Welcome Autodesk President and CEO, Andrew Anagnost.
How's everybody doing this morning? Everybody have a good breakfast? How many people saw the demos? All right, awesome. Because it's really important that you start to understand some of the things we're trying to do that are more complicated than some of the other things we've done in the past.
It gives you a chance to kind of explore things.
Now I think the title of
my presentation kind of sets the tone for what you're going to hear for the rest of the day, this whole concept of moving from transition to growth. We've got a lot of content that we're going to use to help you kind of understand what are the levers we're going to be pulling over the next few years to kind of achieve the targets that we're looking to do. Now those of you who were here last year remembered I opened up with this concept of 5 years and 5 outcomes. And I talked about how 5 years from then Autodesk was going to be viewed not simply as a maker of design software, but as a provider of design and make services that cover the full spectrum of design. I also mentioned that the conversation was going to move from being a subscription company to being a subscription and consumption company where we not only sell access to tools, but we actually sell outcomes to our customers, information, results that actually drive their processes or help them improve their processes.
And I gave all of this under the context of some really important pressures that our customers are feeling and this whole idea of more being inevitable. Every customer we have has a fundamental capacity problem. They have more demands on what they need to do than they can possibly fulfill. And this is not just a phenomenon for our customers. It's a global phenomenon as well.
The world needs to build more, 10,000,000,000 people. We need to build 13,000 buildings a day to achieve the capacity to house those people. There's a rising middle class across the world. There's more products that are going to be built. Every one of our customers is struggling with the inevitability of more, but they're also confronted with the constraint of less and its reality on their business.
They all have to use less materials. They all have to produce less waste. They're all trying to figure out how to use less energy to not only produce what they do, but also the products, the buildings, the products, the everything they create has to use less energy. They're also confronted with the fact that there's not going to be more money to fulfill this capacity. So they're trying to figure out to fulfill this capacity with the existing workforces they have, which are sometimes inadequate and also trying to do this in such a way that they can credibly say they're having less negative impact on the world, which is why we are so focused and I talked about this last year on creating the opportunity of better for them, really creating better design and helping them make better design decisions.
The wonderful thing you're going to hear across this whole entire presentation today is that the opportunity of better, which drives most of our revenue goals, also drives our passion about what we feel we can do in our place in the world with our customers and with our communities. So let's go back to the 5 outcomes. We're now 1 year into this 5 year mission to boldly go where Autodesk has never gone before. And these are the things I talked about. And I thought I'd spend a little bit of time saying, hey, so what's happened over the 1st year since we introduced these concepts and how are we doing?
What progress have we made and what things are moving forward? I think it's appropriate to start with this notion when I said 5 years from then, we would have completed the subscription transition. Well, where are we at? Let's first just look at the results from last year that kind of really demonstrate a lot of evidence that we are moving out of the subscription transition. We're exiting the subscription transition and kind of moving into a new phase of the companies the company.
These results are fabulous. We delivered 34% growth in ARR year over year, bigger than we expected. We ended the year with 4,300,000 subscriptions, dollars 2,600,000,000 in revenue, that's a record for the company. 95 percent of it is recurring, which will be important as we talk about some other things throughout these presentations. And we exceeded our cash flow goals and delivered $310,000,000 in free cash flow.
Now to help you understand the journey that got us here, it's helpful to look at some data that we've seen in the past. So just to look at the last 4 years, so you can get a sense for the ramp and the change. So here's what the percent of revenue over time between subscription and maintenance and others has changed. So you can see how we've ramped radically over the last several years to achieve 75% of the total revenue coming from subscription. That's why we're in the exit phases of this transition.
And if you look at this at the same time, 95 percent increase in ARR since FY 'sixteen, a 95% increase. So these slides kind of illustrate for you not only the momentum we achieved, but actually you can see in a visual form what the outcomes were. And we actually have moved into a world where the famous golden snake that Scott Heron introduced several years back is actually manifesting itself. We are on what I'd like to call the happy side of the curve. So we've moved into the other side into the rapid growth phase.
And I think that's an exciting place to be. And it's creating a lot of exciting conversations and opportunities. And we're reaffirming the numbers we said all those years ago that we were going to achieve $1,350,000,000 in free cash flow. So that's all great. The financial results are fabulous.
But at the same time, our customers are starting to see the benefits of the changes we've been making inside the company. They're starting to glean more value from the subscription model and from the things we're integrating with subscription. Something that doesn't get a lot of airtime is how we've integrated all of the Autodesk portfolio with various online methods of sharing and consuming information that actually allows our customers to collaborate with design intensive data that has lots of connections associated with it in new and interesting ways, not only with each other or contractors or people they relate within their process, but also with their customers. And this is just part of the subscription offering. At the same time, the velocity of capability we're delivering to our customers is faster than any time in the history of Autodesk.
New features are showing up every single quarter for a variety of products. So if you're a collections customer, you're actually seeing features dumping into your offering almost every month from Autodesk. And we've also quietly created an evolution that maybe not everybody notices. Our core product, our flagship product of AutoCAD has become the Office 365 of the design space. It's a cloud connected, multi platform application, multi device application that allows you to use it on the web, to use it on a mobile device, on a mobile phone, on a Windows PC, on a Mac PC, all with the same subscription.
You can use it at home, at work, off-site, all with the same identity, all with the same capabilities, all connected through a data framework that allows you to move your data portably from one place to the next. That change is actually energizing customers to engage more deeply with our premier offering, the collections, because they see all this stuff coming in. As a result, we saw 100% growth in collection subscriptions last year. That's how big people are in terms of engaging with what we're doing with collections. And that's why we're so confident about the $1,350,000,000 that we've been talking about in free cash flow for this year.
And I want to also kind of emphasize that this phenomena you're seeing in our core design offerings, it's not going away. There's a ton of growth left in the core of our business. And one of the big business drivers that's going to be talked about over and over again and we've been talking about for years is the fact we've got 4,000,000 subscriptions and we're really proud of that. It's penetrated about 20% of an 18,000,000 user base. We don't have to penetrate much more of that base to achieve the kind of goals that we're talking about right now.
And I think you all want to keep that in mind as you look at some of the business drivers that are going to accelerate the impact of subscription as we move into the growth phase. So let's next talk about this concept of digitizing the company. I spoke last year about this idea that we need to be a robust digital company, not just only in the way we handle information for ourselves, but how we engage with our customers. What kind of progress are we making on that? What have we done to date that we can talk about that shows that we're making progress?
Well, one thing I think is really important is that we've seen a 4x increase in our e commerce business from FY 'seventeen to FY 'nineteen. You can't do that without a maturing digital infrastructure. It's just impossible to capture that business direct without doing that. And that's a great benefit to Autodesk. But we're also rolling out some pretty significant benefits to our customers that not everybody might appreciate or understand.
For instance, right now, today, this moment, every seat of single user software that we ship as a company no longer has a serial number associated with it. It is a pure identity based offering. And we're in the process of migrating all the legacy customers who had serial numbers over to the pure identity model. Now why is that a big deal? Managing serial numbers, controlling access to serial numbers, uninstalling, reinstalling, reactivating, knowing what serial numbers used were is a massive headache for just about every customer we have.
And we're removing that headache. That headache is just disappearing this year. And it also provides our customers maximum portability of the asset across home use, work use and site use. So this is a big deal to our customers. It just doesn't sound like a big feature, but this is a massive feature of what we've done with subscription.
And at the same time, what we're helping our customers do is understand how they're using Autodesk products, who's using what, which application is getting the most use, when are they having capacity bottlenecks in terms of the applications they own. All of this is now customer facing. All of this is information our customers never had before. And all of it is enabled by the move to subscription and the infrastructure we've built underneath that. And at the same time, we're able to have new types of conversation with what we like to call non compliant users, the ones that aren't actually paying us for the use of the software.
And these customers don't always know that they're using an invalid license or they're engaging with us in a way that probably they want to engage differently. So we can actually start having these conversations with them, engaging with them and getting them to take action that either helps them understand what they're using and why it's probably not in their best interest or just fix it right there in the moment and you'll hear more about that. But at the same time, a big initiative inside the company to drive digitization is unifying and consolidating and more federating, not creating 1 massive data infrastructure, but a federated infrastructure that allows us to respond in a more modern and robust way to both our customer needs and our internal needs. So for instance, we're working to provide a data platform across everything in the company that delivers analytics and insights that help us hit our customers, our internal sales teams and our product teams. For customers, you're going to see us do more of this usage and adoption analytics.
Customers are going to get predictive analytics like what we rolled out with Construction IQ, where we can actually use information about what they're doing on a construction site to provide predictive capabilities of what might happen at the next construction job they bid on. And also we're going to help them understand their performance against their various goals. For our products, the data is getting aggregated and aligned in such a way that it's computable by us, so that we can layer on machine assisted, multi disciplined collaboration, help engineers and architects understand each other with the machine arbitrating some of the difficult conversations between them, which is going to be kind of revolutionary for our industry. We're also doing the real time design and make options. You've seen generative design.
We're going to see a lot more of generative design. We're going to talk a lot about it today. At the same time, there's a lot of opportunity for us to use machine learning algorithms to just eliminate basic repetitive tasks. And all of this is made possible by an investment in digitizing how we deal with our customer data, our account data and all the data that wraps around it. And at the same time, obviously it feeds the engine of revenue where we start to understand what customers are using, how they're using it and more importantly, how we can help them use it successfully.
And all of that is underway right now this year and we'll probably talk more about it next year when we're here looking at the 2nd year of the 5 year journey. And this isn't going away either because there is a absolute business driver around here that robust platforms for big data, for machine learning, for even AR and VR are just becoming ubiquitous and inexpensive. We're going to be integrating them everywhere within the company because it's simply possible to do that. And they deliver massive returns as you do that over time. So that brings us to the 3rd outcome I talked about last year, this idea of driving BIM through the entire AEC ecosystem from design to make or from design to construction.
So how are we doing there? Well, one statistic that I think it's important for all of you to understand is that we're seeing massive growth in real usage of Revit, not just sales of Revit or deployment of Revit inside a collection, but usage of Revit. Monthly active users for Revit has grown 28% year over year. Now for a core design product, that is huge growth. That is the sign of an adoption curve that's accelerating for the product.
And at the same time, we saw 80% growth in monthly active users for BIM 360, which means that more of this information that's attached to the models and attached to the upstream design processes is making its way downstream through applications like BIM 360. Those are real statistics that show something is changing. Now what are some of the things that are driving some of those changes in terms of out there in the market that you can all see day in and day out? Well, one of them is the rise in BIM mandate momentum, right. And what does that mean?
So I'm an owner, either a government or a project owner, and I'm specking a project and I'm taking it out to bid and I'm saying this project requires BIM and you're specifying it right upfront and it's not optional. And this is we've seen this happening all over the world. We've seen it happening in Singapore, the United Kingdom, but it's starting to sweep everywhere where more and more countries are specifying BIM in the initial bids for projects. So you'll see more of this continuing. And some more evidence, just so you get more and more of a sense for what's going on, Revit is starting to show up in lists of hot job skills over the next year or 2 years.
Revit has just popped up to 14 on that list, right? This is signs of what's happening in terms of us driving BIM into the entire AEC ecosystem. The adoption is on fire. People need these skills. These skills are valuable.
People want them and it's on the rise. Now you've also seen us invest a lot more in establishing our leadership in construction. We spent $1,200,000,000 acquiring a great portfolio of companies. We showed you some of what we've acquired out there in the demo stations. Like I said, I hope you got a chance to take a look at it.
But on top of that, what we're doing is we're investing and integrating all of these together, Revit, BIM, the new acquisitions into a model based design make cycle. And this is work that's happening now. We planted the seeds last year. We're doing the work now and this is going to continue to accelerate this entrenchment of BIM in the entire built universe cycle. And again, this is another one of these things where there is a core business driver that's not going away.
Digital transformation is imperative for every industry we serve, but in AEC, it is particularly acute because the AEC industry realizes now that it's somewhat behind in some of the digital processes that its brethren in manufacturing have adopted in previous years. So this is only going to continue over the next few years and I think we should watch how this evolves. Now the 4th outcome I talked about was this idea of us using machine learning algorithms and automations to drive this convergence of design and make in manufacturing. So people can actually understand the impacts, the manufacturability of a design very early in its phases. So what have we been doing to kind of accelerate that or generate more interest and excitement in that part of our outcomes?
So first off, I think some of you probably saw some of the work we did with General Motors. This is a seat bracket. You'll hear a little bit more about it later. But essentially, what we were able to do is take an assembly of 8 parts and through a generative algorithm and generative outcome creation turn it into a single 3 d printed component that was 40% lighter and 20% stronger. Simple.
So 8 parts to 1 part, 3 d printed, lighter, stronger. These are all good words that people want and they want to hear. But also at the same time, we've been moving from exploring parts and individual kind of sub components into looking at entire systems. So we did some work with JPL around this concept for a lunar lander to look at the entire system and the interrelationships between all the various components. So JPL could explore new types of design options that are significantly lighter and more robust than some of the previous options they worked with before.
And that's all great. So you see us doing explorations with GM. You see us doing broader explorations with places like JPL. But what about the traditional base? What's interesting is that our traditional customers are also exploring generative design to drill into new ideas for old systems and machines.
You're going to hear again about Claudius Peters today. They build concrete making machines. It doesn't get older and rustier than that. But they actually woke up to Generative Design and started deploying it to explore new options for components inside these machines they've been making for decades, and they did it. So that's another area where we're seeing changes as well.
As a result, we're seeing a 40% increase in monthly active users for Fusion 360. That's where people get access to generative design. If you recall, Fusion 360 is sold as its own platform, but it's also included inside the manufacturing and design collection, which is how customers like Claudius Peters got access to it. In fact, there's about 360,000 monthly active users of Fusion. I know Jay is going to write that number guys.
March 2019. It's going in a spreadsheet. 360,000 monthly active users of Fusion. Fusion is on fire in terms of growth and you're going to hear a little bit more about where these users are coming from and what they're doing from Scott Rees later today. But we are not going to stop accelerating this trend.
We are going to continue to push generative design as a solution that drives this convergence of design and make solutions or decisions. We are going to continue to add manufacturing methods and continue to provide design options directly to our users that are instantly manufacturable for various types of methods. And it's only the beginning. It starts with parts, it moves to assemblies, it moves to systems and it just keeps going and we're way ahead. Don't let anybody tell you that they're doing generative design when they're actually doing topology optimization.
The 2 are very, very different. And I think I hope some of you invest some time to understand that difference as time goes on. Which brings me to the last outcome, converging construction and manufacturing to a new paradigm. Now what's going on there? How are these two industries coming together?
I think it's really helpful to give a few examples so that you can kind of understand where we're coming from. And we'll explore these examples throughout the day, so you'll get more information as it goes on. So Daiwa House. Daiwa House is the largest builder of homes in Japan. They're also kind of seen out in the vanguard of AEC inside the Japanese market.
They use industrial methods today, but they're looking to adopt more and more manufacturing like processes into how they attack the problem of urban density and housing inside the Japanese market. The Japanese market needs more dense housing, but most of the land is used. So what we did is we worked with them to build a generative product configurator that essentially helps them bid proposals on land that's already in use. So they go to the owners, generate these configurations. They're auto generated through generative algorithms.
So it's got a lot of intelligence behind it. And the data that's created is actually buildable ultimately. So there's a bid presented, it's buildable, it's useful information from design concepts through BIM through construction. This is what people do with products every day in the manufacturing segment. They have configurators that do these things.
You're going to see a rise of these kinds of tools inside the building industry and we're accelerating it. Another great example is Factory OS, just over the Bay here in Vallejo. So this is a company using prefabricated methods to reduce the cost of housing in the Bay Area. So they're trying to solve some of the housing crisis issues here in the Bay Area by working with local unions, by the way, the Carpenters Union, to prefabricate modular homes that are then assembled on-site. So they're configured, they're modular, they're constructed right inside this massive factory that used to build nuclear submarines And they ship it off the site and assemble it like you to assemble a car, a plane or any other manufactured thing.
As a result, they're driving down the expense to build some of these housing units by 20%. They're doing it in 40% less time. And more importantly, because construction is one of the most wasteful industries out there in the world, they're doing it with 40% less waste. So big results. And these are some of the things that we're going to be working to accelerate in the industry, not only through our engagement with customers like Factory OS, but with the technologies we're going to be rolling out over the next few years.
We are absolutely going to accelerate the growth in industrialized construction. And at the same time, we're going to be working with our manufacturing counterparts to help them customize more products. They need to build more custom products and they need different types of design tools and methods to get there. And again, this is another one of these trends that's not going away. It's a persistent business driver.
Competitive pressure, which is the most important driver of any change in these markets, is forcing the manufacturing community to be a lot more flexible, be able to manufacture things that are more and more looking like one offs to particular types of customers and construction to be more predictable. They're going to look a lot more similar, but they're not going to be the same as they are today, either of them. So that is kind of a view of the 5 outcomes I spoke about last year and some of the progress we've been making over the past year. So you get a sense for where we're building momentum, where we're starting to accelerate with some momentum. And I want to make sure I leave you with some of those business drivers I spoke about previously, because I think they're really important.
They're persistent and they're not going away. In the core business, this idea of what happens with the subscription model next, 4,000,000 subscribers, incredible growth, massive outcome, 20 something percent penetrated into an 18,000,000 active user base, 18,000,000. Robust platforms for data, machine learning, ARVR, they're becoming ubiquitous and inexpensive. We don't have to build all these things. We can slide them into the company and build our unique intellectual property on top of them.
That's not changing. That's going to accelerate the pace of digitization inside the company. Digital transformation, like I said earlier, is imperative for all industries. Everybody is facing it, but AEC is facing it even more intensely than any other industry. And that spending on digital transformation is going to continue no matter what happens in the economic cycle as we move forward.
General Design, it's going to drive the convergence of design to make decisions. We're out in front. Other people are coming in and doing similar things. You're going to see more and more things show up around auto generation of geometry that's instantly machinable or the creation of design options that are unique and differentiated from anything that a customer was able to do before. And this notion that competitive pressure is driving manufacturing to be more flexible and construction to be more predictable, that's a 10 year trend.
