Highlights from Autodesk’s Investor Day

Update: Autodesk held its annual Investor Day today. The event was 4 hours long, so these are some of the tidbits I found most interesting: • Autodesk says that FQ2 business is good and is raising the bottom end of its second quarter business outlook from revenue of $435 million to $445 million — in other words, the new range is $445 million to $460 million. • The company also unveiled a long-term business model based on a 12% to 14% compound annual revenue growth rate in the next 5 years, with that growth coming from the many initiatives for its various customer bases and verticals. This is lower than a 15% CAGR target that had been put out a few years ago; CEO Carl Bass said that the perception that the new target is lower isn’t due to any change in Autodesk or its competitive position, but purely on the post-recession economy — and the fact that pockets of the recession are still ongoing. • Update: The company sees a $14 billion addressable market and was asked to give areas that are most attractive: They see Manufacturing as the largest opportunity, where they believe they can take share. AEC is also large, especially in analysis. Mr. Bass also sees significant opportunity in offering suites of solutions to expand its footprint with existing users. When asked which of unit versus price versus product mix (to suites) would contribute most to growth, Mr. Bass sees the suites being the most significant — he doesn’t see prices going up over the life of any particular product. • Update: The 12% to 14% growth rate is anticipated to be organic, especially given the track record of small technology tuck-ins which have not had meaningful revenue impact. • Update: Suites currently account for about 20% of revenue, and this can be “taken to a higher level” and is factored into the 12% to 14% growth rate. • Autodesk says its top 60 customers account for 10% of revenue and sales of 300,000 seats. That’s an average of 5K seats/account — larger than most people realize. Most of these accounts buy from more than one division, meaning that they are not solely interested in BIM or manufacturing. According to Autodesk, one of their biggest tasks is raising awareness that Autodesk has such a broad offering to enable it to grab a bigger portion of the opportunity it sees for its broad portfolio. • Altogether, Autodesk has something like 725 named, enterprise accounts that sum to about 30% of revenue. What most people think of as Autodesk’s sweet spot, the SMB space, accounts for 50% of revenue from 50,000 to 70,000 accounts doing 1.8 million transactions a year for 50 to 500 seats apiece. The other 20% of revenue comes from what Autodesk calls “Professionals” — over 100,000 small companies buying one or two seats. A new segment targeted by Autodesk, but that doesn’t really account for significant revenue at this point, is the consumer market. • Update: This mix has held steady for the last 3-4 years. Going forward, Mr. Bass sees some uncertainty about the mix, since there are efforts underway to bolster each segment — and each may be successful to different extents. Too, economic forces affect each group and each vertical differently. Mr. Bass believes that a good strategy would be to consider the mix to remain relatively stable going forward. • Update: When asked about penetration within individual accounts, Mr. Bass feels that Autodesk is under-penetrated in the large accounts where there is usually a heterogeneous tool set. In the SMB space, he believes that penetration is stronger, since those enterprises are more focused on single-vendor efficiencies. • “Infinite computing” appears to be Autodesk-speak for using the massive compute capacity that exists in the cloud to solve common problems. CTO Jeff Kowalski made the point that it costs at least $7.50 per hour (minimum wage in the US) to apply a human brain to a problem; $0.03 is today’s spot price for an hour of computing on the cloud. We go from testing one option of a design to testing “all” — the computer can guess while a human would have to be insightful. This led to screenshots of Inventor Optimization and the Autodesk Neon rendering service, and the conclusion that “infinite computing” will enable small companies better compete against larger companies with more resources. • Update: Autodesk is encouraging customers to take advantage of added compute capacity and is not moving everything to the cloud — it foresees customers running Inventor on the desktop and sending analysis, for example, to the cloud. • Update: Autodesk is not planning to create its own cloud; everything they are talking about here focuses on using the compute capacity available from providers like Microsoft and Amazon. • CTO Kowalski also showed one of the coolest apps I’ve seen in a while: a pipe run (sewer?) on an iPhone superimposed on a live street scene. It was one of a number of screenshots, and no more was said about it — but it looked cool! Following is content from after the break: • Autodesk’s Amy Bunzsel says that Inventor is taking share from its competitors because it enables customers to start slowly and grow with Autodesk products as their capabilities and needs grow — from simple analysis within Inventor to sophisticated stand-alone products. Ms. Bunszel said that Autodesk Vault has recently taken accounts from Teamcenter (apparently because the users felt the overhead required for TC stifled creativity) and SmarTeam (because the solution couldn’t scale as needed). Because of the many products in its portfolio and its broadening manufacturing solution, Autodesk believes it is taking a greater share of wallet at existing accounts — and also gaining advantage in new accounts and competitive situations. • Autodesk has 1 million AutoCAD users in process and power. A major focus for Autodesk will be to drive up the value chain with purpose-built solutions (P&ID, 3D plant and Navisworks for visualization). In the 4 months that the 3D product has been available, over 20,000 downloads have taken place, so the interest is definitely there. • The company reports that close to 2 million copies of Sketchbook Mobile have been downloaded. It’s the #2 product in the entertainment category in the iTunes store. Each of these users is a potential customer for more extensive products — and at a cost to Autodesk that was “less than a Superbowl ad”. • Mr. Bass sees Autodesk taking share as customers are pushed to do more with less, driving customers away from more expensive vendors; as customers try to standardize on fewer vendors (and Autodesk’s broad portfolio gives it an advantage) and as smaller, local vendors were stressed during the recession.