Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Autodesk Inc. Earnings Conference Call. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Mr. Dave Gennarelli. Please proceed.

Thanks, operator. Good afternoon. Thank you for joining our conference call to discuss our fourth quarter fiscal 2011. Joining me today are Carl Bass, our Chief Executive Officer; and Mark Hawkins, our Chief Financial Officer. Today's conference call is being broadcast live via webcast. In addition, a replay of the call will be available at autodesk.com/investors. As noted in our press release, we have published our prepared remarks on our website in advance of this call. Those remarks are intended to serve in place of extended formal comments and we will not repeat them on this call. During the course of this conference call, we will make forward-looking statements regarding future events and the future performance of the company such as our guidance for the first quarter and full year fiscal 2012, our five-year financial targets, the factors we used to estimate our guidance, the new products and suites releases, certain future strategic transactions, business prospects and financial results, our market opportunities and strategies and trends in sales initiatives for our products and trends in various geographies and industries. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. Please refer to the documents we file from time to time with the SEC, specifically our Form 10-K for the fiscal year 2010, our Form 10-Q for the quarters ended April 30, July 31 and October 31, 2010, and our periodic Form 8-K filings, including the Form 8-K filed with today's press release and prepared remarks. Those documents contain and identify important risks and other factors that may cause actual results to differ from those contained in our forward-looking statements. Forward-looking statements made during the call are being made as of today. If this call…

Thank you, and good afternoon. Our strong fourth quarter results capped off a substantial year of progress. After navigating through the biggest economic downturn in Autodesk history, we're now experiencing a healthy recovery and even achieving record results in several areas. Highlights for the quarter include: 16% growth in total revenue; double-digit revenue growth in all of our geographies and business segments; a sharp increase in large deal activity; record total billings; record revenue for our Manufacturing business; record revenue for our Revit family of products; record deferred revenue; and strong growth in cash flow from operating activities. We experienced strong year-on-year growth in all of our geographies with APAC again leading the way. Global revenue growth was led by our model-based design products. Our Manufacturing business had record quarterly revenue in the fourth quarter and grew 22% for the full year. Over the last few years the dynamics of the Manufacturing segment have shifted dramatically. Historically, engineering software was targeting different sized companies and competition mostly occurred within those strata. Our initial mission was to provide 80% of the functionality at 20% of the price. So truthfully, we're often seen as a provider of high-value but less strategic software and we competed infrequently against our major global competitors. Today, we do much more than that original mission. Through sustained investment in R&D and targeted acquisitions, we now have a product portfolio that is the most comprehensive and functional in the industry, while staying true to our original mission of providing great value. The combination of our modeling, data management and simulation capabilities has allowed us to grow much faster than our major global competitors despite the difficult economic times. Coupled with the continuing investment by our channel partners and an increase in our direct sales effort, we are winning…

[Operator Instructions] Our first question comes from the line of Brent Thill of UBS.

Carl, if you can just maybe expand on the sharp increase in large deals, maybe expand on what you're seeing and how this is potentially tied into the suite sales. And if I could follow up with Mark, on the 10% revenue guidance, I believe you're targeting 12% to 14% long term. So is this just a natural function, just being conservative earlier in the year in terms of your guidance? I would assume you're still comfortable with that as a long-term target?

Okay so, Brent, let me take the first one. I think the large deal activity we're seeing is somewhat a combination of what we see going on in the economy, just a general rebound across the world, as well as specific investments we made. So one of the things I'm glad we were able to do despite the extensive cost cutting we did, is we were able to invest in our major account sales force. And a lot of it is really a direct result of sales and marketing activity of those investments. But one thing I would say, we'll be able to differentiate more as we go along, is most of our major account deals involve some form of flexible licensing, it's generally global and flexible in nature. I would position the suites as being slightly different. Our suites will be for our small- and medium-sized customers. They're better value for them. They'll generally go through our distribution partners or channel partners and will be different than what you see in the large accounts. So two different initiatives and I think they're trying to give the right functionality and licensing models to the appropriate customer. Mark, do you want to take the...

