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February 13, 2006
2005 A Good Year For PLM Giants
Please note that contributed articles, blog entries, and comments posted on MCADcafe.com are the views and opinion of the author and do not necessarily represent the views and opinions of the management and staff of Internet Business Systems and its subsidiary web-sites.
Jeff Rowe - Managing Editor


by Jeff Rowe - Contributing Editor
Each MCAD Weekly Review delivers to its readers news concerning the latest developments in the MCAD industry, MCAD product and company news, featured downloads, customer wins, and coming events, along with a selection of other articles that we feel you might find interesting. Brought to you by MCADCafe.com. If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!

Although 2005 was not particularly kind to many types of businesses, it was certainly a good year for several companies in PLM, including Dassault Systemes (which reports its monetary information in Euros) and UGS (which reports in US dollars), as disclosed below. The two companies were extremely close in revenues for the year at about US$1.15 billion each. These companies join Autodesk in the billion-dollar revenue club for the year, and PTC wasn't far behind at a little over $720 million in revenue.


These are all big dollars, and that's good to see, because the companies have a little different philosophy, product mix, customer sweet spots, and markets of strength. For example, Dassault and UGS have so-called high-end design products (CATIA and NX, respectively), as well as mid-market products (SolidWorks and Solid Edge, respectively.) These two companies are also major players in overall automotive (although PTC has quite a presence in the drive train area) and aerospace. Autodesk, on the other hand, doesn't really have a mechanical design/engineering product suite at this time that could be described as high-end (although that could change depending on what Autodesk does with the
companies and technologies it has acquired in the past year or so). But, what Autodesk does have is diversity in its product line -- mechanical/electrical design, architecture, GIS/infrastructure, and entertainment - not a bad trait to have. For PTC, depending on how it's configured, Pro/ENGINEER can be considered mid-market or somewhat high-end, and it made an interesting foray into technical publishing with its acquisition of Arbortext that will complement Windchill. What all this indicates is a market that continues its state of flux, but proves that there is money to be made by this diverse set of players.


So, while 2005 was a good year for the big CAx players, the big question is, can they sustain their good fortunes this year and beyond? I see the biggest growth potential as a result of the continuing consolidation of the CAx industry. That is, growth due to mergers and acquisitions, rather than just organic growth from within. Like virtually all industries, strong engineering software companies with products and services that customers want will continue to prosper, while those that don't won't fare so well or, ultimately, survive.

Dassault Systemes Reports Record Revenue And Earnings In 2005

Dassault Systemes (DS) reported financial results for both the fourth quarter and full year ended December 31, 2005.


Fourth Quarter and Full Year Highlights
  • Strong Growth Across Software and Services and Core Margin Improvement Drove Fourth Quarter and Full Year Financial Performance
  • 2005 Total Revenue up 17% on GAAP (Generally Accepted Accounting Principles) and up 18% on Non-GAAP Basis
  • 2005 EPS Up 10% on GAAP and Up 17% on Non-GAAP Basis
  • DS Extends PLM Market Leadership With Further Market Share Gain of 1 Percentage Point in 2005; DS Adds 8 Percentage Points Over 2001-2005 Period
  • Bernard Charles, Dassault Systemes' President and Chief Executive Officer, commented, "Dassault Systemes had a great finish to a very successful year. During 2005 revenues increased 18% and earnings rose 17%. These achievements reflect the powerful combination of significant V5 PLM implementations, the competitive advantages of our brands and the strong performance of our alliance with IBM, our partners and our investments.


    "Our largest brand CATIA, for design excellence, had a good year. Our PDM solutions, with ENOVIA for collaborative lifecycle management and SMARTEAM for TeamPDM, delivered 20% revenue growth and added more than 1,000 new customers. DELMIA, for production performance, had strong revenue growth as it also broadened its customer base. And our newest brand, SIMULIA, for virtual simulation, had a remarkable start. SolidWorks, addressing the Mainstream 3D market, continued to demonstrate the strength of its offerings, delivering 25% revenue growth. The SolidWorks community continued its expansion, approaching the half million users' milestone at the end of 2005.


