Thank you for standing by, and welcome to Autodesk Third Quarter and Fiscal Year 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the call over to Simon Mays-Smith, VP, Investor Relations. Please go ahead.

Thanks, operator, and good afternoon. Thank you for joining our conference call to discuss the third quarter results of Autodesk’s fiscal ‘25. On the line with me is Andrew Anagnost, our CEO and Betsy Rafael, our Interim CFO. During this call, we will make forward-looking statements, including outlook and related assumptions, and on products and strategies. Actual events or results could differ materially. Please refer to our SEC filings, including our most recent Form 10-Q and the Form 8-K filed with today’s press release, for important risks and other factors that may cause our actual results to differ from those in our forward-looking statements. Forward-looking statements made during the call are being made as of today. If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Autodesk disclaims any obligation to update or revise any forward-looking statements. We will quote several numeric or growth changes during this call as we discuss our financial performance. Unless otherwise noted, each such reference represents a year on year comparison. All non-GAAP numbers referenced in today's call are reconciled in our press release or Excel Financials and other supplemental materials available on our Investor Relations website. And now, I will turn the call over to Andrew.

Thank you, Simon, and welcome everyone to the call. We finished the third quarter Q3 of the year strongly delivering 12% revenue growth in constant currency and have again raised full year guidance. This reflects the sustained momentum of the business and successful execution of our strategy, including a smooth implementation of the new transaction model in Western Europe. Once again, opportunity, resilience and discipline underpinned our performance. Last month at Autodesk University in San Diego, we hosted 12,000 registered attendees and another 30,000 online. We showed how granular data in the cloud, organized the data models and connected to everything through APIs can deliver even more valuable and connected solutions for customers and partners and support a much broader ecosystem and marketplace. Customers and channel partners that I spoke with at AU remained cautiously optimistic, a sentiment consistent with the underlying momentum of our business, our growing product usage and building connected bid activity trends over recent quarters. I left AU with a tremendous sense of purpose and optimism in the ingenuity and persistence of our customers and for the future. On our earnings call last quarter, I set out our secular growth opportunities and our strategy to capitalize on them. I concluded that Autodesk's investment in cloud, platform and AI in pursuit of those opportunities were ahead of its peers. AU was a good demonstration of that. But we're also leading the industry in modernizing our go to market motion, starting a few years ago with the subscription transition through consumption and self-service enablement and more recently to direct billing. These initiatives enable Autodesk to build larger and more durable direct relationships with its customers and to serve them more efficiently. We have already seen significant benefits from initiatives like these and there's more to come in the…

Thanks, Andrew. Q3 was another strong quarter. We generated broad-based underlying growth across products and regions. In addition, we saw revenue increases from the new transaction model and M&A, which were offset by the absence of enterprise business agreement true ups from Q3 last year and FX. Our make products continued to enhance growth driven by our ongoing strength in construction and fusion. Overall, macroeconomic, policy and geopolitical challenges and the underlying momentum of the business were consistent with the last few quarters with continued strong renewal rates and headwinds to our new business growth. Total revenue grew 11% and 12% in constant currency. By product in constant currency: AutoCAD and AutoCAD LT revenue grew 8%. AEC revenue, which was most impacted by the absence of true-up revenues, grew 12%; manufacturing revenue grew 16% and still comfortably in double digits excluding upfront revenue. And M&E revenue grew 15%, boosted by the Pix acquisition and associated integration adjustments. By region in constant currency, revenue grew 11% in the Americas, which was most impacted by the absence of true revenues, 13% in EMEA and 14% in APAC. The mechanical contribution from the new transaction model to revenue was $17 million in the third quarter and $25 million on a year to date basis. Direct revenue increased 23% and represented 42% of total revenue, up 4 percentage points from last year, benefiting from strong growth in both EBAs and the Autodesk store and also the natural tailwind to revenue from the new transaction model. Net revenue retention rate remained within the 100% to 110% range at constant exchange rate. Billings increased 28% in the quarter, reflecting a tailwind from the prior year shift to annual billings for most multiyear contracts, early renewals and the natural tailwind from the transition to the new transaction…