Yes, absolutely. And, Brent, in terms of the 10%, approximately 10% revenue growth, we feel good about that projection. We feel confident in that. I think the other thing that I would call out is, this is very much consistent with our five-year plan that we have. And so just want to reiterate that as well. This is very much part and parcel to the five-year plan and the achievement of the 30% plus operating margin, as well as the 12% to 14% compounded annual growth rate in revenue over time. I think, clearly, and we came out of '11 with broad-based growth in terms of both GO and industry. We feel like we got a solid plan going forward and we'll continue to drive that. Clearly, there's still are uncertainties in the world. And we're trying to be prudent appropriately with foreign exchange and the various developments of the day in the economy but we feel confident in our guidance.

Our next question comes from Heather Bellini with ISI Group.

Carl, I was wondering if you could talk to us about, if you start looking at the Bureau of Labor Statistics data, you've started to see headcount in some of your key end markets kind of it's not contracting anymore and it's actually kind of just starting to hover and show a tiny bit of growth. I'm just wondering what your outlook is in your revenue guidance for this year, what's baked in there and how should we think about your expectation for seek [ph] growth in your core end markets?

Sure, Heather. What I would say is our guidance really was predicated on no real big change in the employment environment. What we are starting to see, and this is the first quarter in which we've really started to see in some of the hard hit markets, and I mentioned in the kind of prepared remarks. What we're starting to see is hiring, we've seen hiring in AEC firms, AEC firms in the Americas. We started to see some in Western Europe. So that's probably the most surprising thing we've seen. They were really clearly hard hit at some point. We talked about, there were numbers in certain cities in the U.S. in which the architects, the number of jobs have been reduced by 30%. And so we're starting to see both the architecture and engineering and construction firms begin hiring back. And I think the National Labor Statistics are reflecting that. We don't contemplate that improvement in the numbers.

And then my follow-up was just along the lines of, you mentioned suites when you're answering Brent's question to the kind of small and midsize customers. Can you talk a little bit about, do they need to change their workflow? How they do it today to kind of take advantage of the integrated offering? Is it a wait for them to be potentially more efficient with their existing workforce that might drive this uptake of some of the new products that you're starting to come out with?

Yes, so I would look at it as they don't have -- I mean, first of all, people don't have to change. But it gives them an opportunity for people to have more tools available on the desktop and more interoperability between those tools. And it allows them to be more efficient because they focus on productive activities, use the appropriate tool for the appropriate job, spend less time moving data around and kind of just wrangling all the information. And so it's giving each of the practitioners more tools and more capabilities to get their job done. And I think that's particularly relevant for small and medium businesses, where as they come out of this downturn they were looking for more productivity.

And is the channel incented to help drive adoption of these more so than they might be on the standalone products?

Absolutely. I mean I was wondering -- as you can imagine, you know it's valuable for customers if -- our channel and our salespeople are not properly incented, it would take much longer than necessary. And we talked about this a little bit. Remember, we launched a couple of suites during this year as kind of a trial run to make sure we could get everybody lined up in all the incentives and kind of run a drill, so everyone understood it. Early results were promising. We'll go broad as we launch this in March and April. But all the incentives are in place to do that.

Our next question comes from Phil Winslow with Crédit Suisse. Dennis Simson - Crédit Suisse AG: This is Dennis Simson for Phil Winslow. Can you please comment on what feedback you're getting from your several products customers given the budget issues of various governments?

Yes, sure. I mean, so our civil engineering, our infrastructure, our mapping products are used both in public and private sector. What we've seen is a healthy rebound, we've seen lots of good government business. It's debatable how affective the stimulus money has been. But there is a fair amount of build out and when you look at our products worldwide as I referenced before, in the developing countries, it's improvement and it's continuous improvements to what we have. Build out around the world is actually much more general and broad. And so when you look at the emerging economies, there's quite a lot. The other things to remember about these products is they're used across a wide variety of domains from designing parking lots around buildings to building bridges, tunnels, highways, dams, railroads, I mean. So it's quite an extensive one and I would say as the economies change, certainly the usage profile changes but really good reception to our civil engineering sub particularly in the public sector. Dennis Simson - Crédit Suisse AG: And can you expand on the strength in your model-based design segment in the quarter, was there anything in particular that drove the strength there?

I didn't see anything particular that really drove the strength. I mean, I think, it's a continuation of the efforts we've put and people recognizing the value and going to model-based design, which we've talked about for a long time. And so, I think, was just a natural continuation.