And we're going to be part and parcel of it and we believe we're ahead. And it's really only Autodesk that can respond to all of those things. It's only Autodesk that has the user base of this scale. It's only Autodesk that crosses over between AEC and manufacturing. It's only Autodesk that's got a 7 year head start on a lot of the work that it takes to actually build up the algorithms, capabilities and infrastructure to be a subscription consumption provider of not only software tools, but outcomes to our customers.
So that's why you're going to see us continue to evolve to be a design and make company over the next few years. And every year, you'll see us get closer and closer. Now to help you understand that, in addition to Steven Spielberg, Oprah and Scarlett Johansson, I've got an amazing lineup of executives that are going to help you understand where we're going over the next few years. So some of these spaces are new to you. So I'm going to take a little bit of time just to introduce them to you so you get to know everybody that's coming up in the room.
So Lisa Campbell is our Senior Vice President of Business Strategy and Marketing and our CMO. She's going to come up and she's going to dissect the TAM for you in quite a bit of detail. A lot of you have been asking for a little bit more information about, okay, what's the address what's the total market? What part of it can Autodesk address and at what pace is Autodesk going to address those various things? She's going to help you understand that and put some of it in context.
Amy Bunzel is our Senior Vice President of Design and Creation Products. Think of her as Doctor Collections, right? Revit, AutoCAD, Maya, Max, Inventor, all those products are under her purview. They're the core anchors of value in the collections. So she's going to come and talk about what kind of core innovations are accelerating growth and help you understand what we're doing for the core applications and more importantly, what's going to drive collections growth over time.
Now Jim Lynch, another new face. He's our Vice President and General Manager for Autodesk Construction Solutions. This is the unit I created when we closed the acquisitions of the companies that you can view out there. Jim's got 100 percent accountability for our growth in construction, and he's the one that's driving the unification, the integration and all of the revenue targets for construction as well as the product strategy. So he's going to come up and talk about how Autodesk is positioned to win and what the future of construction looks like.
Now Scott Rees is our Senior Vice President of Manufacturing Cloud, which is our platform and our production products. He is going to come up and focus a lot on, okay, where are we going in manufacturing? What's the technology levers we're pushing? So what are some of the things that we're working on? And by the way, how does Forge and some of the things that we're working with on Forge accelerate not only what we're doing in manufacturing, but what we're doing across other aspects of our industry?
Now Steve Blum, our Senior Vice President of Worldwide Field Operations, both of you have seen him over and over again. So he's not a new face, but he's going to talk a lot about how we're delivering ARR growth and some of the mechanics of what we're doing in the sales force and some of the new and unique things we're doing to accelerate and continue to drive growth in our markets. And then of course, the moment everybody is waiting for, Scott Herron, our CFO will come up and tell you nothing. He has one slide. He has one slide and it's all you need to go, don't worry about it, all right.
And he's going to be up here for about 2 minutes, all right. And with that, I would like to introduce Lisa Campbell up to the stage.
Good morning. So today I want to talk to you about the big growth opportunity for Autodesk overall. And the way I'm going to do this is I'm going to start by talking to you about the big overall industry trends impacting all of our industries. Then I'm going to give you a click down into every single one of our industries, so you can better understand these pressures. And then last, I'm going to talk to you about the great opportunity we have to monetize what we call non paying users.
Now one of the things I wanted to remind everybody is we have 3 major industries that we serve, architecture, engineering and construction, which we call AEC, manufacturing and media and entertainment, which we call M and E. Now one thing that's really interesting here is that we have some of our trends that cover every single one of our industries and some trends that cover 2 of our industries and I'd like to point those out to you. Automation, now you heard Andrew talk a bit about this. Every single one of our industries is struggling with what do you do with machine learning and artificial intelligence and the next generation of robotics to help them be more efficient and more effective. And then you look at things like waste.
Architecture, Engineering, Construction is dealing with waste, so is manufacturing. You might wonder what's waste in media entertainment, it's digital waste. It's all this content that's not being used. We are also dealing with the rising middle class that is putting more pressure on our AEC customers and our manufacturing customers. And last but not least, we are starting to see manufacturing processes come in to construction.
Now I thought it would be very helpful if I showed you an example of one of our customers that's being impacted by every single one of those trends I just talked to you about. Now you're looking at this and you're probably saying, well, this looks like a pretty efficient manufacturer, right? It looks like a nice manufacturing production flow, looks like they're using latest and greatest state of the art technology and robotics, right? This is a construction customer. This is not a manufacturing customer.
You heard Andrew talk about DaiwaHouse. Well, let me give you a little bit more information. Daiwa House is a design build and operate firm and they have an aggressive goal to be a $100,000,000,000 company and how are they going to do that, because they are going to expand not only in Japan, but outside of Japan and they do this by bringing manufacturing processes to their construction process. And I'll give you an example. They design and then they build prefabricated components, ship those prefabricated components to their site and assemble them just like you would expect a manufacturer to do.
In fact, they have similar processes to our car manufacturer because they do the design and then they simulate how is that part going to work before they actually pre fabricate. Now I want to talk to you about the TAM for Autodesk. Last year we were talking about the 2020 TAM being $48,000,000,000 for design and make. We are very excited to say that in 2023, our TAM is going to be $59,000,000,000 It's almost $60,000,000,000 TAM and that's in design and make. And I know many of you probably have questions about what comprises that $59,000,000,000 and I'm going to walk you through the detail of that.
Break it down by design and make, dollars 34,000,000,000 is in design, dollars 24,000,000,000 is in make, that's manufacturing and construction. Now in addition to that big TAM opportunity, we also have the opportunity to monetize non paying users. Now Andrew mentioned that we have over 4,000,000 paying subscriptions. But what I'd like to point out is for every one paying subscription, we have over 3 non paying users. And just to define this a little bit more for you, 12,000,000 of those are non compliant users.
Now some of you in the audience might refer to them as pirates. And then we have 2,000,000 that we call legacy users. These are users that are no longer on maintenance nor are they using our subscription offering. Okay, so that's the big opportunity for Autodesk overall. Now what I'd like to do is break it down for you across all of these areas.
And let me start with AEC. Now out of that $59,000,000,000 TAM, dollars 27,000,000,000 of that is in AEC. And that is servicing 29,000,000 design and construction professionals. And again, I am showing you 2023 data. And I am going to show you how this breaks down.
So first, how does that $27,000,000,000 breakdown? That's $15,000,000,000 in design, dollars 12,000,000,000 in construction. Who are these TAMs servicing? That $15,000,000,000 is associated to 11,000,000 design professionals and who are these people? They are architects.
They are building engineers and they are civil engineers. That $12,000,000,000 in construction TAM, who are the professionals, these 18,000,000 professionals, these are people who do construction documentation, pre construction and site execution. Now what are the big trends that are impacting our AEC customers? I want to highlight just a few of them for you. Urbanization, now last year if you were here, we talked about the fact that we have so many people moving into cities every day.
Well, our AEC customers have to deal with this influx because you need more buildings and you need more infrastructure. They are dealing with productivity problems. Construction is the least digitized industry in the world. And then waste, construction is responsible for 30% of the waste in the world and by the way buildings account for 40% of the carbon footprint in the world. Now imagine you are an AEC customer and you have these pressures facing you.
Now I thought I'd make this a little bit more real for you so you could understand. So imagine that we have 200,000 people moving into cities every day. We would need to deliver 13,000 buildings every day. That is a 30% increase over what we do today. And in addition to that, they need infrastructure around these buildings.
So what we would need to do is develop enough road and rail to circle the earth 30 times every year. Now, instead of just focusing on building new, we also have to focus on what about established infrastructure and buildings. There are $4,000,000,000,000 worth of assets today that are at risk of collapse. How do we make that more resilient? 90% of large cities are in coastal areas that are at risk of flooding.
Again, our AEC customers are dealing with these pressures. They need to use BIM to be able to figure out how to make these assets more resilient. Now all of these trends and all of these pressures are going to create a 31% increase in construction spend over the next 4 years. Now governments around the world understand this demand and pressure And Andrew mentioned this to you, but I'd like to give you a little bit more insight into this map. Now where you see blue is where there's current BIM mandates or policies.
That means that you need to use BIM on public projects. And I'll just give you an example. The U. K. A couple of years ago published that since they put their mandate in place for public projects, they have cut the number of public projects in half that are late or over budget.
Now I think some of you in the audience might be scratching your heads when you look at the United States. Doesn't the United States have BIM mandates? For federally funded buildings, we have been mandates, but for all other buildings and infrastructure, we do not. However, we expect the United States to go the same path as other countries and we do expect to see these mandates and policies. Now these BIM mandates are driving more usage of BIM around the globe.
And what I wanted to show you here is the BIM penetration. Now you would think because building information modeling has been around for a few decades that in fact it would be well penetrated. Well, the good news is we have a lot of room to grow, to grow our core BIM portfolio and adjacent products, products like data management, analysis or fabrication tools. Now we have prioritized our market expansion opportunity within architecture, engineering and construction. And the way that we've done this is we've looked at buildings, infrastructure and construction.
Now we don't have time this morning for me to walk you through every single one of these opportunities. So I thought I'd focus on just one of these segments where we are expanding. And I am going to talk to you about airports. We are expecting that by 2025, we will have 8,000,000,000 passengers that airports are dealing with. That is double what we're dealing with today.
That kind of spend is going to mean that we're going to have about $500,000,000,000 so $500,000,000,000 of average annual global construction spend on airports. What is this airport momentum? How many airport projects could there possibly be? Take a look at this map of the world. Where you see blue, Autodesk is already participating in those BIM projects for airports.
In green, those are projects we expect to be participating in. BIM is everywhere and we expect with our solutions to be able to participate in all of these projects as we expand into airports. Now, I think some of you might have a question that says, what do these projects look like? What are entailed in a BIM project for airports? Because building an airport is like building a mini city and I wanted to show you my favorite project.
Now this is the Beijing Saksang International Airport and you can see it had a very unique star shaped figure to it. And one of the interesting things is that when this gets delivered and that is expected to be delivered in September, it will be the largest single terminal airport in the world, estimated size 2 thirds the size of Manhattan, that's including the runways. They expect to handle 100,000,000 passengers per year. And you look at this amazing design and this is what they're doing. By the way, the architects using our BIM solutions, they were focused on how to make an amazing passenger experience.
And for all of us that travel, we know that sometimes it's not an amazing experience. They used our BIM solutions to optimize how long it would take to get from gate to gate, how long it takes to get through a security line, how long it takes to get on an elevator and get to where you're trying to go. Okay. So what about construction? We are expanding to the trade, site execution and pre construction.
Jim is going to come up here and he's going talk to you about all of the great things that we're doing to grow in construction. One of the things I just wanted to leave you with is just a few of the big pressures that are on our construction customers so that you understand what they're dealing with. So first of all, just to remind you and we talked about this last year, construction is the least digitized industry in the world, highly fragmented, highly analog. 30% of global waste comes from force is retiring. Now last year I told you millions of new jobs were being created for construction that were high skilled jobs that needed technology.
Our construction customers are talking about the fact that they are now having a retiring workforce and need to be able to replace that talent. And in addition, look at construction productivity as compared to manufacturing and the total economy. These are the pressures that they're dealing with as they have to deliver 13,000 buildings per day and deal with those trillions of assets that are at risk of collapse. Okay, so let's move on to manufacturing. Out of that $59,000,000,000 TAM, dollars 31,000,000,000 of that is design and make for manufacturing.
That serving 28,000,000 professionals. Those are designers, analysts, production engineers. And again, these are 2023 numbers. Let me break that down for you into design and make. Dollars 18,000,000,000 of that $31,000,000,000 is on design and $13,000,000,000 is in make.
That $18,000,000,000 is focused on these 9,000,000 professionals. Who are these people? They are electrical engineers. They are mechanical engineers. They are drafters.
What about that $13,000,000,000 going after the $19,000,000,000 These are toolmakers, setters, operators, machinists, supervisors on the manufacturing floor, people that are working on a shop floor. Now the big pressures facing our manufacturing customers are the ones that I've highlighted here. New production techniques and Andrew talked to you a little bit about this and you'll hear more from Scott later. Additive manufacturing, putting additive with subtractive so that you get hybrid manufacturing. All of our manufacturing customers are dealing with these new ways to do production, which allows them to design in ways they've never designed before.
Automation, machine learning, artificial intelligence, the next generation of robotics and what can that do for them to make them more efficient and more effective. Rising middle class, I am going to give you more insights into this. That makes a lot of demands on our manufacturing customers and makes them change the way they currently deliver products today. And finally, our manufacturing customers are dealing with mass customization. For 100 years, our manufacturing customers have been optimizing their production lines for faster, cheaper, better that does not work when you're talking about mass customization when you have to respond to custom specs for your customers.
So let me help you a little bit with more details here. We're talking about 4,200,000,000 consumers by 2025. Now I talked to you about the 13,000 buildings that need to get delivered every day. Well, there's people living in those buildings and they need products. I want a refrigerator, I want a washer, I want a dryer, I need tables, I need chairs, I need beds.
And they want them customized. When I talk to our manufacturing customers, one of the big things that they tell me whether it's industrial, fans, things for commercial buildings or for residential buildings is more and more they have to respond to custom specifications. So they're looking at new production techniques where they can on demand, automating with machine learning and artificial intelligence and shop floor digitization. We estimate that there's 11,000,000 professionals that want to get access to shop floor information. We call that top floor to shop floor and how do you get all of this information available in the cloud and available collaboration?
And just to give you a sense of the retooling opportunity that we see in manufacturing, take a look at these statistics. 60% of machine shops use analog processes in Microsoft Office. 30% of machine shop capacity is wasted due to poor productivity. You can't respond to all of these trends that I talked to you about when you have issues like this. That's why our manufacturing customers are looking at the new solutions that we provide as well as our existing solutions.
Now just like we did in AEC, we have prioritized our expansion for manufacturing and the way that we look at this is expanding in our core markets. So with design and expansion where we see design and make conversion. And again, we don't have time to go through all of these, but I do want to give you a few examples so you can understand the challenges that our customers face. So what I'll start off with is I'm going to focus on our core portfolio talking about connected workflows and impacts for our building product manufacturers. Now connected workflows, our product design and manufacturing collection is absolutely amazing.
In one environment, we provide design, we provide simulation, computer aided manufacturing or CAM and generative design. And when I say one environment that means that the data flows seamlessly through all of those capabilities. It's unprecedented capabilities in one environment. Now to give you some comparisons, that means our customers can get started for just $2,500 a year and expand from there. Now if they were trying to put together an integrated solution from disparate systems that are out there, we estimate it's about $5,000 to $50,000 a year and two additional pressures for our customers if they go this path.
Number 1, they have to deal with the import and export of data because there is not connected workflows between these products. And number 2, they are dealing with multiple business models, perpetual models and subscription models. With Autodesk, we provide all of those capabilities in one collection with one business model subscription. Now what about our building product manufacturing customers? There is 1,300,000 professionals in building product manufacturing.
And I thought it would be very helpful just to give you an example of a typical building product manufacturing customer that we have. This is Greenheck Fans. They are based in Wisconsin and they have been around since the 1940s. They make industrial fans for commercial buildings and industrial buildings. And their whole value proposition is about value and airflow And you would wonder what kind of competition are they facing?
A few things. Number 1, they have pressure from lower cost providers and they have European competitors that are actually innovating on airflow and doing it more efficiently or effectively and they need to respond to those pressures. But one of the number one pressure that they shared is that they now need to respond to custom specifications. So they need to respond to these bids to be able to win them using our product design and manufacturing collection. They are able to pull up parts that they've designed before, customize them, run that simulation, make sure that it works and then send it to the shop floor for manufacturing.
Now what about that whole design and make conversion space over here that's serving the 19,000,000 professionals. Now Scott Reese is going up here and he's going to talk to you in detail about this opportunity. But I thought I'd just give you one example of an industrial machinery customer that we have just to talk about the issues they're dealing with. So this is Claudius Peters and you heard Andrew mention them. But to give you a little bit more information, they've been around for over 100 years.
And what they do as you can see from this massive assembly is they build material handling systems. Now just to make sure you understand what you're looking at here, this massive assembly is the size of half of a football field. This is the kind of design and accuracy they can do in our product design and manufacturing collection. Now what was the pressure facing Claudius Peters because what they are dealing with is molten rock. You would know it's cement or what they call clinker.
Well, they had pressures to try to figure out how to do better cooling of clinker. So using our collection along with generative design they were able to innovate and they developed and delivered a new cooler that actually has reduced the cooling time from days to hours. Pretty impressive. By the way, we have hundreds of customers like Greenheck's fans and Claudius Peters that have similar challenges. What about media and entertainment?
Some of the key pressures facing our media and entertainment customers is accelerated content creation. There is a fierce war out there of creating more and more content, immersive environments and state of the art visualization. Now we are excited about the growth opportunity in Media and Tamron and we are seeing a few things. Number 1, with disruptors like Netflix, we are seeing a proliferation and explosion of content creation, which is creating demand for our leading content creation tools, Max and Maya. Then when you create all of this content, you have to manage it through its lifecycle and avoid digital waste.
We need to be able to collaborate and we have an offering like shotgun to help those customers with that. And third, this content is very complex. You might be surprised to find out that it takes over 1,000 people to work on creating content for a video or a game. And with that level of complexity, our customers are looking to see how machine learning or artificial intelligence can help them with behaving to deliver this faster and more effectively. Now the other key benefit that we get from the media entertainment space is it gives us broad brand visibility And that really helps us because people love their MAX and Maya products.
And in addition, we are able to bring state of the art visualization capabilities to our architecture engineering customers as well as our manufacturing customers and they benefit from the state of the art technology. Okay. So finally, now I want to talk to you about our opportunity with the non paying users. And just to remind you what I said earlier, we have 4,000,000 paid subscriptions. For every one paid subscription, we have over 3 non paying users and the way that they break down is 12,000,000 in non compliant and around 2,000,000 in legacy.
Here is what we know about these customers. Number 1, we know that 98% of the products that are being used by these 12,000,000 non compliant customers are these 5 products, AutoCAD, 3ds Max, Revit, Inventor and Civil 3d. We know the top two countries where we have these non compliant users and it might surprise you to know that the United States is number 2. And the good news is we really know how to market and sell to the United States customers. We also know that over 50% of the non valid licenses being used are with AutoCAD.
