Commentary: MCAD Industry View - A March 2007 Update



The Company's model-based 3D products, Inventor, Revit and Civil 3D, continue to increase their market penetration. Combined revenues from these model-based design products increased 40% over the fourth quarter of fiscal 2006 to a record $121 million, or 24% of total revenues in the quarter. In total, Autodesk shipped more than 47,000 commercial seats of 3D in the quarter, including 23,000 seats of Revit, over 15,000 seats of Inventor, and nearly 9,000 seats of Civil 3D.

The Americas accounted for 41% of total revenue, Europe for 38% and Asia for 21%. Europe was the revenue growth leader both year-over-year and sequentially. Asia Pacific revenue declined sequentially. All three segments grew about 20% year-over-year.


Carl Bass, Autodesk president and CEO, said, "We are pleased to finish another year of outstanding execution and revenue growth. In fiscal 2007, we delivered revenues of $1.84 billion, nearly double the level of three years ago. Our fourth quarter growth was driven by strong performance from emerging economies, our subscription program and, most significantly, record revenues from our model-based 3D products. Looking to fiscal 2008, we expect Autodesk to continue to focus on delivering industry-leading 3D design software solutions that help our customers be more productive, improve quality and foster greater innovation."

By the way, on February 12, 2007, Carl Bass outlined the Autodesk's strategic direction at its World Press Day event, and articulated his vision of a fundamental transformation in the design process to encompass performance, aesthetics and user experience. See the following URL for some of his remarks:


http://www10.mcadcafe.com/nbc/articles/view_article.php?section=CorpNews&articleid=352441&printerfriendly=1

You can also see Jeff Rowe's MCAD Weekly comments on the Autodesk Strategy at:

http://www10.mcadcafe.com/nbc/articles/view_weekly.php?articleid=353564

In a separate announcement, Autodesk stated that the Audit Committee of the Autodesk BOD has completed its voluntary review of the company's stock option grant practices. As a result the firm expects to restate its previously-issued financial statements for fiscal years 2003 through 2006, to make adjustments related to accounting for stock-based compensation expense. The Company currently estimates that the pre-tax, non-cash charges to be incurred are in the range of $38 million to $45 million for stock-based compensation expense over the period of the review.



On February 14, 2007 Dassault Syst?mes reported financial results for its fourth quarter and year ended December 31, 2006. In $US, total revenue for the quarter was $449 million, an impressive increase of 24% over the $362 million in the fourth quarter of 2005, and a 28% increase over the $351 million in the previous quarter. Software revenue was $368 million up 23% year-over-year and 29% sequentially. Software revenue accounted for 82% of total revenue. This included $172 million in new license revenue and $196 million in recurring revenue. Service and other revenue was amounted to $81 million up 31% year-over-year and 25% sequentially.

The Enovia brand, which includes Enovia, MatrixOne and SmarTeam, generated $89 million in the quarter, or 20% of total revenue. This was a 60% increase year-over-year and a 1% drop sequentially. SolidWorks generated $74 million, accounting for 16% of total revenue. The $74 million represented increases of 22% year-over-year and 15.5% sequentially. CAD generated $288 million, or 64% of total revenue. This was slightly down year over year, but up 31% sequentially in the usually very strong fourth quarter.


Revenue from America was $140 million, or 31% of total revenue. Revenue from Europe was $220 million, or 49% of total revenue. Revenue from Asia was $91 million, or 20% of total revenue. Year-over-year revenue from America was up 42%, from Europe 17% and from Asia 19%.

Bernard Charl?s, Dassault Syst?mes President and Chief Executive Officer, commented, “2006 was a remarkable year for DS. We delivered strong financial results growing revenue by 27% in constant currencies and earnings per share by 15%. We successfully integrated two major acquisitions within a twelve-month period. And we redesigned our 25-year strategic partnership with IBM to jointly expand the enterprise PLM offering sold by IBM and to transition to a DS-managed PLM indirect channel. Thanks to everyone's focus across DS on innovation and execution to serve our customers, DS reached an important leadership milestone, with a total PLM market share estimated at 25%.”



On November 29, 2006 ESI-Group reported financial results for its third quarter, the period ended October 31, 2006. Turnover for the third quarter of the 2006 financial year totalled 12.6 million euros, up 4.7% organically on the same quarter of the previous financial year. At constant exchange rates, the increase was +7.3%. The performance of License activity over the third quarter was marked by very dynamic growth (+ 17.9% at constant exchange rates), thus continuing the trend noted the previous quarter. The weakness of Consulting & Services activity (-18.4%) is essentially due to projects delays in the Asian zone, notably with a significant fall in Japan associated with the halting of low value-added projects.

Consolidated turnover for the first 9 months of the year totalled 39.0 million euros (+4.2%). The surge in Asia has been reaffirmed.

Alain de Rouvray, ESI Group's Chairman and CEO, said: “Our sector's growth drivers are currently moving to emerging zones such as China and India. ESI Group's participation in the French State's recent visit to China reflects the quality and soundness of our relationships in Asia. Despite structural and situational difficulties in Consulting & Services, the ongoing dynamism of our Licence activity and the intensification of our S&M efforts - notably in Asia - should, in the short term, allow an acceleration in growth, a reduction in our average costs through the globalisation of our teams, and an improvement in our profitability, a direct consequence of an essentially fixed-cost structure”.



On February 6, 2007 Moldflow Corporation announced the results for its second quarter of the 2007 fiscal year. Total revenue of $17.7 million was up 15% sequentially, and up 4% from the corresponding quarter of fiscal 2006.

Total product revenue of $10.4 million represented a 30% sequential increase, and a 3% increase over the same period of the prior year.

Total services revenue of $7.2 million represented a sequential decrease of 1%, and a 6% increase over the same period of the prior year.

Revenue from Design Analysis Solutions totaled $14.0 million, or 79% of total revenue, and represented a 21% sequential increase, and a 10% increase when compared to the same period last year.

Revenue from Manufacturing Solutions totaled $3.6 million, or 21% of total revenue, and was flat sequentially, and represented a 13% decrease when compared to the same period last year.

Regionally, revenue in the Asia/Pacific region represented 38% of total revenue, while the European region represented 35%, and the Americas represented 27% of total revenue, respectively.

Net income for the quarter was $1.8 million, including a charge of $451K for stock-based compensation expense, compared to a net loss of $109K.

Roland Thomas, Moldflow Corporation's president and CEO said, "Our second quarter results, which continue to validate our fiscal 2007 business model, produced increased revenue, net income and earnings per share on both a sequential and year-over-year basis. During the quarter, we continued to see increased leverage coming out of our Design Analysis Solutions business. When compared to the same period of the prior fiscal year, Design Analysis Solutions product revenue grew 11% and total revenue grew 10%, representing another step in this division supporting our longer-term business model. As planned, our Manufacturing Solutions business continued to operate close to breakeven, with increased gross margins on slightly lower revenue during the second fiscal quarter."



On February 27, 2007 MSC.Software Corporation reported financial results for the fourth quarter and the year, periods ending December 31, 2006. Total revenue for the quarter was $66 million, a drop of 22% compared to the $85 million in the fourth quarter of 2005, but an increase of 13% from the $58 million in the prior quarter. Software revenue was $28 million, or 42% of total revenue, down 40% year-over-year, but up 223% sequentially. Maintenance and service revenue was $38 million, or 58% of total revenue, down 1% year-over-year, but up 6.7% sequentially. The fourth quarter included $1.2 million of PLM services revenue.

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