Our next question comes from Sterling Auty with JPMorgan. Sterling Auty - JP Morgan Chase & Co: If I look at the revenue by segment, the platform solutions, the $181 million, that's the only segment that actually, the fourth quarter was not the high point for the year. Can you just talk, are we actually starting to see even a further shift into the more vertical, Revit had, obviously, a good quarter. So just a little color there and then I have one follow-up,

Yes, as I often remind all of us, ourselves included. One quarter doesn't make a data point or makes a data point doesn't make a trend, and I would say maybe. We predicted a strong move to model-based design and more vertical products for a long time. But our horizontal products continue to be very strong. Sometimes individual incentives, just the dynamics of the end of your business lead to one thing. It would be good for us if that was happening. I just wouldn't be too anxious to jump on that as a long-term trend yet. Sterling Auty - JP Morgan Chase & Co: And then the follow-up is actually on the maintenance revenue side. Mark, as we look at the improvement overall in the business, how should we think about how the maintenance revenue will start to kind of improve in that kind of correlated manner, obviously, in a lag effect, but should we start to see a little bit more catch-up in the next couple of quarters or will it still be kind of a slow gradual improvement lagging behind the improvement in license?

It's a good question, Sterling. Let me just say this. Certainly, there is a lag effect to your point. I think there's several variables that we always like to look at with the model. The first thing, it always starts with is certainly the billings. And it was called out, we have a 13% year-over-year growth in billings, which we really liked. And that over time will obviously translate into maintenance revenue. And so I think you need to look at that and factor that into the equation. I think, the other thing you have to factor into the equation as you start to model out the maintenance revenue over time is you have to look at the renewal on the attached rates, Sterling, and kind of call it on that because we don't actually do that. We don't guide that per se forward-looking. But those are the variables that you want to look at, right? It's the billings, how they're looking at now, how that's going to work itself out into revenue over time and what your prediction is on the future attachment renewal. I do want to comment on a couple of things here that might give you a little bit of extra color. Again, our renewal rates were up year-on-year and quarter-on-quarter. We don't talk about specifics but directionally, we think that's a good sign. Our cash was up year-on-year and that's, I think, is a dynamic that you want to think about. So hopefully, that algorithm answers your question and gives you a little perspective as you start to model that going forward. But it certainly has a lag effect.

Our next question comes from Richard Davis with Canaccord.

So, Carl, so couple kind of questions that kind of go together. So with regard to Moldflow, how does that lived up to your expectations pluses and minuses? And then more broadly kind of derivative question, is the new categorization of new and adjacent, it's kind of a bunch of different products. If I'm working in one of those units, am I hoping that one of those units gets big enough to kind of graduate to become a suite or a flagship? Or kind of what is that? Is it science projects? Is it -- how do you think about that segment of the business?

So I'm very happy with Moldflow. I think we had not a typical integration issues. We had a very different selling model than we're accustomed to. I think we're long past that. I like two parts of it. One is the way it complements our manufacturing portfolio, generally. When you now look even in places were we're not the primary design tool, primary, let's say, engineering tool, we maybe in there with design tools like Alias. We're in there with documentation and tooling stuff, we're there in the design of the factory, we're there with our analysis and simulation capabilities. So we can have a footprint even when we're not the primary engineering tool. Obviously, we prefer it when we're more than that. But just when you look at being able to serve customers in many different ways, Moldflow is just one part of it. Just in the way I look at Blue Ridge Numerics is providing the same thing in simulation and analysis. So I'm overall thrilled with what we've been doing with analysis and simulation. When you get to new and adjacent, what I think you should look at there is a movement towards more of the products moving to suites. Suites should be our primary delivery vehicle over time for the majority of our customers. And I think you'll see revenue moving into the suites category and it's the best way to gauge it. I think, some of this is a potpourri of stuff. I mean, it's labeled that way. Generally speaking, we have a bunch of products that are not broadly applicable enough to be in the suite. Some of those are still valuable businesses. We will continue those business, continue to invest in them. But I think what you should look for is products maturing to the point where they get included in suites as kind of a graduation.

