MCAD Industry View – An August 2006 Update

Net loss for the quarter was $440K. This compares to net income of $1.4 million and $1.5 million in the year ago and prior quarter, respectively. There was a $1.3 million restructuring charge in the quarter.

 

Total revenue for the fiscal year 2006 was $65.6 million, just under a 2% increase from the $64.4 million in fiscal 2005. Product revenue was $38.2 million in both fiscal years. This accounted for 58% of total revenue in fiscal 2006. Services revenue was $27.3 million, up 4.4% from the prior year. Design Analysis Solutions revenue of $48.5 million represented 74% of total revenue, and increased 3% over fiscal 2005. Product revenue in this segment was $24 million. Manufacturing Solutions revenue of $17.1 million represented 26% of total revenue and was flat when compared to last year. Product revenue in this segment was $14.3 million.

Net income for the year was $1 million compared to $6.8 million in the prior year. There were $2.7 million in restructuring charges during fiscal 2006. The geographical distribution for the year was the same as in the quarter.

Roland Thomas, Moldflow Corporation's president and CEO, said, "Fiscal 2006 was a challenging year for Moldflow. We made critical business judgments that led us to restructure our Manufacturing Solutions unit as well as other aspects of our business. Our fourth quarter results show the initial benefits resulting from the right-sizing of our Manufacturing Solutions business and our focused market approach."

On July 10, 2006 MSC Software Corporation filed its 10Q for the first quarter of 2006. On August 10, 2006 the company filed its 10Q for the second quarter 2006, the period ended June 30, 2006. These filings bring MSC current with regard fiscal reporting to the SEC. The firm is hopeful that its application for reinstatement on the NASDAQ will be approved.

Total revenue for the quarter was $67.9 million, an increase of 1.6% over the $66.9 million a year earlier and almost 1% increase sequentially from $67.4 million. The company sold its PLM business in March 2006. That unit had $2.2 million in revenue in 2Q 2005. Excluding PLM and effects of foreign currency exchange rate, revenue was up 7% year-over-year. Software revenue was $31.4 million, accounting for 46% of total revenue. This was an increase of 9.4% year-over-tear and an increase of 7.3% sequentially. Maintenance and services revenue was $36.5 million, accounting for 54% of total revenue. This was a decrease of 4.3% year-over-year and a decrease of 4.1% sequentially.

Geographically the Americas accounted for 27% of total revenue, EMEA 41% and AP 32%. 

2Q06

1Q06

Delta

2Q05

Delta

Americas

18,361

22,593

-18.7%

21,392

-14.2%

EMEA

28,044

23,244

20.7%

25,348

10.6%

AP

21,530

21,541

-0.1%

20,142

6.9%

Total

67,935

67,378

0.8%

66,882

1.6%

Table 6 MSC Software Revenue by Geographic Segment

Indirect sales accounted for 11% of total revenue. The company has hired a vice president to head this sales channel. The goal is for indirect sales to reach 20% of total revenue.

On June 20, 2006 MSC introduced SimEnterprise, an enterprise simulation development platform that enables CAE designers, analysts, managers and the supply chain to interact throughout the design process

On July 7 MSC Software announced a worldwide strategic alliance with IBM. MSC will embed and optimize IBM technology as part of their SimManager Enterprise offering, integrating services oriented architecture (SOA) with DB2, Websphere and Tivoli to meet the growing demand for enterprise based computer-aided engineering and analysis in the PLM space. Under this arrangement, IBM Global Services will develop Centers of Competence that help deliver CAE enterprise solutions to clients in association with SimManager Enterprise implementations. IBM Global Services will also resell and implement SimManager Enterprise, and both companies will undertake joint sales and marketing activities to promote the offering. IBM Global Services will develop Centers of Competence that help deliver CAE enterprise solutions to clients in association with SimManager Enterprise implementations. IBM Global Services will also resell and implement SimManager Enterprise, and both companies will undertake joint sales and marketing activities to promote the offering. During the conference call CEO Bill Weyland pointed out that Dassault Systemes, long time IBM PLM partner, is moving more towards a direct sales model.

On July 26, 2006 PTC reported results of its third quarter of fiscal 2006, the period ended July 1, 2006. Total revenue for the quarter was $217 million, an increase of 20% from the $180 million in the same quarter a year ago, and a 8% increase from the $200 million in the just prior quarter. This was at the high end of the guidance given a quarter ago. License revenue for the quarter was $65.7 million, accounting for 30% of total revenue. This was an increase of 33% year-over-year and an increase of 20% sequentially. Maintenance revenue was $96.6 million, accounting for 44% of total revenue. This was an increase of nearly 9.4% year-over-year and 6% sequentially. Service revenue was $56 million, accounting for 26% of total revenue. This was an increase of 26% year-over-year and essentially flat sequentially.

Desktop Solutions generated revenue of $143 million, accounting for 66% of total revenue, while Enterprise Solutions generated revenue of $72.8 million, accounting for 34% of total revenue. Desktop Solutions revenue growth was led by strong license revenue, which grew 30% to $43.5 million from the same period last year. Enterprise Solutions license revenue was $22.2 million, up 41% over the same period last year. Revenue grew from acquisitions of Arbortext and Mathsoft.

2Q06

1Q06

Delta

2Q05

Delta

Desktop

143,876

131,811

9.2%

125,994

14.2%

Enterprise

72,828

68,383

6.5%

54,340

34.0%

Total

216,704

200,194

8.2%

180,334

20.2%

Table 7 PTC Revenue by Segment

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