Thank you, Betsy. Let me finish by updating you on our strong progress in the third quarter. We continue to see good momentum in AEC, particularly in infrastructure and construction, fueled by customers consolidating on to our solutions to connect and optimize previously siloed workflows through the cloud. The cornerstone of that growing interest is our comprehensive end-to-end solutions encompassing design, pre-construction, field execution through handover and into operations. This breadth of connected capability enables us to extend our footprint further into infrastructure and construction and also expand our reach into the midmarket. As a sign of our growing momentum as the benefits of our end to end solution become more apparent, our construction business continue to perform robustly with net new customers doubling year over year and existing customers renewal and expansion rates remaining strong. Let me give you a few examples. Power Construction is number 79 on the engineering news record ENR top 400 U.S. Contractor list. It is a Chicago-based general contractor serving residential and non-residential end markets. After completing a competitive RFP to replace its legacy project management tool, Power selected Autodesk for its unified construction platform across preconstruction, construction and VDC. By standardizing on Autodesk Construction Cloud, Power will have a single source of truth for project data, enhanced collaboration capabilities and streamlined workflows on a single platform. Power Construction was one of two ENR 400 top 100 U.S. Contractors that standardized enterprise wide on Autodesk build during the quarter. In Europe, Bouygues, a top 10 ENR 250 International contractor based in France and leader in sustainable building and infrastructure projects renewed and expanded its EBA in the quarter. Bouygues is continuing to consolidate on Autodesk Solutions across the enterprise, including broader adoption of Autodesk Forma, Carbon Insight and Informed Design to digitize, decarbonize and…

[Operator Instructions] Our first question comes from the line of Jason Celino of KeyBanc Capital Markets.

Hey, thanks for taking my questions. Just two for me. The first one, Andrew, some of us are unfamiliar with Janesh. Can you just tell us a little bit more about him and what he brings to Autodesk?

I certainly can. Before I do that, let me make sure that I thank Betsy for everything she brought to Autodesk during this interim period. I really appreciate it, the company appreciates it. Thank you, Betsy. Now, we're really excited about Janesh. Let me tell you why we're excited about Janesh. As you remember, one of the things I was telling you that I was looking for was someone that was going to be able to dispassionately drive optimization and scale inside Autodesk. And what that really means is someone that's going to be really inwardly focused looking at every dollar that we invest and make sure that we're getting the most returns for the business, that investors are getting the best returns from their business. The next kind of criteria we were looking for, which is a nice to have was time in the seat as a sitting CFO, which was important for us as well. But it was kind of the next nice to have after the optimization of scale. Janesh brings a great balance of both of those things, all right. He's been in the seat seven years at Elastic, both CFO and COO, driving some fairly turbulent changes inside of Elastic. So he's got battle scars from pushing inside the company to get changes done inside and we like that. We like that a lot. He's also got very good early experience at companies that we feel have always added value to Autodesk. So, he was at VMware in a senior position, he was at Cisco in a senior position. We've had good success bringing people from those kind of companies. He worked at those companies driving optimization at scale, which is the number one criteria I was looking for when we're driving this work. He also has another nice to have. He's got knowledge of our industry. He spent two years at PTC in his career. He was actually recently on the PTC Board. So, he understands our industry and he'll be able to get up to speed pretty quickly. The number one goal here, drive optimization and scale over the next few years, make sure that we're getting everything we need from every dollar we invest, which is a very important theme for Autodesk. And with that, I'm really excited and I'm looking forward to him joining in December.

Okay, great. Interesting. And then for my second question, now that you do have a CFO, do you have any thoughts on when you might hold the next Investor Day? I think in the past you usually did it in March. Is that a good timeframe or is that too soon?

Yeah. Well, Janesh is joining in December. I think we need to give him time to get his few legs on, give him time to kind of drive the end of the year and actually get us set up for next fiscal year in good speed. So, I would say, it's unlikely we will be doing anything in the spring, but we will get back to you on that as soon as Janesh is ready to talk about those things.

Our next question comes from the line of Jay Vleeschhouwer of Griffin Securities.