And finally, we know that over 40% of our legacy customers are using software that is over 5 years old. Now Amy is in a club here and she's going to talk to you about the great investments that we've made in our core portfolio. But I'll just give you one example. These are the same customers that are trying to compete and bid on projects that have this mass customization pressure or the pressure to reduce construction waste or 13,000 buildings and they are not using the latest and greatest technology for things like data sharing and collaboration. They can't compete effectively without moving to the latest capabilities.
So in summary, we are very excited about the Autodesk opportunity, a $59,000,000,000 TAM and we have the opportunity to monetize 14,000,000 non paying users. So with that, I thank you for your time. And I would like to introduce our next speaker, Amy Bunzel is going to come up and she is going to talk to you about all the great things that we are doing to grow with our core portfolio. You can clap now.
Thank you, Lisa. So I'm delighted to be here today to share with you how our core design portfolio has been accelerating value for both our customers and for Autodesk. And there are 3 main enablers to growth going forward that I want to share with you today. First, our simplified portfolio removes friction and accelerates time to value. And our desktop offerings are now hybrids with more value delivered through the cloud than ever before.
And our continued innovation inspires customers and creates new sources of value. So let's talk about simplification. By simplifying our portfolio, we're making it easier than ever before for our customers to choose the product that's right for them. We migrated customers from 21 suites down to 3 industry collections. And in addition to being easier to understand than suites, these collections deliver an unprecedented amount of value.
So much so that last year, collection subscriptions grew by doubled in their growth. And with 1 AutoCAD, we've made it easier than ever before for our customers to get to the value of AutoCAD. We've simplified the AutoCAD portfolio by providing one offering that includes AutoCAD, all of the specialized toolsets and our award winning web and mobile offerings. And better still, 1 AutoCAD is part of the product design and entertainment. Here we have Autodesk customer, D Man.
They're this year's Visual Effects Oscar Award winner, beating out several other Autodesk customers for their work on First Man. In fact, for the past 20 years, every Academy Award winner for visual effects has been an Autodesk customer. And these customers are now getting new value delivered through the M and E collection. M and E collections customers now have access to our Arnold render engine as part of the collection. We're seeing this collection grow by 146%.
Now Lisa introduced you to Claudius Peters. Claudius Peters is about as traditional as you get in terms of inventor, industrial machinery customers. When they needed to drive more innovation and stay competitive, they turned to the product design and manufacturing collection. And in this collection, they're using Inventor, they're using Recap, they're using Simulation and they're using Fusion with generative design. And better still, they've moved beyond the product design and manufacturing collection and they're also using BIM 360 when they install these massive machines in their huge facilities.
And in AEC, we have customers like Virgin Hyperloop 1. They are developing a new mode of public transportation that travels non stop at over 6 70 miles an hour, both above ground and underground. And the integrated workflows in our AEC collection allow them to use Revit and Civil 3d together to work on both the station buildings and the tube and track alignment. And Virgin Hyperloop 1 is not alone in their use of Revit. You can see that Upwork recently named Revit as one of the top skills number 14 in getting yourself hired in 2019.
So let's talk about what we're doing with our cloud hybrid products and how we are providing more access to new capabilities, better insights and more control for our customers. So we've truly adopted a subscription and SaaS mindset, delivering frequent releases throughout the year. We release at least quarterly for the majority of our products and we're seeing customers take new releases faster than ever before. So there's always new value on the horizon. We are now delivering more value than ever before through the cloud for our customers.
So much so that you are missing out on a ton of value if you are using our products with a perpetual license and not with a subscription. And customers who take advantage of our maintenance to subscription program have instant access to all of this cloud value. And better still, those customers are renewing their subscriptions at over 95%. And Andrew talked about how our single user subscribers are getting access to more streamlined administrative control that gives them better insights into how their users are using our products. And AutoCAD files are everywhere.
There are an estimated 5,000,000,000 DWG files up in the cloud. And these AutoCAD files can be found on every cloud storage solution imaginable. And we've taken a novel approach to connecting AutoCAD with top tier third party storage brands. This creates an on ramp to subscription for legacy license holders, clone users, non compliant users who may not be aware of the amazing capability we've added to AutoCAD and LT over the years. And by connecting AutoCAD to OneDrive, Box and Dropbox, anyone accessing AutoCAD files in these systems will be able to view them in AutoCAD.
So only Autodesk can provide an upsell path to genuine AutoCAD for a better CAD literate experience with our data. And just like the Adobe Acrobat Reader was used for market expansion, the free AutoCAD web viewer will help us reach new and legacy AutoCAD and LT customers with our highly intelligent, truly modern collaboration and editing experiences. And we've also delivered subscriber only collaboration capability across our portfolio. Customers can now securely share their data across their ecosystem and it self destructs in 30 days. This keeps their data secure and minimizes mistakes that might be made for using out of date information.
You can think of this as Snapchat for design. In higher trust situations, they can share intelligent data with Autodesk Drive. And our subscribers are using services to share the work they do in their favorite Autodesk products anytime and anywhere. And they've already racked up 87,000 collaboration sessions since launch, with many of them happening on phones and tablets. And this is a huge shift from how they used to work in the past with their licenses and their data locked to their computers.
And maintenance customers can only get access to this capability if they switch to subscription. So the ongoing delivery of new capabilities creates an ever widening gap between what our subscription customers have access to versus what our maintenance customers and our legacy customers have access to. This puts customers on much older versions at a significant competitive disadvantage. And how many customers are there back in our legacy base? We have about 1,000,000 who are on products that are 5 years younger back and we have 700,000 on versions that are 5 plus years older.
So that gives us an opportunity of 1,700,000 customers who need to think about how they can take advantage of all of this great new capability. And history shows us that when customers get to about the 7 year mark, starts to get increasingly uncomfortable and they're much more willing to take action and move to the newer versions. And what products are they using? Well, about 70% of them are using AutoCAD or AutoCAD LT and 24% are leveraging our suites. And the great thing here is, they can get current with 1 AutoCAD and collection subscriptions and get all of that value we just spoke about.
And innovation has never been more important in our design portfolio. Customer expectations are constantly changing on platform, on workflow, on outcomes and Autodesk is here to meet them. AutoCAD is leading a multi platform revolution. Who would have thought that our oldest product would be the one leading the way with AutoCAD running on Mac, on Windows, on web, on mobile, seamless data sharing across all of these platforms. You can think about this as Office 365, but for AutoCAD.
And the original AutoCAD Core is even running on the new iPad Pro as highlighted at the latest iPad Pro launch. And even better, AutoCAD is still winning industry recognition for both our user experience and as a high demand skill set. Fast Company Magazine recently awarded us an Innovation by Design Award and CIO Magazine reported a 71% increase in the demand for AutoCAD skills. And that's not all. Our efforts to unify our data platform are enabling us to connect manufacturing and AEC together.
Think about all the overpasses you drove by on your way here. Those concrete structures are very parametric and perfect for Inventor. And now, we are able to leverage the power of Inventor inside Civil 3d and InfraWorks and pass the completed designs on to Revit. And thanks to our partnership with Esri, we can easily include accurate GIS data that our customers demand in their designs. This enables them to design even better in the context of the real world.
And together with Unity, a leader in real time three d development, we are streamlining end to end workflows for our Revit customers. This type of deep workflow based integration is unlocking the full power of augmented and virtual reality for our Revit customers. Imagine any Revit designer being able to walk through their design in virtual and augmented reality and customers will be able to use this capability coming this fall. And how we design and collaborate is also taking on new forms. In the future, it's all about immersive experiences.
Imagine designing in full scale environment with your coworkers and your customers all coming together. The future will bring fully immersive collaborative environments that allow life-sized real time interactive experiences that enable distributed teams to work together as if they were in the same location. Now these platforms are maturing rapidly and Autodesk is at the forefront and we are going to be able to leverage our experience in product design and manufacturing, in AEC and in media and entertainment to bring amazing outcomes to our customers in this space. In fact, Autodesk is the only company on the planet with the breadth of experience to deploy to this challenge. So, all this product innovation is great for our current customers and enables them to achieve amazing outcomes.
But don't forget that our estimated 14,000,000 nonpaying users and our almost 800,000 maintenance customers can only get access to all this capability if they upgrade to subscription. And these capabilities are clearly compelling reasons for that upgrade. I couldn't be happier about where we are today. The portfolio simplification has been driving time to market value for our customers very rapidly. And our cloud offerings, Cloud connected value, sorry, has transformed our desktop offerings into hybrid SaaS based offerings.
And innovation is alive and well in our core portfolio. I hope you are as excited as I am about what the future brings for both Autodesk and our customers. And with that, we're going to bring up Jim Lynch to tell us about what's happening in exciting Construction Solutions. Thank you, Jamie.
Good morning, everybody. Autodesk will win in construction. There are 4 key factors that differentiate us from our competitors. 1st, our unmatched portfolio. 2nd, our global reach.
3rd, our strength and leadership in design and BIM. And 4th, our ability to not only address the needs of the industry today, but in the future as well. The customers are ready, the technology is ready and Autodesk is ready. So today, I want to share our construction strategy with you and also talk about these four factors and how they help us win in construction. So earlier, you heard from Andrew and from Lisa about this tremendous opportunity in construction.
Dollars 12,000,000,000 TAM by 2023, dollars 18,000,000 addressable professionals in that same time frame. Lisa also talked about 4 trends. She talked about the lag in digitization. She talked about the massive global waste. She talked about lack of productivity, and she talked about the aging or retiring workforce.
Now if you think about this massive demand in both infrastructure and buildings, coupled with those four factors or those four trends, plus the complexity of construction today,
creates an industry of
extremely high risk with low margins and low productivity. This industry has to embrace digital technology in order to thrive and in order to meet the demand. Our mission is to deliver a comprehensive integrated platform that seamlessly connects the office, the trailer and the field. Our opportunity at Autodesk is to significantly change the way construction gets done. Let me share our strategy to do that.
Our strategy has 3 pillars. The first pillar is around digitization. It's about helping our customers move off of paper and digitize their workflows. Paper creates uncertainty, ultimately leading to errors and inconsistencies, which can lead to project delays and cost overruns. So by helping our customers digitize their work processes, we can help them get better outcomes.
At the same time, as we help them digitize, we're also helping them to collaborate better. Now our second strategy is around integrating and automating workflows and business processes. That means connecting design to preconstruction, to site execution, ultimately to operations and maintenance. And then our 3rd pillar is around analyzation, analyzing our data, analyzing our customers' project data. Our customers are collecting lots of information on every project.
Our 3rd pillar is about tapping in to that information and helping our customers extract key learnings and insights to drive better outcomes on future projects. So our 3rd pillar is around analyzing the data and predicting better outcomes. Now let me talk about our product strategy to get there. First, let's start with BIM 360. So last year, we invested heavily in our next generation BIM 360 solution, particularly in the area of project management.
We introduced RFIs and submittals. And last year with BIM 360, we saw great traction, approximately 80% monthly active user growth and over 5,000 new logos. And I'm confident this momentum will continue this year as we introduce our cost control capabilities. So great momentum around BIM 360. In July of last year, we acquired Assemble Systems.
Assemble Systems ultimately helps construction project teams interpret design information, and it's a key differentiator for us in preconstruction. You can see last year, 60% growth in active projects in assembled systems. Perhaps more impressive is the fact that since its inception, we've seen 84,000 takeoffs. And now think about that, 84,000 takeoffs by their customers by our customers. So for those of you who are unfamiliar with the takeoff process, let me explain it just briefly.
Quantity takeoff is an important step in the construction estimating process. It's essentially where estimators translate drawings and specifications into cost and schedule. Traditionally, it's a really manual process, time consuming, error prone process. But Assemble speeds up that process and allows project teams to quickly move on to the next step of the pre construction planning process. It's a huge differentiator for our customers.
It's about taking that design information and conditioning it for construction. Of course, at the end of last year, we acquired PlanGrid. PlanGrid had an amazing year again last year. They added 3,000 new logos. And it's no surprise when you think about their mission, which is to create powerful, simple software that construction teams love to use, it's easy to understand and you'll find high affinity.
The customers love PlanGrid. And those customers are general contractors, subcontractors and owners. So to date, we see 1,500,000 total projects being done in PlanGrid. And to date, over 150,000,000 sheets have been processed in PlanGrid. Those are compelling, compelling numbers.
Then of course, most recently, we closed BuildingConnected. Now BuildingConnected on its surface has disrupted the bidding process. But I think more impressive is the fact that BuildingConnected has created this extensive construction network. From day 1, the BuildingConnected team set out to be the definitive source of information for the construction industry, for construction projects, construction teams and construction companies. Now to understand a little bit of what BuildingConnected does, if you're a general contractor, traditionally you've had your Rolodex to find subcontractors to bring on to a job.
Not really effective, not really efficient. But building connected automates that entire process and quickly brings the most qualified subcontractors to you. Think of BuildingConnected as the LinkedIn for the construction industry. These three acquisitions coupled with BIM 360 put us in a unique position to really serve the entire needs of the industry, from design through to preconstruction to site execution to operations and maintenance. But we're not stopping there.
We're fortifying our offering by partnering with key technology providers across the industry. In this case, you see estimating, scheduling and production control. And we're building those relationships through our Forge platform. Forge is an open platform that allows us to extend the ecosystem for our customers. What's even more exciting about Forge is to date, we have over 60 partners signed on and 100 more in the pipeline.
And these partners span the entire life cycle of construction, from pre construction all the way to operations and maintenance. And some of these tools are really cool. What they essentially do is they remove time they address time consuming and error prone tasks for our customers. So think about things like supply chain management, talk to any of our customers about the challenges of supply chain management or keeping time on the job site. Our partners do this and they do it really well.
So with our extended portfolio and with our partner program, we're really connected creating a more connected industry. So let me talk for a moment about the relationship and the overlap between BIM 360 and PlanGrid. Now when you step back and look at these two technologies, they offer some of the most compelling project management and site collaboration tools in the industry. Going forward, we're going to leverage PlanGrid's field collaboration work flows and partner them up with BIM 360's project management capabilities. Our longer term strategy is to tap into both of these technologies, pull the best of both technologies and create a unified integrated platform delivering even more value to our customers.
But it's important to point out that customers that are doing project management and field collaboration in either BIM 360 or PlanGrid should absolutely continue to reap the benefits of those products. And long term, those customers will benefit from an integrated, unified platform delivering even greater value than the individual tools today. Now we already have customers that are using both of these technologies on one project on the same project. Coming in from the airport, you may have passed the UCSF Medical Center. This is a DPR project, really cool project I got to visit a couple of years ago, as they were building it out.
DPR is a great example of a customer that today uses both PlanGrid and BIM 360 on the same project. And what are they using those tools for? They're using ultimately for better collaboration across the extended project team, across general contractors and subcontractors. And you can see here for yourself the benefits that DPR realized. Higher quality project delivered days early with over $200,000,000 in savings.
And we know there are many, many, many other examples of customers using both of these technologies. So what we want to do is make sure that we continue to bolster these technologies as we build out towards that long term strategy. Now we're not stopping there though. We're delivering value in the immediate future. Now this is actually hot off the press.
What you see here, this is a PlanGrid session running right now. What you see here is BIM models being accessed within the PlanGrid environment. Now this has been a long standing requirement for PlanGrid customers pre acquisition. Now that they're part of Autodesk, we can tap in to the BIM standard that Autodesk helped to establish. This sets us apart from our competitors.
The ability to go from a 2 d drawing to the 3 d model seamlessly is extremely, extremely powerful. As I said, this sets us apart from our competitors. Let me talk about our construction portfolio priorities. 1st and foremost, most importantly, is we're going to continue to deliver on the roadmap commitments that we've made to customers pre acquisition. That's across the board.
That's priority 1. However, at the same time, through product development efficiencies, post acquisition, we're able to accelerate our roadmaps. Secondly, we're going to build meaningful workflows between these tools. Now I already showed you Revit in a Revit and BIM in a PlanGrid session. I already explained how we have customers using both BIM 360 and PlanGrid on the same project.
For those companies, what we want to do is we want to make sure they can easily move documents between BIM 360 and PlanGrid. We're also going to enable those teams and those products to synchronize RFIs and submittals between the 2. But we're not stopping with PlanGrid and BIM 360. We're also working on integrating BuildingConnected with Assemble. Remember, Assemble gets those quantities, those accurate quantities and accurate quantities will drive better bidding.
The other thing we're doing is we're connecting PlanGrid with BuildingConnected. Imagine during the bidding process if the subcontractor was able to bring up that drawing within the BuildingConnected session. That's what we're enabling. We are building meaningful workflows across the portfolio. Ultimately, as we build out these workflows, we are building an integrated platform, a unified platform that will deliver greater value across the entire workflow, across the entire lifecycle.
If you think about our extended portfolio and you bring our design authoring tools, Revit and AutoCAD into the mix, we have the strongest portfolio in the industry from design, through pre construction, from site execution, out to operations and maintenance. Now you'll hear customers, you'll hear contractors say how frustrated they are about getting value out of the design information. We're changing that with our technology. With Assemble Systems, we're able to bridge that gap. We're able to make that design information more valuable.
That's exactly what we're doing. As we continue to integrate these technologies and ultimately build this unified platform, we will transform the industry. I'm confident. And what's really exciting is that we already have customers using all of these assets. Take for example, Clayco.
For those of you who don't know Clayco, they're a U. S.-based private held design building construction firm. We've got about $2,600,000,000 in revenue, about 2,000 employees across the U. S. Clayco early on embraced the digitization of construction.
And they early on adopted BIM 360 as their construction management platform. But they also embraced Assemble, PlanGrid and BuildingConnected pre acquisition. And you can see here, they tell us that because of these technologies, because they've embraced this digitization of construction, they're able to have a 60% to 70% reduction in the time it takes to find project information. That's extremely, extremely compelling. So we've got examples of customers using BIM360 and PlanGrid on the same projects.
