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Autodesk Investor Day 2005 1
Media and Entertainment Vertical Solutions and Beyond
Martin VannVice President
© 2005 Autodesk Autodesk Investor Day 2005 2
Television
Film Advertising
Games
Media and EntertainmentCustomer Segments
© 2005 Autodesk Autodesk Investor Day 2005 3
Games
Smoke
Flame
Lustre
Stone Shared
3ds MaxFlint
Smoke
Lustre
3ds max
Combustion
Inferno
Fire
Lustre
Toxik
3ds max
Combustion
Stone Shared
AdvertisingTelevisionFilm
Media and Entertainment Solutions
© 2005 Autodesk Autodesk Investor Day 2005 4
Media and Entertainment Industry Trends
New TechnologyFilm digitization High Definition (HD) production solutionsNext-generation platforms
Increased focus on ROIMidrange seat expansionContent proliferationIntegrated 2D/3D workflowMedia and data management
© 2005 Autodesk Autodesk Investor Day 2005 5
Film Business is Growing
Market Growth2004 box office grew 10% over 2003 2004 DVD revenue grew 18% over 2003
Digital film is at its infancyOver 4000 globally released films in 2003; less than 100 used a digital intermediate workflow Less than 50 films globally acquired content digitallyLess than 1% of all movie screens are digitalCollaboration is still a highly manual process
© 2005 Autodesk Autodesk Investor Day 2005 6
Film Market is at Early Adopter Stage
Technicolor Creative Services invested over $5.5M in Autodesk digital film workflow solutions globallyNBC Universal invested $1M in Autodesk solutions for film trailersKodak invested $2.1M in Autodesk digital film solutions Asylum is the first company to deploy an all Autodesk digital workflow for film effects, grading and data-centric collaboration
© 2005 Autodesk Autodesk Investor Day 2005 7
Television Market is GrowingSale of High Definition (HD) televisions growing 50% annually
Global marketplace for content is accelerating as content’s value increases
Growth of graphically oriented sports
Increased focus on station branding and promos
Trendwatch reports that 81% of all facilities and studios have yet to invest in HD production solutions
© 2005 Autodesk Autodesk Investor Day 2005 8
HD Customer Adoption is Just Beginning
NBC has spent $1M on Autodesk solutions for HD promotions
Paramount invested in HD solution to convert “I Love Lucy” to HD
ABC, CBS, Fox, Australian Broadcasting Company, Beijing TV, Videoland Taiwan and Star TV-India all invested in standard definition and high definition production solutions
© 2005 Autodesk Autodesk Investor Day 2005 9
Advertising is Back on TrackGlobal advertising will grow 5.8% to $363B in 2005
Television advertising is expected to grow 12.5% in 2005 to $143B
Cinema advertising is the 3rd fastest growing medium behind the Internet and TV and grew 10.7% in 2004 to $1.5B
China is now the third largest ad market (in revenue) trailing the US and Japan
Autodesk provides the industry’s best client facing solutions
Best of breed creative toolset to solve any production problemAbility to work in multiple formatsIndustry Leading ROI
© 2005 Autodesk Autodesk Investor Day 2005 10
New Platforms and Formats Fuel Retooling in the Advertising Industry
Optimus invested over $1M in Autodesk HD solutions replacing competitor’s solutions Derwin invested in their first ever Autodesk SD and HD solutions GTN, Nice Shoes and Universal Images all standardized on Autodesk digital workflows for advertising
© 2005 Autodesk Autodesk Investor Day 2005 11
GamesGame market is now larger than worldwide film market
WW sales are expected to be $20B in 2005
Next generation game consoles will be available within next 18 months from Sony, Microsoft and Nintendo
Positioned to become next generation HD/DVD player
Budgets on best selling games exceed $10M with over 150 artists and programmers
Grand Theft Auto: San Andreas contains over 8 kilometers of cityscape modeled in 3ds Max
© 2005 Autodesk Autodesk Investor Day 2005 12
More than Half of All Games Released in 2004 were Created with Autodesk 3ds Max
Top Titles included Halo 2, World of Warcraft and Grand Theft Auto: San Andreas
Ubisoft’s latest Tom Clancy’s Splinter Cell game, had over 1.4M pre-orders
Next generation game development will be fueled by development partnerships
Microsoft’s XNASony’s Collada
© 2005 Autodesk Autodesk Investor Day 2005 13
Media and Entertainment Summary
Industry shift to digital entertainment is just beginning
Customers need to invest in collaborative, digital workflows to support digital entertainment creation
Growth over last year has been driven by early adopters
Autodesk will continue to lead this transition with:Technical innovation Workflow and collaboration solutionsCreative functionality
© 2005 Autodesk Autodesk Investor Day 2005 2
The Sales Organization of the Future
2D 3D LifecycleManagement
Discipline-specificSoftware(Vertical)
© 2005 Autodesk Autodesk Investor Day 2005 3
Foundation For Success
Sales modelSolution sellingSales productivityChannel developmentSales capacityGeographic opportunity
Emerging markets
“Autodesk’s trusted advice was pivotal in making our solution a complete success.”