Thank you. Andrew, as of the third quarter, your three year CAGR for current RPO is about 12%. How are you thinking about the sustainability or perhaps improvement upon that CAGR for CRPO over the next number of years? When we think about the ingredients of that, it looks like over the last several years, the CAGR for your unit volume for all brands is roughly 6% to 7% in the aggregate. So on top of that, you've had price and other ingredients, but perhaps talk about how you think you might be able to improve upon the most recent trajectory for current RPO? Then my follow-up.

Yeah. Hi, Jay. This is Betsy. Let me just give you a couple of things. There's a number of things that are going on, on the headline of the CRPO number. If you first take away the headwinds and the tailwinds, CRPO was broadly consistent with the second quarter. And as I mentioned in my opening commentary, early renewals and growth with and the new transaction model are providing a tailwind. And then there's also a headwind to CRPO growth from the declining contribution of billed and unbilled deferred revenue, ripped from the large multiyear and EBA cohort coming up for renewal in fiscal '26. And just as a reminder, these are the same larger cohorts we are calling out as tailwinds to free cash flow for next year. And if you look back to fiscal ‘22, we saw the same dynamic ahead of the fiscal 2023 renewals as well.

Okay. Since new management is part of the news this evening, could you talk about how you're thinking about the Chief Revenue Officer position? Would it make sense perhaps to continue to have separate CRO or do you think it might make more sense perhaps to combine CRO and COO?

Yeah. So, we're going to continue to have a separate CRO because we have various functions that work together there under the COO organization including our IT organization, our infrastructure and all things associated with. What we're looking for in our CRO is someone that understands how to continue to drive a business when you have direct engagement with the customer. So that means someone that really understands what it takes to analyze self-service patterns, actually understand the data that comes in from the customers to help drive cross sell and up sell, while also transforming a channel from a transactionally focused extension of Autodesk to kind of a solutions partner that's driving lifecycle solutions for our customers. So, that's the kind of role we're looking for here. And yes, it's going to continue to be a standalone CRO role within the COO organization.

The next question comes from the line of Adam Borg of Stifel.

Awesome. Thanks so much for taking the questions and congrats to Betsy and Janesh. Maybe on the new transaction model, I know it's still early. I was just curious, are there any learnings from those customers that are on the new model that you're seeing in terms of the adoption of Autodesk technology and the ability to find white space to better upsell and cross-sell different solutions now that you have a more direct relationship?

Yeah, Adam, it's really early on to be able to make any kind of conclusions about that. What I can tell you is that we definitely see some shift to some of the direct channels at Autodesk for customers that were probably just served on a very kind of arm's length kind of transactional level. But in terms of driving cross sell and upsell, early days, early days. But if you want to get a sense for how that might evolve, we've got experience with our EBAs and our enterprise business agreements. And we've learned over the years that having that kind of relationship with the customer, where we really understand their usage patterns, who they are and what they're doing, we are much more effective at driving cross sell and up sell, even when partnering with our channel partners. So I think those kind of stand as a testament of what's possible as we move forward with the completion of the new transaction model.

Great. And maybe just as a quick follow-up, just as we think about the new administration coming in, you talked about the macro being broadly consistent. Any change in tone in your conversations with the end markets in terms of optimism or their ability or willingness to expand new projects ahead of the administration, any pause or just full steam ahead? I'm just curious, any commentary you have there from a macro perspective would be really, really helpful.

What I'll say is the things that matter to our customers are bipartisan things, all right? Our customers care about infrastructure build outs. Both parties care about infrastructure build outs. Our customers care about domestic manufacturing, be it in Europe, be it in the United States. Both parties agree that domestic manufacturing build-outs are important. It's supply chain independent, supply chain stability. All of these things are bipartisan issues that really affect our customers. So regardless of the administration, I suspect the things that are important to our customers are continuing to be a focus.

Our next question comes from the line of Joe Vruwink of Baird.

Great. Thank you. On the outlook for next year, $2.05 billion in free cash has I think been the expectation for the past year now. Within the last year, you've also seen more co term of contracts and I think that leads to better billings in FY '26. So my question is, does that actually create the potential that things are better and that's why you're qualifying now the $2.05 billion as the midpoint of possibilities?