    "At the heart of our vision is our belief in the power, enormous potential and pervasive applicability of 3D technology to enhance communication, businesses and the environment at large."


    Fourth Quarter Financial Results Highlights

    GAAP total revenue of EUR 304.2 million (up 27%) and GAAP EPS of EUR 0.58 (up 14%)
  • PLM revenue up sharply on solid performance across all PLM brands
  • ENOVIA and SMARTEAM drove PDM revenue up 32% as reported and up 29% in constant currencies
  • SolidWorks revenue EUR 51.9 million, up 26% as reported and up 23% in constant currencies
  • Non-GAAP supplementary information excluding deferred revenue write-down and acquisition costs:
  • Total revenue of EUR 313.3 million, up 31% and up 27% in constant currencies
  • EPS up 29% to EUR 0.67
  • Software revenue up 27% to EUR 261.3 million and up 24% in constant currencies
  • PLM (process-centric) revenue of EUR 261.4 million, up 32% and 28% in constant currencies
  • Revenue

    GAAP total revenue increased 27% to EUR 304.2 million in the 2005 fourth quarter, compared to EUR 239.9 million in the year-ago quarter. Non-GAAP total revenue was EUR 313.3 million, representing increases of 31% and 27% in constant currencies compared to the year-ago period. Strong growth in both software and services revenues drove the year-over-year increase in Non-GAAP total revenue. In addition, fourth quarter 2005 financial results included ABAQUS, which the Company acquired in early October, 2005. For the 2005 fourth quarter, ABAQUS' revenue contribution totaled EUR 22 million before the impact of deferred revenue write-downs required under GAAP purchase accounting treatment.
    Software and service revenue represented 83% and 17% of non-GAAP total revenue in the fourth quarter of 2005.


    In the 2005 fourth quarter, Non-GAAP software revenue increased 27% to EUR 261.3 million and increased 24% in constant currencies on strong growth across all the Company's software applications and the inclusion of ABAQUS. In the year-ago quarter software revenue was EUR 206.4 million. New CATIA and SolidWorks seats licensed in the 2005 fourth quarter increased 14% to 22,484 seats, compared to 19,726 seats in the year-ago quarter.


    Non-GAAP PLM (Process-centric) revenue increased 32% and 28% in constant currencies in the fourth quarter of 2005 reflecting strong software growth across design, digital manufacturing and PDM applications and the inclusion of ABAQUS. Non-GAAP PLM revenue totaled EUR 261.4 million in the 2005 fourth quarter, compared to EUR 198.6 million in the year-ago fourth quarter. PDM revenue, on a stand-alone basis, increased 32% as reported to EUR 47.1 million and increased 29% in constant currencies in the 2005 fourth quarter, compared to EUR 35.6 million in the year-ago period. PDM software end-user revenue increased 22% in the 2005 fourth quarter, compared to the year-ago fourth quarter. For the
    2005 fourth quarter, CATIA licenses increased 6% year over year to 11,416.


    In the Mainstream market, SolidWorks revenue increased 26% as reported and 23% in constant currencies to EUR 51.9 million in the 2005 fourth quarter, compared to EUR 41.3 million in the year-ago period. SolidWorks seats licensed increased 24% to 11,068 licenses.


    As anticipated, service and other revenue increased significantly in the fourth quarter. Specifically, service and other revenue increased 55% as reported to EUR 52.0 million and increased 52% in constant currencies, compared to EUR 33.5 million in the fourth quarter of 2004.