Our next question comes from Steve Ashley with Robert W. Baird. Steven Ashley - Robert W. Baird & Co. Incorporated: I'd actually like to follow-up on two lines of questioning. And first just relates to the simulation and analysis market traditionally sold into the manufacturing sector. Do you have an opportunity to take those tools to the AEC sector and maybe integrate them with Revit and bring them to an engineering kind of group that is historically not been a simulation and an analysis customer?

Yes. So we surely have -- the first and foremost, we have a way to bring them more broadly to the manufacturing sector. We have historically not offered many of those tools and this gives us an opportunity to give our customers more on manufacturing. But we certainly have that same capability in AEC. We've provided some tools around energy analysis so far. We've done some around structural engineering analysis. When you look at things like the CFT software we just acquired, it is applicable to both markets. And as people in AEC are doing more model-based design, our ability to provide them with more simulation and analysis just grows. Steven Ashley - Robert W. Baird & Co. Incorporated: And then I'd just like to drill down just a little bit more on the new suites that are pending and kind of Heather's line of questioning, what is going to make them more channel friendly than the existing line of suites today?

I don't think it's more friendly necessarily than the existing suites. So I wouldn't start there. I think you have a broader range of suites, so the number of industries or industry subsegments they cover is much broader and they're tiered into three different offerings. So they should be easier for our channel partners to sell. The overall offering is more rationalized in terms of what's out there. As we talked about with, in answer to Heather's question, there are incentives in place to make sure that our channel partners are incented to sell them. But really what's in it is a better workflow for our customers. What was contemplated as we put together is what is the person trying to accomplish? So when you look at the engineer or architects sitting there, in their day job, what are they trying to get done and what tools do they need to get that done? And how can we make those tools work as well as possible? And as you know, we're not breaking any ground here. If you look at what Microsoft did with Office a decade ago or more or if you look at what Adobe has done with the Creative Suite. Those are good examples of people really doing the same thing, taking discrete products that were often used by the same person, putting them together in ways that are more conveniently packaged for the go-to-market part and provide better value to the customers.

Our next question comes from Keith Weiss with Morgan Stanley.

It looks like it's a pretty strong quarter for updates and upgrades at $61 million this quarter. It seems like that line item every once in a while comes down and surprises us to the upside. Anything unusual that sort of drove that revenue line this quarter?

Some of these cases that surprises us too.

Let me -- Keith, I'll add a couple of commentaries. One of the things, Carl had talked about some of the major deals that were going on. We found some customers as we -- got increased account penetration where they were doing some upgrades and cost-grades and just really nice packages that were coming together with the customers and so that translated into some nice business results. So that was really one of the big drivers that was influencing that line.

And then as a follow-up, it looks like the non-subscription related portion of the deferred revenue balance was up very strongly in the quarter. I calculate $79 million, up 50% year-over-year. Anything in particular are going in that bucket like undelivered products or something and does that give you something of a head start for Q1?

Well, there's a variety of things that go into deferred revenue in general. Certainly, we understand the subscription is the absolute lion's share of that, there is also multiyear subscription that will actually classify itself beyond just one year, for example, is another major dimension of that. We have other things that are in there including training and things of that matter. But in terms of whether it's a jump on Q1 or not, I think all that's fully factored into our guidance and our thinking for the quarter and for the year.

And as generally speaking, the unfulfilled product is a miniscule part. I won't take that as being a big thing. That's just generally not there.

It's absolutely is a miniscule part. I can see the data here.

Our next question comes from Walter Pritchard with Citi.

This is Ken Wong from Citi in Walter's place. With your commentary around big deals, it sounds like large enterprise is showing pretty good health. Can you talk a little bit about the SMB and professional market?

Yes, I mean in order to post the results we did, absolutely, our SMB market has to do well. It's still the lion's share of our business. The majority of our business is to small and medium enterprises. We've laid that out a little bit over time. About 30% of the business is to our top-tier customers. 15% of the overall business goes through us directly. But 85% of our business is through our channel partners and I mean, and that's the majority of the business. So when our business does well, it's because we're seeing a pickup in small and medium business. And as we talked about as we went into this downturn. The place where the business fell off the most was in the small and medium business. So we've seen a nice rebound around the world in terms of small and medium business. In order to get back to levels we were at before, we still think we want to see a decrease in unemployment and as employment levels get back and as hiring continues, we think we'll continue to see that but we were very pleased overall with how the small and medium businesses did.