We've got examples of customers using our entire extended portfolio
across
their businesses. I've spent a lot of time talking to our customers post acquisition and I can tell you they're all really, really excited about what's in store for sure. But let me talk a little bit about our go to market strategy. We have an aggressive yet achievable go to market strategy and there were really 4 key components to it. Now, 1st and foremost, as we acquire these companies, they have great sales momentum.
We want to maintain that. So we're keeping these teams whole and asking them to continue to do what they've been doing and what they do best. But at the same time, we're working to realize revenue synergies across the broader Autodesk team. So our sales teams from Assemble, BuildingConnected and PlanGrid are partnering closely with our worldwide field organization so that all teams can sell the entire extended portfolio. We're also expanding to other segments.
If you think about PlanGrid, PlanGrid has great traction today in the subcontractor community. And they've got great momentum in new segments like heavy civil. We're going to continue to work with those segments and bring our broader portfolio to help broaden technology adoption across subcontractors and other adjacent segments. And then finally, of course, Autodesk is extremely, extremely strong in our global reach. We're going to use our global reach to help further drive the growth of our portfolio.
PlanGrid today, of course, is already sold in Europe and parts of Asia. We're going to double down on that. We're investing in sales, support and product to get PlanGrid more widely adopted. We'll also do the work this year to set us up for growing BuildingConnected internationally next year. Talk about expanded opportunities or expansion opportunities.
If you think about our installed base, design base, we have 80,000 customers today who self identify as construction service providers. So these are companies that are construction companies that use our design portfolio, but less than 5% of them actually use our cloud construction portfolio. Our foothold on the design side with these construction service providers opens the door for us to bring our construction portfolio into those accounts. It's a significant, significant opportunity. So if you step back and look at our portfolio from design across the operations and maintenance, we really have the end to end project delivery system.
We're in the best position to help our customers win the work, plan the work, coordinate the work and ultimately perform the work. The breadth and depth of our solution in construction is absolutely unmatched in the industry. But we're not stopping here, we're also looking at the future needs of the industry. I'll talk to any general contractor and they will tell you the biggest challenge is risk and mitigating risk in particular. According to OSHA, construction
is one of
the highest fatality jobs in the country. About a month and a half ago, we launched a technology called Construction IQ. Construction IQ uses machine learning to help our customers extract key learnings and insights from previous project information to predict outcomes and drive better outcomes on future projects. So Construction IQ does things like sends notifications to project managers and saying, hey, there's a potentially costly water penetration issue you should be aware of. Or there's a subcontractor who may create some risk on the project.
And it does this by using machine learning to tap into previous project information. Now while we just launched Construction IQ about a month and a half ago, we've had customers using it for several months. And here's a great quote from Ben, right? They talk about 20% reduction in quality and safety issues, thanks to Construction IQ. Now make no mistake about it, risk mitigation is a game changer for construction and it's a game changer for Autodesk.
None of our competitors offer these capabilities today. Another growing trend Andrew talked about earlier and Lisa talked about earlier with IWHAUS is the convergence of manufacturing and construction. This is one that I'm deeply excited about. This you see the video here, it's Factory OS. We're working closely with companies like Factory OS and others who are really challenging the status quo of construction and how construction gets done.
They're looking at the industrialization of construction to drive better efficiencies, better productivity, reduce costs and reduce waste. I'm confident that over time, this convergence of manufacturing and construction will absolutely disrupt and transform the industry. And nobody is better positioned than Autodesk to help that transformation, thanks to our leadership
in design
and our strength in manufacturing. Now when I think about construction, I see a vibrant construction industry, where predictability and productivity are exponentially increased and job site waste is proportionally reduced. And people go home safe to their families at night. And I'm confident, confident this vision can become a reality. As I said earlier, there are 4 key factors that significantly differentiate us from our competitors.
1st, our unmatched portfolio, spanning design through pre construction, through site execution to operations and maintenance. Secondly, our leadership in design and BIM. 3rd, our global reach, our ability to reach anywhere in the world and deliver compelling technology solutions. And then finally, as we look ahead where the industry is going, our ability to service the convergence of manufacturing and construction. We have the ingredients and we're seizing the opportunity that comes with unrelenting demand.
In closing, the customer is ready, our technology is ready and Autodesk is ready. We're changing the way the world builds. Thank you.
Please welcome Senior Vice President, Manufacturing and Cloud Products, Scott Rees.
Good morning, everyone. Thanks for coming back together. So good to see all the great conversations happening. Sorry to interrupt those things. But we're excited to shift gears a little bit and talk about the opportunity that we
see in manufacturing. And you're going to see and hear a lot of
similarities between what Jim manufacturing. And you're going to see in here a lot of similarities between what Jim just talked about around construction. We're very bullish that manufacturing is one of the next big waves of growth for the company moving forward, just on a slightly different time frame than we see construction. So let's take a look at why we're so bullish. Many of you talk to manufacturing companies.
We obviously talk to them every day. And one of the things we see and hear from every company that we talk to, regardless of their size and their history, is that they're going through this element of disruption. Every company is being driven for more and more innovation. And that means something different depending on exactly which industry or sub segment they serve. Across all segments, they're being driven to deliver more products in shorter time spans than ever before.
Now, if you look at the way the manufacturing market is addressed today, it's highly fragmented. We talk about the CAM space, right, and the CAM tools that we deliver, the CAD space, the simulation space, data management, PLM. And the thing about that is that those historical silos of capability map directly to the organizational silos that exist in a lot of these manufacturing companies historically. And they serve those companies well for decades. But now that is the very thing that is working against them.
In order to really meet the market's demands for more innovation and more products, they have to work differently. And that's our vision for the convergence of the process of designing something with the process of making something. That's the better way to work that we see the manufacturing companies need. And that's exactly what we've been investing in, in a product that we call Fusion 360. The right side of that disruption, we think, is a huge expansion opportunity to converge those 2.
The left side of this lightning bolt, the old siloed way of working, we see that as a huge share shift opportunity for Autodesk. So we talk about Fusion 360. How do we map it to those historical industries? Is it a CAD tool? Is it a CAM tool?
Is it data management? Is it simulation? You won't hear us use that language to categorize Fusion 360, because it's none of those things. It's literally all of those things from a capability perspective built into a single application on top of a single data model, all based in the cloud, allowing teams to work in a very distributed nature, very collaboratively together. It's a very different way of working.
So if we take a look at the product in action, what you'll see again, the data is in the cloud, I can access it from anywhere in a web browser and mobile device. I can open it up, I can collaborate around it, do some design reviews, do some sketching, conceptual design, go straight into modeling and put the math behind the idea. And these are different folks in these workflows. We're all working collaboratively creating documentation, be it assembly documentation or shop floor drawings. It's all in a single application on top of a common data model.
Run some simulations to test the real world performance of the idea that we're designing. And then once my design is complete, I can push straight out into manufacturing. Again, all cloud based, enabling that collaborative way to work, all in one application. None of those silos showed up. I'm not exporting data out of one system and importing it into another system.
It's all one application on top of one data model. So we see the opportunity. We're excited about what we've built. What are the users saying? What's the market saying?
So Andrew talked about this morning, we've seen tremendous growth in activity and usage. So we have over 360,000 monthly active users. When you start looking at the customer segments, that's where it starts to get interesting. Of course, we have the commercial subscribers, but there are 2 customer segments in particular, I think are really interesting to look at a deeper level. The startups are doing interesting things.
Now, something that's unique to the startups versus a lot of the traditional manufacturing companies is they don't have legacy. They don't have existing processes. They have an idea and a bunch of money about how to go to script a particular segment. They don't want to work in that old siloed way. They want to go straight to the future and they're choosing Fusion 360 to do that.
And we'll look at an example there. The other segment is the student community that's showing up. Talk about a segment that has no fear. These students, all they see is the future. And when you talk to them about, hey, we have this tool for CAD and this one for CAM and this for simulation, which is what they hear from a lot of our competitors, it just sounds crazy to them.
They recognize that those tools were written before they were ever born, right? So for them to think about bringing those into the way that they work is just a crazy idea. They're coming to Fusion 360 and doing amazing things. Kind of another interesting dynamic that's showing up with Fusion 360 here in the early days is similar to what we saw with AutoCAD in the early days. It's this notion of broad appeal across
a bunch of different segments. So on this
slide, you see small
industrial machinery companies companies, industrial machinery companies. And one of the things we're seeing is that in these companies, again, regardless of size, a particular department will embrace Fusion 360, say in the industrial design department. And then before long, the engineering department is going, wait, can we work on that alongside with you? And then before long, the manufacturing team is talking to them. So it's really bringing this whole notion of collaborative product development to bear.
It's a really interesting trend that we see. Then if you look at the media, right, they acknowledge kind of this siloed way of working and the challenge that manufacturing companies have in meeting disruption. Engineering.com, everything is seamlessly connected, acknowledging we're not exporting and importing and losing data all along the way. They acknowledge the capability all in one application on top of a common cloud model. Machine.design.com.
Fusion 360 is the
type of technology
that will take manufacturing into the future, recognizing the disruption or recognizing the need to work differently, acknowledging that Fusion 360 is starting to address those needs. 3dprintingindustry.com, really trying to figure out new means of manufacturing. Fusion 360 is really on fire. So we're excited about the opportunity. Users are adopting.
People are taking notice. So again, let's look at the customer segments, be it the startups, the students, and then commercial subscribers. What I'll talk about is kind of more traditional manufacturing companies
than what we're seeing there. Let's start off with startups
and take a look at the manufacturing companies and what we're seeing there. Let's start off with startups and take a look at a company called ModBot. ModBot was founded by a couple of Australian robotics engineers, Adam and Daniel. Right out of college, they got great jobs in a big manufacturing wow,
these robots are rigid.
They're hard to deal with. They're expensive. Wow, these robots are rigid. They're hard to deal with. They're expensive.
There has to be a better way. They quit their jobs, moved to the U. S. And started ModBot. So with ModBot or with Fusion 360, they've been able to design, build and deliver this very configurable, flexible, easy to use, easy to program, affordable robot.
And they're really starting to disrupt industrial automation and traditional robotics. And they're doing that with Fusion 360. We have hundreds of stories like this starting to show up. But again, the students talk about an inspirational community. Every time we engage with the students, we're just blown away.
The famous quote from Mark Twain, where he says, They did it because no one told them it was impossible, is exactly what you see day in and day out from the student community. Students at Stockbridge High School in rural Michigan are no different, right? Look at these smiling faces. These are kids 14 to 17 years old. So they're learning Fusion 360 in the classroom.
Their instructor is teaching them the fundamentals of engineering, the fundamentals of systems design, but then helping them take it out and apply it in the real world. They started a robotics team. They built this remotely operated vehicle. It has data collection instrumentation, it has vision systems. They took it to the American Samoa's and submerged it to the sea floor to collect a bunch of data around marine life that they'll now bring back and study.
Anybody doing this when they were 14 to 17? It's not what I was doing. So beyond the fact that that alone is quite amazing, it's really the progression of what happens next is where it gets super interesting. Meet Chelsea on the right. Chelsea was part of that robotics club at Stockbridge High School.
Chelsea had a family friend who had a hand deformity and couldn't partake in the family fun of fishing. Chelsea took her knowledge of engineering, of system design and of Fusion 360 and designed and built this young boy a fishing pool that he could use to partake in the family fun. So taking it outside of the classroom, applying it to real world problems where she has a passion. Before long, Chelsea will be in college. She'll be studying engineering.
She'll be doing that with Fusion 360. Next, she will become a commercial subscriber out in one of our awesome customers, changing the world, doing that with Fusion 360. It is such an inspirational community for us and the size is becoming quite massive. And then the commercial subscribers, I would describe most of these as what you would think of as the more traditional manufacturing companies. And the thing that's different about the traditional manufacturing companies, they do have tools.
They do have processes. They do have legacy. What could they possibly find interesting about Fusion 360? And that brings me to the topic that I believe is going to give Autodesk the ability to leapfrog anyone and everyone playing in this space right now moving into the future. So now that we have all of the capabilities from conceptual design out through manufacturing built into a single application on top of 1 data model in the cloud, now that we have all that together, and that's no small feat, we can drive it all algorithmically in the cloud.
That's what we believe is the response to that disruption moving forward. Andrew talked about General Motors, let's put a little bit more behind that. The bracket that you see here on the left, this is the bracket that is quite likely in some of the vehicles that such some of you are driving today. It's in their production vehicles. It works.
Its performance meets every requirement that General Motors had. But as you can imagine, all of the automotives are under stress to take weight out of the vehicle without sacrificing anything around quality or safety or performance. So General Motors saw the promise in generative design and said, hey, if you can take weight out of this bracket, if you can increase the performance of this bracket, we can only imagine what we can do with the rest of the car. So let's start there. Now the thing about human engineering teams is that with the time pressures that we have, we usually only have time to go through a single iteration.
We find something that works and we roll with it, right? We go straight to market. If we have the luxury of time or maybe a more distributed team, we go through 2 iterations or 3 iterations. But that's kind of it. It's time to go to market.
With general design, what the engineers at General Motors were able to do was frame the problem. Don't describe the geometry. Frame the problem that needs to be solved and let Fusion 360 explore all of the options. And in less time that it took that engineering team to design the commercial bracket, they were able to explore 150 different options, seeking the single best option, not just the option that works. This is the result.
So you can kind of see in the picture the magnitude. Here you can see I'm holding it with 2 fingers. So again, think back, that original part, again, it works, right? Its performance was fine. But it was 8 parts.
Imagine the complexity of manufacturing 8 parts, bringing them together, part. So all of the simplicity that comes with that, not only is it a single part and brings all that simplicity is 40% lighter and 20% stronger. So it's simpler, stronger and lighter. That's a winning combination. So just imagine the excitement of General Motors about taking that technology to the rest of the vehicle now.
Let's talk about a younger company, WIL, based out of Japan, founded by 3 young engineers.
Now, one
of those engineers had a friend who used a traditional wheelchair. And they saw how restrictive that was for their friend. This friend was not able to get out and explore the outdoors. And these 3 young engineers set on a mission to change that. They delivered what some are calling the next generation wheelchair, totally electric.
But look at it, it's all terrain. We have one just behind you out here today. I encourage you to take a look at it. But beyond being electric and being all terrain, one of the other big differentiators that they wanted to really solve for their friend was they wanted you to be able to collapse the vehicle down and load it by yourself into your car, right? So no special equipment to lift it, no special equipment needed to move it around.
So as you can imagine, size and weight are kind of a big deal. So the vehicle already existed. So what they did is the engineers at Will picked 1 of the heavier parts and said, let's define the constraints that this part has to live within. It has existing bracketry that it has to mount to. We have safety standards that we have to adhere to.
We only have certain manufacturing techniques. So they framed all of that out inside of Fusion 360. And then again, Fusion 360 explored the geometry. They didn't guess at what geometry would best solve the problem. They let the computer explore it based on what problem it was they were trying to solve.
And that's exactly what happened. They explored several options, 100 options. And then Fusion 360 helped them select the best one. And you can see it here, and you can see it for yourself at the brake on the vehicle that we have here. So the resulting part was 32% lighter and actually more performance characteristics than the original part.
So it's lighter without giving up any safety or performance characteristics. So you can imagine now, Will is going to go through the rest of that vehicle and use generative design on every part. So a key point to remember is Amy, Lisa and Andrew all touched on Claudius Peters. Claudius Peters and every subscriber to our collections has access to Fusion 360, has access to generative design as an additional element of value to their subscription. Again, no surprise, right?
This is no news to any of you about the disruption that's happening in manufacturing. But something I think that is important is to recognize what we're doing to not only respond to that disruption, but also the share shift opportunity that we see moving forward, as well as the
on the site, the point of the work. And then everything that I just showed you around how we're reimagining manufacturing is based on cloud and heavy compute being a big part of that. Autodesk Forge is how we are accelerating those efforts. And just like Andrew talked about how we're unifying our data experience and streamlining workflows across industries and across applications, that's because all of these things are now built on Autodesk Forge. It's the way we're accelerating our efforts.
A couple of interesting dynamics. As interesting as Autodesk Forge is for our internal efforts, it's equally interesting to our customers. Think of a manufacturing customer who has an ERP system, an MES system, an HR system, there are all kinds of gaps that exist between those internal workflows. And they're using Autodesk Forge to start to fill some of those gaps, companies like JD Dunn, Johnson Controls, Toshiba. And there's a traditional what you might think of as a third party ecosystem is starting to develop as well.
We have over 1,000 active developers outside of the company on top of Autodesk Forge today. And then just like Jim talked about, we have over 60 of those focused squarely on broadening out the construction solution. So beyond everything we're doing in BIM 360 and PlanGrid and BuildingConnected and Assemble and across our whole portfolio, we have 60 partners outside building on top of 4 to the same data platform, the same set of services that we are building our solutions on top of. And we're not going to talk about monetization of
But what I will give you is the activity, the growth, the maturity that's kind of flowing through. Last year, we doubled the amount of activity that's flowing through the Forge platform, coming up on 50,000,000,000 API calls. This is software talking to software. So think about this as growth in the platform as well as maturity in the platform. I'll share with you one example of a partner building on top of Autodesk Forge, a company called XenApp, based in the Netherlands.
So XenApp's entire existence is about helping BIM engineers check the adherence of their BIM data to the local design standards and the local building standards. The worst thing that can happen in a construction project, you get halfway through, the inspectors show up say, Hey, here's a bunch of rework that you have to go through. You heard Lisa talk about 30% waste in construction. That's exactly one of the places that it comes from. XenApp's entire existence is to keep that from happening.
They're doing that with Forge. Here, one of Zen App's customers, Grandfoss, shares their experience, talking about how they've brought all of their CAD data together inside of the Zynn Apps application and they run their design checks. What used to take days is literally minutes now. So that's real waste prevented. That's real productivity brought to every project.
So another way to think of it, Forge is absolutely unique in our industry. Forge is the platform for every industry we serve, all across AEC, all across manufacturing and that content explosion that Lisa talked about in media and entertainment. We're using Forge to help all of those industries accelerate those efforts. So hopefully, you can see the excitement, the bullishness, both around the manufacturing opportunity that we have, as well as the budding opportunity that we see for growth in the platform. So now to talk about everything that's happened out on the field, I welcome my friend and colleague, Steve Blum, the SVP of Worldwide Field Operations.
