Autodesk Inc (NASDAQ:ADSK) Q2 2020 Earnings Conference Call Transcript

Aug 27, 2019 • 05:00 pm ET

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Autodesk Inc (NASDAQ:ADSK) Q2 2020 Earnings Conference Call Transcript

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Presentation
Executive
Andrew Anagnost

technology, but also to a wide range of Autodesk services and expertise that will help them achieve their corporate growth and market expansion goals.

On the manufacturing front, revenue grew 20% in the second quarter, despite a more challenging manufacturing environment in Europe. Customers are seeing the benefits of our differentiated solution, and we continue to gain market share while displacing competitive offerings in the space. For example, during the second quarter, a leading Swiss watchmaker selected Autodesk's Design and Manufacturing Collection to replace Solidworks given the flexibility offered by our solutions. In addition, our investments in generative design and Fusion 360 have resulted in competitive displacements not only in the CAD market, but also in the computer-aided manufacturing or CAM space where there are lower barriers to switching vendors. As a result, we see displacements of competitors like MasterCAM. And once we're embedded in those customers' downstream processes, we are increasingly penetrating design activities within those same accounts. Customers pick Fusion over competitive offerings due to its integrated CAD-CAM functionality, it's compatibility with other CAD tools, ease of use and the attractive pricing model.

Now, let's talk about progress with our digital transformation. Many of you recall that a key part of this transformation will increase the insight we have on our non-compliant user base. One of the initiatives we undertook to accomplish this started last year and has given us the ability to analyze usage patterns of our non-compliant users. Since last year, we have analyzed significant amount of data on these users, including how long they use the software and how their journey traverses across non-compliant usage to downloading free trials or using student editions. With this data, we can test different ways to convert them, including in-product messaging and leveraging our inside sales team.

While still early in the conversion process, we have an increasing amount of data that allows us to take necessary actions to convert this large pool of potential customers. In the quarter, we expanded our pilot cases for in-product messaging to many international regions and enhanced our license compliance initiatives using our sales teams as well as via email campaigns. These conversations resulted in multiple deals, including two over $1 million, one of which was in China. Our billings from license compliance initiatives were up by approximately 65% versus last year, although on a small base.

So, as you've heard, we made great progress this quarter that enabled us to finish the first half of the year strong. We continue to execute well in Construction where IT spending remains strong. We are making competitive inroads in Manufacturing with our innovative solutions and are making strides in converting the current 14 million non-paying users into subscribers. We are highly confident in Autodesk's ability to capitalize on our large market opportunity and are committed to delivering on our fiscal '23 goals.

With that, Operator, we'd now like to open the call for questions.