
But they're also saying, okay, how can we work differently? And that's when they start talking about off-site construction. They start talking about, we need to do more prefab. We need to do more things in a controlled environment. And that's the promise of industrialized construction.
They look at companies like Factory OS that are look at what Factory OS is doing in California in the Bay Area. They are doing everything in a controlled environment and they're delivering under budget and they're reducing waste and they're doing it with a leaner union workforce.
Brilliant, Jim. That's a good place to stop. So we've come to the end of the questions and also near the end of the session. So I think we'll stop it there. Thank you everyone for coming along.
We're going to take a short break now and we'll be back at 12:30 Pacific Time, so just under 20 minutes for a Q and A session with Scott Rees, sort of presentation and then Q and A session with Scott Rees, our EVP of Product Development and Manufacturing Solutions. Look forward to seeing you then.
Thanks everybody. Thanks for the great questions. Thank you. You have joined the meeting as an attendee and will be muted throughout the meeting. This meeting is being recorded.
Welcome back from the break. Up next, we have a presentation and Q and A session with Scott Rees, our EVP of Product Development and Manufacturing Solutions. Before we kick it off, let me share our Safe Harbor statement with you once again. I'll let you read through it, but basically, we may make forward looking statements during the course of this presentation. Please refer to our SEC filings for information on risks and other factors that may cause our actual results to differ materially from these statements.
With that, let me hand it over to Scott to kick it off. Scott?
Okay. So thanks for joining us. And now we wanted to take some time and talk about the growth opportunity that we see in the design and manufacturing industry. I'm Scott Rees, the Executive Vice President of Product Development and Manufacturing Solutions. And I'll be talking through what we see that growth opportunity shaping up to look like from a size perspective as well as what we're doing to realize it.
Now we'll start off by looking at the TAM and you may have seen us at the recent Investor Day session that we had. We see a $38,000,000,000 TAM forming through the year of FY 'twenty six and that's the combination of design and manufacturing. And we see it as roughly split evenly between design and manufacturing. So we're bullish about the amount of growth that is in that number from both sides of it, but in particular on the manufacturing side of it. And as you might remember from previous presentations, we believe we have a unique strategy around converging design and manufacturing that sends us up well to realize that opportunity.
Now another reference I would make back is to where this market is coming from and where we believe it is going to. So historically, maybe the history of manufacturing, if you will, has been a very linear and siloed approach. There's CAD, which is primarily design CAM, which is manufacturing CAE, mostly simulation and then PLM and PDM, some refer to it as, to manage kind of the whole end to end process. And you know that we have a good growth position in each one of those segments, but it's really the right side of this lightning bolt that we see as most interesting from a growth perspective. And that's really where we are working hard to convert design and make.
Now what are the secular trends that are taking place out in the market that are forcing the manufacturing industry to think and work differently? These are the 3 big buckets that we think a lot about and talk to customers about. 1, every product that our customers make, it's getting smarter in some way. No longer is it just mechanical design, it also has electronics in it, it has software in it. And that goes both for consumer facing goods as well as machines are now communicating more and more with other machines.
So products are getting smarter. Processes are digitizing. And as all of you know, manufacturing is an industry that's been largely digitized for decades, but there are parts of it that have not been digitized. They're largely analog, in particular, out on the shop floor for the SMB segment in particular. That's digitizing.
You're also really starting to see AI and ML play a much bigger role across the whole spectrum. And then all of you are painfully aware that supply chains are just really fragile and not as resilient as they really need to be ultimately. So there's a big growth opportunity for us there as well. Now if you map our strategy, what are we doing to realize that opportunity on top of the secular demand? These are the 3 big buckets is how we break our work down and how we drive the conversation with our customers.
So the first is all about data. If you think about the siloed linear approach, a lot of it is that way because of the number of providers involved from a vendor perspective and the old kind of closed and proprietary data file format. We're breaking that down, put the data in the cloud, disaggregate files into more useful workflows where the information kind of flows across. We're also continuing to converge things that have historically been siloed products into capabilities on top of 1 cloud based data backbone. So different chain with data, continuing to converge capabilities from design and make.
And then the third thing is to continue to expand our TAM, expand our market reach out on the shop floor as well as expand our market reach out on the shop floor as well as with smart products themselves as well, so things like electronics, for example. Now if I click down into each one of these things, I just want to tie back to the Up Chain acquisition that we did earlier in the year. And a couple of reasons we were really excited about that Up Chain acquisition. 1, we believe it really accelerated all of our data efforts probably by a number of years. We had a great vision alignment and upturn and proven product ready market ready.