There is no change to how we've talked about the free cash flow guide for fiscal ‘26. It continues to be $2.05 billion at the midpoint.

Okay. Fair enough. And then just on the M&A environment over recent history, Autodesk has been more in a mode of, I would say, strategic tuck ins. I think there was actually an asset in the CFE simulation space that was announced during AU in the quarter. Is that the right approach for Autodesk just given this point in time all the work you've done to build out the cloud platform, the data models and so these tuck-ins make the most sense? And if that's true, how would you maybe compare and contrast some of the larger scale M&A that's happening with your peers in the space?

Yeah. So, look, consolidation in our space is inevitable. I'm not going to comment on any specific deals, but here is what I will say. Autodesk has always been an acquisitive company and we will be a acquisitive company when that makes both strategic and financial sense for the company.

Our next question comes from the line of Elizabeth Porter of Morgan Stanley.

Great. Thanks so much for the question. As partners are getting customers just up and running on the new transaction model, we picked up that they're spending a little bit more time than usual of time and resources with those existing customers. So I was curious if that had any impact on new business demand kind of more recently. And then just more broadly, any change in new business trends that you think you should call out from versus last quarter?

Yes. Elizabeth, it's Betsey. And so just broadly speaking, we continue to see growth but at a slower pace due to a number of factors over the really over the last several years, macro COVID, exiting Russia, elections. And while a drag on the forward momentum of the business, all of that's really factored into our guidance. So I kind of just will leave it at that.

Great. And then a follow-up just on billings. Understanding there's a lot of volatility around the change from multiyear and the transaction model. But it looks like guidance implies a bigger step down in growth in Q4 just despite an easier year ago compare. So it's helpful that you could help us unpack the balance of those headwinds and tailwinds that would drive kind of a greater downtick in growth in Q4.

Well, again, let me start out with just from a fiscal '25 perspective. Your billing tailwinds are going to be from the final shift to annual billing, new transaction model and early renewals. And you're going to get headwinds from co-terming and business booked ahead of the new transaction model launch and in recent weeks, some FX. So again, I think that we've continued to perform well as we've executed through Q3. And so, I think we feel very strongly about our expectations for Q4.

Our next question comes from the line of Bhavin Shah of Deutsche Bank.

Great. Thanks for taking my question. Andrew, at University, there appeared to be a noticeable uptick in attendance and sessions geared towards owners and operators. What's been driving the recent interest from this segment? How much of it is enhancing you guys have made versus really more focusing and emphasizing from a go to market perspective? And how long before this segment of buyers kind of becomes more meaningful to the financials?

Yeah, Bhavin, that's an excellent question, all right. We're very interested in tackling the whole entire lifecycle from design through make, construction, manufacturing all the way into operations. You're probably aware we have a product called Tandem. And a lot of those sessions were driven by increasing interest and increasing adoption of Tandem, which is a digital twin solution tightly coupled to our solutions that also has a toolkit that allows people to easily connect sensor data through the digital twin solution. So you're seeing that uptick because we're directly releasing products and capabilities that are of interest to the owner space. You can expect to see that trend continue over time and you can expect to see us continue to talk about the owner space, continue to deliver solutions for the owner space and even APIs for the owner space. It's an area of great interest, especially when it comes not only to vertical buildings, but factories and other things that are related to that as well as infrastructure like what we were doing with some of our water owner solutions. So, yes, owners matter. We're building software for them and you're going to see more of that.

Super helpful there. And then Betsy, one for you. Just in terms of the underlying improvement that we've been seeing in the margins and I know you've called out FX and the transaction model. I know it's very early, but as we think about next year, how do we think about the impact of FX and the transaction model to kind of the headline operating margins?

Well, I wish I could give you that answer, but I think that the new CFO would probably have a little bit of a problem with that. So we'll wait till the end of February to give you more specifics on that.

Our next question comes from the line of Tyler Radke of Citi.

