MCAD Industry View – A November 2009 Update

Net income for the quarter was $29.5 million, a drop of 72% from the $104 million in the same quarter a year ago but a 181% increase from the $10.5 million in the preceding quarter.

During the current quarter, Autodesk determined that the way in which its third-party software application accounted for estimated forfeitures in stock-based compensation calculations, was incorrect. As a result, fiscal third quarter 2010 GAAP results include a one-time adjustment to increase stock-based compensation expense by $7.9 million net of tax. This is a cumulative adjustment from prior periods.

Carl Bass, Autodesk president and CEO, said, “Our business appears to be increasingly stable. We posted sequential increases in a number of important metrics including revenue from commercial new seat licenses, revenue from our Americas and EMEA geographies, revenue from our 2D horizontal solutions, and revenue from our 3D animation solutions. These results reflect the business environment that began stabilizing in the second quarter of this fiscal year.”

Bass continued, “In addition, our efforts to reduce operating expenses resulted in a sequential increase in profitability for the second consecutive quarter. While there are several data points in our business that are encouraging and represent positive indicators for our business, the health of the global economic environment remains mixed and the continued job losses in our core markets represent ongoing challenges to a swift recovery in our business.”

On October 29, 2009 Dassault Systemes reported financial results for the third quarter ended September 30, 2009. Total revenue was $417 million, a drop of 12.6% from the $477 million in the third quarter of 2008 and a dip of 1.3% from the $423 million in the second quarter of 2009. Software revenue was $366 million, a drop of nearly 12% year-over-year and a dip of just under 1% sequentially. This accounted for 88% of total revenue. New License revenue of $84 million was down 38% from a year ago and down almost 11% from the prior quarter. This was 23% of software revenue. Recurring revenue of $281 million was up 1.3% and accounted for 77% of software revenue. Service revenue was $52 million or 12% of total revenue. Service revenue was down nearly 18% year-over-year and down over 4% from the preceding quarter.

Dassault Systemes, a French company, reports its financial results in euros but provides average conversion factors to dollars for each quarter and year. These factors were used to calculate US dollar numbers. Revenue for the quarter in terms of constant currency GAAP was down 12% versus the second quarter of last year.

Revenue from North America was $127 million accounting for over 30% of total revenue. North American revenue was down 12% from the prior year and down 3% from the prior quarter. European revenue was $193 million or 46% of total revenue. European revenue was down 12% year-over-year and down 1.7% sequentially. Revenue from Asia was $97 million pr 23% of the total. This was down 8.7% from the same quarter a year earlier but up 1.6% from the previous quarter.

The Enovia brand which includes Enovia, MatrixOne and SmarTeam generated $43 million in the quarter or 10% of total revenue. This was down 35% year-over-year and down 21% sequentially. Note that MatrixOne was acquired in May 2006 for $410 million. Dassault has now combined SolidWorks and CosmosWorks into Mainstream 3D. This category generated $87 million accounting for 21% of total revenue. This represented a decrease of 14% year-over-year and a decrease of 1.2% sequentially. CAD generated $170 million or 41% of total revenue. This was down 7.5% year-over-year but was up 6% sequentially. See Table 4.

Net income for the quarter was $55 million, down 17% from the $66 million in the year ago quarter but up 57% from the $35 million in the preceding quarter.

Bernard Charlès, Dassault Systèmes President and Chief Executive Officer, commented, “More than ever, this quarter illustrates our ongoing commitment to reconcile short-term execution and long-term strategy. Looking at the third quarter, the environment continued to be challenging, similar to the second quarter. Against this reality, our earnings and operating margin results came in above our objectives on in-line revenue results, thanks to the strong execution of our cost savings program. We are on track to not only achieve, but in fact to exceed our full year savings target, all while maintaining our R&D and customer support investments in all the industries we serve.

He added, “The agreement with IBM is very timely to get closer to our clients delivering unique V6 value for sustainable innovation and expand our partnership with IBM in services, flexible financing and new enterprise infrastructure.”

On September 15, 2009 ESI Group announced financial results for the second quarter and half year 2009/2010 ended July 31, 2009. Quarter sales totaled 14.8 million euros, “exceptionally reduced” by the renegotiation of a perpetual license contract into an annual license for 0.4 million euros.

First-half sales totaled 31.2 million euros, up +6.4%. At constant exchange rates, sales were almost stable at -0.8%.

The integration of Mindware contributed 2.8 million euros to Group sales over the period. The product mix has moved significantly towards Services, which represented 34% of total first-half activity compared to 27% a year earlier.

License sales for the first half came to 20.7 million euros, down -2.7% on the first half of 2008.

Using average currency exchange rates total revenue for the quarter was $21 million, down 4% from the nearly $22 million in the same period a year earlier and down 5.8% from the $22 million in the prior quarter. License revenue was $13.7 million or 65% of total revenue. This was down 13% year-over-year and 9% sequentially. Service revenue was $7.3 million up nearly 19% year-over-year and up 1.2% sequentially.

Consolidation incorporates activities associated with the intellectual property of Vdot software (acquired on 20th October 2008) and with Mindware (acquired on 16th December 2008). The inherent seasonal effect of ESI Group’s licensing activity means that a substantial proportion of annual revenue is recorded over the second half of the year.

Alain de Rouvray, ESI Group’s Chairman and CEO, concluded, “First-half figures show that our activity is resisting well, despite the effect that the negative economic situation is having on some of our clients. Control of our cost structure should limit the impact on our profitability. The maintaining of the high level of our Licences repeat business reflects the persistent confidence that our clients, notably in the automotive industry, have in our innovative solutions. Lastly, the Mindware integration is proceeding in accordance with our execution plan.”

On October 28, 2009 PTC reported financial results for its fiscal fourth quarter and for the fiscal year ended September 30, 2009. Total revenue for the quarter was $246 million, a drop of 18% from the $300 million in the same quarter a year earlier, but a rise of 8.6% from the $226 million in the prior quarter. License revenue was $70.7 million accounting for nearly 29% of total revenue. This was a drop of 31% year-over-year but an increase of 43% sequentially. Note that Maintenance Revenue was $124 million, or over 50% of the total. This was a dip of 5.2% from the prior year but an increase of 1.7% from the preceding quarter. Service revenue was $51 accounting for the remaining 21% of total revenue. This was a decrease of 24% year-over-year and a drop of 7% sequentially.

On a geographic basis North America generated 42% of total revenue, Europe 38% and AP 21%.

Reseller revenue was $57 million or 23% of total revenue. This represented a drop of 25% from a year earlier but an increase of 21% sequentially. Revenue from direct sales was $189 million accounting for 77% of the total. This was a decrease of 15.5% year-over-year but a rise of 12% from the prior quarter.

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