    Full Year Financial Results Highlights
  • GAAP total revenue of EUR 934.5 million (up 17%) and GAAP EPS of EUR 1.49 (up 10%)
  • PDM revenue up 20% to EUR 121.9 million on record year for ENOVIA
  • SolidWorks revenue up 25% as reported and in constant currencies
  • Non-GAAP supplementary information excluding deferred revenue write-down and acquisition costs:
  • Total revenue of EUR 943.6 million up 18% and up 19% in constant currencies
  • Revenue growth before inclusion of ABAQUS up 16% and up 16% in constant currencies
  • EPS up 17% to EUR 1.59
  • Software revenue up 18% to EUR 792.7 million and up 19% in constant currencies
  • Revenue

    GAAP total revenue increased 17% to EUR 934.5 million in 2005. Non-GAAP total revenue increased 18% and 19% in constant currencies on strong growth in both software and services. Specifically, Non-GAAP total revenue was EUR 943.6 million in 2005, up from EUR 796.6 million in 2004. In 2005 Non-GAAP software revenue increased 18% to EUR 792.7 million, from EUR 670.9 million in 2004 and increased 19% in constant currencies. Service and other revenue increased 20% to EUR 150.9 million in 2005 compared to EUR 125.7 million in 2004 and increased 21% in constant currencies. Services gross margin improved to 23.6% in 2005, compared to19.6% in 2004. Non-GAAP software revenue represented 84% of
    Non-GAAP total revenue with service and other revenue accounting for 16%. Recurring licenses revenue continued to represent a large component of Non-GAAP software revenue, representing 50% of Non-GAAP software revenue in 2005. Total CATIA and SolidWorks seats licensed in 2005 were 72,078, representing an increase of 15% above 2004 where seats licensed totaled 62,577. Seat pricing trends for the full year 2005 remained stable in comparison to 2004.


    DS benefited from strong growth across its PLM software applications in 2005 as well as the inclusion of ABAQUS for one quarter. Non-GAAP PLM (Process-centric) revenue totaled EUR 761.8 million in 2005, increasing 17% and 18% in constant currencies in comparison to 2004 where PLM (process-centric) revenue totaled EUR 650.7 million. The recent acquisition of ABAQUS accounted for approximately 3 percentage points of growth in revenue for 2005 before the deferred revenue write-down. In 2005 PDM revenue on a stand-alone basis totaled EUR 121.9 million, increasing 20% as reported and in constant currencies. CATIA licenses increased 6% to 34,798 in 2005, compared to 32,695 in 2004.


    In 2005, SolidWorks revenue increased 25% as reported and in constant currencies to EUR 181.8 million and increased 25% in U.S. dollars, the reporting currency of its peer group. SolidWorks seats licensed increased 25% to 37,280 seats in 2005 on strong demand across all major geographic markets. SolidWorks accounted for 19% of Non-GAAP total revenue in 2005.


    From a regional perspective, the Americas delivered the strongest growth in 2005, increasing 24% in constant currencies, with Europe growing 19% and Asia posting an increase of 13% in constant currencies. As a percentage of Non-GAAP total revenue, Europe accounted for 47%, followed by the Americas at 30% and Asia at 23%.