So we're excited about that. The other piece of our strategy that it aligned well to is it met the customers where they are. So whether they're using Inventor or AutoCAD or Mastercam or SolidWorks, which are obviously competitive products, those customers are as well served as if they were a Fusion user themselves. So it recognizes the heterogeneous world that is such a reality for our customers to help us move their data to the cloud and then lead them to a much better workflow. So really excited about what's happening with Upchain.
The second thing I'd touch on is just put a little bit more color around what convergence of design and make really means. Historically, we've had dozens of products in the design and manufacturing industry and a lot of those products are now becoming capabilities on top of the Fusion 360 platform itself. And I'll share with you the business model as to how we're making those capabilities accessible by more and more people as well as making the more advanced capability accessible to those subscribers to continue to drive the ASP higher and higher. And then the third thing, when you think of open and connected, it's really the power of the manufacturing ecosystem. So Fusion 360 has design capabilities, it has electronics capabilities, it has simulation, it has manufacturing all built into one application.
But the secret sauce is how it's built on Autodesk Forge and its cloud data backbone. What that does is it allows the ecosystem to provide capabilities that connect directly to that same cloud data backbone in Autodesk Forge. Companies like Xometry bringing their manufacturing processes in. Opera Re is bringing costing into the process and ANSYS is able to offer their more specialized simulation capabilities to Fusion users directly. So really excited about what we're doing to ignite that manufacturing partner ecosystem.
I think it's also important to understand how our customers will experience this new platform we refer to as Fusion 360 for the design and manufacturing industry. And the first thing that's important to acknowledge is that everything that we're building for a vertical industry at Autodesk is built on top of Autodesk for just our common horizontal platform. But with Fusion 360, there's a base extension or base subscription rather that customers subscribe to. And then there's more advanced capability that is accessible to each of them on top of that base subscription in the form of an extension. And that's how we drive up the ASP for Fusion subscriptions without forcing us to over serve the entire market.
And then of course, there are consumption services, which tend to be the more compute intense services as well as third parties on top of that as well. Now it's important to understand where the business model is coming from as well. How the capabilities work is important, but the business model for Fusion 360 is disruptive as well. So if you think of what it takes to conceptualize, design, validate and ultimately manufacture our products, you would have to acquire products from just about everybody listed here on the left for upwards of $50,000 to be able to run that end to end process. And then you compare that to what we're doing with Fusion 360.
The model on the left naturally limits your reach into an enterprise. And with Fusion 360, we want that base level capability to be accessible to the masses for $4.95 per user per year and then offer more advanced capabilities, but only to those who need it. So it gives us a much broader reach in the enterprise as well as a deeper penetration. Now to give some more context as to what is in these extensions, the most popular and fastest growing one that we have is this machining extension. So we have base level machining capabilities in the base level Fusion 360 subscription at the $4.95 price point.
But for those who need more advanced capability, they can then add on the machining extension, they get that more advanced capability again without forcing their entire enterprise to subscribe to it, driving up our ASP and serving the customers in ways that works for their enterprise. Now I've shared with you a bit about commercial subscription growth over the last few years. So I wanted to give an update as to what that growth vector continues to look like. So over the last 3 years, we continue to see a lot of growth. We have over a 53% 3 year CAGR and we exited Q2 with 165,000 paid commercial subscribers.
But like we talked to you about last year, we're continuing to pay more and more attention to driving the ASP for these subscriptions as well. And there's really 2 levers there. So one is that we're not discounting these subscriptions as much as we used to, right? The flywheel effect is really starting to kick in and we don't have to discount as much if we're talking to the right people. If a user can't justify $4.95 for what Fusion brings to the table, we're probably talking to the wrong people.
So we're discounting a lot less. And then the extensions are really starting to gain traction. And I'm not going to give you an absolute number here, but I will show you the normalized growth vector for billings as well. So you can see 107% 3 year category. So the business model is really starting to work both from a subscriptions growth perspective as well as from a billings growth perspective.
And what we wanted to bring some additional color to is really the new capabilities that we're bringing to Fusion 360, shortly after Autodesk University. We're going to be highlighting these with users, all week long here. And I'll put them in 3 buckets. 1 is what we're doing to really bring generative design to the masses. The second is what we're doing to leverage artificial intelligence to automate so much of that drawing creation that takes place downstream for the design process itself, as well as talk about what we're doing to automate and continue to digitize some of those historically, mundane processes that happen out on the shop floor.
