Debbie Clifford
Chief Financial Officer at Autodesk
Thanks, Andrew. Amidst the more challenging macroeconomic environment and ongoing headwinds from currency in Russia, Q1 was strong. The overall momentum of the business was similar to last quarter with new subscriber growth decelerating a bit and renewal rates improving a bit quarter-over-quarter such that current remaining performance obligation growth was the same as last quarter. Strong renewal rates demonstrate existing customers are committed to and investing in their long-term strategic partnerships with Autodesk.
Some customers are also elevating their relationships with Autodesk from subsidiaries company-wide. When this happens, it can sometimes cause quarterly timing differences for the renewal as multiple contracts are co-termed to a single renewal date. We saw an instance of that in Q1, and as a result, some of the upfront revenue we expected to hit in Q1, we now expect later in the year. Q1 revenue would have been towards the top-end of our guidance range if adjusted for this upfront revenue.
Total revenue grew 8% and 12% in constant-currency. By-products, in constant-currency, AutoCAD and AutoCAD LT revenue grew 10%. AEC revenue grew 11%. Manufacturing revenue grew 13% and M&E revenue grew 9%. By region, in constant-currency, revenue grew 14% in the Americas, 11% in EMEA and 8% in APAC. Direct revenue increased 15% in constant-currency and represented 35% of total revenue, up one percentage point from last year due to strength in both enterprise and e-commerce.
Net revenue retention rate remained the same as last quarter. And within 100% to 110% at constant exchange rates. As we filed in our annual guidance given last quarter, our transition from upfront annual billings for multiyear contracts impacts our billings growth this year. That transition started on March 28th. So we had about one month of headwind in the first-quarter. Billings increased 4% to $1.2 billion, primarily reflecting growing renewal rates and early renewals, partly offset by about one month of annual billings for most multiyear contracts. Total deferred revenue increased 20% to $4.5 billion.
Total RPO of $5.4 billion and current RPO of $3.5 billion grew 15% and 12% respectively.
Turning to the P&L, non-GAAP gross margin remains broadly level at 92%, while non-GAAP operating margin decreased by two percentage points to approximately 33%. This reflects ongoing cost discipline, including the expected Q1 cost of repurchasing approximately 250 roles to invest in our strategic priorities, as well as the impact of exchange rate movements. GAAP operating margin decreased by one percentage points to approximately 17% for the same reasons. Free-cash flow was $714 million in the first-quarter, up 69% Year-over-Year. In addition to the underlying momentum of the business, there were three factors that provided a tailwind in the first-quarter. First, cash collections from the last month of billings in fiscal '23 were strong.
Second, we saw a favorable linearity and early renewals in the first-quarter, driven by the end of our multi-year buildout program and third, after the winter storms in California, we received a federal tax payment extension for the third-quarter. Turning to capital allocation, we continue to actively manage capital within our framework. Our strategy is underpinned by disciplined and focused capital deployment through the economic cycle.
As Andrew said, we are being vigilant during this period of macroeconomic uncertainty, paying close attention to attrition and recruitment rates and the increase upward pressure on costs from a weakening dollar. We will continue to offset dilution from our stock-based compensation program and to opportunistically accelerate repurchases when it makes sense to do so.
During Q1, we purchased 2.7 million shares for $534 million at an average price of approximately $199 per share, reducing total shares outstanding by about 3 million shares.
Now let me finish with guidance. The overall headlines are the expectations embedded in our guidance range for the full-year remain consistent with the underlying momentum in the business and we expect a tailwind in the second-half of the year from a strong cohort of enterprise business agreements. These EBAs labs renewed three years ago at the start of the pandemic and subsequent adoption and usage have been strong. Let me summarize some key factors we highlighted last quarter. First, foreign-exchange movements will be a headwind for revenue growth and margins in fiscal '24. Revenue headwinds from Russia and FX peak in the first-half of the year. Merchant headwind from FX will persists throughout the year.
Second, switching from upfront annual billings for most multiyear customers creates a significant headwind for free-cash flow in fiscal '24 and a smaller headwind in fiscal '25. Given this transition started on March 28th, this will become more apparent from the second-quarter onwards. Our expectations for the billing transition are unchanged. And third, it's possible that during the transition to multi-year contracts billed annually, some customers may choose annual contracts instead. We haven't seen much evidence of this in the limited time since the annual billings program started on March 28th, but it's early days and we'll keep you updated as the year progresses.