    UGS Reports Full Year Revenue Of US$1.15 Billion

    UGS Corp., announced full year 2005 and fourth quarter 2005 results. Financial highlights from the full year 2005 include:
  • Total revenue increased to US$1.15 billion, or 18 percent growth over the same period a year earlier, as the company saw an increase in total revenue in each geographic region compared to the combined revenues of Jan. 1, 2004 to May 26, 2004 (Predecessor) and May 27, 2004 to Dec. 31, 2004 (Successor).
  • Software revenue growth, which includes license and maintenance revenues, increased 21 percent over the same period a year earlier.
  • Collaborative Product Development Management (cPDM) revenue increased 58 percent including acquisitions, or 37 percent without acquisitions, over the same period a year earlier.
  • Operating income increased to US$83.5 million, or a 166 percent increase over the same period a year earlier, and includes the impact of acquisition-related intangible amortization costs of US$150.8 million.
  • EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was US$241.5 million, or a 37 percent increase over the same period a year earlier.
  • The acquisition of Tecnomatix Technologies Ltd. closed on April 1, 2005 and added US$68.4 million in overall revenue and US$52.2 million in software revenue (including license and maintenance revenues).
  • In the amounts presented above, the company has not made adjustments for the impact of deferred revenues written off in connection with the acquisition of the company and acquisitions by the company. These write-offs had the effect of reducing full year 2005 revenues by US$11.3 million and 2004 revenues by US$40.9 million.
  • Fourth Quarter Financial Highlights
  • Total revenue increased to US$326.7 million, or 15 percent growth over the same period a year earlier. The company's fourth quarter revenue included US$248.8 million in software revenue (including license and maintenance revenues), or a 20 increase as compared to the fourth quarter 2004. The company saw an increase in total revenue in each geographic region compared to the same period in 2004.
  • Operating income was US$47.1 million, a 93 percent increase as compared to the fourth quarter 2004, and includes the impact of acquisition related intangible amortization costs of US$39.2 million.
  • EBITDA was US$92.6 million, or 22 percent growth over the same period a year earlier.
  • cPDM revenue increased 47 percent including acquisitions, or 23 percent without acquisitions, over the same period a year earlier.
  • In the amounts presented above, the company has not made adjustments for the impact of deferred revenues written off in connection with the acquisition of the company and acquisitions by the company. These write-offs had the effect of reducing fourth quarter 2005 revenues by US$1.1 million and 2004 revenues by US$14.0 million.
  • "Today we celebrate our continued momentum and our first full calendar year as an independent company," said Tony Affuso, chairman, CEO and president of UGS. "In 2005, we claimed the number one spot in digital manufacturing and solidified our cPDM leadership. With our victory at Nissan, a hotly contested multi-year battle, we underscored our superior CAx technology and relentless focus on customer satisfaction. In 2005, we also highlighted the mission-critical nature of Global Innovation Networks through our new corporate vision, and launched our game-changing initiative bringing PLM to the mid- market."

    The Week's Top 5

    At MCADCafé we track many things, including the stories that have attracted the most interest from our subscribers. Below are the five news items that were the most viewed during last week.


    CoCreate's OneSpace 2006 Now Shipping

    CoCreate Software, Inc. announced availability of the OneSpace 2006 product suite geared for customers whose priorities are speed, flexibility and responsiveness to change. With CoCreate's subscription pricing, it is available for as little as $75 per week per user. According to the company, the release features the following significant enhancements:
  • Full digital mockup (DMU)
  • 64-bit processing
  • Lightweight models -- quick-to-load graphical representations of models
  • 3D Configurations for managing multiple views of an assembly within one file
  • Both the Drawing Manager and Model Manager repositories now support Microsoft SQL Server 2005
  • Designer Modeling's Annotation module includes a wizard for quickly creating drawings and detailing of 2D plans from 3D models
  • CoCreate's OneSpace.net product further automates the exchange of data between enterprise (ERP) systems and Model Manager so companies can now close the loop between their ERP system (system of record) and Model Manager (work in progress).
  • ICAM Selected For Integrated NC Post-Processing & Machine Tool Simulation For The 787 Program

    ICAM Technologies Corp. (ICAM) has been awarded a contract from Boeing Winnipeg to develop NC post-processing and machine tool simulation solutions for new CNC equipment installations under the 787 program initiatives. A new Zimmerman 5-Axis mill, trim & drill machine will be equipped with an M-Torres Universal Holding Fixture (UHF), more commonly known as an actuator or pod system. ICAM's NC post-processing and machine tool simulator, CAM-POST and Virtual Machine, respectively, will be used to manage the complex synchronization requirements of the Zimmermann machine and the UHF. Boeing will use ICAM's software to perform analysis to ensure that no collisions exist between the cutting tool
    and the UHF during the machining process. The post-processor will then output the appropriate commands to the M-Torres machine to set the initial height and vacuum conditions for each individual holding fixture. As a result of this NC manufacturing methodology, CATIA V5 design & engineering changes, as well as changes to the part location, become irrelevant to the manufacturing programming process for the Zimmerman / M-Torres UHF.