So if we start
off by looking at generative design and what we're doing there, as many of you know, we've been working on generative design for several years and we've proven out the technology, we've proven out the science as to how it will work and how it can generate viable models. We've also spent a lot of time investing in helping those algorithms understand your manufacturing capabilities and bringing back models that you can manufacture. Now what we've done is directly inside of the Fusion 360 window itself, start to really give users guidance as to, how to explore more and more geometric alternatives based on what they're trying to accomplish in context of the design. Every time I talk to the team about what we're doing here, the analogy that pops into my head is kind of autocomplete. Now in any word processor or browser, you start to type and it's constantly guessing and trying to accelerate you getting to the information that you need.
This is very similar, in how it works and it's all about bringing it to the masses. The other thing that we're proud of is that it will understand your manufacturing capabilities and give you shapes that you are able to manufacture. So it's not all organic if you don't have the proper additive capabilities. If you have a 3 axis mill, it understands that and it gives you shapes that you can manufacture on a 3 axis mill. So just to give you a little better context as to how this works.
Here I am, I'm in a design and I have these 3 spindles that I need to connect via some sort of a wishbone mechanism. But I don't know exactly what the design is going to look like. So instead of drawing this design and guessing as to how to best connect these 3 spindles, I will just connect or select the connection point and then allow the generative design capability to suggest geometric alternatives. So you can see it's calculating in the cloud and it's bringing back a variety of alternatives for me to consider. Now remember, these are valid alternatives.
It knows that I can manufacture them based on the manufacturing capabilities that I have. It knows that it will work based on the strength requirements that are built into this design. So again, think of it as almost auto complete for your design. This is how we believe we're going to bring the power of generative design to the masses over time. So you can see how I can kind of flip through the different design alternatives.
So very excited about the possibilities here. Now if we look at our bringing artificial intelligence to drawing creation, this is another thing that we're really excited about. As you know, we have the capabilities that so many users in this industry use to document those designs. Why shouldn't we be able to automate them? And that's exactly what we've asked the team to do.
Based on the company's preferences and historical drawings, let's start to automate bringing the different views into a drawing and the different dimensions onto the drawing. So you can see from this image the complexity and the breadth of dimensioning and views that a customer requires. Now we're not going to replace all drafting here or all documentation needs, but we should be able to, based on your preferences, leverage AI to automate so much of that viewing creation and dimension creation and that's exactly what we're doing. And then the user can use our industry proven documentation tool to finish off the design to their liking there as well. But really excited about our ability to leverage AI to automate so much of that downstream process.
And then if you think about the shop floor, we have a lot of exciting things coming here as well. So just want to share a bit about that. And everything that we're trying to do out on the shop floor is automating everything between knowing what you want and having the design done and actually starting to manufacture it out on the shop floor itself. So things like automatically generating the G code that needs to feed into your machine to drive its operation. So historically, there's a lot of manual mundane work that has to happen to create that G code to feed in and drive your machine's operations.
And we're starting to automate that. So here you can see a little video where we have the model, we know what machine that you want to send it to. And in the cloud and directly out on the shop floor, we're able to automate the creation of that G code and then leveraging the capability that we acquire with Camplete, do a simulation to make sure that it's going to give you the outcome that you're looking for and then send it directly to the machine itself. We often refer to this as push button manufacturing and just like before any of you would print out one of your spreadsheets, you would hit print preview to check the margins. This is a similar thing.
You generate the G code, hit print preview effectively, leveraging the Camplete capability. And then from there, and you know what you're going to get, send it directly out to the machine, something that we're very, very excited about. Now these are things that we believe only Autodesk can deliver on because we've been investing in Fusion 360 in this cloud data model for the better part of a decade. We've done dozens and dozens of acquisitions over the year to give us the intellectual property to bring it all together. And then you combine that with these two numbers.
1, the huge TAM ahead of us growing rapidly through fiscal year 2026 combined with the momentum that we're already seeing, the manufacturing industry realizes that it is being disrupted and that it needs to work differently. It needs agility. It needs flexibility. It needs resiliency in the supply chain. And we have over 165,000 paid commercial subscriptions today for Fusion 360.
