Commentary:
MCAD Industry View – A May 2007 Update
by Dr. Russ Henke and Dr. Jack Horgan
Henke Associates
In the first MCAD Industry Commentary published May 2003 in MCADCafé.com, then-recent yearly and quarterly financial performances of a selected group of public Mechanical Computer Aided Design (MCAD) companies were analyzed and compared. Expectations of future financial performances of these same MCAD entities were documented. The May 2003 MCAD Commentary was followed by fifteen quarterly updates in MCADCafé.com, one for each subsequent calendar quarter. URL's on all past articles are available. The nine entities covered were ANSYS, Autodesk, Dassault Systèmes, UGS PLM, ESI Group, Moldflow, MSC.Software, PTC and Tecnomatix.
As a result of the acquisition of Tecnomatix by UGS that closed April 1, 2005, Tecnomatix was eliminated from coverage thereafter as a separate entity.
Accordingly, this seventeenth article below recounts the financial performances of the remaining group-of-eight (G8) MCAD/PLM entities for the nominal first quarter of 2007.
Recent MCAD & PLM News Highlights
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 2007 subject to specific closing conditions. The transaction, to be paid in cash, is expected to be non-dilutive on DS non-GAAP earnings.
On May 7, 2007 UGS announced the close of its acquisition by Siemens AG, effective May 4. As a result, the business will go to market as UGS PLM Software, a global division of the Siemens Automation and Drives (A&D) Group. The companies had announced on January 25, 2007 a definitive agreement for Siemens AG to acquire UGS for US$3.5 billion, including assumption of existing debt. More recently, the European Commission announced on April 27, 2007 that it had approved the planned acquisition of UGS by Siemens AG, thus completing the standard anti-trust reviews of the transaction.
On May 16, 2007 PTC announced it had acquired NC Graphics Ltd., headquartered in Cambridge, England. NC Graphics delivers software for optimizing tool making and high-speed precision machining processes.
On May 15, 2007 Agile Software Corporation, the largest remaining independent cPDm vendor, announced a definitive agreement for Oracle to acquire Agile through a cash merger for approximately $495 million, about a 14% premium over its market capitalization. Oracle President Charles Phillips said, “The addition of Agile, which will serve as the foundation of our PLM offering, will further Oracle's strategy of delivering industry-specific enterprise applications and allows us to offer yet another strategic application to SAP customers.” Agile reported preliminary results for the fourth quarter of its fiscal 2007 year, with total revenues expected to be in the range of $37.0 million to $38.0 million. The firm also expects total fiscal 2007 revenues to be in the range of $133.7 million to $134.7 million, or approximately $2.0 million higher than fiscal 2006. The firm has had cumulative losses of $130 million from fiscal 2002 through fiscal 2006. For the first nine months of fiscal 2007, Agile had revenues of $96.7 million and a net loss of $11.1 million.
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Agile had acquired Cimmetry Systemes in February 2005 for $41 million and Eigner in August 2003 for $19.3 million. According to Agile CEO Jay Fulcher, the company today has over 1,250 PLM customers and over 10,000 visualization customers globally.
For perspective on the price paid by Oracle for Agile, recall that Dassault Systemes acquired MatrixOne about this time last year for $408 million. Then an independent PLM vendor, MatrixOne's revenue had been around $125 million in the previous year.
Oracle's principal competition remains SAP AG, the leading ERP company headquartered in Walldorf, Germany, with annual revenues of around £.6.6 billion.
(For an overview of PLM and cPDm, see PLM and cPDM Update
MCAD Vendors' Financial Performances in Q1 2007
As a group, the G8 MCAD vendors generated combined revenues of $1.61 billion, a healthy increase of 18% from the $1.37 billion in the first quarter of 2006, but a 5.2% decrease from the traditionally-strong fourth quarter of 2006. ANSYS was by far the year-over-year percentage growth leader, due largely to its acquisition of Fluent in May 2006. Autodesk, Dassault, PTC and UGS all had year-over-year growth above 10%. The only decliner was MSC.Software at -14.4%. On a sequential basis, ESI-Group was the runaway percentage growth leader. Three of the leading high-end firms (Dassault, PTC and UGS) saw a low double-digit percentage drop in revenue from the fourth quarter 2006, whereas Autodesk eked out a small increase and eclipsed a half-billion dollars in quarterly revenue. See Table 1.
