Commentary: MCAD Industry View - An August 2007 Update

Jim Cashman, ANSYS President and CEO, stated, “This quarter's results continue the momentum that we have seen building over the past several quarters and reflect the strength of our diversified global business. We have made encouraging progress during the recent quarter and first half of 2007 to capture the strength of combining the ANSYS and Fluent businesses into a broad portfolio of unprecedented engineering simulation solutions. Compared to a year ago, this quarter's non-GAAP revenues increased over 35% while non-GAAP diluted earnings per share increased 43%. We have also continued to focus on strengthening our margins and balance sheet. These efforts produced record cash flows from operations of $37 million for the second quarter and $59 million for the first six months of 2007”

On August 16, 2007 Autodesk, Inc. reported financial results for the second quarter of its fiscal 2008. Total revenue for the quarter was $526 million, an increase of 17% from the $450 million in the second quarter of 2006 and an increase of 3.5% from the $508 million in the just prior quarter. The $526 million quarterly performance was in the middle of the guidance given last quarter. License revenue was $394 million, accounting for 75% of total revenue. This was a 14% increase year-over-year, and a nearly 3% increase sequentially. Maintenance revenue was $132 million, accounting for 25% of total revenue. This was an increase of 27% year-over-year, and an increase of almost 6% from the prior quarter.

The Platform segment, which accounts for about 46% 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 31% year-over-year and 5.3% from the prior quarter. A “guesstimate” of MCAD revenue would be about $180 million for the quarter.

3D model-based design solutions -- Autodesk Inventor software, Autodesk Revit software and AutoCAD Civil 3D- accounted for 23% of total revenue or $121 million, up 34% year-over-year and 13% sequentially. In total, Autodesk shipped more than 39,000 commercial seats of 3D in the quarter including 21,000 seats of Revit, 11,000 seats of Inventor and 7,200 seats of Civil 3D. Revenues from 2D vertical products increased 22% compared to the second quarter of fiscal 2007.

The Americas accounted for 37% of total revenue, Europe for 39% and Asia for 24%. All three regions had year-over-year percentage growth rates in the mid teens.

Revenues from the emerging economies in Asia Pacific, Eastern Europe, the Middle East and Latin America increased 37% over the second quarter of fiscal 2007 to $82 million, and represented 15% of total company revenues.

Revenues from new seats increased by 17% compared to the second quarter of last year. Revenues from new seats of Revit and AutoCAD Mechanical were particularly strong, increasing 56% and 54%, respectively, compared to the second quarter of last year.

Upgrade revenue and maintenance revenue from subscriptions combined increased 16% over the second quarter of fiscal 2007 to $178 million. Maintenance revenue from subscriptions increased 27% compared to the second quarter of fiscal 2007, to $132 million.

Carl Bass, Autodesk president and CEO, said, “During the second quarter, we executed extremely well -- driving widespread adoption of our 3D and 2D tools, continuing to increase new seat revenue, and increasing sales and emerging economies. We have been able to grow significantly by addressing our customers' competitive challenges. Our numbers demonstrate that we continue to win market share as our revenues have increased significantly faster than our competitors. As a result, we are again raising our guidance for fiscal 2008, to reflect our confidence in our financial performance for the remainder of the fiscal year."

On July 26, 2007 Dassault Systèmes reported financial results for the second quarter, the period ending June 30, 2007. Total revenue for the quarter was $413 million, an increase of 17% over the $353 million in the same quarter a year ago, and over an 8% increase from the $381 million in the just prior quarter. Total Q2 revenue in euros was 305 million, just above the high end of the guidance given last quarter. Software revenue at $343 million, or 83% of total revenue, was up 14% year-over-year and 6% sequentially. This included $130 million of new license revenue and $212 million of recurring revenue. Service revenue was $71 million, up 34% year-over-year and 20% sequentially.

The Enovia brand, which includes Enovia, MatrixOne and SmarTeam, generated $79 million in the quarter or 19% of total revenue. This was a 39% increase year-over-year, but almost an 11% decrease sequentially. Note that MatrixOne was acquired in May 2006 for $410 million. SolidWorks generated $78 million, accounting for 19% of total revenue. This result represented increases of 11% year-over-year and 7% sequentially. CAD generated $255 million or 62% of total revenue, up nearly 13% year-over-year and 16% sequentially.

Revenue from America was $126 million, or 31% of total revenue. Revenue from Europe was $190 million, or 46% of total revenue. Revenue from Asia was $96 million, or 23% of total revenue. Year-over-year revenue from America was up 24%, from Europe almost 12% and from Asia 20%.

On July 11, 2007, DS announced the appointment of Jeff Ray as the new CEO of SolidWorks. Mr. Ray was previously Chief Operating Officer of SolidWorks.

Net income for the 2nd quarter was $38 million, up 29% from the $29.4 million in the same quarter a year ago, and up 15% from the $33 million in the prior quarter.

Bernard Charlès, Dassault Systèmes President and Chief Executive Officer, commented, “Dassault Systèmes delivered a very solid second quarter with revenue and earnings coming in above objectives. Moreover, given the large customer transaction in the year-ago second quarter, achieving non-GAAP revenue growth of 13% in constant currencies and delivering non-GAAP EPS growth of 14% is rewarding.”

On June 12, 2007 ESI Group announced its consolidated sales for its first quarter to 30 April 2007. ESI Group sales totalled 13.5 million euros for the first quarter of its 2007 financial year, up +11.0% in volume (organic growth at 'constant perimeter'). Due to a substantial currency effect over the period, actual growth in euros was up +5.9%.

Licences activity remained particularly buoyant with a growth of +11.7% in volume. Licence sales recurrence improved in comparison to the Q1-FY06 figures to reach the high rate of 82%, while new business (new products and new clients) recorded a very substantial growth of +31% in both emerging and industrialized countries.

Services activity also showed a renewed growth (+8.7% in volume), notably due to a further strengthening of demand on high added value projects (engineering services) associated with the development and adoption by industry of virtual simulation technologies and methodologies for Simulation Based Design (SBD).

Alain de Rouvray, the ESI Group's Chairman and CEO, concludes: “Despite a particularly unfavorable exchange rate evolution over the period, reported sales for the first three months of our fiscal year demonstrate a fine takeoff in activity. In particular for Licenses, mature products are continuing their transition towards 2G solutions while emerging and innovative products remains efficient growth relays.

Regarding Services, booking order prospects are again encouraging, and confirm the expected upturn in this activity through FY 2007.”

On August 23, 2007, after a two-week delay, Moldflow Corporation reported preliminary results for its fourth quarter and the full 2007 fiscal year. Total revenue for the quarter was $15 million, an increase of nearly 17% from the $12.9 million in the same quarter a year ago and a 2.3% increase from the $14.7 million in the just prior quarter. The $15 million was above the guidance given just last quarter. Total revenue was split very evenly between product revenue and service revenue. Product revenue was $7.6 million, an increase of 20% year-over-year, but a decrease of 6% sequentially. Services revenue was $7.5 million, an increase of 13% year-over-year, and a 12% increase sequentially.

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