All else equal, if this were to occur, it would proportionately reduce the unbilled portion of our total remaining performance obligation and would negatively impact total RPO growth rates. Deferred revenue, billings, current remaining performance obligations, revenue, margins and free-cash flow will remain broadly unchanged in a scenario. Annual renewals create more opportunities for us to drive adoption and upsell, but without the price lock embedded in multiyear contracts. We still expect our cash tax rate will return to a more normalized level of approximately 31% of GAAP profit before-tax in fiscal '24, up from 25% in fiscal '23 for the reasons we outlined last quarter.
As I mentioned earlier, a federal tax payment extension after the winter storms in California means cash tax payments will shift from the first-half of the year to the third-quarter reducing third-quarter free-cash flow. The tax payment extension will change the first-half second-half free-cash flow linearity a little bit. But we still think we will generate roughly half of our free cash flow in the second-half of the year with second-half free-cash flow generation significantly weighted to the fourth-quarter. We still anticipate fiscal '24 to be the free-cash flow trough during our transition from upfront annual billings for multiyear contracts.
Putting that all together, we still expect fiscal '24 revenues to be between $5.36 billion and $5.46 billion, up about 8% at the midpoint or about 13% at constant exchange rates and excluding the impact from Russia. Normal seasonality, peak second-quarter currency and Russia headwinds and as I mentioned earlier, a strong second-half pipeline of enterprise agreements last renewed three years ago in the immediate aftermath of the onset of the pandemic mean we expect reported revenue growth to accelerate in the second-half of the year.
We expect non-GAAP operating margins to be similar to fiscal '23 levels, with constant-currency margin improvement offset by FX headwinds. As I said earlier, in a more challenging macroeconomic environment, we are being vigilant and proactive to sustain our margins. We expect free-cash flow to be between $1.15 billion and $1.5 billion. The midpoint of that range $1.2 billion implies a 41% reduction in free-cash flow compared to fiscal '23, primarily due to the shift to annual billings, a smaller multiyear cohort, FX and our cash tax rate.
The slide deck on our website has more details on modeling assumptions for Q2 and full-year fiscal '24. We continue to manage our business using a rule of 40 framework with a goal of reaching 45% or more over time. We think this balance between compounding growth and strong free-cash flow margins captured in the Rule of 40 framework is a hallmark of the most valuable companies in the world and we intend to remain one of them.
As we said last quarter, the rate of improvement will obviously be somewhat determined by the macro-economic backdrop. But let me be clear, we're managing the business to this metric and feel it strikes the right balance between driving top-line growth and delivering on disciplined profit and cash-flow growth. We intend to make meaningful steps over-time toward achieving our 45% or more goal regardless of the macroeconomic backdrop.
Andrew, back to you. Thank you, Debbie. Let me finish by updating you on our progress in the first-quarter. Our strategy is to transform the industries we serve with end-to-end cloud-based solutions that drive efficiency and sustainability for our customers. We continue to see good growth in AEC fueled by customers consolidating our solutions to connect previously siloed workflows in the cloud. HNTB, an employee-owned infrastructure solutions firm that servers the public and private owners and contractors expanded its EBA with Autodesk to help achieve its goal around design modernization, digital transformation and digital infrastructure solutions. The ability provided by our EBA means that HNTB can easily consolidate more workflows to Autodesk. For example, in addition to adopting and integrating this Autodesk build and Innovyze, HNTV has been prototyping Autodesk's immersive collaboration platform. By leveraging VR collaboration. It has been able to help transportation agencies like Florida's Turnpike Enterprise use digital twins to train facility management and first responder teams on realized scenarios from the safety of their offices, instead of on busy interstate highways. HNTB sees the potential of further applications in its work on complex bridges and tunnels, as well as its work with airports and state departments of transportation across the country. In construction, we continue to benefit from our complete end-to-end solutions, which encompass design, preconstruction and field execution to handover and into operations. DPR is among the top 10 largest general contractors and construction management systems in the U.S., and specializes in technically complex and sustainable projects. In the first-quarter, DPR, expanded and extended its partnership with Autodesk, and unified on Autodesk Construction Cloud. Our construction platform that connects stakeholders throughout the project lifecycle. In moving away from point solutions and onto Autodesk common data environment in cloud, DPR aims to connect all workflows, centralized communications and improved project management and operations across the office and job site. We continue to see significant opportunities to grow our construction platform outside the U.S., benefiting from our strong international