Thank you.
All right. Good morning. Doing okay? All right. So it's great to be here with you today.
As Andrew mentioned earlier, FY 'nineteen was a year of records for Autodesk And I'm very proud of the results that we drove through that year. And we're really set to have a great FY 'twenty and beyond. And I'm going to step you through our go to market approach and how our focus on customer success has us prepared to reach new heights in FY20 and beyond. So first, what I want to do is just remind you about how we go to market. We've talked about this before, but I know it's each year I want to make sure you at least follow along with our go to market approach by customer segments.
So we basically have 4 different customer segments named accounts, mid market, territory and digital sales. And I structured the chart to try to make it easy to comprehend overall. So if you go across the horizontal top half of the chart for named accounts and digital sales, this is where we take a direct approach with our end customers. The bottom half across the horizontal, mid market and territory counts is where we're indirect, where we're working together with our partners to go and deliver a great experience to our customers. If you follow along the vertical on the left hand side, named accounts in mid market, that's where we have an account based sales and marketing approach.
That's where our sales teams are focused on specific accounts as opposed to geographies. On the right side, territory accounts and digital sales is where we take a geographical approach. This is with inside sales or through our e store. Our account based folks are outside field based, field located resources, so they're close to the customer. Now, as we focus on digitizing the company, our ability to connect with more end users grows dramatically.
Now we've always had the human engagement approach to selling and driving customer success with all of our customers. But we're now benefiting from having digital means of getting to end customers to provide value that's personified, specific to who they are and helps them drive adoption and success overall. I'm going to come back to this view of human engagement and digital engagement several times throughout my conversation to talk about how we're combining the 2 together to connect with many more end customers around the world. All right. So, we're all focused on delivering ARR growth.
We've been delivering ARR growth in FY19, FY18 and we're focused on that, of course, for FY20 and beyond. And I'm going to focus in on 4 areas of our go to market. I'm going to talk about our existing accounts and how we're focusing on driving expansion within those accounts. I'm going to focus on our new customer acquisition where we're acquiring new customers to add more ARR
to the fold.
Customer success is critical in a subscription and consumption based model. I'm going to focus specifically on what we're doing to drive adoption, which ultimately improves renewal rates. And of course, I'm going to give you an update on what we're doing with our partners. I know that's always an interesting topic. And I'll give you a quick update as to what we're doing with partners and how they continue to be very important to the overall success of Autodesk.
So, let's start with the existing accounts and let me start with named accounts. Now within named accounts, we're leading with enterprise business agreements. We're focused on moving those named accounts to enterprise business agreements. And as a reminder, what an EBA is, so that's the enterprise business agreement, EBA, it's a combination of an access model. So we make the entire portfolio available to our customers.
It's a consumption based model based upon tokenizing those offerings and we make it available to all users within the enterprise. But that's not the only part of the EBA. We marry up the access model with a focus on driving success. So we have dedicated customer success managers, dedicated support specialists. This is where we focus our consulting resources.
So we worked closely with our customers. We built jointly owned customer success plans and then we execute on those plans based upon important business outcomes for our customers.
And this is where we're
applying our service delivery resources to execute on those CSPs to drive those business outcomes. So how are we doing? We're making great progress with our named accounts. Each time we move a customer from a maintenance model to an EVA for the first time, we're getting 2.6 times the numbers of subscriptions that we had compared to the prior model. So we're driving more much very strong expansion.
We're getting to many more users within the enterprise. Over the last 3 years, we've had approximately 40% growth compound annual growth in ARR. So when we get in and focus on expansion, we accelerate growth in a continued fashion with our named accounts. And as of right now, as of the start of FY 2020, approximately 55% of our named accounts are on enterprise business agreements. Here's how you should think about that.
So a little more than half of our customers are in the environment that we're getting great expansion, great success, reshaping the relationship overall, And that's driving incremental ARR growth for us. But we still have a nice runway of growth opportunities and moving the named accounts that are not on Enterprise Business Agreements to Enterprise Business Agreements. And that continues to be a focus for us. So let's talk about our customer success. I'm going to tie back to one you've heard about twice now.
Andrew mentioned Iowa House earlier and then Lisa gave you more details about how we're working with them and how they're taking advantage of our technology. But I want to give you insights about the relationship and what they've been doing together with us. So as a reminder, this is the company that's they're the biggest home builder in Japan. They've actually built about 1,700,000 residences so far and they really drive the AEC ecosystem in Japan. They did their first EVA with us 2 years ago.
And their focus on moving to an EVA was to help to gain our help in helping them drive their growth initiative. They have an internal growth initiative of going from $40,000,000,000 globally to $100,000,000,000 Now, we've made the entire portfolio available through the EBA and they're using lots of our offerings, things from AutoCAD to Revit to BIM 360. They're even using Inventor throughout the process. Now, we have a jointly owned and created customer success plan. And one of the core areas of focus over the past 2 years has been to implement a BIM standard and help them drive BIM 360 across the entire enterprise.
And they're having great success. And as a result of that, they renewed their EBA with us in FY 'nineteen for a total contract value that was 16 times larger than the first EBA. Just one example of how we can drive growth working together with our named accounts ensuring that their success is also our success. All right, now let's talk about mid markets. As a reminder, mid market again, this is where we go with an account based sales and marketing approach, but working together with our partners.
In named accounts, we can have a sales rep that maybe is responsible for 1 account only or 1 or 2 accounts. In mid market, they have more accounts because they actually get the benefit of working together with partners, but their focus is on the portfolio of accounts that they have. One of the big steps forward that we made in FY 'nineteen after we introduced the program was building out the account based marketing together with the account based selling. If you recall, we actually piloted mid market in FY 2018, but the focus was predominantly on can we actually gain more success focusing our outside sales reps on a portfolio of accounts. And of course, we believe that we could and we move forward to implementing it in production in FY 'nineteen.
Some of the big things that we actually did though in FY 'nineteen was we took some best practices that were very human oriented, which we were doing with named accounts, where we were basically go on-site, we do lots of lunch and learns, we were visiting the accounts very extensively and we digitize those things because we can't get to every one of our mid market accounts. But we can offer persona specific personalized content that is relevant to individuals, to the contacts that are within our mid market accounts to ensure that they have the information they need to be successful based upon the products that they're using, the industry that they're in and the business challenges that they're facing. So, 1 year of being fully in mid market and we've built some great momentum during the year. More than 90% of the accounts we put into the mid market program purchased from us. Now, some of these accounts had not purchased from us ever, Many of them hadn't purchased from us in years.
So, the fact that we were able to engage with that many accounts and get them to start purchasing and reengaging with us was a great success. Of the accounts that did purchase, we grew our billings over 25% with them year over year. And now this is where we focus on leading with collections. With named accounts we lead with EBAs, mid market we're leading with collections. Last year, we grew our billings for industry collections with mid market accounts by over 80% or approximately 80%.
So, really good success. I want to give you a customer example here too. I'm going to talk about Tirans. They were leading community development consultancy firm in Sweden. They were one of the accounts we put in the pilot in FY 2018 and we had a great success with them.
In fact, during FY 2018, we grew our business with them by more than 2 25%. It's one of the reasons we actually chose to move from piloting mid market to moving to full blown mid market approach for our go to market. Now since then, we've been working with them on enabling digital workflows and driving innovation. They have an innovation initiative across the company. And we focused on adoption explicitly.
And we did things focused on education, webinars and we really stepped up the executive engagement with the account. As a result of that, after having a huge FY 2018, we had a great FY19, growing our business more than 35% more during the year. All right. Now let me move on to acquisition of new customers and I'm going to focus on 3 areas: digital sales, our non compliant users and our legacy users.
And I'll
start with digital sales. So as a reminder, digital sales is a combination of our digital engines. It's our e stores. It's our ability to do the knowledge network. It's our online chatting capabilities.
It's all the means that we can have outreach and connections to end customers digitally. We marry that up though with inside sales resources that can connect through those digital assets to end customers. And in many cases, we could even have inside sales reps that are purchasing on behalf of our customers through our e commerce engines overall. We had a great year. We exited the year with over $230,000,000 of ARR through digital sales.
The growth in ARR for the year was approximately 56%. And what's very interesting is that approximately 50% of all the subscriptions that were purchased through digital sales were from new customers, new logos overall. This still ends up being the best mechanism for acquiring new logos and bringing new customers into the company. All right. Now, I want to switch over to non compliant users.
Now, to remind you to connect back to Lisa's message, she told you that there's 12,000,000 users of our software that aren't using genuine software. I'm going to break it down a little bit more for you overall and then talk about how we've been doing with them. So, of the 12,000,000 users, 4,000,000 of them are in mature markets, 8,000,000 of them are in emerging markets. When we then peel the onion back further, we have continued to invest in capabilities to identify who those non compliant users are. We're now at a point where of the mature market non compliant users, we can actually identify 1,800,000 of them.
In the emerging markets, we can identify 2,300,000 of them. Now this is how we take different approaches based upon if we can identify a customer or not. If we can identify a customer, we pass that information over to a direct global team I have that then works on engaging with those end customers to buy compliance software to resolve the issues that they have if they're in a country that we can get to and engage with them. For all of our non compliant users, we've been investing in technology to reach them digitally through in product messaging. If you recall, last year I actually introduced to you the idea of in product messaging to our non compliant users.
And we've introduced the idea of having a pop up window. And we've been revamping the pop up window. So this is what it looks like today. Now it's customized now. So it actually identifies what product is being used.
It even lets the user know, hey, we even know it's serial number that you have. It does give them an opportunity to resolve that issue right away. They can click on this button, it will take them to our e store where they can buy compliance software. Now, as Lisa said, we're focusing on 5 products, those 5 key products that make up 98% of all non compliant use, with AutoCAD being over 50% of them and I've listed them here. The goal is to have these non compliant users take action on their own since we may not be able to identify who they are to actually access compliance software.
Now, the pop up window is interesting, but it may not actually drive an outcome, an action that we want. So we've been working on continuing to evolve the capabilities in product. So it was only 2 years ago we didn't have in product messaging. Last year we introduced the ability to pop up a window when we identified that a serial number or a subscription was no longer or was not a compliant use of software. Today, we can start changing the frequency of times that message pops up.
We can also change how long it comes up for and what actions can be taken to remove that by the end customer or by the end user. These are not customers. So we're doing a lot of testing now. Now that we have this capability, we're doing AB testing, trying to figure out what are the things in product that we can do that will stimulate the behaviors we want to have, which is purchasing compliant subscriptions. All right.
One more update and that's on the legacy customers. So these are again the folks that have maintenance license maintenance sorry, they have perpetual licenses but they're not on maintenance. They've fallen off maintenance overall.
This year
is all about focusing on the value and benefits of moving to subscription that Amy talked about earlier. There is a significant difference in the customer experience using subscriptions compared to old perpetual licenses. First of all, you saw the frequency of releases that we're delivering and the added value that we're putting into those products. We get access to the cloud. We give insights and controls of those subscriptions to the end users that are really benefiting those companies.
We give collaboration capabilities and we even provide support as part of the overall subscription offering. So the focus on those 1,700,000 legacy users is to make sure they understand how much value they are missing by not being on subscription and making sure they know how they can access current subscriptions. We also have an interesting compelling event in the market. Microsoft is ending the support of Windows 7, which means a lot of companies are going to need to replace their software, their operating systems and even their hardware. And each time they've gone through this cycle, we've actually seen some incremental actions from some of our customers that were on old maintenance licenses and we expect to see that again.
Okay. Our focus on adoption and renewals and customer success. We have we focus on the customer success cycle all the way from landing new customers, ensuring they're adopting the software, ultimately expanding their use of the software and then at the very end, renewing and continuing that engagement. And then it's a cycle overall. We've moved from having just human engagement customer success focuses, either with our named accounts through our CSMs or dedicated support specialists or through all customers through our people oriented technical support team to adding a lot of digital engagements.
So now we can do digital nurturing for all of our subscribers. We can send them personalized emails. We can send them persona specific content that's relevant to who they are and where they are in the engagement cycle working together with us overall. And we also have the ability now through subscription to have early warning systems where we can actually evaluate the health of a customer to see if they're engaging with us and with the software and adopting it the way we would expect. This is an example of how that works.
So let's say a customer has purchased a software, they're using it, now we're sending messages, digital nurturing messages that are relevant to that user based upon who they are, the type of industry they're in. The early warning system could indicate to us there's an engagement problem. We're not actually seeing the same types of actions and behaviors that a customer other customers just like this customer should be doing. At that point in time, we change the engagement model. We contact the partner.
If this is a customer that's purchased from a partner and ask the partner to engage directly with a human to find out what the issues are and see if they could help move that customer back to a healthy state. If we don't actually see an improvement in the early warning scores, we will use our own customer success specialists in outreach to contact that customer directly and to help them adopt and start using effectively the subscriptions that they have. Now we're continuing that digital nurturing all the way through because we know there's high value there. And when we actually see the improvement in the early warning digital interaction and continues in an ongoing fashion. All right.
Finally, a quick update on our partner strategy overall. We continue to engage with partners around the world. We have a common global partner framework. The focus of that framework is to have consistency and stability for our partners because we need our partners to continue to invest in the business and they need to know that this is a stable growth oriented business for them to invest their dollars. We've been focusing a lot on adoption and customer success as we've moved into the world of subscription.
And what we're hearing from customers and what we're seeing ourselves is more and more customers are asking for more help from us and from our partners to help them implement the software. They need a lot more services overall. We can deliver services to our named accounts, but we're even running out of some capacity there and need the help of some partners. In the territory mid market, there are significant opportunities for service delivery for our partners. And our focus is to provide partner service enablement capabilities to our partners so that they're positioned to deliver the high quality services that we can deliver directly to end customers.
Specifically, in the framework for this year, our focus is on execution here in FY20. So we had minimal changes overall. We did put a focus or a spotlight on maintenance to subscription. This is the last year of our maintenance to subscription program and our partners are leading the way with most of our customers that are left to move. So we're working closely with them on that.
We continue to move the partner incentive dollars from the front end to the back end. We've moved more of those dollars from the front end to the back end. For those of you that reach out and talk to our partners, you probably hear some mixed messages about this. What I'll tell you is this, our best partners, the ones that we work closest with that are investing in the business, that are driving growth overall, they see this as a real positive for their business. There are some though that don't like this overall.
So you're going to get some mixed messages for sure. And we of course are focusing partners on driving adoption and renewals as our base of subscriptions has now grown to over 4,000,000. So why do we continue to work with partners? Well, we do it because we're selling in approximately 180 countries around the world through approximately 1300 partners and we get great scale and coverage through our partners. So this last metric is the number of partner people we have out in the field representing Autodesk each and every day in our ecosystem for every quota carrying person I have on my staff at Autodesk.
And I showed you this last year as well. So for those of you that remember, the ratio was actually 15:one. The reason why it went from 15:one to 14:one is that as we've been adding more inside salespeople, I was able to scale more quota carrying people to go focus on the mid market and territory. So the denominator actually grew and it moved us from 15 to 14. It's still the model we want, it's the right coverage model and we're really pleased with how our partners are engaging with us in that area.
Last piece on partner strategy, we talked a lot about direct and indirect and the mix between direct and indirect. FY 'nineteen is basically showing a representation we are approximately 70% indirect, 30% direct. Our future state model is to go fifty-fifty. This is somewhere out in the future. The key takeaway here, the thing that I keep telling our partners overall and I want you to take away as well is that the size of the pie, the total business continues to grow dramatically.
And when we take a look at the amount of business that will go indirect through our partners, when we get to the future state of fifty-fifty, it's dramatically larger than the amount of business we did in FY19 indirect. So every once in a while our partners are concerned about, fifty-fifty doesn't mean Autodesk is trying to take all the business direct. The answer is no. In fact, if anything, what we're telling them is get ready to grow, invest in your business because the amount of business we're expecting to do over the next 3 to 5 years through our partners is significantly larger than it is today. All right.
So to summarize, account based selling and marketing is driving expansion opportunities for us with named accounts in mid market. We continue to have significant opportunities to acquire new customers in the three areas that I talked about. Customer success is absolutely critical to our success and that focus on driving adoption leads to the renewal rates that make our business model a highly successful and rewarding one. And our partners, of course, are critical to our success and they are critical to us driving long term growth. So as I said at the beginning, I'm very proud of the results we've driven.
I'm excited about the opportunities we have ahead of us. FY20 for sure is going to be the year that we reach new heights. And as a result of that, we can all expect to win. Thank you very much. And it is now my pleasure to introduce to you the man with just one slide, Scott Herring.
Thanks. All right. So we've covered a lot of ground. Recognize it's a little warm in this room. So I've got good news and bad news, and it's the same.
I've got more than one slide, Your point of view, whether that's good news or bad news. But what I want to do is kind of touch on 3 topics. As we exit the transition phase of this move and kind of embark on just a much more of a growth story, I want to highlight again and put in context the momentum that we've built. I want to walk you through some of the mechanics of the fiscal 2020 numbers that we've had out there for some time and that you've seen that we've guided to at this point. And then I want to talk longer term between fiscal 20202023, give you the targets that we've got out there and talk about some of the trends that drive that growth between fiscal 2020 and fiscal 2023.
And then there's been a lot of questions as we spend a lot of time obviously talking to almost everyone in this room. And one of the questions has been resiliency, right? And if we go back to 2010, it was when that hit, it had an impact on Autodesk. How do you see that playing out today? So I want to walk through those things.
All right. Let's start with a slide that you saw earlier from Andrew, but I want to put some context behind this. So if you look at the 34% growth in ARR, which was a record at the end of Q4, if I go back and compare that to the total ARR we had when we began this, right? So back to Q1 of our fiscal 2015, we had a little more than $1,000,000,000 of ARR at that point. It was all maintenance, right?
So we've gone from $1,000,000,000 to $2,750,000,000 in the quarter we just closed, significant growth in ARR. At that point in Q1 'fifteen, we had about 2,000,000 subscriptions, again all maintenance. The quarter we disclosed, we exited with 4,300,000 subscriptions, a record in revenue at 2.6 and the difference between this and the $2,500,000,000 revenue that was our previous record is now it's 95% recurring, right? If you went back to the previous time we were in this $2,500,000,000 before we went through the transition, that was about 40% recurring. So it's a significantly more stable model at this point.