So think about why we win. It is because of that strength that we have in core design and make capabilities. Again, dozens of acquisitions throughout the last couple of decades that's really helping to give us the underpinning we need to build best in class outcomes. But also the data, it's how we're bringing it together on this cloud database backbone that's going to be the differentiator. And then it's all about how we're converging the capability on top of that cloud based data backbone.
That's really the differentiator for how Fusion 360 is helping those customers respond to those secular demands that our manufacturing customers are inevitably encountering and help them really thrive and drive the growth on the other side of disruption. We look forward to any questions that you may have. Because it's a strategy and a vision and a momentum that we're really, really excited about.
Brilliant. Thank you, Scott. That was awesome. We'd love listening to you. Just to remind everybody, there's lots more depth and content from AU, Autodesk University this week, which you can register for and listen to replays, both from what Scott was just saying and also what Jim was saying earlier.
So well worth having a look at all of that. Also just to also remind you that you can submit questions in the server, please do so. Otherwise, we're just going to be asking questions from Jay for the whole session, and you wouldn't want that at all. But as Jay submitted some questions early, let's start with some from him. So Scott, at AU, Autodesk introduced the term manufacturing driven design.
How does that fit with the concept of simulation driven design? Can Autodesk can or should Autodesk do both?
Yes. Thanks, Jay. It's always good to hear from you. And it's a good question. And both are very relevant and both are things that we unquestionably are committed to doing.
Now, let me add a little bit to that. You can see like from that Wishbone example that I showed on generative, That took into account manufacturing, what manufacturing capabilities do you have. It also took into account your performance requirements. So it was running simulation calculations and manufacturing calculations as it generated the geometry and brought back those options to you. So, we definitely have both of those constructs built into our generated algorithms.
Now, the part that I would add on to that is that we will always have this notion of an open and extensible model to where partners like ANSYS can bring in their simulation capabilities and layer it on top of our generative algorithms as well. So if a customer has preference for say ANSYS simulation tools, they can use it with our generative as well. A Priore is another example to bring costing into generative, right, because for a lot of designs, cost is a key factor. They're able to bring those in. So the notion of simulation driven design and manufacturing driven design are both relevant for what we're trying to accomplish.
Brilliant. Let's move on to another one from Jay. Can you discuss your investments in generative design for modeling just a bit more? You talked about it in your presentation. And really just talk to, which is the question I think, the commercial prospects once released, how you're expecting it to be used and where, which bits of the market?
Yes. Another insightful question. So let's talk about where generative modeling is coming from. So as you know, we've been investing in generative design in general for a number of years. And we've proven out in lunar landers and aerospace parts, automotive parts where the technology works, right?
It really works. Now the challenge is making it accessible to more and more people, right? If you or I want to design a new product, how do we get access to these same generative capabilities if we're not a simulation expert where we can set up the different equations and whatnot? That's what we're trying to do with generative modeling. Our users, they know how to draw stuff.
And now what we're doing is we're computing ahead, taking what we can glean from what they're trying to design and kind of direct their efforts, right? And we refer to it a little bit as auto complete. And then ultimately, that gets people more familiar with generative design and they can start kind of from scratch. Ultimately, the best way to use generative design for the best outcome is to start with functional requirements. You don't draw anything.
You lay off the problem and let the computer kind of figure it out. So we're really trying to blend the 2 in that generative design extension.
Brilliant. So next question, I think it's from Adam Borg. This week you announced the first third party extension with ANSYS simulation for Fusion 3 What is the opportunity for additional third party extensions beyond what you already announced? Maybe you want to talk about the ANSYS extension as well?
Yes. So there'll be many opportunities for partners to have their own extensions. At this stage, we don't have any reason to limit those or intentions to limit those. We want it to be open and extensible. Any part of that end to end product development process that a partner can show, we want them to have that opportunity.
So the data model is completely open. Any partner can get to that data model and bring their capability. And so, it's hard to say, Adam, how many of these extensions you'll see. We'll obviously deliver the ones that we believe are the most pervasive. But I think we'll see a lot of partner extension as well.
Right. It's not unlike kind of App Store where you see a bunch of different apps that play niche capabilities. But the Extinction framework ties directly into the Fusion data model is kind of the key piece there.
Great. So next question from Matt Vroom. When do you expect our chain to be fully integrated into Fusion 360? And what incremental workflows will that enable?
Yes. So good question. And I guess the key word there is fully. It's difficult to really put definition around what fully looks like. But I can tell you that integration is well underway today.