Yes, good afternoon. Thanks for taking the questions. I was going to ask you about a placeholder for next year's guidance, Betsy, but I don't want to waste a question on that, but feel free to answer. But Andrew, I wanted to kind of ask you about some of your comments you made around efficiency, especially as it relates to hiring Janesh, who you pointed out has a lot of experience at larger companies, VMware, Cisco, et cetera. Now that you're a few quarters into this transaction model rollout, you have kind of visibility better on some of the channel, prior channel relationships, having that direct billing with the customer. What are some of the areas that you've identified as having that efficiency potential? And then as we think about that efficiency unlock, should we think about that as incremental to the free cash flow number you have out for next year or is that embedded in that already?

So many layers in that question. So first, let me kind of answer the question in a curious serious stage, it's going to dodge other ones, okay. So first off, optimization is kind of a mindset at Autodesk. It's not something that suddenly happens. I want to reemphasize that because if you look right now this year, for example, when you look at the apples to apples comparison, which will be in the slide deck or in our disclosed materials. You can see that our non-GAAP margins are already hitting the targets we set for next year, this year, okay. So optimization is a mentality. You've also heard me say over and over again as the new transaction model starts to roll out, optimization of our go-to-market efforts is going to be a critical step for us and part of the optimization journey that we're on. That's going to deliver margin growth for the company for couple of years to come, okay. And I think that's important. It's a long-term driver. Now, we're getting into the specifics, okay. I think the specifics are probably for another time, but let me just kind of give you a sense for some of the things that are important, all right. One is the drive to self-service, all right. Self-service is a huge impact on how our customers will engage with us and where those customers come from. And that is a value accretive to Autodesk, both on an efficiency side from renewals and other things, but also on a revenue growth side through capturing the customers directly. The other thing I talked about is understanding the customer better, so the upsell and cross sell. So we're going to be able to do a lot more automation and understanding about what where the opportunities are and that's going to drive some efficiencies. And we're moving the channel partners away from this model of being the transactional players to being the solution providers and the IP providers to our customers. That's going to have all sorts of opportunities to eliminate duplication of effort and drive real cost efficiencies for the company moving forward. So there's both top-line efficiencies here and revenue growth, but there's bottom line efficiencies as well through removing the redundancies and steps that just aren't necessary for the customer. You'll get a lot more clarity on that as you see us continue to move forward with this go to market optimization in next year and beyond that.

Great. Thanks for the detail. And then my follow-up question, Andrew, you talked about some really strong net new customer additions within the construction cloud, I think doubling year over year. We also saw the make revenue accelerate to 28% constant currency. Can you just help us understand, do you think that reacceleration is durable? And how are you sort of thinking about just your position there? What's been driving that strength in the new customer additions?

First, let me comment on the make revenue, then I'm going to go into construction. So, the make revenue also includes some revenue from PIX and things associated with that. However, let's talk about the facts around our construction business, because I think this is important, right? Number one factor is that we continue to drive consistent high growth in our construction solutions. You're seeing it, it's built into the make numbers and it's the lion share of those make numbers. You're really seeing some consistent growth there. That's organically. Inorganically, we're actually executing incredibly well on things like Payapps and that's driving acceleration of our growth. So we are not decelerating as a business, okay. We are actually performing solidly or inorganically we're accelerating, all right. And I just want to be really clear about that. And yes, we said year over year we drove a 2x increase in our new customers. And I'll talk about where some of that's coming from in just a minute. But I also want to highlight the other thing that's going on. We are strengthening an already strong position in the ENR 400. So you heard about the story about power construction, which was a great example of someone taking out a competitive RFP and say, look, I need a forward looking cloud based solution on new technology that goes end to end from design to construction all the way to operations. And they chose us. And that was just one example that we gave in the opening commentary. So already a strengthening position in the ENR 400. Now, the other qualitative things that are driving some of that new customer growth is we already have our distribution channel operating at scale. In the U.S, this is helping us go down market more effectively, which is allowing us to capture more customers more effectively, be places where we weren't before and where others aren't, which is part of driving that. But also, we're already at scale operating internationally with our distribution channel. So that's driving international growth for us. And that's a really important driver as well as some of those net new accounts that you're seeing there. And the last thing I'll add and then I'm done with construction is that look, I heard this over and over again at AU. I'm hearing it over and over again from customers in lots of different places. They want the end-to-end solution. They want the life in the cloud. They're placing bets for the next 10 years. They want to go from design to construction to operations. And that's just making our solution more attractive to the market.