presence and reputation. In Singapore, Autodesk Build was selected over three competitive offerings as the construction management platform for what will be Singapore's tallest skyscraper. When awarding the contract to our partner, China Harbor, the project owners chose Autodesk Build because it connected the design and made processes in the cloud, centralized project schedules and generated automated class reports to reduce risk during construction. Of course, these stories have a common theme: managing across the project life cycle to increase efficiency and sustainability while decreasing risk. And this means our customers are renewing and expanding their relationships with us. Over time, we expect the majority of all projects be managed this way, and we're getting ready today to scale to serve that demand. Jim talked at our Investor Day about how product innovation, go-to-market expansion and customer success are helping us get ready. In the first quarter, we took another important step by integrating our construction sales force into our worldwide sales team. While integrations of this scale inevitably cause some short-term disruption, combining the two teams will allow us to expand the scale and reach of our construction business, particularly in our design customer base and our ability to serve our customers across the project life cycle. Moving on to manufacturing. We made excellent progress on our strategic initiatives. Customers continue to invest in their digital transformations and consolidate on our design to make platform to grow their business and make it more resilient. For example, Rittal is a leading manufacturer of electrical enclosure systems. It uses inventor, vault and mold flow to optimize and manage its product manufacturing to produce thousands of customized and configured switch cabinets daily. Rittal is focused on maximizing internal automation to accelerate its speed to market and respond more nimbly to changes in demand. In Q1, it increased its EBA with Autodesk to include Fusion to serve as its central data management system, build a more resilient supply chain and drive competitive advantage through quicker turnaround times. Using Fusion, Rittal will be able to automatically route online customer orders through its engineers and integrated product line and make deliveries in as little as one or twoi days. In the U.K., a precision engineering firm was looking to update its CAM workflow to increase engineering efficiency and optimize costs. After a competitive evaluation, the customer migrated from its existing provider to Fusion with the machining extension because of Fusion's intuitive UI, cloud capabilities and simple integrations with its existing software and machines. Realizing the opportunities to drive breakthrough efficiency by consolidating all workflows on a single design and make platform, the customer is now also evaluating the migration of its CAD workflows from a competitor to Fusion. Fusion continues to grow strongly, ending the quarter with 231,000 subscribers as more customers connect more workflows in the cloud to drive efficiency, sustainability and resilience. In partner with higher education providers across the globe, we continue to invest in the workforce of the future. We recently partnered with the Tamil Nadu Skill Development Corporation and Anna University in India to integrate Fusion into its twenty mandatory product engineering courses and launched the Fusion design challenge to showcase the skills of 20,000 students. Fusion's intuitive UI and cloud-based data management make it easy for students to learn and collaborate on class products. Autodesk is also investing in a new technology engagement center at California State University Northridge that will promote interdisciplinary collaboration in engineering and computer academic programs and house the global Hispanic-serving institution, Equity Innovation Hub, which aims to build a more diverse and inclusive engineering workforce. And finally, we continue to work with noncompliant users to ensure that they are using the latest and most secure versions of our software. In the first quarter, we made substantial progress on two initiatives we outlined at Investor Day: further hardening our systems by significantly tightening concurrent usage of named user subscription; and significantly expanding the precision and reach of our in-project product messaging. We expect both initiatives to drive further conversion and growth in the second half of the year and beyond. Let me finish where I started. Autodesk remains relentlessly curious with the propensity and desire to evolve and innovate with our AI-infused industry cloud, Fusion, Forma and Flow scaled on Autodesk platform services, our customers will be able to leverage their large domain-specific inter- and intra-industry data sets to deliver further breakthrough productivity, operations and sustainability gains. And with intuitive UIs and the application of multimodal AI models that move beyond language models to capture sketches and realities directly into accurate 3D models, we will be able to accelerate the transition from products to capabilities that I talked about at our recent Investor Day. Our transformation from products to capabilities will enable us to forge broader, trusted and more durable partnerships with our customers, give Autodesk a longer run rate of growth and free cash flow generation and enable a better world designed and built for all. Operator, we would now like to open the call up for questions.