    Boeing Delivers First Next-Generation 737-800

    The Boeing Co. and New Delhi-based SpiceJet celebrated the delivery of the airline's first Next-Generation 737-800 with Blended Winglets, the first of 10 737-800s ordered. SpiceJet will use a single-class seating configuration for 189 passengers on its short and medium-haul flights within in India. The airline will receive three additional 737-800s in 2006, with the remaining six to be delivered in 2007. The digitally designed 737-800 is the most technologically advanced airplane in the single-aisle market. With a new wing and more powerful engines, the 737 can fly higher, faster, and farther than previous models and its competitor. The advanced-technology Blended Winglets allow airlines
    to save on fuel, extend range, carry more payload, and reduce engine maintenance costs. Unlike traditional winglets that attach at abrupt angles to the wing, Blended Winglets gently curve out and up from the wingtip, reducing aerodynamic drag and increasing performance. The 8-foot (2.4 meters) high winglets add about 5 feet (1.5 meters) to the airplane's total wingspan.


    The Tragedy Of General Motors

    In an in-depth analysis of America's largest automaker, General Motors, FORTUNE magazine comes to some troubling conclusions. "Bankruptcy isn't going to occur next week," says editor-at-large Carol Loomis. "But down the road--say, past 2006--its probability is high." Many doubt that GM can turn around its reeling North American auto operations, now reduced to an embarrassing market share of 26%. In that percentage, reports Loomis, lies a harrowing, and maybe intractable, revenue problem. Says a GM executive: "There's no fix for us unless we get revenues stabilized." The story, "The Tragedy of General Motors," appears in the February 20 issue of FORTUNE and at www.fortune.com. General Motors CEO Rick Wagoner and his crew must deal with the full range of GM's problems which add up to a Hummer-sized load. The company lost $8.6 billion last year; it's product mix in the U.S.-- heavily weighted towards trucks, pickups, and SUVs--is on the wrong side of gas prices; a majority interest in its finance subsidiary, GMAC, must be sold to keep that company healthy; and it is inextricably entangled in the bankruptcy of its biggest supplier, Delphi. "The company is even under investigation by the SEC for accounting sins, as yet unrevealed," says Loomis. Troubles loom so large that one Wall Streeter deeply familiar with the company
    recently stated the challenge starkly: "I would say that turning GM around is a harder logistical and managerial task than the invasion of Iraq."


    AutoCAD Electrical Honored With Award

    Autodesk announced that AutoCAD Electrical, an application for design of industrial control systems, has been recognized by the readers of Control Design magazine for providing the best technology value, services, and support in a recent survey. The survey results, as part of the Fifth-Annual Readers' Choice Award, showed AutoCAD Electrical as the preferred application by 79% of the subscribers who responded. AutoCAD Electrical is a 2D design application created for electrical control designers, by electrical control designers. Built on the AutoCAD platform, it automates the tedious tasks of creating ladder drawings and point-to-point style electrical drawings, tracks all wire numbers and
    component tags, and cross references coil and contact information. AutoCAD Electrical generates a wide range of automated reports, including bills-of-materials and from-to wire lists, to minimize the errors that can occur with manual reports. It also can link cable and harness information to Autodesk Inventor 3D software.



    Jeffrey Rowe is the editor and publisher of MCADCafé and MCAD Weekly Review. He can be reached
    here or 408.850.9230.