Our next question comes from the line of Michael Turrin of Wells Fargo.

Hey, thanks very much. Appreciate you taking the questions. The commentary on the call sounded consistent, but wondering if there are any added details you can provide for us on, just the overall macro spend environment and how that's maybe progressing across either key product segments or geos, whatever split you think is more useful. I think what we're trying to get a sense for is if there are any shades of improvement anywhere or if you'd characterize as mainly just consistent over the past couple of quarters?

Michael, I think the core answer here is consistency, okay? We're seeing consistent trends that we've seen with all in all the other quarters. There's always puts and takes in a large business like ours, especially one that's diverse as ours. But the general tone is, it's consistent with prior quarters.

And I would just add that there's also been a lot of noise this year from the new transaction model and then obviously the elections leading up to that. And so it's hard to sparse out, kind of that particular behavior. So I think as Andrew said, we call it consistent.

Yes, tough first, two. That's why we keep asking. Betsy, congrats on the transition back given you're also on the Board. I think it'd be useful to hear you chime in on the hiring of Janesh and maybe just also comment on how you ensure you're able to hand over the reins and keep progress going on the key transitions the company is working through?

First, I was involved in the process, which was quite extensive in the company, the recruiting of Janesh. And so we're certainly very excited to have him on board. What I would also say, is obviously with my experience of being on the board for 11 years as well as my deep dive into the business over the last six months, One of the reasons I'm staying around until the end of the fiscal year is I think I can be really helpful in that transition for Janesh. And so I'm very much looking forward. And I think that we have a great finance team, and I think that he's going to be -- he's going to fit very well, and I'm looking forward to making that happen as fast as we can.

Our next question comes from the line of Matthew Hedberg of RBC Capital Markets.

Hey, guys. This is, Mike Richards on for Matt. Thanks for taking the question. I was wondering if you could provide an update on Project Bernini and maybe how customer reception has been and where we are in developing other foundational models or just the monetization opportunity there.

Yeah. So first off, before I comment on bringing you, AI is you might have heard from AU. AI is embedded in everything we're doing from a bottom up and a top down perspective. And you also heard us talk at AU about new types of foundation models we're building that understand how certain things are done in our applications. You heard about a foundation model that's driving automated drawing creation. You heard about a foundation model that's driving automated sketch generation and sketch constraints. That kind of stuff is bottom up innovation. Bernini is more of a top down type innovation where you're actually specifying things and trying to generate a preliminary outcome from those specifications. And what we've been doing with Bernini is we've been trying to engage with certain targeted customers to get them to participate with us in making Bernini smarter and more intelligent. It's not available commercially right now, but it's getting more intelligent. We've actually been successful in getting some customers to stand up and say, look, yeah, I'd like to work with you to make this more intelligent because we need something that actually understands 3D geometry as geometry, not just as a picture of something, okay? So that's what's going on with Bernini right now. And you should continue to see refinements and extensions of that moving forward. Now with regard to monetization, monetization, nobody knows exactly how all this is going to be monetized. But is a few vectors here that come into play. One, we are ahead of our competitors in this space. We intend to be ahead. We're investing to stay ahead. That increases one's competitive position in the marketplace and that's really important. Also, you get to be able to charge for some of these incremental features in the future. When you're delivering value or a high quality outcome as a result, you're going to charge for that outcome. How we charge for those things? Let's let this play out, okay? It's still early days. But you also there's also monetization opportunity through licensing certain technologies for specific mature maturation for a specific customer's needs, all right. And that will be another avenue. So how these avenues play out, which one weighs more, let's just play out. But what you need to know about Autodesk is we're ahead, we've been ahead for a while, we were the first out there with an AI research lab that's been out there for over six years, published 70 papers. We're right on the cutting edge of 3D design technology and AI, and we intend to stay there.

