Specialist
Former VP at Autodesk Inc
Agenda
- Autodesk (NASDAQ: ADSK) and its evolution to a cloud platform company with considerable and expanding modules and functionality
- Business segment specifics, with a current emphasis on manufacturing and offerings following a focus on construction
- Competitive considerations, particularly across AEC and manufacturing, highlighting Bentley Systems (NASDAQ: BLY), Dassault (EPA: DSY), Procore (NYSE: PCOR), PTC (NASDAQ: PTC) and Siemens (ETR: SIE) and others
- 1-3-year outlook, noting opportunities and risks, as well as management overview
Questions
1.
Could you describe Autodesk and how it’s evolved over the years? The company has changed quite a bit, and people would point to the cloud, more of a focus on suite solutions and continuously adding via M&A.
2.
Could you discuss Autodesk’s key products and offerings? As you noted, there are a handful of product areas that continue to exist as key parts of Autodesk, including AEC [architecture, engineering and construction], AutoCAD, AutoCAD LT business, manufacturing, which seemingly has become more of a priority, and then M&E [media and entertainment], which seems to be different than the other offerings. Then there are multiple solutions within each of those categories, but the flagships are AutoCAD and BIM 360 for AEC and then Fusion 360, the manufacturing offering.
3.
What do you consider to be the most important among Autodesk’s different categories and products, and to what extent would you put manufacturing at the top of the list? Is Fusion 360 in particular enough to drive what the company is doing? I think there are some concerns about the solution set not being as broad as it could be, and the company has been very active with acquisitions, so perhaps those could be used to enhance what the company is doing in manufacturing.
4.
What do you think Autodesk’s revenue mix could be in 3-5 years, given your point that manufacturing would be a notably larger component of the revenue mix? In the company’s FY21 revenue mix, AEC accounted for 41% of revenues, and AutoCAD was 28%. Manufacturing was only about 20% of revenues, and then media and entertainment was around 11%.
5.
You said the AutoCAD family of products differs from other segments and is more of a general type of category, so all different sorts of users and clients and revenues are within that rubric. If that’s 28% of revenues, I’m guessing it doesn’t fully allocate to AEC manufacturing and M&E. How do you think about the three main categories and how they account for revenues if you were to take out AutoCAD and allocate it to the user type?
6.
It seems there are a lot of people and manufacturing-focused customers within Autodesk. Is it simply an effort to migrate those AutoCAD users to the manufacturing-specific solutions? Is it the fact that, as you pointed out, there needs to be more robust solutions, features and functionality? What do you think the company will do to build out that manufacturing business in the way you’ve touched upon?
7.
Which key digital manufacturing players can serve as models for Autodesk’s strategy for this solution set?
8.
Are any areas ripe for Autodesk to enter? What features and functionality would make sense to pursue in the near term, whether via M&A or internal development? It seems there are obvious areas for the company aim for and it is set in terms of the primary end markets and vertical segments it serves.
9.
Many people that focus on Autodesk and this industry are thinking about the impact of macroeconomic factors on the company, its clients and the industry as a whole. You touched upon supply chain issues and labour shortages. The flip side of that is how Autodesk does have many non-enterprise-sized clients, and so if you’re talking about increasing interest rates, that will have a disproportionate impact on it regarding borrowing and overall profitability. How might Autodesk be thinking about this confluence of macro issues and how it’s affecting its clients, the company and the industry more broadly?
10.
What do you think of people who say, “If this project doesn’t get off the ground, then that means we’re going to lose not just this revenue, but also maybe this client?” Do you think that’s a legitimate concern over the near term, or is it typically that, yes, these things might be pushed out, but they will still eventually happen?
11.
You’ve talked about Autodesk’s historical focus on AutoCAD. Presumably, the increasing focus on vertical offerings would inherently cater more to large businesses, so that might also be a reflection of AutoCAD’s lower revenue mix overall, correct?
12.
Autodesk alludes to 15 million non-compliant software users, and of that mix, two million are targetable within the customer base. It seems that’s something the company has been talking about for some time. Is it just steady progress? Is there a possibility that there will be an inflection point where one quarter or one year it says, “We’ve figured this out, and suddenly we’re going to bring on hundreds of thousands of new previously non-compliant users?”
13.
We’ve discussed Autodesk having multiple-segment solutions, which are increasingly cloud-enabled and integrated, although it seems there’s some work to do on both fronts. How important is it competitively that the company has a suite and cloud approach where many competitors have products that have been around longer than Autodesk has been a company? Clearly, those are legacy products, and many of them are point solutions. How helpful is the current Autodesk strategy for winning business?
14.
How would you characterise the competitive landscape for AEC and how does Autodesk stack up? AEC is often thought of as A&E and then C, and there’s been a lot of focus on the construction area with a lot of M&A. How would you characterise the competitive landscape, given there are companies such as Bentley, Nemetschek and Procore?
15.
What do you think Autodesk has to do to potentially catch up to players such as Dassault, PTC or Siemens in manufacturing? Could the company acquire PTC? When considering the relative sizes of the companies, that’s something that could make sense. PTC is a USD 13bn-14bn market cap company. How else could Autodesk catch up in manufacturing? It seems there are other competitors and it could do more of a roll-up approach, which is what it seems to do in construction.
16.
Autodesk is seen generating top-line growth of 15-20% annually from FY21-24. What are the top 2-3 drivers of that growth?
17.
What do you think of Autodesk’s partner network and why is it in a position to take value out of the equation by taking more of the margin for itself? There are benefits of being around for a while and being a large global player, and one of them is an opportunity to build out a global partner network, which is something the company has done over time. Is that something it aims to continue? Perhaps as it moves more to the cloud and has a global brand, it doesn’t need partners quite as much.
18.
What do you think of Autodesk’s management? CEO Andrew Anagnost has been in that position for almost five years. You said he comes from a manufacturing background. Less than one year ago the company added a new CFO and new CTO, I think both from outside Autodesk.
19.
What is your 1-3-year outlook for Autodesk, and what is its largest risk? You touched upon potentially one in your commentary about the management team.
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