And overachieved on free cash flow, $310,000,000 for the year. And I just want to remind you something that I told you when we started fiscal 'nineteen about free cash flow. We had 2 kind of one time significant one time payments that are netted from that $310,000,000 dollars We had about $100,000,000 attached to the rebalancing that we announced in November more than a year ago, where we rebalanced internal resources to put more into construction. That was about $100,000,000 outflow that's reflected in that $310,000,000 and another $30,000,000 attached to exit taxes as we moved our European hub from Neuchatel, Switzerland to Dublin. So if you add those 2 those are one time obviously are not going to recur.
If you add those 2 back in, we're well north of $400,000,000 in free cash flow in fiscal 'nineteen. You saw in the press release this morning, I just want to highlight again, our outlook is unchanged from what we gave you at our earnings call at the beginning of this month. A couple of highlights. Obviously, strong growth in ARR and in revenue, north of $4,000,000,000 in billings this year, and I'll talk about the drivers of that $4,000,000,000 in billings. Non GAAP EPS in the range of $2.71 to 2.90 dollars which is again, the year we just closed, non GAAP EPS was $1.01 So significant growth year on year in non GAAP EPS.
And perhaps the most important number on the slide, dollars 1,350,000,000 of free cash flow. You've seen this slide before. I think the answer there's a couple of interesting points. One is, we did better in fiscal 'nineteen than we had anticipated. So we this slide first I first showed you this slide in this forum a little more than 3 years ago.
And I still remember it very well because of the clatter of keyboards when this slide hit the wall. I don't think anyone was expecting it to be shaped quite like this. Two things. We've executed right to this line either at it or better as we've gone through the transition. If you look at where we ended fiscal 'nineteen, that slope is actually a little less steep from fiscal 2019 to fiscal 2020 because of the over execution in free cash flow in fiscal 2019.
I want to update you on the components of that $1,350,000,000 This is again the same slide that I showed you last year, it's updated now. Basically the 2 big drivers are the same. Net income obviously is a huge driver and the change in deferred revenue is the 2nd big driver. There's other adjustments, non cash charges and changes in working capital, not much change in those. And again, the overall growth is lower than it had been a year ago.
The biggest change between what you see in non GAAP income and change in deferred revenue is about a $50,000,000 to $70,000,000 swing based on the acquisitions that we did in Q4. It create a headwind, as we talked about, to net income. But of course, they bring with them billings, which drives an increase in deferred revenue. So that's the big change from where we were last year. It's not significant.
And again, I think the year on year growth is slightly less than it had been a year ago. The net income growth, you can get right out of our guidance, right? We've talked about spend. We've talked about where revenue is. You can calculate the net income growth.
Wanted to talk about billings because billings is really what drives that deferred revenue growth. First thing, obviously, comparing to $4,100,000,000 fiscal 2019, what I've added back, remember billings for us is reported revenue plus the change in deferred. If you remember at the beginning of fiscal 2019, like every software company, we had to implement the new revenue standard 606. When we did, if you remember Q1 of 2019, I talked about $160,000,000 impact lower deferred revenue, right, from the one time implementation of 606 back in Q1 of 2019. That obviously doesn't recur this year.
So if you add that back to get a more apples to apples compare, what was it without the $160,000,000 one time impact? This is the growth you from $2,900,000,000 to $4,100,000,000 The drivers of that is not new. And I think you've heard the goal of today, by the way, was to have introduced all these concepts before I got up, right? So the growth in the renewal base, remember renewals come at a higher net price to us than a new sale does. As the renewal base grows and I'll show you that in a couple of slides that drives growth in billings.
Talked in this forum last year about multiyear billings reverting to the norm. And I'll show you I'll give you a little more detail on that. The growth of the core business, I think Lisa did a nice job giving you a sense of what that TAM looks like. And then Amy, on the things we're doing, the innovation we're bringing to that core business to drive growth in the core. So growth in the core business, obviously, is a part of that.
The bleed back of unbilled deferred, right? This is we sell EBAs. It's a 3 year agreement. We build them mostly annually. So year 2 year 3 aren't on the balance sheet sitting in deferment.
They're not anywhere, right? But we do get to build those. So we had I showed you a slide last year that filled that back. I'll give you an update on that slide again this year. You've seen the shift to industry collections.
That drives growth. Obviously, the acquisitions come in. That drives growth in billings year on year. And the increasing direct sales mix, right? Steve showed you that, showed you where we're going.
I'll give you a little more insight on how we're doing that. Start with multiyear. This is something that we traditionally had offered. So what we've done is in the second half of fiscal 'nineteen, reintroduce the offer that we had previously on maintenance. If you remember on maintenance before the M2S program launched, we had a if you paid for 3 years upfront, you got a 10% discount, which is fairly standard for SaaS type companies if you pay for it upfront.
We had that on maintenance. But when we rolled out maintenance to subscription, we gave visibility to 3 years of maintenance price increases, right? And so if someone had saw that and bought a multiyear at the front end of that, they front ran all those price increases. So we stopped. We ended at that point when M2S rolled out, we ended selling multiyear maintenance, which was most of our recurring revenue at that point.
As we've progressed now and much more of our ARR is driven by product subscriptions, as Andrew showed you, in the second half of last year, we reintroduced that. I expect to see the percent of our total billings that's driven by multiyear revert back to the mean that it had been in historically in that 20% range. So and one of the questions is why do you do this? And I think it's good for our customers, right, in a sense that they get stable pricing. You've seen I saw one of the preview notes ahead of this that came out this week that noticed we rolled out our annual price increase, right?
It's nominal. It's a CPI type 2.5%. We rolled that out. What a customer gets for multiyear, of course, they get stable pricing over that time frame. Obviously, they get the discount.
And don't minimize every time they want to go forward to renew their product subscription, depending on the company, they end up having to talk to someone like me inside their company. And that approval process is not always fun. Okay. So you see the Autodesk people in the back. You can ask them about how that goes.
So there is benefit to the customers. It's obviously better for our channel partners, right? They get the cash flow upfront. They get the liquidity that they need. It's a much, much bigger sale for them.
It's better for us, right? Mainly because that's 100% it's a guaranteed 100% renewal in year 2 year 3 for those that take advantage of the offer. It also provides a potential pad, a potential bit of added resiliency if there's an economic slowdown, right? So they've already paid for the renewal in year 2 year 3. So this is just reverting to the norm as we've talked about previously, same slide that I showed last year.
We've updated the numbers on unbilled deferred. And as I said, this is year 2 year 3 of EBAs, so you see how it built up. At the end of Q4, we had 591,000,000 dollars of unbilled deferred. And if I didn't tell you that, you wouldn't know it because it's not on the balance sheet anywhere, right? It's unbilled.
Of that 5 $91,000,000 you can you guys can measure the chart about $330,000,000 will get billed for the first time in fiscal 'twenty, right? And at this point, as we continue to sell, when you were when we were here, 2 years went into unbilled deferred here and here and there was nothing coming back out, a nominal amount that was coming back out. When we get to fiscal 'twenty, it's pretty well hit steady state. The EBAs we sell this year, 2 years will go into unbilled deferred. But at this point, we've got 2 years to pull out of unbilled deferred.
So the unbilled deferred begins to hit a little bit more of a steady state and will be driven more by the growth of our EBAs than the just the buildup of unbilled deferred. Modeling slide, just a couple of things. You saw this in our earnings deck. Couple of things I wanted to point out here. One is, when we did the acquisitions in Q4, we talked about we brought in about $500,000,000 of short term debt with no early prepay penalty on that.
That is sitting in the round numbers 3.5% to 4% interest rate, which is showing up in OI and E on the balance sheet. And so it's one of the places that I think we have a little bit of a disconnect between what we're saying and what I see in a lot of the models is the interest attached to this, which we do expect to retire in fiscal 2020, but you need to make sure you've got the interest attached to that built into your OI and E line on the model. The second is long term deferred, again, based on what we see happening in multiyear. You saw in Q4 for the first time in several quarters, long term deferred actually grew for the first time sequentially in several quarters. Expect to see long term deferred get back into the range little bit below where it was historically, but back into that low 20% range.
All right. Let's look ahead. Because all the factors that we talked about that drive growth into fiscal 2020 also drive growth from fiscal 2020 out through fiscal 2023. And I would be remiss if I didn't start by putting this slide up, right? So no change in our long term targets for fiscal 2023, dollars 5,600,000,000 in ARR and $2,400,000,000 in free cash flow.
Just wanted to make sure that slide was there and everyone saw that. So you say how do you grow? How do you go from round numbers 3 point 5 $1,000,000,000 get ARR in fiscal 2020, the guidance we gave you for fiscal 2020 up to 5.6. It's over 2,000,000,000 dollars of incremental ARR and it's the same trends that we've talked about. As that renewal base grows and you saw what Steve talked about, everything we're doing within his team to drive adoption and to nurture renewals.
As our renewal base grows, obviously renewal rate becomes a very critical component. We've invested nicely. We've got good process work back behind that. And that growing renewal base obviously grows part of the 2,000,000,000 dollars The core business, again, Lisa talked about $48,000,000,000 of TAM growing to $59,000,000,000 of TAM. So our TAM grows by $11,000,000,000 over those 3 years.
And based on the innovation that Amy walked through, the core business will continue to grow. That will drive some of the ARR. We'll continue to convert non paying users. And this has been a theme you've heard from us now for several years and you saw from Steve the progress that we've made on that. And I think with the end product messaging and the data science has gotten better and our ability to identify some of those, we call them non compliant users.
I think a lot of people call them pirates. So that is a driver of the ARR increase. Industry collection still has room to grow beyond fiscal 'twenty and into fiscal 'twenty three. Direct sales mix, I'll peel back a bit. And then construction.
And Jim, who leads the construction business, Jim Lynch, I think did a nice job laying out the market opportunity and how we plan on going after that with the acquisitions we've done. That's how we drive the 2,000,000,000 dollars There's a new metric I want to give you. You know at the end of Q4, we said that's the last time on a quarterly basis we're going to roll out subs. We're going to give you subscription count. And it's largely because it's a misleading factor in terms of the growth of the business, but it was creating a lot of angst.
Consistent with others who have gone through the same transition, you get to a point where you're on the growth side of the curve and we're not going to talk about subs. We'll give you a regular update. I recognize it's not completely unimportant. But you know we've said we're not going to continue to report that. I wanted to give you a metric though that is more ARR specific.
So as you retool your models away from a P times Q, how do you think about what that what's going to drive ARR growth? And so consistent with a lot of SaaS companies, we talk about net revenue retention rate, right? And so this is just an example calculation, but it's basically same store sales. So at the end of a quarter snapshot all of your active customers, all right? 4 quarters later, look at that same customer base, how much revenue are they giving you, right?
Some of them will have churned out, some of them will have upgraded, some of them will have added more licenses. What is that what is the net revenue retention of that same of that cohort? You get to the next quarter, it's a new cohort, right? You look at them 4 quarters later and see what the net revenue retention rate. What's the growth you're getting out of those same customers?
And then, of course, you layer on new and reengage, people that have fallen out previously or net new customers layer on top of that. That's the example calculation. As we went back and applied this to fiscal 'nineteen, what you see is we're consistently in this 110% to 120% range. It will vary a little bit by quarter, but to give you a sense of what that same store sales type metric looks like, it's been consistently in this 110% to 120% range. And that's important because the renewal base continues to grow, right?
We left the year we ended fiscal 'nineteen with about $2,700,000,000 of recurring revenue. So to give you a sense of what our expectations are for growth of that base. All right. The other growth opportunities, I'll just reiterate what Lisa said, dollars 4 point $48,000,000,000 growing to $59,000,000,000 Obviously, we expect to get at least our share of that growth. We've made great strides in monetizing non paying users, which is bigger than non compliant.
Obviously, legacy users aren't paying us. They have a legitimate license, but they've fallen off maintenance. They're not paying us. You've seen and you saw in Amy's presentation that number is now 1,700,000 of those and 12,000,000 non compliant users, 18,000,000 active users, only 4,000,000 paying us today. The shift to industry collections, this has been a big success.
And I think we've talked about it several times. We spent a tonne of time getting this right, adding the right value, simplifying it, making it easier, not just to sell, but easier to buy. It's easier to consume than sweets were. That's gone faster than expected. Honestly, 28% of our total product subs are now industry collections.
That there's room for that to continue to grow. Steve just showed you this slide, the seventy-thirty in fiscal 'nineteen going to fifty-fifty at some future state. Here's what we didn't talk about. The growth a lot of that growth from where we are in fiscal 2019 to when we get to fifty-fifty will come through the investment that he and his team have made in digital sales, right? And that's both the e store, but also his inside sales teams.
They're doing a lot of the outreach and chasing through leads. As you'd expect, that comes at a significantly higher net to us when we sell through that channel. So the growth in direct sales drives ARR and billings growth for us longer term. And then construction, I just wanted to recap a lot of the key points that Jim made. There is significant growth in construction, technology spend for all the reasons that he talked about.
I want to make sure you didn't miss one of his slides where he talked about having 80,000 current customers mostly buying design products from us today in the construction services space and less than 5% of them are current customers of our cloud based products in construction. So there's an enormous opportunity to just expand within our existing customers. With the acquisitions, we now have greater reach into the subcontractors and into the trades. That drives growth in construction and international. We're fairly uniquely positioned against the others in this space that are investing in construction to be able to expand given the successful footprint we have internationally.
So those are the drivers longer term. Another and this is a new slide that I wanted to give you this year because if you do the math from $3,500,000,000 to $5,600,000,000 of ARR, It's about a 17% compound annual growth rate. And one of the questions that I've gotten several times is GDP is going to grow 2% to 3%. How do you guys grow 17 on a steady state basis? So I wanted to give you some of the backdrop behind that.
And this slide is
in the deck that you'll be able to download. I see everyone taking notes. Market factors will drive 4% to 6%, both GDP growth. And as you saw, we just had a we will do a regular rhythm of small but cost of living adjustment type price increases. Core business will contribute another 8 to 9 points for all the reasons we just talked about, the growing renewal base, our ability to monetize non compliant users, converting the rest of those legacy users, etcetera.
And the construction and advanced manufacturing opportunity will add another will contribute another 3 to 4 points of growth between fiscal 2020 fiscal 2023. So wanted to give you a little bit of a framework for how you think about the drivers of our growth in that time frame. All right. So I've already talked about the $5,600,000,000 of ARR, the $2,400,000,000 of free cash flow. We said in this event last year that we would be at a combined of somewhere between 55 65.
That's pretty lofty. For those of you who do this calculation regularly, that's pretty lofty set of metrics combining very successful growth and very successful margin at that point. And the math, the arithmetic takes you to an operating margin that's in the 40% range. Couple of quick modeling considerations. This is more it's something I wanted to make sure you had in your hand as you go back and start updating your models.
Expect billings and revenue to grow in that mid to high teens rate. Gross margins have been stable and you've seen them stay in this 90% range. I expect that to continue out through fiscal 'twenty three. And at this point, expect OpEx to grow in this kind of high single, low double digits. That's consistent with what we've said in the past, kind of high single digit, low double digit for op total spend growth out through fiscal 'twenty three.
And what I'm modeling into my set of calculations is stable share count. That's a modeling point. I also wanted to touch on this. I think it wouldn't be an Investor Day if we didn't at least touch on cap allocation, particularly with the amount of free cash flow we're in the process of generating. No change in our overall policy for cap allocation.
So and what you've seen us do and this is something that I feel actually pretty good about over the last 3 years is we stopped allocating cash to acquisitions, right, until we got into Q4 of last year. And the cash we did spend was around share buybacks. As we were going through that golden snake and our share price was going through a very similar dip, it was a great opportunity for us to buy back stock. We reduced the share count over that time by 6,000,000 shares net of any new shares issued. We'll continue to support the growth of the company both organically and inorganically as part of our cap allocation strategy.
Last point, let's talk about resiliency. And what I want to compare to is back in 2010, because obviously we have a very different business model than we had at that point. If you look at where we were on the where it says license model, that's in fiscal 'ten. About 40% all maintenance, about 40% of our revenues were recurring at that point. Again, in the quarter we disclosed 95% or the fiscal year we disclosed 95% recurring revenue.
Even back in 2010 as desperate as that felt and kind of everyone went in, I don't know where you were, I remember exactly where I was and everyone was in cash conservation mode. And at that point, you could stop paying for maintenance. The product still worked, right? It was pretty you bought a perpetual license. Maintenance didn't affect the way that you had access to the product and you could use it.
And we still grew maintenance revenue right through that phase. We're now at more than 4,000,000 subscriptions. And if you don't pay for your product subscription, obviously, you lose access to the product during that time. And finally, as bad as that was, we still had a little more than half of the prior year's demand for new sales,
right? So remember how that felt,
but we still had I mean, it was a 40% reduction in perpetual license sales, but the other side of that equation is 60% of the prior year's demand still showed up and needed a new license that year. And at this point, obviously, new license sales layers on top of the renewal base and what that how that grows through the phase. So to give you a sense of how we think about resiliency, I'm not predicting a downturn, but I think a lot of people are. And I wanted to give you that kind of thinking as you go back and look at your models. So with that, I feel great about the momentum we've built.
I think we've done a we've tried to do a nice job of giving you a lot more detail this year about what our addressable market is. I think there's been concerns in the past about innovation. I think Amy did a terrific job walking through how we're innovating even in the core business, the opportunity we have in construction, some of the exciting things that Riese and his team are doing around Fusion and how we think about that longer term and then the great execution we've had in the sales team gives us confidence that we're on a path not just for the $1,350,000,000 of free cash flow for fiscal 2020, but the $2,400,000,000 of free cash flow for fiscal 2023. So with that, what I'd like to do is bring up our CEO, Andrew Anagnost for a few closing comments.
All right. So we had more than one slide, but there's only one slide that any of you are waiting for. I know which one it was. So I hope you've gotten a real picture around what we're doing in our 1st year on this 5 year journey to become a design and make company. And I hope you've got some insights into some of the levers we're trying to pull to actually make this happen.
