MCAD Industry View - A May 2006 Update


Revenue for the years 2002, 2003 and 2004 was $234 million, $253 million and $277 million, respectively. While software revenue was relatively flat, maintenance and service revenue increased 43% in two years. In 2004, revenue was almost evenly split between America, Europe and AP. This reflects growing AP revenue and shrinking US revenue.

Figure 3 MSC.Software Three Year Financial Performance


On April 26, 2006 PTC reported results of its second quarter of fiscal 2006, the period ended March 31, 2006. Total revenue for the quarter was $200 million, an increase of 14% form the $176 million in the same quarter a year ago and a 4% increase from the $192.5 million in the just prior quarter. The $200 million was at the high end of the guidance given a quarter ago. License revenue for the quarter was $54.6 million, accounting for 27% of total revenue. This was an increase of 3.6% year-over-year and a decrease of 6.7% sequentially. Maintenance revenue was $89 million, accounting for 45% of total revenue. This was an increase of nearly 6% year-over-year and essentially flat sequentially. Service revenue was $56 million, accounting for 28% of total revenue. This was an increase of 44% year- over-year and an increase of 26% sequentially.

Desktop Solutions generated revenue of $131 million in the last quarter, accounting for 66% of total revenue, while Enterprise Solutions generated revenue of $68 million accounting, for 34% of total revenue.

$K 1Q06 4Q05 Delta 1Q05 Delta
Desktop 131,811 126,369 4.3% 124,826 5.6%
Enterprise 68,383 66,149 3.4% 51,277 33.4%
Total 200,194 192,518 4.0% 176,103 13.7%
Table 6 PTC Revenue by Segment

North American revenue was $78 million, accounting for 39% of total; European revenue was $67 million, accounting for 22% of total revenue; and Asia Pacific revenue was $55 million, accounting for 28% of total revenue. NA revenue was up 23% year-over-year, European revenue up 13% year-over-year and AP revenue up 3% year-over-year.

Net income for the last quarter was $10.7 million, down 48% from the $20.5 million in the year ago quarter, but up 43% from the $7.5 million in the just prior quarter. PTC adopted FAS 123 in the fourth quarter of fiscal year 2005, and therefore the GAAP results from the year-ago period do not include the cost of stock-based compensation.

C. Richard Harrison, president and chief executive officer, said, "We executed well in the second quarter of (fiscal) 2006. We delivered record revenue in our Enterprise Solutions category, launched a major release of Pro/ENGINEER, and we have since completed our product integration of Arbortext and Windchill. Also, our new relationship with IBM has already reached a milestone as we closed our first joint transaction under the agreement we announced in January."

On April 26th PTC announced a definitive agreement to acquire Mathsoft Engineering & Education, Inc. (Mathsoft) for $63.25 million in cash. Mathsoft is the provider of Mathcad, software that helps engineering organizations create, automate, document and reuse engineering calculations critical to the product development process, as well as other mathematics-driven processes. Mathsoft has annual revenue of approximately $20 million and over 250,000 professional users worldwide. Based in Cambridge, Massachusetts, Mathsoft has 130 employees in seven countries including the United States, United Kingdom, Germany and Japan.


On May 11, 2006 UGS Corporation announced the results for the first quarter of 2006, the period ended March 31, 2006. Total revenue for the quarter was $273 million, an increase of 8.4% from the $252 million in the first quarter of 2005, but a 16% decline from the $326 million in the just previous quarter. The $273 million was a 13% increase on a constant currency basis. License revenue was $79.5 million, accounting for 29% of total revenue. This was nearly 9% year-over-year increase, but a 30% decline sequentially. Maintenance revenue was $126 million, accounting for 46% of total revenue. This was an almost 13% year-over-year increase, but a 7% decline sequentially. Software revenue (license + maintenance) was up 11%, or 15% in terms of constant currency. Service revenue was $69 million, accounting for 25% of total revenue. This was a 1% increase year-over- year, and a 12% decline sequentially.