And even in the base level Fusion 360 subscription, you'll start to see things like product data management capabilities start to show up in their revision control, the ability to reuse data, ability to search and just finding that exists, you just don't know exactly where they are. So those capabilities will start to show up both in the base Fusion as well as in the managed extension itself. So that is absolutely our plan is to converge the UpGen capabilities with Fusion. We see Fusion not as an application. It is really that end to end product development platform and the UpGen capability fills a huge gap for us there all around lifecycle and data management.
By the way, we're starting to see kind of the historical Autodesk customers buy Upchained. We've included it in our first EBA agreement and we're starting to see our sales motions at Autodesk really start to kick in for Upjohn. We're excited about not just the technology, but also the commercial traction that we're starting to see there.
So, John, this is Scott. I'm going to drop another sort of question in there, which sort of relates actually to what you just said, which was and the question is from Nicholas Appelo. Most of Fusion wins so far seem to be in the small and medium sized manufacturers or in smaller roles of bigger companies. What will take Fusion 360 to replace Korea and 3 d experience? So how does it expand out to your point just then?
Yes. So while if you look at the $165,000 number that we communicate, the majority of those are kind of small to medium sized businesses. Don't forget that our collections customers for our D and M collection, they get fusion as well, right? And we're really starting to see traction of fusion within the collections start to go up. I met with one of our larger EVA customers who also have some of the solutions that you just talked about and they're starting to embrace Fusion for generative design, right?
Now, here's what they discovered is that the parts that they've designed with some of those other solutions are way over engineered, right? And they're already successful in the market. So you might just say, leave well enough alone. But what they've discovered is that by using generative design, they were able to take over 20% of the actual material, right, not just the weight, but the overall mass out of the component. And the savings were enormous.
And then they did a case study figuring out like what does it cost to go remake all of the tooling and rebuild all of our processes and what happens to stock and the entire end to end business case was outstanding. So in those scenarios, they're embracing Fusion right alongside of some of those other solutions. So I think that's what you're going to see more and more, because in that scenario, they're able to get Fusion to be used by a much bigger population inside of their enterprise. And again, every collections customer has access to those capabilities inside of Fusion 360.
Just sort of going on from that one, a question from Ken Wong. I don't think we'll answer it specifically, Ken. Sorry about that. We're not going to give you Fusion sub forecasts. But the question is, and sort of relates, Scott, to what you were just saying, how should we think about the long term subscriber opportunity of Fusion's 165 subs relative to the 5,000,000 plus users in the Autodesk installed base?
Are there worries that improved efficiency and high levels of automation will reduce seat counts longer term and weigh on the revenue model? So just sort of a continuation of the theme you're just talking about on our expanded opportunity, Scott, I think. Yes, totally. Simon, I think
the piece that I would kind of pull out there is that, will it reduce the number of subscriptions? We think just the opposite. And that's why we think that the business model is going to be really, really interesting here, because what we're finding so far is that accounts that might have historically had, say, 5 subscriptions of a piece of software, like Gibson Guitar was a good one. They had 5 subscriptions to SOLIDWORKS. They threw out SOLIDWORKS and they got 20 subscriptions to Fusion, right?
So they were able to get the capabilities that their engineers needed into the hands of more of the engineers because it's more accessible and then they get the extensions for just the people who need them. So I think that's the scenario you're going to see more and more is that for a $500 subscription, everybody within an enterprise who needs it, you're going to have access to it.
Brilliant. So next up from Blair Abanathi, where are you seeing the most traction for digital twins in manufacturing today? And where do you think that it'll be in 5 years' time?
Yes. So I think it's going to be in a very different position than it is today in 5 years. I think manufacturing is kind of catching up to where AEC is from a digital twin perspective. You see some interesting use cases, but it is not ubiquitously spread kind of across all segments of manufacturing. I think when ARVR gets a lot more accessible to the masses, the digital twin manufacturing gets a lot more interesting for things like preventative maintenance or predictive maintenance, installation and assembly instructions, all get super, super interesting around a digital twin.
IoT, for example, gets a lot more interesting. I think all of these technologies, IoT, digital twin, etcetera, in the manufacturing space in particular, are still in its relative infancy. And there's just a lot of growth to happen there. The technology has to get easier to use. It has to become a lot more accessible for it to be widely adopted, I believe.
And maybe you've already answered this, Scott, but just another one from Jay on that point. The Forage in Tandem platforms and other product integrations would seem to be the basis for a service lifestyle management and or in terms of things solution. There's also plans to invest in or ramp up in those areas.