I think you're going to see us continue to make progress on all these vectors. And I think you're going to see us continue to grow and expand in all the areas we've been talking about. I think there's a lot of opportunity that we have yet to capture in all the markets we play. And the other thing I wanted to make sure that you are aware of was the big drivers that are driving some of those 5 outcomes I talked about. And as you just remember, these things are not going away.
They're core multi year business drivers. The fact that we've penetrated the 18,000,000 user opportunity with 4,000,000 subscriptions a day, about 20 something percent of that opportunity. So huge growth to drive into that. The fact that the company is going to continue to find new ways to optimize, enhance and digitize its business, both for us and our customers because the cost of doing those things just continues to go down. And there's more and more platforms out there that allow us to do amazing things with our data, both our customer data, our internal account data and some of the data that we create for ourselves to understand our customers better.
The other thing is this notion of digital transformation being an imperative for the AEC business. Like I said, it's an imperative for all our businesses, but the AEC business in particular sees a huge need to continue to change. I hope some of the things you're seeing around what we're doing with generative design and technologies like it help you see how serious we are about bringing design and make together and driving innovations, both technological, process wise and frankly in all the industries we serve that enable these two disciplines to come closer and closer together. And the last piece, this competitive pressure that's changing the manufacturing construction industries, it's not going away and the pace and intensity of it is bigger than these industries have seen in the past. Historically, industries like manufacturing and construction are very slow to change, but it's becoming less and less possible for them to do that.
Competition from other areas are increasing. Those who automate and digitize first are getting gains and the pace of this is increasing. This is not something that's going away. The other thing I want to make sure I emphasize and I want to close on this point and kind of give a little bit more context on it is we're doing this all in the backdrop of a world where our customers have a fundamental capacity problem. In fact, our world has a fundamental capacity problem where what we need to build, we cannot build the way we built before.
There's not enough material resources. There's not enough energy, there's not enough labor to do what needs to be done. This opportunity of helping our customers build better, design better, make products that are better is something that's huge and it has impacts well beyond our business, which is an interesting closing point because for those of you who are interested in environmental, social and governance issues, historically, companies have viewed these things as risk mitigation strategies. And we've been at the forefront of this. Autodesk for years years has been out in front of the issues associated with this.
But something that is incredibly unique about Autodesk and about our mission, our passion and what our customers do is that unlike a lot of companies that talk about these things, our revenue strategy is actually aligned with these outcomes. We cannot achieve these results we were talking about.
And this was the slide
that you were really looking for in
a lot of respects
in Scott's presentation. We can't add another $1,000,000,000 in free cash flow over the next few years without actually helping our customers realize the opportunity of better. We realize the opportunity of better. Our customers win. Their customers win.
And we hit our business results. So our goals in terms of having impact on the world are absolutely aligned with our revenue plan as a company. And you can see it in some of these things we talked about. We were always clear with you that the FY 'twenty goals are going to be driven primarily by the core. But if you look out to the FY 'twenty three goals, our efforts in the cloud around digital convergence, around construction particular are going to be critical to achieving those goals.
So we're lined up to do that. And only Autodesk has a story like that, where our goals for social good and our revenue plan are actually fully aligned. It's not just words, it's actually actions and connectivity for us. And it's only Autodesk that is going to respond to all of those key business drivers that I've highlighted for you and all the opportunity that's out there. We're the only company that straddles all of these industries and straddles all these opportunities.
And I hope you're starting to understand that. I hope you continue to watch this space and see what we do over the next few years and over this next year in particular. So now with that, what I want to do is move into the Q and A phase. So I'm going to invite the team back up on stage and we're going to start the Q and A process. So first, we're going to get the chairs up and then the team will come up.
Thank you.
And I stand awkwardly while the chairs are assembled. Thank you. Maybe I could actually do something.
I feel like I should do something.
Hand me the chair. All right.
All right,
team, come on up. Nice job on your one slide.
So before
we start answering the questions, so I just I have to highlight something. There's one individual in the room that has come to my attention that this is their 30th attempt at sitting through Investor Day with Autodesk. So Jay, it's my honor to give you the first question, though you were going to get it anyway. You were determined to do that. But I think in acknowledgment of your 30 years, you deserve it.
So I will ask you 30 part question.
That's not a joke.
Andrew, you alluded several times to your customers' capacity pressures and so forth, and that represents an opportunity for you. The question therefore is about your capacity and your processes. When we think about what's already been underway with your license You're not that far from $1,000,000 and going past that. When we're You're not that far from 1,000,000 and going past that. When we talk about your digital infrastructure, customer engagement model that Steve went through, Help us understand how you're thinking about your capacity and processes over the next number of years.
You're going to be beaming an EBA like model into the channel sooner or later. That's going to put additional pressure on your capacity and license activation, all those sorts of operational things. So help us understand that. I've got a follow-up on the store.
Okay. So first off, you're hitting issues that are near and dear to my heart. Solving this capacity problem for us is essential. That's why I shifted money over into infrastructure, both the cloud infrastructure around data that collects our customers' data and the infrastructure that we use to run and manage the company and engage with customers. I have a Chief Digital Officer back in the back, Jeff Kinder.
Raise your hand, Jeff. He was not subjected to this. It was unfair punishment and 3 months in for him to be up here confronting all of your happy faces. But what we've done is we've not only shifted money, but we've actually invested in new people and new talent in this area. And one of the things that we're also doing is we're measuring the things that matter.
So inside the company, we actually had a KPI that as our volume increased, the number of direct touches, the number of times we had to touch customers was actually supposed to stay constant. We actually overachieved on that. And that was all a result of putting pressure on the digital infrastructure we were building, because we wanted to make sure that as the interactions went up, that the number of touches didn't go up at the same time, because that's where you start to actually suck the life out of the customer and the company. So we're putting the right KPIs in place, the right money the but they scale in a way that our customers are actually able to cut the cost of interacting with Autodesk. It's going to be cheaper for us and it's going to be cheaper for them.
And we're committed to this. This is not going away and dead serious about it, so watch more.
Relatedly on the store, you're obviously looking to multiply the size of that business. Help us understand how you're thinking about that in terms of how much of that is driven by LT, which is already doing a lot of business on the store or accounts for a lot of the store versus more importantly driving collections and other business through the store to get to that multi-100 $1,000,000 target that you're implying?
Yes. So look, when it comes to the e store and what we're trying to do with e commerce, one of the things we tell our partners very explicitly is that we want them to follow the path of value, where the engagements that the partner has directly with the customer and I will I'm going to let you engage in this because I'm not going to sit here and monopolize the answers. It's just Jay. I can't help myself.
He sucks
me in like a vortex. We're telling our customers very much to focus where they can add value. Things like the collections where there's lots of products, lots of capability, lots of interconnections, where there's a cloud platform coming in underneath them, arbitrating a lot of things are places where our partners really need to focus for value. The other parts of the business, LT in particular, are areas where most customers know what they need. They don't really need long term engagements with someone to customize their LTE engagements or even some of their engagements in terms of the construction solutions.
In those areas, we see a lot of growth coming from it. We really want our channels to focus on collections. Steve, do you want to add something to this? Yes.
I mean, it's to follow along with the value oriented conversation and how these scale, we need our partners like I mentioned to continue to invest in You inferred something that I'll actually comment quickly on. We are going to be piloting a consumption based model or mid market this year, very small one. It's something that we'll work together with the channel. It's going to go through our partners and they are going to have to have service capabilities and deliveries that are emulating what we do with our EBAs overall. So they only have so much capacity.
We've got to focus them on the high value capacity overall and make it easy for customers to engage directly with us on volume based things. The one other thing I will say is and hopefully you picked it up from my conversation about the non compliant users, we see there being a big opportunity for us to directly actually going to be another big stimulant of growth for us. And that's actually going to be another big stimulant of growth for us.
Great. Hi. It's Brad Zelnick with Credit Suisse. Thanks so much for hosting today. It's a fantastic event.
My question is for Scott. Scott, a good portion of your long term free cash flow target comes from changes in deferred revenue. And you talked about your expectation for billing duration to trend back to what you experienced when you offered multiyear prepay years ago under the maintenance model. So my question is in the context of your helpful points on resiliency. If we look back to 2010, what happened to duration then?
And how is the business model today similar and or different along those lines? Thanks.
Yes. So, wow, 2010 I wasn't here. But from the spreadsheets, I think duration stayed fairly constant through that time frame. Remember, we're only talking about it's not every customer, obviously, if it has multiyear, it's in long term deferred is in the 20% range, low 20% range, which means, remember, what goes in long term is year 2 year 3, right? So half of that would be what was buying multi year from a billing standpoint.
So I don't think you'll see a big change in duration going through it. And I think if we look back at 2010, we ought to wherever Dave and Avaya are, we ought to actually go pull the data point and see what happened on duration at that point. I don't think you'll see a big change in duration there. The reason I wanted to give you that data point though is I think there is a big growth in deferred revenue coming this year. It's consistent with what we said in prior years and I know it's a question that I've answered in almost every meeting I've had for the last 2 years.
And I want to give you a sense of the elements that drive that, right? But as we looked historically when we offered multiyear on maintenance, kind of got to that level and just stayed there. It stayed in that same level. So it's a while it's a driver of growth this year, it will be more consistent going forward just as overall billings grow.
Saket Kalia from Barclays. Thanks for taking the question. So 2 part question here, right? So for you, Scott, thanks a lot for giving that revenue retention rate that 1 percent to 120 percent range. That is a net number though.
And so I'm curious if you had any comments on what that gross any broad brushes on what that gross number could look like sort of apples to apples excluding upsell, right? So that's the first question. And the second question for you, Andrew, is a lot of talk about that $14,000,000 right, the $14,000,000 plus $4,000,000 And I think it was last year that you started talking about in product messaging and look at all the intelligence that we got on it just a year later. The question is, what other mechanisms could you put in place to get you've got a lot of visibility and not 100% visibility. Is there a plan to get 100% visibility?
What are the additional tools that you could deploy to get there?
You want to do that one first or you want me
to go? No, why don't you go first?
So the net revenue retention rate is not just new to you, it's new to us, right? And we've sliced and diced it as you can imagine along the lines that you've said in just every way imaginable internally. I'd love to get a little more stick time, a little more time with the metric before we start slicing and dicing it more publicly out to you guys.
I want
to make sure we fully comprehend all the drivers that are back behind any changes that we see in there. So I'll hold off on answering you directly on that. As we get more stick time, we can perhaps give you a little more insight into the drivers there. Sure.
So to answer your question, so one, I want to reiterate something I've said previously. There's no sudden event here.
I just
want to make sure that we're all clear and there's no sudden event where non compliant users just start flooding into the Autodesk business, right? This is a process, it's a conversation, it's an engagement with the customers. But there's a couple of vectors beyond just kind of our engagement and being able to touch and connect with those customers that rise up and Amy kind of talked to some of them as time goes on, as we become more and more identity based. The truth is that a lot of the things that are adding value to the product over the next 3 years are not accessible to these non compliant users. They simply can't get them.
If you're not on a valid identity based version of our software, you will be blocked out from more and more things that are important to the ecosystem of Autodesk users. This is going to be the kind of pressure in the system with regards to the fact that customers who are paying us are getting more, customers who aren't are getting less and the gap between competitiveness is growing. This is something that's just going to continue to it's already building pressure in the system because we're in our 3rd plus year of not selling perpetual licenses. So the pressure is already building. The pressure will continue to build.
Now we can also choose to engage more and more deeply with the customers through some of these in product messages. But right now what we want to do is we want to learn, we want to engage, we want to make sure that the customers who weren't aware are actually being treated with the kind of respect that they expect to be treated with so that we bring them into the ecosystem happy, not shell shocked. So but this combination of identity based licensing, the gap between what is in the ecosystem for everyone else that's paying and those who aren't and the fact that we can talk to them directly and have a dialogue with them is going to continue to drive a long term change in this space. It's important to
look at both sides.
So now
this is Keith Weiss from Morgan Stanley. Thanks for hosting the event
and taking the question.
Maybe 2 for Scott. On that net retention rate, should we assume that that range, that's what you're assuming holds steady as we go through the forecast period through FY 'twenty three? And number 2, on cash flow. So FY20, you see a nice benefit from sort of rebounding towards historical norms in terms of multiyear contracts. Should we be cautious of any kind of hangover effect into FY 2021 of that you pulled forward a lot of cash flows, you did a lot of 3 year deals, You don't have the same kind of benefit in the forward year now that you're there.
So is there any hangover we should be aware of in FY 2021?
Yes. It's a
great question, Keith, and thanks for asking. It. So on the first one, that is our expectation for fiscal 2020 that it stays in that 110% to 120% range. As you look further out in time, again, I talked to Sacket about let's get a little more stick time with that metric. But you can do the math based off what we've shown and get a sense of what our expectations are out in time.
In terms of the hangover, what we saw historically when we offered the same kind of a discount on maintenance is it kind of got to that level and stayed pretty steady state. And so the amount that was sitting there in any year, the growth in long term deferred that was driven by that was just driven by the growth in overall billings, right? So that same percentage. We didn't see a hangover. We didn't see it spike and then come back down and then spike again and come back down.
And so you'd expect to see long term deferred revenue grow into that low 20% range that I talked about, stay there out through the fiscal 2023 timeframe.
Ken Talanian from Evercore ISI. I just wanted to hop back on that retention rate yet again. Could you talk about what you've done in the past to maximize that, what you plan to do? And then how you might make changes to your business in the event that you do see a downturn?
I actually think that gets 2 people answering it. So why don't you talk about the things we've done in the past, especially with the EBA progress and those things? And then Scott, take the downturns. Sure.
So net revenue retention is all about driving expansion within our base, customer by customer overall. The focus on customer success hits right in the heart of driving that rate up because it's driving renewals and expansion together that actually give us the growth overall. So the things we're doing with our named accounts and the things we're doing with our mid market and territory accounts through the digital engagement process were specifically put in place to drive this. So the why behind that what is this is all about driving expansion and growth within our existing base.
And the big drivers that get it from $100,000,000 to $110,000,000 because there is some fallout on non renew. They get it up to that level. Obviously, price changes, but also ups renewal rate, as Steve just talked about, and adoption and all the things we're investing in to continue to drive a high renewal rate. And then it's just upsell within those accounts. So as you try to apply that back to some of the metrics I gave you on what happened in 2010, remember that rate is only for our recurring revenue, the 110% to 120% that's 95% of our total revenues, but it's all about recurring.
And what we saw then is the only recurring revenue we had was maintenance. Maintenance actually grew slightly. Maintenance revenue even as bad as the global financial crisis was actually grew in that 3% range as we went through it.
So I
would expect to see again. Obviously, you could I think what you've seen from us from a pricing standpoint is, I don't want to use the word discipline, but a little more regular rhythm of annual price increases. We did that this year. Those aren't these aren't huge. They're not meant to be punitive at all.
They're meant to just reflect ongoing kind of cost of living adjustments that everyone sees. But as we put that out there, that will obviously be a little bit of a tailwind to net revenue retention as well.
And one more thing too, the expansion selling is going to drive net revenue retention overall. When we move from individual products to industry collections, that's actually a positive. We move to a consumption based model as you saw in the results, it's another positive. So actually moving to the higher value offerings is going to be a core motion that we have implemented through all of our different customer segments to specifically go drive net revenue retention.
And is there any potential benefit from moving to the identity based license model? Does that give
you better ability to renew or raise that retention rate?
Well, I mean, I'd like to have Amy comment on some of the work we're doing to kind of understand what our customers are doing with the products and how that kind of feeds into the sales organization because that is something we do get through the identity model. So Amy, why don't you comment on that?
Right. So through our data and analytics, we can monitor both sort of individual and aggregate customer behavior. And so we can partner with Steve's team both with kind of the early warning system, but then we can look at whole chunks of users and look at their behavior and see how we can drive them to more frequent use of the product or deeper use of the product.
The digitization effort that Andrew
talked about, one of our core initiatives is giving us insights. It's giving our customers insights into how they manage their own environments, but it's giving us tremendous insights in that sales and marketing bubble that he had to understand how are customers using the offerings, how frequently are they using it, Are they using them the right way overall, so we can actually help them gain more value out of the use of the subscriptions?
Hi, Kashur,
I'm going
to be Avan here.
First of all, Jay, congrats on 30 years of covering Autodesk. When you initiated coverage in Autodesk, I was still loading my floppies designing my first program on Autodesk. So I had something to do with Autodesk as well. So a question for you, Andrew. You talked about transition to growth, right?
When you go through a transition, you're predominantly converting existing customers into subscription. Then you go to the next chapter of your journey, acquiring new subscribers, new end markets, construction TAM, new TAM in design. How are we to reconcile that next chapter where you add $2,000,000,000 of new ARR against Scott's goals, which you outlined clearly that you intend to hit an operating margin of 40% non GAAP that calls for nearly doubling your operating margin targets in a 3 year time horizon. How do we reconcile these ambitious costs, not quite controlled, but inhibited growth versus ambitions to really take this company to the next level in terms of growth and attacking new markets?
So I think Scott and I might tag team this a little bit. But first off, we're moving not only into an era of increasing revenue, but we're moving into an era where we're going to be releasing more and more spend in the ecosystem as we go out into previous year. We stayed flat for what, how many years? 4 years. 4 years, okay.
It's time to start spending more. You can see as we absorb the construction acquisitions, we actually have invested more in terms of R and D and go to market associated with those things. So what you're going to see us do is prudently invest in areas that result in expansion of our opportunity. The first one you saw is construction. So that construction opportunity has actually increased the spend of the company in a way that all of you can see.
We're going to make that spend produce. And we're going to focus on getting a return from what we're doing with construction. And we're actually layering in more money in construction from other efforts as well. Jim is the grand recipient of money in terms of driving investment and growth. You'll see us do that in a prudent way to hit those goals, both from the revenue growth targets and the free cash flow margin targets that we have, so that we actually can grow into these opportunities.
So it's going to require a balance of getting the right revenue numbers and getting the right spend. We're completely aware of that. That's why we kind of give you a lens into not just the free cash flow target, the way we look at the
business when we look at it
from a sum of revenue growth and the free cash flow margin because that's really how we manage the business because you can't get the growth without the spend.