And then perhaps, can you -- in that same vein, can you maybe talk a little bit about how suite adoption between those three markets differs?

Yes, I mean, right now -- I mean, we only have the historic data about the suites that we offered before. Most of the new, the introduction of the suites will happen in the spring of this year, in the next couple of months. And so as we look at that introduction we'll be able to give you more color about that. Right now, for our flagship products, like Revit and Inventor, a majority of them are sold in suites we introduced in the summer of last year. Our Entertainment Creation Suite is doing real well. So I believe this will be the primary way we go to market certainly for small and medium business but we don't have any more detail right now.

Our next question comes from Dan Cummins with ThinkEquity.

I had a question on the visibility of the business. If we exclude maybe four quarters a couple of years ago at the tail end of the bubble, the peak of the bubble. I'd say, in my judgment, Autodesk, you're back, so to speak. So I guess my question is, why not guide all the way down to the EPS line? And if you could give us a sense of how much, what level of visibility, maybe percent of recurring revenue and so forth is inherent in the guidance, in the 10% revenue guidance?

A couple things here. Certainly, Dan, I think the visibility is better. And we acknowledge that there's, as we all see around the world, there's some economic unevenness and uncertainty. But it's certainly better, we feel confident in the guidance that we put forward. It's good double-digit growth on top of a strong year that we just completed in FY'11 that Carl talked about. And so from that standpoint, I think, it kind of stands on its own. In terms of guiding all the way down to the EPS level, right now, we felt like people are primarily interested in what's happening at the operating margin level and in the revenue level. Certainly, we've given some direction on the tax of being approximately 26% non-GAAP for the year, something to think about for the year, so that helps people get around that. And then the delta has to do with share buyback and things of that nature. You can certainly see our pattern historically and share buyback has largely been to cover dilution. But I think that's probably the biggest thought I would give you there. In terms of reoccurring versus non-reoccurring, I think, I'd go back and look at the history that we're showing in terms of the subscription revenue relative to the license revenue and you can kind of see how that's breaking and how that's trending right now. And just imagine that we're factoring that in as we go forward. We don't guide the breakout of that on a forward-looking basis but you can see the trending.

Yes, there's no doubt our subscription revenue has been growing. But still the majority of our revenue comes from non-subscription. And I'm not sure we will cross that line any time soon.

Can I ask a follow-up on Revit?

Sure.

I've been trying to track it, I think, it feels like it's perhaps crossed the threshold of 10% of revenue overall. It feels like it's really on the cusp of breakout demand. Is that fair to say?

Yes, I think that is. I mean, I think it's become a commonly accepted, it is kind of industry standard for BIM. So when we introduced -- I mean, remember, we acquired some technology a bunch of years ago. At that point, it had almost no revenue and no customers. We've invested in it heavily over the last few years. We've invested in the idea of building information modeling and the industry has now accepted this is a better way to do business. I don't think that's in dispute at all. And I think when you look for products that deliver on BIM, Revit is the category leader. And so I think we've hit this point where people now recognize that they need to move to BIM products, it's not a question of if, it's just a question of when. The downturn allowed a lot of firms to retool. Many people went into this saying, okay, first reaction was, how do I cut my expenses, how do I cut my staff? The second reaction is, how do I come out of this better positioned to be more effective and more efficient and to be more competitive? And in many cases, that involved adopting a BIM workflow that centers around revenue. So I'm really pleased to how well we've done with Revit. And I think you've correctly identified that it's become the tool of choice for doing BIM.

Our next question comes from Derek Bingham with Goldman Sachs.

Just on the suites, just curious what you learned from kind of this first kind of trial rollout over the past year or so in terms of how long it takes the channel and customers to kick the tires on these things and then start to really get interested, and do you expect the kind of maybe a similar kind of lag or a shorter lag when you put out your next route of suites?