I don't know
if you want to answer specifically, but just sort of generally sort of talk to those points.
Yes. So Jay, you can kind of see where all this is headed, right? And I didn't count how many times you heard the word platform over the last 2 days, but it's more than 10. So you can tell we're really taking a platform approach. The Tandem platform, if you will, will absolutely be leveraged in manufacturing workflows.
Hopefully, you got to see where Dasher, the IoT capability from a building operations perspective, is starting to show up and be integrated with Tandem as well. All of those things naturally poured over into manufacturing workflows as well. So we haven't done that yet, but you can absolutely see where that's headed. We're focusing tandem right now on kind of the building operator, and the platform capability itself is applicable much more broadly than where it is today.
And just because it leads on, I think, from that question, another one from Jay. At the Forward Roadmap session and a quick add there for everyone, there's lots more confidence at AU, which happened this week. The company acknowledged it was harder over the past year to attain the desired good performance and scalability. Presuming this has been overcome and you're now on a steeper path for performance and scalability. And I know Andrew sort of called out Fusion as a good example of leading the way on that.
So maybe you can talk to that. Yes. Look, we've learned
a lot over the last few years about performance and scalability as we have grown really, really rapidly. Things like offline, for example, we learned pretty quickly early on with Fusion 360 that offline capabilities are absolutely critical in the manufacturing industry. So, look, there will be issues in the cloud, no question. Our job is to make sure that our workloads are resilient, so the user never feels those issues. And that's where I believe we've made a lot of progress.
I'm proud of the progress that we've been able to make there. And no matter what the issues are with Fusion 360, the user experience continues to be pretty smooth. So we cash a lot of the data locally. So a lot of the performance happens locally. And then it's constantly syncing with the cloud.
So really, really happy with where we are there.
And then moving on to a different topic from Matt Broom and maybe sort of extend this into sort of convergence of AC and manufacturing. How often are you seeing Fusion 360 used by EBA accounts?
Yes, more and more. It's still, I would say, early days, no question. But the EBAs, the super interesting thing about EBAs is they know they have access to the capability, so they make it available to everyone. Now our teams are able to go in and have conversations with the different departments about just try it, right? Try it out for CAM, try it out for mesh editing, try it out for reverse engineering workflows that maybe some of the other competitive solutions aren't tackling quite as well.
So we're seeing really good that's a really successful motion for us. But there's a lot of growth to come in EVA accounts throughout all the different elements of Fusion 360.
So just a reminder to everybody that if you have a question, please put it in the client server on the bottom right hand corner. So I'm going to ask while we sort of wait for questions, maybe talk about ECAD and MCAD convergence and what we've been doing with Eagle and what we've financed this week on the ECAD side?
Yes, absolutely. So we talk about smart products. I don't know if there is such a thing as a dumb product anymore. Every product has an element of certainly mechanical, but now it's electronics and it's software. And if we're talking about complete product development platforms, we have to have capabilities in all three of those areas.
And that's why we've really stepped up our investment on Eagle. And that's why taking it to the next level with ANTHUS, for example, in that partnership, being able to talk about how that design is going to perform throughout the life of the product is kind of that critical next step for delivering on the vision of smart products. So, I'm really excited about kind of everything that's coming together inside of Fusion. You have conceptual design, mechanical design, you're starting to see some of the injection molding capabilities start to show up, you thin wall part analysis, out into manufacturing, additives, subtractive. Now we're bringing AI in, automatically generating g code, automatically generating drawing.
Getting really exciting. And this is what we set out to do with Fusion is truly convert
what it
takes to design something with what it takes to make it. And you're starting to see it come together. And ECAD is just another example of kind of where we're filling things in.
Brilliant. So next question is from Ken Wong, another one. And so talking I think to some of the themes you covered as well in your presentation, maybe a bit more detail, Scott, on what's driving the sort of 2x increase in the 3 year billings CAGR versus subscription? That's an acceleration in billings versus the sort of value versus volume growth.
Yes. It's really a combination of 2 levers. So one, we've been discounting a lot less. Like I talked about, the value that comes from a $4.95 subscription infusion is reasonably overwhelming if you understand what it takes to amass those capabilities from certainly from competitors. So there's no reason for us to discount that.
We're at 165,000 subscription. Our NRT is really good inside of those accounts. So we're starting to spread. The word is starting to spread. So that flywheel effect is starting to kick in.
