Commentary: MCAD Industry View – A May 2007 Update

Net income for the first quarter was $16.1 million, a major increase from the $3.2 million in the year ago quarter, and a 31% increase sequentially from $12.2 million in the just prior quarter.

Jim Cashman, ANSYS President and CEO, said, “We are very excited to start off 2007 with record first quarter operating results. These results are the outcome of the persistent dedication and efforts of the global ANSYS team and demonstrate our continued progress in executing on our long-term vision. We entered into this fiscal year with enthusiasm and momentum, and we continue to be pleased with the measurable progress against our integration plans for the Fluent acquisition, particularly as we have reached another important milestone with the one year anniversary this week."

On May 17, 2007 Autodesk, Inc. reported financial results for the first quarter of fiscal 2008, the period ended March 31, 2007. Total revenue for the quarter was a record $509 million, an increase of 16.5% from the $436 million in the first quarter of fiscal 2007, and an increase of 2% from the $498 million in the last quarter of fiscal 2007. License revenue was $383 million, accounting for 75% of total revenue. This was a year-over-year increase of almost 10%, and a 2% increase sequentially. Maintenance revenue was $125 million, accounting for 25% of total revenue. This was an increase of 44% year-over-year, and an increase of 1.6% sequentially.

The Platform segment, which accounts for nearly 50% of revenue, includes AutoCAD and AutoCAD LT products that service multiple markets. Other segments are AEC (previously two segments: Building and Infrastructure) and Media/Entertainment (previously named Discreet). The Manufacturing segment (which includes the Inventor product lines) accounted for almost 19% of total revenue and grew 25% year-over-year, but was down 4% from the prior quarter. A “guesstimate” of MCAD revenue would be about $175 million for the quarter.

On May 17, 2007 Autodesk announced that it has passed the one million mark for users of its 3D model-based design solutions -- Autodesk Inventor software, Autodesk Revit software and AutoCAD Civil 3D. Combined revenues from these model-based design products increased 19 percent over the first quarter of fiscal 2007 to $106 million or 21 percent of total revenues. In total, Autodesk shipped more than 32,000 commercial seats of 3D in the first quarter, including 14,000 seats of Revit, 10,600 seats of Inventor and 7,400 seats of Civil 3D.

Installed base revenue, which includes upgrade revenue and maintenance revenue from subscriptions, increased 22 percent over the first quarter of fiscal 2007 to $197 million.

The Americas accounted for 36% of total revenue, Europe for 41% and Asia for 23%. Europe was the revenue growth year-over-year at 26% and Asia Pacific was the leader in sequential growth at nearly 14%.

As stated earlier in this Commentary, Autodesk did not report earnings for the recent quarter. On May 2, 2007, Autodesk said it is seeking the advice of the Office of Chief Accountant at the Securities and Exchange Commission (the "OCA") and on May 3, 2007, Autodesk submitted to the OCA certain financial statement information arising out of adjustments related to accounting for stock-based compensation expense as a result of a voluntary review by the Audit Committee of the Board of Directors regarding timing of past stock option grants and other related issues. Autodesk intends to file its restated financial statements, as well as its delinquent quarterly reports on Form 10-Q for the quarters ended July 31, 2006 and October 31, 2006 and its annual report on Form 10-K for fiscal year ended January 31, 2007, as soon as practicable after receiving the advice of the OCA.

While Autodesk is in the process of restating prior years' financial statements to reflect the additional compensation expense associated with past stock option granting practices, the Company is also recording other minor adjustments related to reseller incentives on its subscription program. These adjustments increase revenue and decrease deferred revenues for fiscal 2006 and fiscal 2005 by approximately $15 million and $5 million, respectively.

Carl Bass, Autodesk president and CEO, said, "Autodesk delivered another record quarter of revenue. During the quarter, we launched strong new releases of our 2008 family of products which continue to improve our customers' design experience. Customers are responding enthusiastically to the improved performance and scalability across the product line. Additionally, our industry-leading 3D design software solutions are providing customers the ability to experience their ideas through the power of digital prototyping resulting in improved competitive advantage."

On April 27, 2007 Dassault Systèmes reported financial results for the first quarter, the period ended March 31, 2007. Total revenue for the quarter was $381 million, an impressive increase of 26% over the $303 million in the first quarter of 2006, but a 15% decrease from the $449 million in the previous quarter. Total revenue in euros (�291 million) was above the high end of the guidance given in the last quarter. Software revenue was $322 million, up 26% year-over-year, but down 12.6% sequentially. Software revenue accounted for 84.5% of total revenue. This included $125 million in new license revenue and $197 million in recurring revenue. Service and other revenue was amounted to $59 million, up 26% year-over-year, and down 27% sequentially.

The Enovia brand which includes Enovia, MatrixOne and SmarTeam generated $88 million in the quarter, or 23% of total revenue. This was a 180% increase year-over-year, and a 1.2% drop sequentially. Note that MatrixOne was acquired in May 2006 for $410 million. SolidWorks generated $73 million, accounting for 19% of total revenue. This represented increases of 19% year-over-year, and a drop of just under 1% sequentially. CAD generated $220 million, or 58% of total revenue. This was up nearly 5% year-over-year, but down 24% sequentially from the usually very strong fourth quarter.

Revenue from America was $125 million, or 33% of total revenue. Revenue from Europe was $161 million, or 42% of total revenue. Revenue from Asia was $94 million, or 25% of total revenue. Year-over-year revenue from America was up a whopping 37%, from Europe 20% and from Asia 21.5%.

Net income for the quarter was $43 million, up nearly 15% from the $37.6 million in the same quarter a year ago, but down 57% from the $100 million in the fourth quarter of 2006.

As reported in the News Highlights above, on April 27, 2007 Dassault Systèmes and ICEM announced an agreement pursuant to which Dassault Systèmes would acquire ICEM. The proposed acquisition, for an estimated price of 51.4 million Euros, should be completed in June subject to specific closing conditions. The transaction, to be paid in cash, is expected to be non-dilutive on DS non-GAAP earnings. ICEM has a large reach, with over 700 customers. In 2006, it generated 20 million euros in revenues.

Bernard Charlès, Dassault Systèmes President and Chief Executive Officer, commented, “Dassault Systèmes had a very solid start to the year as the implementation of our new PLM mid-market channel and redesigned partnership with IBM are delivering results. DS achieved a 21% constant currency increase in non-GAAP revenue and non-GAAP earnings per diluted share increased 15% in the first quarter.”

On March 13, 2007 ESI Group announced the financial results for its fourth quarter and the full year, the periods ending January 31, 2007. Total sales for the quarter were 27 million euros, an increase of 24.7% from the 20.7 million euros in the same quarter a year earlier, and an increase of 114% from the 12.6 million euros in the prior quarter. License sales were 23.1 million euros, or 86% of total sales. This was an increase of 11.6% year-over-year, and an increase of 138% sequentially. Service and other revenue was 3.9 million euros, or 14% of total sales. This represented a decrease of 5% year-over-year, and an increase of 30% sequentially.

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