$Millions 1Q06 1Q05 Delta
CAx      
Software 134 133 0.8%
Service 27 32 -15.6%
Total CAx 161 165 -2.4%
cPDm      
Software 72 52 38.5%
Services 41 35 17.1%
Total cPDm 113 87 29.9%
Total      
Software 206 185 11.4%
Services 68 67 1.5%
Grand Total 274 252 8.7%
Table 7 UGS Results by Product Segment

Table 7 reveals that the area of UGS growth is clearly cPDm. cPDM revenue increased 29% including acquisitions, or 8% growth without acquisitions, over the same period a year earlier. On a constant currency basis, cPDM revenue increased 33% with acquisitions, or 12% without acquisitions. The Americas accounted for 45% of total revenue, EMEA for 36% and Asia for 19%. Revenue from the Americas was up 11%, from EMEA up 7% and from Asia up 5%.

Net loss for the recent quarter was $19 million, compared to a loss of $8.2 million in the first quarter of 2005, and compared to a net gain $12.9 million in the just prior quarter. EBITDA for the quarter was $48.1 million, compared to $46.7 million a year earlier, and compared to $92.7 in the just prior quarter. Also on May 11, UGS announced that India's Tata Consultancy Services (TCS), a leading global services organization, joined the UGS Partner Program as a UGS System Integration Alliance Partner.

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  • October 09, 2008
    Reviewed by 'Randy Bigs'
    I agree that the authors did not clearly tie in the overall state of the economy with the topic at hand: The MCAD industry. But, based on this week's Wall Street stock meltdown, and the worry about increased inflation, It's obivious that we've got big trouble right here in River City, and it will not only negatively impact our economy in general but the MCAD industry specifically. I applaud Russ and Jack for their in depth financial analysis, but I also would like to see their US and geopolitical comments weaved into the central theme, and I hope when things turn around they'll continue to present an objective viewpoint.

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  • October 09, 2008
    Reviewed by 'Mac'
    Where's the beef? As I read the article hoping to get an update on the MCAD industry, I quickly realized that this article was just another political aid without any data that could be interpreted without a secret MCAD decoder ring. I find it ridiculas that instead of giving us a real opinions on state things in the MCAD space, the authors just threw up graphs and charts and ambigious explantions about what those caharts and graphs meant. At the end of the article, I could only grin as I kept wating for some information that might actually provide me with some insight on the state of affairs in the MCAD space, but it didn't happen.
    I guess I will have to keep on collecting data myself and come up with my own opinions as I am not on someone's pay roll and have no political agenda. Here's a noval idea, lose the jibber jabber talk (Denny Crain) and call it like it is for once.
    Mac

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  • October 09, 2008
    Reviewed by 'S. Wertel'
    This article is quite detailed and well written, but what does your political view on the current administration have anything to do with MCAD?
    The entire Economic & Geopolitical Factors section is filled with tripe and misleading statistics pulled from sources biased to anti-Bush sentiments. Is this the only medium Henke and Horgan have available to prevail themselves as some sort of economic masterminds? Please keep your political drivel to yourselves, or at least place them in a forum suited to that topic. If I were to have written something as perverse as this, my high school social studies teacher would have accused me of having diarrhea of the mouth and sent me back to perform an unbiased analysis showing both side of the story and how they relate to the topic at hand - the state of the MCAD industry. No where in the Economic & Geopolitical Factors section was there a tie between the rubbish on the page and how it relates to the topic of MCAD. Please go back to high school.
    In the future, please contain the Industry View to just an Industry View, or at least tie in the Economic and Political Factors with how they affect MCAD.

      One person found this review helpful.

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  • October 09, 2008
    Reviewed by 'Brian T.'
    What can I say, this article is not a News/Commentary article on MCAD. It is a Liberal Propaganda Tool which I will no longer subscribe to. This is my third comment on these out of place personal comments in a otherwise informative article. When the last article was being reviewed, the last I checked 6 out of 7 responses to that last article agreed with my review, then it was removed from the mcadcafe page. I guess this would be expected, that poll might not swing their way, so cut it short before it looks bad. I have never seen this report taken off this site before. These views are included in a bias manor. Some of the same information could be included with out the Liberal Bias View or the quotes from the Like Sources. Enough Said, another media tool that can't seem to go down the middle.

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