J.P. Jones, CIOMacerich Company
“Autodesk’s trusted advice was pivotal in making our solution a complete success.”
J.P. Jones, CIOMacerich Company
© 2005 Autodesk Autodesk Investor Day 2005 4
Indirect (VARs, Distribution)Direct Sales ForceN
ot R
eady
Rea
dyM
arke
t
Not Ready Ready
Product/Solution
Sales ModelRight Products, Right Customers, Right Time
IndirectDevelop
Develop
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CapabilitiesCapabilitiesDifferen-tiationDifferen-tiationSolutionSolution
Selling Products to Solving Customer Problems
Standard methodology and terminology (1,600 direct & channel reps trained)
Sales productivity increasesDeal size increases
UniqueBusiness
Value
CompellingEvent
Business Drivers
Business Drivers
BusinessInitiativesBusinessInitiatives ProjectsProjects +
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Solution SellingBenefits of Target Account Selling
Standard methodology and terminology (1,600 reps trained)
Technical solutions to solve customer business problemsBased on compelling event and unique business valueSales productivity increasesDeal size increases
“Any software solution we chose had to enhance our productivity and make us competitive with larger firms. That was first on my mind.”
John Mangan, PresidentMangan Group Architects
“Any software solution we chose had to enhance our productivity and make us competitive with larger firms. That was first on my mind.”
John Mangan, PresidentMangan Group Architects
© 2005 Autodesk Autodesk Investor Day 2005 7
Autodesk Sales ProductivitySales Affects Topline and Bottomline Profitability
RevenueSales Opex as % of revenue
FY03 FY04 FY05
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Worldwide Channel Sales Productivity
Avg Revenue / VAR
# of VARs
# of VAR sales reps
FY03 FY04 FY05
© 2005 Autodesk Autodesk Investor Day 2005 9
Direct Sales ProductivityDirect deals over $100K grew 60% worldwide from FY04-05
+63%
+27%
+155%
“The strong direct partnership between Parker Hannifin and Autodesk supports us on the road to achieving our critical business strategies and objectives.”
Craig Maxwell, Vice PresidentTechnology and Innovation
Parker Hannifin Corporation
“The strong direct partnership between Parker Hannifin and Autodesk supports us on the road to achieving our critical business strategies and objectives.”
Craig Maxwell, Vice PresidentTechnology and Innovation
Parker Hannifin Corporation
© 2005 Autodesk Autodesk Investor Day 2005 10
Channel DevelopmentBuilding Trust Through Predictability
Technical bootcampsBusiness skills trainingPackaged Service OfferingsValue Incentive Rebate programInvestment fundsR/E/A/L channel marketing programs
“We could not be more pleased with Autodesk’s commitment to the market by way of their product set, but more importantly,their commitment to us and the reseller community.”
Adi DrotleffFounder and CEO
Mensch und Maschine, Germany
“We could not be more pleased with Autodesk’s commitment to the market by way of their product set, but more importantly,their commitment to us and the reseller community.”
Adi DrotleffFounder and CEO
Mensch und Maschine, Germany
© 2005 Autodesk Autodesk Investor Day 2005 11
Future Emerging Markets
+43%
Russia +40%
China
+38%
India
“Using Civil 3D for our design work in JinpinGrade 1 Hydropower Plant, we are able to dramatically improve on the precision of excavation and our work efficiency.”
Xue LijunSenior Engineer
CHIDI, Chengdu, China
“Using Civil 3D for our design work in JinpinGrade 1 Hydropower Plant, we are able to dramatically improve on the precision of excavation and our work efficiency.”