I would say the biggest lesson, I think, we knew it going into it but we now probably have more details and particulars, is to make sure that everybody involved is aligned around this. It's probably about getting alignment, so we may make a great offering and the customer could find it incredibly valuable but unless all of our sales and marketing, all of our go-to-market efforts, all of our people, as well as that of our channel partners are aligned, those things will not be successful or as rapidly adopted as we might see it. So I think a lot of it is fine tuning around how to make sure everything is aligned in terms of messaging and incentives and everything else. The other thing is, I'd say, is we knew when we put these together for many of these suites, they would be a version one of the suites. And so for many customers they just sit there and wait and see. For a customer who's been buying Inventor up for 10 years, they'd want to understand what more do I get? But overall, the general reactions has been great. If you were to go up and look at the newsgroups or the blogs about it, really, customers are really excited about the value that's delivered and particularly, these ability to integrate the different products together. So generally speaking, very good but the biggest lesson is to make sure we're aligned as possible both internally and externally.

The increase in the maintenance attached and renewal rates that you're talking about, is that just kind of a very straightforward function of the increased mix in model-based and suite products? Or is there anything else that you're doing kind of proactively to drive that?

I think some of it has to do with what you described there, Derek. I think some of it also is related to when we went to the simplified upgrade pricing, it just makes more economic sense to stay in subscription. And I think customers see the value of it. And as the economy recovers, they want the benefit that we offer with our subscription.

Our next question comes from Brendan Barnicle with Pacific Crest Securities.

This is Matt in for Brendan. Is there a way we could look at ASP increases and things like BIM and suites and see how that translates into revenue growth?

No, you can't. Generally, we haven't broken that out. But historically, what we've said and it continues to be true is we don't see dramatic shifts in ASP on a line item by line item basis. When you SKU by SKU, you don't see great variability in ASPs. What you do see occasionally is a substitution of one product for another. So a suite for a product would result in a higher ASP but if you were to look at standalone products quarter-over-quarter, there's not a huge amount of variability absent promotions in the ASPs.

And then on emerging markets, how are efforts to combat piracy been able to help your growth there? And also, due to the fact that most of the users who pirate your products are pirating the kind of highest ASP products, have you been successfully converting any of those users?

I don't think we did. It's kind of a tale of two cities. It's the best and worst in the sense that I don't think we've been particularly successful. And on the other hand, we've been more successful than many other software companies and both of those things continue to remain true. I think there are some things coming on the horizon that I'm slightly more optimistic about than I had been. A lot of the work we've done to combat piracy either involves direct enforcement or policy change with local governments. What I see coming forward for the first time is the ability to do things technologically different by virtue of offering products that are a combination of our traditional desktop delivery, as well as a cloud-based delivery. And as more value gets embedded in the cloud, obviously, there's less piracy there. So I think that's the most optimistic thing I've seen in many years in terms of looking forward. Looking back, I think it's same old, same old. We continue to work on it in the same ways that we have with moderate success.

Our next question comes from Steve Koenig with Longbow Research.

I'd like to dig into maybe one of your favorite topics, competition with our friends at SolidWorks and DISO. So clearly, you have a bigger base overall. It looks like they're obviously being very successful selling model-based tools into manufacturing. And now, they're trying to attack AEC and they're also trying to move to the cloud. And I'm just wondering, what are your thoughts on they're moving to AEC, would you plan a competitive response? How do you see yourself dealing with that situation?

Yes, first of all, I would say is, I think, we've been much more successful than DISO as a whole. So you have to look at their high-end product, CATIA and their low end product, SolidWorks. What we see is them trying to co-mingle these two things in ways that they've never done before and we think that's to our advantage. Every quarter, I'm more and more amazed by the number of competitive swap outs and displacements that we have of CATIA, as well as the number of replacements we have for SolidWorks. So we think of them as a competitor in the manufacturing space and we're increasingly pleased with our performance relative to them. If you were to look, it's very hard given the limited and obscure financials that they've disclosed. But if you were able to break through it, you would see very limited growth in their CATIA product. So their flagship product really is not growing much at all. And we think that's in part a result of how well we're doing in offering a broad range of manufacturing solutions. When it comes to AEC, we'll see what they do. But right now, I think they have their hands full competing in manufacturing.

Can you guys comment on how many -- each of these acquisitions by themselves may not be significant but in total, would you expect them to add, one, two points to revenue growth this year in terms of all the acquisitions you do this year? How should we think about that?