Now the other lever is extension. It's still super early days for extensions, but the extensions are starting to get traction. And as you know, the extensions are at a higher ASP, so the overall billings starts to go up. So the business model is starting to work. So as you probably understand, we're pretty excited about starting to see that all come together.
Sorry, just putting myself on mute. I had a pandemic first. It's normally my dog barking that's interrupting. First time, the Blue Angels and Twin Week in San Francisco flow past the window.
Okay. That's correct. Do you want to hear that?
I'll let the fighter jets go past the window. So If you can't be
representative, it would be fitting.
So another question from Jay. Regarding the ANSYS relationship, would it make sense for Autodesk to add access to 1 or both of their simulation process and data management systems and be the materials, data materials, intelligence system? I don't know whether you want to get specific on that, but could you have any sort of broad thoughts on that question?
Yes. I would just say, we have a very friendly relationship with ANSYS. We have a lot of respect for the capabilities that they bring. ANSYS plays an important role in our industry and with most of our customers. So anything that makes good sense for both companies and on behalf of the customer, we'll have an appetite to kind of play it out.
We picked ECAD and Electromagnetic signal first just because it's truly a unique capability that will now be available to the market when we ultimately deliver on what we're working on there with ANSYS. So if there are other areas that make sense
for both of us to
do, we'll absolutely explore those.
So just a reminder, we please put questions in the Q and A function at the bottom. There's one more question, which I'm going to ask now. So if you have a burning question, please ask it now. Otherwise, we'll finish after this question. So this one from Matt Broom.
I don't think we'll answer the first bit of it, Matt, just to acknowledge that upfront, but I'll ask it just so you know. What is the average number of extensions used by Fusion 360 customers? And the second bit, I think, perhaps we will dwell on, which is what is the most popular extension? And maybe you could go into why.
Yes, without question, that's the machining extension is, we're seeing a lot of volume with the machining extension. No, a lot. There's a lot to come, but we're pleased that we've got the kind of the value mix right there. So a lot of the ARR is being driven by the machine extension. Now we're also starting to see some good traction with the managed extension.
And to the earlier question, I think as we bring more and more of the up chain capabilities, you're going to see a lot of growth in that managed extension as well, because every company or every user that is working with someone other than themselves, they have to manage that data, right? They have to manage the life cycle of that product. They have to release it to manufacturing. So, I think we'll see a lot of growth in that managed extension as well. But today, the majority of the extension growth is coming from the machine and extension.
Now generative design extension, we anticipate this is almost back to Jade's question, I think I forgot to touch on. We really anticipate seeing growth from that generative design extension as a result of the generative modeling capability. We think it's going to be a nice on ramp to what is generative, how do I get the computer working on my behalf, and that's going to lead a lot more people to embrace more generative, we believe.
And maybe just a question for me, Scott, to end, as we don't have any more questions, is just to sort of talk a bit more about this sort of on ramp strategy and why that's important in a world where there's a significant amount of legacy technology and helping our customers, why that providing those different on ramps is so important?
Yes. Look, our industry, I believe has been stalled out because the tools themselves have over served the customers. And as a result, they've just become inaccessible to people who need them. It's one of the reasons that we made Fusion 360 available at no cost to startups. Think about a startup, right?
If you haven't raised a bunch of money yet, you're just trying to figure some things out. You're trying to prove out a product. Does it work? You're not making any money, right? So now think about kind of that value equation.
You have to go spend $50,000 buying all that stuff, hoping that it works or partner with a company like Autodesk who is willing to get in with you and give you that on ramp. So the same goes for people who are already commercially successful. Dollars 4.95 we've proven out that it's accessible to the masses within an enterprise of any size. So and then that leads to further investment. But again, without forcing them to over serve anyone inside of their company, they again get the extensions only for the people who need it.
So we believe that on ramp is something that is truly unique in our industry and something that's just long overdue. It's a combination of the technology advantages of bringing design and make together, but it's also this disruptive business model that honestly is just decades overdue.
Brilliant. Scott, we don't have any more questions, so we will stop there. Thank you everyone for coming along. Hope you found these sessions useful. As I said in the previous session, there will be a survey pop up as you exit the webinar and we'd love to hear your feedback.
If you have further questions, please just ping the IR team and we'll respond as soon as we can. Thanks everyone and thank you Scott.
Thanks Simon. Thanks everyone.
Goodbye.