Yes. The only other thing I'd add, Kash, and I'm sure you pushed the numbers on this. You know what I'm about to say. We're at a point where the top line is growing quickly enough to where we can both grow spend and grow margins at the same time. And so I talked about high single to low double digit spend growth times a $2,200,000,000 spend rate last year.
You're talking more than $200,000,000 a year in added spend. So I think there's plenty of fuel in the tank to actually drive that top line growth. Your question reminds me of one that one of your peers who's sitting a couple of seats over asked about 3 years ago, you can't possibly grow revenue at the same time you're keeping spend flat. And you've seen that we've done that. So it's I think we're in a position with the top line growth.
I see you're looking around. I see him smiling too. We're in a position where we can both drive top line growth and drive growth and spend and add round numbers 15 points to our operating margin if you're now in fiscal 2023.
Hi, guys. It's Gun Munda from Berenberg. I have a couple of questions. The first one, I'd just like to touch a bit on EBAs. You guys have mentioned you've had it out for a couple of years now.
You mentioned that example of the warehouse where you're expecting 16x upgrades and the renewal. Can you talk about the aging of those EBAs? And when you what are you expecting when those are coming up for renewal? We've talked to some of your biggest customers, the Autodesk University. They're offering you next year.
So is that the first real driver of the EBA ARR growth? And what's the average? Is it above the company's average ARR growth?
So we've been working at this for a while like you indicated. There isn't like one moment where everything comes up for renewal. They're actually scattered across quarters and through years as well. Most of them are 3 years. The first Iowa House one was just a 2 year one.
That was more an exception than the norm. We are seeing significant growth at the time of renewal. It's not the only time by the way that we grow our business through EBAs. What we're finding is by focusing on those customer business outcomes and executing on the customer success plans, we're driving more use across the enterprise. They're winning more business.
And as a result, they're actually using the software, the portfolio more frequently. So now we're actually finding customers that are buying more tokens before the term of the contract expires, because they're running out. They commit to a certain number of tokens based upon their usage in consumption for a 3 year window. And we're now finding quite a few of them are buying maybe on the conservative side, which by the way, I would prefer, because I don't want them to end the term with excess tokens. And then they're buying more through the term of the contract.
So it's a great expansion opportunity overall. And what we tell our customers, we look them in the eye and we say, we only win when you win. I mean, in a consumption based model, they're only going to consume more if they're getting more value out of it overall. So we're really both on the same side of the table. If we can help them win more business, if we can help them make more money, if we can give them an advantage in their marketplace competitively, it's a win for them and we benefit from it as well.
Just as a follow-up, I know on the net revenue retention rate, you're not going to comment on the absolute renewal rates. But if you compare the subscription, which has been in that for quite a while now, and you compare those renewal rates to the old maintenance renewal rates, how do those compare just kind of in terms of the
Yes, both have tracked right in line with their expectations through the model period. So it's not a rather than give you its x points, I think the way to think about it is we've looked at both where we were in maintenance and as we launched maintenance to subscription, obviously, it had a series of price increases, what our expectations were for renewal rates through those the people who stayed on maintenance through those renewals. It's tracked right in line with our expectations. Same with product subs, those renewal rates have tracked right in line with our expectations.
Sorry, is it fair to say that subscription renewal rates would theoretically be lower sorry, higher than the maintenance renewal rates that you said?
Fair to say sorry, again. It's fair to say that those renewal rates are one of the big drivers of the 110% to 120%.
Should we prank Jay while he's gone and hide his notes?
Or write a special note on his parents.
Write a
special note saying, yes. Give Scott a raise.
Or give him a question.
Zane Freeman with Bernstein Research. A question for Steve and Scott. It sounds like you're shifting some of the incentives for your channel partners from customer acquisition towards renewals. I'm wondering, is that a recent decision or is that or has that been part of the long term strategy that's you're just now starting to implement? And if it's a recent decision, does that mean that ARPS maybe doesn't expand quite as much as you had modeled a year ago just due to the fact that the renewals becoming a bigger portion of that's helped drive ARPS expansion?
Second question for Scott. I know your model doesn't really assume a recession. I'm just wondering how would you expect that revenue CAGR you're modeling through fiscal 'twenty three to look in maybe a modest economic downturn? And what do you think happens both sort of the revenue CAGR and the renewals? Thank you.
Let me take the first.
Yes. Okay. So as far as the partner framework and the incentive models, we're actually not shifting more money into the renewal side and away from customer acquisition or expansion. In fact, if anything, we pay less on the renewal base than we do on new. New, by the way, the way we work with our partners and the way our sales teams work is a combination of new customer acquisition plus expansion within those existing accounts.
So it's the growth rate that ties into the net revenue retention rate that we're focusing them on. You saw me highlighting the importance of the focus on driving adoption and renewals. It's as critical in our business model of subscriptions and eventually consumption that everybody, all of us, our partners have a keen focus there. We're not actually making changes within the incentive model to push them there and away from expansion and new. They actually will make more money on expansion and new.
Yes. And the just to finish off that point before I address your second one, renewals come at a higher net to us than a net new sale, right? We talked about that earlier. So that growing renewal base actually is
a positive to ARMs, not a negative to ARMs.
To your second question, that's why I went through the slide that I
went through. Really, the only analogy we've got is to
look back at what happened in the dynamics that we saw. The recurring revenue we had there was maintenance. I think everyone I know the company I always had, we were in cash conservation mode. We were taking reduction in force 10% across the board. That was a pretty desperate time.
And through that time maintenance which you could stop paying for maintenance and the product continued to work, grew 3% through that time frame. So that's the closest analog we have. Obviously, if you stop paying for a product subscription, you lose access to the product, right? You can't continue to work. So I wouldn't say we wouldn't a spinning slowdown, we wouldn't feel it.
Of course, we feel it. I think it's a significantly less impact to us because of the business model shift we've made than it was historically. I think that's the that was the point of kind of pushing that out there. There's a fair amount of what I would call scar tissue from the way we the way our revenues responded during the global financial crisis. And I think there's still this concern that, oh, another downturn, Autodesk is so cyclical.
And I just wanted to get some of the facts out that this is how we think about cyclicality, just to give you a good sense of that.
Steve Koenig with Wedbush. Thanks for the great event as you guys do every year, well organized as usual. One financial question and then a follow-up, which is a product question. So on the financial question, so just getting into the weeds a little bit on the multi year promotion and those renewals. Now that some of the details of the promotions have come out, it's clear you all are being very consistent with the message that you delivered last year about how the multi year subscriptions will return to historical norms.
And it will really help achieve your cash flow targets. Maybe help us understand though what's the business rationale for doing this? Why is this good for Autodesk and the customer not just for meeting your cash flow targets? And then maybe the kind of the second part of that financial question is just a follow-up on Keith's question about does this pull some free cash flow forward? When we talk to resellers, it seems like the resellers expect that it in fact will boost cash flow this year, but that multi year promotion particularly an M2S promotion will not do that as much in following years.
So maybe you can help us understand why there's this disconnect maybe between your perception of what that program will do and the resellers' perception. Then I do have a product follow-up if
you don't mind. All right. Okay. Thanks. That was a mouthful, Steve.
Thanks. And thanks for asking the question because it's one that also comes up from time to time. And it's back to really what I said to Keith. The closest analog we have on this is we have the exact same offer on maintenance. And what we saw then is it kind of got to that level and stayed steady state at that level.
And so that's what our expectations are now, which means you see a bigger growth this year, but we didn't see a dip. It wasn't an up and then down and then up and then down, all right? So as long as it stays at that level, it will grow deferred revenue will grow at the rate of our overall revenue growth. This piece of it will. So I don't think that there's an expectation that it spikes and then comes certainly not our expectation, it spikes and comes back down in fiscal 2021.
Can you address maybe the business rationale for
doing this?
Yes. And that's what I tried to do by saying, here's why
it's good for our customers, here's why it's good for
our partners and here's why it's good for Autodesk on that slide. From our standpoint, we get 100% renewal in year 2 year 3, right? And that as we think about the potential for an overall spending slowdown, that actually provides a little bit of a pad for us against that kind of a slowdown. Obviously, we get the cash upfront. From a reseller standpoint, liquidity as we've gone through this dip, liquidity has been on all of their minds.
And getting a bigger sale upfront and getting the cash upfront obviously is a more profitable sale for them in total dollar terms as well. So the resellers love it. They were not real happy when we pulled back multi year on maintenance when we launched maintenance to subscription. I'll just leave it at that. And from a customer standpoint, they get certainty.
There's no change in price over those 3 years. They get a single approval process, which when you talk to our customers, especially our bigger customers, don't underestimate the benefit that is to the people that actually have to go through the process. So I think it's good for all 3. That's why I put all those words on the slide, which is to try and articulate that.
Thanks. The follow-up is on Fusion 360. So the generative design capabilities which look quite differentiated, Can you give us maybe a little more color on if that drives share shift? Is it from SOLIDWORKS? Is it from the enterprise CAD tools?
And if it drives market expansion, maybe some specifics on what parts of the market will expand from that?
Scott, why don't you take that question?
Yes, sure. So I think as far as share shift goes, it will come from a variety of places. We're already seeing it on the industrial design side of things. We're seeing it come from all of the traditional CAD players, if you will. So we would expect that to continue.
Kind of this notion of working differently with generative is something that we think is going to take a little time to gain momentum, but it's gaining momentum in a really meaningful way. One of the things that we see early on is that being able to partner alongside of systems is pretty important. So like for inventor users, in particular like Qualities Peters, we built a piece of technology called AnyCAD, kind of a nerdy term for it, which is where it creates full associativity between the work that they're doing in Inventor and the work that they're doing in Fusion. So if you think of the collection and the value there, not only do you get the additional capability, it's kind of the safe bet for them because they can have the best of both worlds. That works alongside of other CAT systems as well.
So certainly one of our strategies to help people kind of bridge from the world that they're in to the world that they really need to go to.
Look at a high level, there are there's the market for product design and engineering talent is going to grow at a certain rate year over year. Every so often there's a dislocation in the 3 d modeling space. The last one was the move to the PC. Before that, it was the rise of PTC and parametric modelers. Those always result in a share shift activity.
And what's happening now is the rise of the cloud database driven design environment with combinations of technologies like generative design. And people are going to start reevaluating their design environments. It's going to go through another one of these cycles like it's gone through previously. And it's almost like on a clock the way this works. And that's where most of the innovation is going to come from and that's where most of the revenue from these applications are going to come from.
Ken Wong from Guggenheim Securities. Scott, really appreciate the long term framework for fiscal year 'twenty three. I guess when I look at it, it seems like the biggest unknown there or the relative unknown element would be the 3 to 4 points of growth from manufacturing and construction. I guess how should we think about the conservatism of that range relative to the massive opportunity that you guys have highlighted? And then just any thoughts on how you guys might help us track success of that particular initiative?
Yes. So you're asking do we sandbag the 3 to 4 points on Construction and Manufacturing? I think Ken, we I feel really good about both CEO staff. So we all anything that it takes that we need to all bring to the table to try to drive that construction business, he's got immediate access to all of us. So I think we're well positioned from a portfolio standpoint.
I think we're the market's ready. You just look at some of those trends in productivity and in the 30% waste. And just to put it in context, right, if it's a $100,000,000 building, maybe the size of this building, right, that general contractor is going to make best case 5% profit. So he's going to make $5,000,000 on it and they're going to waste $30,000,000 They're going to waste 30 percent of that $100,000,000 So that gives you a sense of the opportunity. That's why we're so bullish on it.
I don't think it there's a little bit of a conundrum of do we take the 5.6 up to a higher number and it's 3 plus years out. That didn't make sense to me to do that. The more you then say, well, if the total is fixed and you allocate more to the construction business, are you signaling weakness in the core? We don't feel the core. We think the core is continuing to progress nicely as well.
So I wouldn't say it's a sandbag number, but it gives you a sense of what we see in terms of it's 3% to 4%, it's contributing 3% to 4% to the overall growth rate, right? So it's 3 to 4 points times the overall revenue not 3% to 4% versus where it had been previously. That takes you out to a number that we showed on the slides. It's a pretty healthy business by the time we get to fiscal 'twenty three. So I don't feel like it's overly sandbagged.
Hey, guys. It's Adeboort with Stifel. Thanks so much for the question for today. Just want to dig deeper into generative design and the idea around moving it beyond the early adopter phase. What really needs to happen?
Because it seems like it's really compelling, but seems really early and when do we start to see that inflection? Thanks.
Yes. Scott, why don't you start with that one again?
Yes. So I think ease of use is going to be one of the things. If you watch kind of that video, there's still a little bit too much nerdiness in there, where you have to apply loads and some of that kind of stuff. So we've really applied a lot of user experience expertise to figure out how to enable a much broader range of professionals to gain access to it. But we certainly see that being an element.
The other is getting the mindset to trust the results. We saw this early on with a lot of the adopters. As much as they believe in, oh my gosh, it's 32% lighter, my mind, right, based on the history of human understanding of engineering, can't comprehend how that's better when I look at the results. So we're having to go with them and really apply the science and share the math with them about how it is actually stronger. So I think there will be a shift in perception about what because if you a lot of those designs, they look at organic.
And a lot of the human designed things that we know and appreciate are square and round and they're not super organic. So I think there's a shift in trusting the math, but we've seen enough of the math to know that to have confidence that that's going to happen. So it needs to be easier to use and then over time as engineers we need to be able to trust the outcome.
Jason Celina from KeyBanc. You had a slide up there on the governments that are mandating BIM. We do kind of hear that kind of in the channel as a driver, but can you maybe go into why exactly some of these countries are kind of making this a requirement?
Lisa, you want
to comment on that?
Yes. So, you guys are making yes, so what these countries are saying, you saw some of these pressures, etcetera. They know that if they can start to mandate them being used that they are going to get this reduction in waste. They're going to get things that are more on time. And so they are saying that for all public projects, that's why they want to put them in place.
And now they're actually seeing from like U. K. I think was one of the first to do this and people started to see the benefits that they were getting from mandating BIN. And so that's why they're seeing the spread across well, sorry, all of these different countries.
I think just to add on that a little bit is a lot of these owners be they governments or be they developers or whatever types of owners recognize that when you insert BIM into somebody's bidding process and mandate it, it's a process change. So people are being prudent about the rate at which they roll these things out, because you're not just rolling out a technology, you're rolling out a new skill set, a new process and a new way of actually delivering a final built product. So recognizing that people aren't pushing these things suddenly, and that's why you see some kind of these incremental rollouts of these things. And you're going to continue to see that because people people's their
industry.
Thanks guys.
It's Matt Lemenager from Baird. I had a question on the direct versus indirect over time. So the e store sales have grown nicely and I think a lot of that came from AutoCAD LT initially and it has continued to grow the AutoCAD LT business. As we go to kind of the from seventythirty to fiftyfifty, which products I guess are expected to kind of help drive that? Is it outside of AutoCAD LT or we'll be seeing more collections bought directly through the e store?
Yes. So that's kind of like what Jay's question was earlier. I think you're not going to see a large prevalence of collections on the e store. I do believe collections benefit most from a partner, both explaining the value to the customer and supporting that value downstream once the customer sees it. However, there's a whole swath of standalone products from LT to AutoCAD to Maya in particular as well that will probably see a lot of e store growth over time, right?
Maya in particular, the Maya the market that buys Maya is increasingly fragmented against across a small number large number, sorry, of small professional shops, 1 or 2 people, 3 people, You could see that ecosystem buying more and more online as time goes on. So it'll be something more like that, but not collections per se. I mean, sure, there will be the opportunistic sell of a collection, but partners really need to be close to that opportunity and our customers need someone close to them to be successful with us.
And I'll add because I mentioned earlier when Jay asked a question too. We do actually see growth on our digital sales through the non compliant focus that we have overall. As you see, we are directing folks to resolve their problem, purchase genuine software through our e store overall. We do expect that that's going to be another mechanism that's going to drive growth. And we said that AutoCAD is more than 50% of the base.
You saw all 5 of the products that make up 98%. They're exactly what Andrew was saying. They're individual products overall. So we see that as another growth element overall.
Thanks, Matt. I think Saket had a question.
Hey, thanks. Sorry to get back in queue, but I just want to make sure this question was asked for you, Scott. So that we got that picture of that Golden Snake through fiscal 2020, great name by the way. What it the question is the realest question is, what does that Golden Snake look like between 2023?
Were there any
comments that you want to make on that?
Yes, yes. So thanks for asking that, Saket. What we expect to see is obviously there's a significant acceleration from 2019 to 2020 as billings cross over the spend line. I think we expect to see annual growth in free cash flow. So it's not going to be another slow and then significant acceleration out in fiscal 'twenty three.
Expect 2021 to be higher than the $1,350,000,000 we put up this year. Expect growth again into fiscal 2022 and then into fiscal 2023. It is a little bit of an accelerating curve as you get further out in time as you'd expect because the compounding value of revenue growing at a faster rate than spin grows obviously drops more into the free cash flow over time. But I do expect to see free cash flows grow again from fiscal 2020 to fiscal 2021, again from 2021 to 2022 and then 2022 to 2023. Thanks for that.
Just a follow-up for me. Fortune is becoming a big part of the story when we talk to your customers specifically. Is there a way for you to directly monetize that in the future? Or should we see it as an enabler?
Yes. Scott, why don't you answer the Forge question?
Yes. It's early days on our thinking around monetization of Forge. What we have right we have a way to monetize it. It's a subscription, but it is not the in state, no question. We see that becoming a subscription plus consumption, mostly consumption.
There are a few good models out there. This is one of the ways Salesforce really grew their business, right, is the shift to a platform. So that's a good model. We also see AWS as a good model. So right now, as we've engaged customers kind of on that early adopter phase in a model that gives them access and covers our cost, but we're really kind of track how they use it, what those patterns are, what the cost is, what the benefit is to them and then craft that model based on those learnings.
But I think you'd expect it's going to look something like what Salesforce and AWS has.
Anyone want to take the last question?
All right. With that, we can break otherwise. We can get into lunch if you still want to say anything.
All right.
Thank you. Thanks, everybody.