Yes, I would say your general idea that we'll add, it's a little bit hard to know at this point given the size of it. Right now, we were in a slightly awkward position in that there's two deals that we've announced but not closed yet, and fully accounting for some of the accounting details is not done yet. But for what I have seen so far and corresponds with history pretty well is as times get better, the number of deals goes up slightly and we also see slightly larger deals that we're already seeing that. So absent the accounting details of deferred revenue write-down, those are the kind of things you'd see. But in general, what I expect us to do is to concentrate on those kinds of acquisitions that are mostly for technology. Mark, do you have anything to add about accounting?

I totally agree with your point. And I would say from the standpoint, Steve, that it's largely immaterial in the current year. As we can see it right now, we'll see as we go on with the particular deals that we're talking about, the two immediate ones. But that would be my point there and certainly reaffirm Carl's point that we like the opportunities to add technologies to our business.

Our next question comes from Israel Hernandez with Barclays Capital.

My questions were just that but maybe a follow-up with respect to your performance in the emerging markets, which was up 16%. Can you maybe comment and drill down on what you're seeing across the various BRIC countries? And what are the possibilities that we could see acceleration going forward in those markets?

Yes, I think we're coming out of a period and we certainly saw a decline and then a slightly chaotic period and it's increasing. And I think we could surprise ourselves to the upside there. When you look broadly at the emerging markets, signs in almost every one are positive. I think it's still -- there are a handful of places, when you look at some of the geopolitical concerns in places like the Middle East, are still an issue for us that could weigh on us. But other than that when you look at the major parts, all the signs are kind of hopping [ph] to the right.

[Operator Instructions] Our next question comes from Blair Abernethy with Stifel, Nicolaus. Blair Abernethy - Stifel, Nicolaus & Co., Inc.: Carl, just back on the manufacturing briefly. Great performance this quarter. Can you give us a sense of the 31 large deals, how much of that came from the Manufacturing segment? And I'm wondering if you can just sort of expand a bit more on where you're getting your traction there? Is this expansions, just mostly displacements, new customers? What's driving that, the outperformance in that segment?

So we don't break it down by segment for the large deals and one of the main reasons is what we see in most our major account activity and just in general when you look at that 30% of revenue that comes from the top 1% of customers. When you look at that kind of customer, they're almost always buying products from multiple groups. So when you look at the reporting segments and we've crossed all the segments, they're buying products across them all. When you look at the character of what's going on, to generalize a little bit, a lot of times -- we generally don't do a big deal from nothing. So it doesn't show up on our doorstep and buy $5 million that hasn't been a customer before. A lot of it is expansion within an account and a lot of it comes from consolidation. As we've talked about before, many accounts have heterogeneous engineering environments. They use multiple products by choice, they've ended up with multiple products that they inherited through their own acquisitions, and this is usually part of a process of rationalization. Occasionally, it's also a process of expanding their business. So it's a combination of rationalization, sometimes it comes from centralization and more central coordination within their accounts. And sometimes it is just improving their tool sets for going forward. A lot of them do involve competitive swap outs. So in many places, the increased use of our tools is replacing something else. I mean, it almost never comes at the expense of having them do nothing. So it's almost always that they're replacing someone else's tools with our tools. Blair Abernethy - Stifel, Nicolaus & Co., Inc.: And any update on the data management side or progress with the Vault product?

Yes, I'm actually thrilled with our data management product. We have thousands and thousands of implementations of data management. Sometime during this year, we'll talk about it a little bit more. I'd like to give you more detail on it. But our strategy, which has been in to kind of stark contrast to that of our competitors, we've stuck pretty close to data management for the engineering teams has been very successful, considered high-value, widely deployed, easy to implement and I think that's worked really well. It's very different than what many of our competitors are doing and they're finding some success there but we're happy with what we're doing in this space and when we disclosed the numbers, I think everyone will be quite surprised by the amount of data and the number of users who are managing the life cycle of products through Vault and the associated products.

Ladies and gentlemen, this concludes our Q&A session for today's event. I would now like to turn the call back over to Dave Gennarelli for closing remarks.

Thanks, operator. That concludes our remarks. We'll be at the Morgan Stanley conference next Tuesday, the first, in San Francisco. And if you have any questions in the meantime, you can reach me at (415) 507-6033. Thanks.

Thank you for your participation in today's conference. This concludes today's presentation. You may now disconnect and have a great day.