Our next question comes from the line of Steve Tusa of JPMorgan.

Hey, good evening or afternoon. Lots of good questions asked. Just a detailed one, what's the change in the billings contribution from the transaction model change, the 5% to 6% to 5% to 5.5%.

Yeah. So it's basically because we did more buy sell business ahead of the European launch. So remember we said 5% to 6% when we launched Europe and it was the if we did more buy sell business, which means there's less tailwind from the new transaction model. The flip side means that means that the underlying increase in our billings guidance is greater than it looks on a headline basis.

Our next question comes from the line of Joshua Tilton of Wolfe Research.

Great. I have a kind of a high level one on the incoming CFO. If I if I heard correctly, we didn't exactly get, like, an initial outlook for, revenue growth for next year. And I'm just trying to understand in the context of the new CFO coming in, is there anything that could change the calculus of how you guys think about that 10% to 15% growth for the underlying business outside of the agency transition that's ongoing today?

Well, first, let's talk about that framework a little bit and then I'll comment a little bit on the increase in CFO. So, look, the 10% to 50% growth, right now we're pretty much right at the bottom end of that range. And if we look back over the last two years, there's been a series of things that created headwinds to new business. It started off with things like the pandemic, the inflation, the exiting of the Russian business, the writer's strike, the whole trade wars within particular geographies, all of these things were accumulated headwinds that built slowly into the business and have pushed us down to the low end of the range. It takes time in a subscription model for those things to build out of the business, okay? So it's going to take time for us to build out of that. That's to be expected with a subscription model. The revenue goes down slowly, it goes back up slowly as headwinds turn into tailwinds. So expect us to be near the bottom of that range in the short term just as a general kind of guideline for the core business to be at the bottom of the range, okay? As a long term framework, the 10% to 15% still makes sense as a long term guide for the company. But of course, as new eyes come in, we'll look at these things and we'll evaluate them. But right now, this all still makes sense.

Our next question comes from the line of Siti Panigrahi of Mizuho.

Thanks for taking my question. I understand the new business model have some kind of noise on your expense and margin side. But if you exclude that, where do you see some of the operating leverages that you can drive in next year or so?

Well, I think we've actually provided kind of historically what we've done over the last three years pretty clearly. And I think we said that we're continuing to be focused on expansion, but nothing further to add as far as next year.

We did provide data on that. So you can see what the underlying thing is and we expect to see continued improvement in that same vector.

On the same basis.

On the same basis, on the same apples-to-apples basis.

Our next question comes from the line of Michael Funk of Bank of America.

Hey, guys. Thank you for the questions tonight. Two if I could. You've mentioned a few times in the last calls about the largest multiyear cohort renewing next year and then also a large EBA cohort. Just wondering if you can give us kind of the range of potential outcomes among the renewals there, whether potential to upsell, risk of down sell and what that variance might look like around those renewals?

No, I mean, I think what we have said is that it's the largest cohort that and we saw that performance in ‘23. And so we expect a strong renewal year, but we're not giving any specific guidance on what that looks like for ‘26 at this point and we'll wait until we report earnings in February.

Okay, great. And then Betsy, one more. You've mentioned a few times off the investment in new transaction model, people, processes and automation, presumably more fixed cost versus variable like commission. Can you quantify that for us to help us with modeling as we try to forecast margin? I know you've not giving guidance, but better understanding of what that cost might actually be on an absolute basis would help us to think about our modeling?

Mike, we've got a slide in the earnings deck to help you think about modeling and I'll just point you to that.

Thank you. And ladies and gentlemen, that is all the time we have for Q&A today. I would now like to turn the conference back to Simon Mays-Smith for closing remarks. Sir?

Great. Thanks, and thank you everyone for joining us today. Looking forward to seeing many of you on the road over the next few weeks. If you have any questions in the meantime, please email me or call me. And in the meantime, all those of you in North America, wishing you a very happy Thanksgiving. Thank you.

Thank you, Simon. This concludes today's conference call. Thank you for participating. You may now disconnect.