    This Week

    Lead Story
  • Dassault Systemes Reports Record Revenue And Earnings In 2005
  • UGS Reports Full Year Revenue Of US$1.15 Billion
    Product and Company News
  • Sales Growth Drives Restructuring At Roland
  • Agile At Digital Factory
  • Cyon Research Releases White Paper On PLM Information Sharing
  • MatrixOne To Release Q2 Financial Results
  • Moldflow Announces Celltrack 2.1
  • From 2D Design to the Creation of Surfaces TopSolid Offers a Parametric Optimization for Boat Makers
  • GoEngineer Celebrates 10 Years as SolidWorks Reseller
  • Fluent Participates In Second Annual Diesel Emissions Reduction Consortium
  • AUTOWEB LAUNCHES PRODUCT "DATA VAULT" SOLUTION FOR MANUFACTURERS
  • Altair Engineering Establishes Trans-National European And Asia/Pacific Operations
  • UGS To Host Full Year 2005 And Q4 Earnings Webcast/Teleconference
  • Synthes Deploys Agile For PLM
  • New Stratasys FDM Vantage X Rapid Prototyping System Offers More Material Options And Higher Resolution
  • Stratasys Conference Call To Discuss Q4 and Fiscal 2005 Financial Results
  • Boothroyd Dewhurst Sells DFMA Software To Plug Power Inc.
  • Surfware Reports Record Sales
  • Computer Aided Technology, Inc. Earns Top SolidWorks North American Subscription Service Award
  • KUKA Robotics Signs New System Partners
  • TekSoft And Lantek Sign Distribution Agreement
  • Agile Software Announces Q3 Earnings Conference Call
    Related MCAD News
  • Nominations Sought For 2006 CAD Society Awards
  • Evans & Sutherland To Sell Its Simulation Business To Rockwell Collins
  • The Imagination Worker
  • Brembo Receives Frost & Sullivan Product Innovation Of The Year Award
  • New IBM Blade Computers Speed Data Up To 10X
  • Tacton Integrates Sales Configurator With SMARTEAM
  • IDC Announces Top Ten 2006 Predictions For Applications Markets
  • NASA Selects Unisys For Support For Langley Simulation Facilities
  • "Virtualization" Methods Slash IT Costs, Optimize Infrastructure
  • Microsoft Automotive Business Unit Honored
  • Dell Introduces Curriculum-Specific Intelligent Classrooms For Schools
  • Oracle Wins Copyright Infringement Suit
  • Final Boeing 717 Begins Production On Moving Assembly Line
  • Hybrids Win "Best Overall Value Of The Year" Awards
  • Unisys Receives Contract From NASA Langley Research Center
  • Jet Manufacturer Fails To Remedy Known Problem
  • Delphi to Design, Build Cockpit Module, And Wiring Harnesses For New SUV
  • PolyVision Introduces Thunder Virtual Flipchart System
  • KLA-Tencor Reduces Cost Of CD Metrology For IC Manufacturing
  • Harley-Davidson Selects SAP For Global Operations
  • Discovery Machine Introduces Knowledge Capture Software And Services
  • ITT Industries Completes Sale Of Auto Brake & Fuel Tubing Business
  • Emphasis On Portable Devices To Fuel Automotive Wireless Applications
  • Sigrity Enters IC Package Physical Design Market With Technology License From Synopsys
  • Castle Harlan Acquires RathGibson, Manufacturer Of Specialty Tubing
  • Delphi Debuts Four New CV Technologies
  • TI Automotive Unit Earns GM Supplier Of The Year Honors
    Corporate Moves
  • One of Caterpillar's Founders Inducted Into Inventor Hall of Fame
  • VISTAGY Hires General Manager For Asia/Pacific
    Upcoming Events
  • ABAQUS Announces 2006 Worldwide Users' Conference
  • Delcam To Feature High-Speed And Five-Axis Machining Strategies
  • ITEDO Technical Illustration Seminar in Chicago, IL
  • Delcam To Show Product Development Software Range At Industrie


    You can find the full MCADCafe event calendar here.


    To read more news, click here.



    -- Jeff Rowe, MCADCafe.com Contributing Editor.


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