Weyland continued, "We believe that MSC has the key business drivers for success in 2008. Our innovative Simulation Enterprise and MD product line introductions should continue to provide us with a first mover advantage in the simulation software marketplace. Further, as we launch a new product cycle with the R3 versions of our enterprise simulation products, we expect to see increased customer acceptance and transaction activity.”
On January 23, 2008 PTC reported financial results for the first quarter of its fiscal 2008, the period ended December 29, 2007. Total revenue for the quarter was $241 million, an increase of almost 9% from the $221 million in the same quarter a year ago, but a 9.5% drop from the $267 million in the just prior quarter. The $241 million was slightly above the $230 to $240 million range given as guidance last quarter. License revenue was $67 million, accounting for only 28% of total revenue. While this was up almost 1% year-over-year, it was down 30% sequentially. Maintenance revenue was $114 million, accounting for 47% of total revenue. This was an increase of 13% year-over-year and an increase of 7.4% sequentially. Service revenue was $60 million or 25% of total revenue. This was an increase of 10.4% year-over-year, but a decrease of almost 7% sequentially. Reseller revenue was $60 million or almost 25% of total revenue. This was an increase of 26% year-over-year, and an increase of 16% sequentially.
In the quarter PTC sold 5,450 seats of Pro/Engineer and 41,900 seats of Windchill. Cumulative seats of Pro/Engineer reached 368,300 and of Windchill 533,400.
North American revenue was $84.5 million, accounting for 45% of total; European revenue was also $102 million, accounting for 55% of total revenue; and Asia Pacific revenue was $55 million, accounting for 30% of total revenue.
Year-over-year quarterly revenue growth of 23% in Europe, 7% in the Pacific Rim, and 3% in Japan, was partially offset by a 2% decline in North America. On a sequential basis, North America was down 17%, Europe was flat and Asia Pacific region was down 12%.
Net income for the quarter was $9.9 million, down 35% from the $15.1 million in the corresponding quarter last year, and down 67% from $30.6 million in the previous quarter.
C. Richard Harrison, president and chief executive officer, said, “We performed well in the first quarter. Our focus on delivering significant operating margin improvement in 2008 has begun to pay off. We delivered an 18.2% non-GAAP operating margin in the first quarter, a 330 basis point improvement from the same period last year. Our continued efforts to evolve our distribution and services models, our globalization strategy, and the immediate non-GAAP operating margin accretion provided by CoCreate contributed to this improvement. In addition, we continue to deliver revenue growth that is higher than market growth rates."
On December 3, 2007 PTC announced it had completed its acquisition of CoCreate Software GmbH, a provider of product development solutions, for approximately $250 million net of cash acquired and excluding transaction fees. CoCreate, based in Sindelfingen, Germany, has 280 employees and more than 5,000 customers globally including Agilent, Canon, Molex, Fujitsu, HP, Liebherr, Matsushita Electric, NEC, Olympus, Phoenix Contact and Seiko Epson. PTC financed the acquisition and related expenses with a combination of $50 million of cash and $220 million of debt from its existing revolving credit facility. PTC expects to repay the loan within two years. The transaction value represents approximately 3.1 times CoCreate's total revenue, 4.6 times its maintenance revenue, and 7.4 times its non-GAAP operating margins, based on trailing twelve-month data.
PTC's GAAP and non-GAAP results for the first quarter of fiscal 2008 include expenses of $3.2 million associated with its restatement of the third quarter of 2007 and prior financial results announced and completed during the quarter
MCAD Vendor Stock Performances
The combined stock prices of the selected MCAD vendors grew by almost 22% in absolute dollars from the same period last year, and by 21% in average price. This compares to an increase of only 6.6% for the major stock indexes year-over-year (and a decrease of 3.4% sequentially, presaging the then-upcoming US economic recession).
ANSYS was the percentage year-over-year growth leader at 91%, followed by Autodesk at 23% and Moldflow at 16%. MSC.Software was the lone decliner at negative 14.7%. On a sequential basis, ANSYS was again the leader at 21% with PTC the only other firm to see an increase in its stock value at 2.5%. Moldflow and Dassault saw the largest declines at -16% and -10%, respectively.
“Calendar Year” Performances
Where the fiscal year of a firm (ESI Group, Moldflow, PTC) does not correspond to the calendar year, the last four quarters of reported operations are used in this MCAD Commentary.
As Table 8 reveals, the combined 2007 year’s revenue for the group was $5.6 billion, up a very healthy 16% from the $4.8 billion in calendar year 2006. ANSYS was by far the percentage revenue gain leader at 46%. Autodesk, Dassault Systemes and ESI Group delivered close to 20% increases in annual revenue in US dollars. Both Moldflow and MSC.Software endured lower annual revenues than the year before.
The combined earnings of the group were $818 million in 2007, up a noteworthy 33% from the $614 million in the prior year. See Table 9. Both Moldflow and MSC.Software suffered net losses for the year after having net gains in the prior year. The other firms delivered net earnings gains for 2007 over 2006.
Annual Results by Company
For the calendar year ANSYS amassed total revenue of $385 million, a remarkable 46% increase over the $260 million in 2006. Software license revenue of $253 million, accounting for 66% of total revenue, was up 61%. Maintenance and services revenue of $132 million, accounting for 34% of total revenue, was increased 24% from the prior year. Note that the Fluent acquisition occurred early in 2006, so only 8 months of Fluent operations are included in 2006 results.
For calendar 2007, Autodesk revenue was a record $2.172 billion, an increase of 18% compared to 2007. Calendar 2008 net income was $356 million, a 23% increase compared to net income in 2007 of $290 million.
For the calendar year 2007 Dassault Systemes sported total revenue of $1.725 billion, an increase of 18.7% from the $1.46 billion in 2006. Software revenue was $1.46 billion, or 85% of total revenue. This was a 10.4% increase from the prior year. Services revenue was $268 million, up 15.5%.
For calendar 2007 Moldflow had total revenue of $45 million, a decrease of 10% from the $50.7 million in calendar 2006. Net loss for the year was $2.2 million compared to a net gain of $4.5 million in the prior year.
For the calendar year 2007 MSC.Software delivered revenue of only $247 million, down 5% from the $259 million in 2006. Software revenue was $94.7 million, or 38% of total revenue, down 15% from the prior year. Maintenance revenue was $125.5 million, or 51% of total revenue, up 9%. (Usually a problem exists when a software vendor’s revenue from Software is lower than revenue from Maintenance). Services revenue was $26.4 million, or 11% of total revenue, down nearly 21% year-over-year.