Xue LijunSenior Engineer
CHIDI, Chengdu, China
Total revenue growth from FY04-05
© 2005 Autodesk Autodesk Investor Day 2005 12
Why We Will Continue to WinAnd build lasting business partnerships
“Our relationship with Autodesk holds strategic value for Parker Hannifin because they have invested in understanding our business needs, they consistently deliver to meet our requirements, and they truly understand what it takes to build lasting business partnerships.”
Bob McAdooDirector of Business Systems
Parker Hannifin Corporation
“Our relationship with Autodesk holds strategic value for Parker Hannifin because they have invested in understanding our business needs, they consistently deliver to meet our requirements, and they truly understand what it takes to build lasting business partnerships.”
Bob McAdooDirector of Business Systems
Parker Hannifin Corporation
© 2005 Autodesk Autodesk Investor Day 2005 2
FY 2005 Goals
Invest for future growthStrong commitment to cost management
Continued productivity improvement Achieve operating margin targets 18% to 20% annual basis for FY2005 (One year early!)
Maintain balance sheet strengthManage stock option program
New accounting rulesDilutionStock option overhang Retain staff
© 2005 Autodesk Autodesk Investor Day 2005 3
FY 2005 Key Metrics ~ Doubled
Revenue growth doubledUp 30%
Operating margin nearly doubled11% to 21%
Cash from operations nearly doubledFrom $220 to $373M
EPS more than doubled$0.42 to $0.88
© 2005 Autodesk Autodesk Investor Day 2005 4
New Seats Drive Growth
$0
$250
$500
$750
$1,000
$1,250
FY03 FY04 FY05
Upgrades
Subscription
New Seats & Emerging Business
© 2005 Autodesk Autodesk Investor Day 2005 5
Additional Drivers of GrowthCritical changes in our model past 24 months
Strong annual releasesUpgrade price increaseSubscription growth2D to 3D migrationProductivity focusNew products & services Management changes
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$0
$1,234
1 52Weeks
FY05 Autodesk Revenue Linearity
Benefits of Revenue Linearity:PredictabilityDSO ImprovementSales DisciplineOperation Efficiency
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Deferred Revenue
0
50
100
150
200
FY03 FY04 FY05
Subscription
Other
© 2005 Autodesk Autodesk Investor Day 2005 8
Productivity Drivers
Company-wide process analysis Centralization and standardization of administrative processesBack office systems investmentsGross margin initiatives
© 2005 Autodesk Autodesk Investor Day 2005 9
Productivity Drivers
Procurement initiativesRationalization of direct vs. indirect sales effortsStrong target account selling modelMarketing initiativesOffshoring
© 2005 Autodesk Autodesk Investor Day 2005 10
Productivity is Increasing Significantly
FY03 FY04 FY05 FY03 FY04 FY05
Revenue per Employee Revenue per Labor Dollar
© 2005 Autodesk Autodesk Investor Day 2005 11
Productivity: Base Salaries Decreasing as Percent of Revenue
0%
5%
10%
15%
20%
25%
30%
35%
FY03 FY04 FY05
© 2005 Autodesk Autodesk Investor Day 2005 12
Stock Option Overhang is Under Control
16%
0%
5%
10%
15%
20%
25%
30%
FY03 FY04 FY05
© 2005 Autodesk Autodesk Investor Day 2005 13
FY2006 Key Financial Goals
Achieve guidanceContinued strong balance sheetReturn on shareholder equityContinued high integrityAchieve current year productivity targets
Set up for subsequent year achievementInvest for future growth
© 2005 Autodesk Autodesk Investor Day 2005 14
New Guidance Summary
Q1 FY 2006Revenue $340 to $350 MillionEPS $0.27 to $0.29
Q2 FY 2006Revenue $335 to $345 MillionEPS $0.21 to $0.23
Fiscal 2006Revenue $1.425 to $1.475 BillionEPS $1.10 to $1.15*
* Excludes Impact of Employee Stock Compensation Expensing
© 2005 Autodesk Autodesk Investor Day 2005 15
Return on Shareholders’ Equity Improving
34%
0%
5%
10%
15%
20%
25%
30%
35%
40%
FY03 FY04 FY05
We’re Proud Of Our Return On Investment