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Figure 1 below provides a bar graph showing the revenue trend for each of the covered vendors, for the periods mentioned in Table 2.
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For the Q1 2007 quarter, Autodesk was the clear share leader among the G8, followed in order by Dassault Systemes, UGS PLM Software and PTC. The others had low single digit shares.
(As always, it needs to be pointed out that unlike the other vendors in this report, Autodesk earns a major portion of its revenue outside of the MCAD space. Autodesk does not break out its mechanical contribution. Also, both Autodesk and Dassault Systemes sell mostly through third parties, while UGS sells mostly direct).
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Turning to earnings, the picture is not so bright. First of all, Autodesk, ESI-Group and UGS did not report earnings results for the quarter. In absolute terms ANSYS, Dassault and PTC had net income while Moldflow and MSC.Software had net losses. On a sequential basis ANSYS was the growth leader at +32%. PTC was the only other sequential gainer. See Table 2.
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Details on Individual Vendors' Q1 2007 Performances
On May 3, 2007 ANSYS, Inc reported results for the first quarter of 2007. Total revenue was $87.9 million, an increase of 91% from the $46 million in the first quarter of 2006 and a 3.1% from the $85.2 million in the last quarter of 2006. The $87.9 million was above the guidance range given last quarter. Software license revenue was $57 million, accounting for 65% of total revenue. This was an increase of 114% year-over-year, and a 7.5% increase sequentially. Maintenance and services revenue was $30.6 million, or 35% of total revenue. This was an increase of 59% year-over-year, but a decrease of 4.3% sequentially. Much of the year-over-year increase was due to the acquisition of Fluent for $565 million, a transaction that was completed in May 2006.
On May 14, 2007 ANSYS announced that its Board of Directors has approved a 2-for-1 stock split of the Company's common shares. The stock split will be in the form of a stock dividend to be distributed on June 4, 2007 to holders of record at the close of business on May 25, 2007.
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.
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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%.
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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.
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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.
In terms of US dollars total quarterly revenue was $35.4 million, up 19% year-over-year and 118% sequentially.
2006/07 annual sales totaled 66.0 million euros, yielding a growth of 6.2% compared to the previous financial year, and 7.6% on a constant exchange rate basis. License sales at 53.2 million euros (81% of total sales) grew by 11.2% in volume terms over the 2006/07 financial year, versus 7.0% the previous year. License sales recurrence remains high at 85%. Service and other revenues at 12.9 million euros declined by 5%.
The geographical split of global activity was America at 17%, Asia at 36%, and Europe at 47%. License sales recorded in Asia were up 20.6% (24.5% at constant exchange rates), essentially due to China, Korea and India, despite a slowdown in Japan which was further affected by the weakening Yen.
Alain de ROUVRAY, ESI Group's Chairman and CEO, commented: “We are pleased with the growth in our licenses activity. In particular, growth was buoyant in Asia, where emerging areas with substantial development potential also contributed to the sectorial diversification of our sales, in particular in the aeronautical sector. Although our services activity was significantly impacted by conjunctural events over the last year, its upturn towards the end of the year resulted from a substantial improvement in the economic climate and the development of certain new sectors such as electronuclear. Services should be further consolidated by the commercialization of a restructured offer and the launch of promising co-financed and innovative projects.”
On May 10, 2007 Moldflow Corporation announced the financial results for its third quarter of fiscal 2007. The firm also announced a revised corporate strategy which focuses on its CAE Design Analysis Solutions business. The Company also announced its intention to sell its Manufacturing Solutions division.
If one looks at the combination of continuing Design Analysis Solutions operations and discontinued Manufacturing Solutions operations, the total revenue for the quarter would be $18 million, an increase of 10% from the $16.3 million in the same quarter a year earlier and a 2% rise from the $17.7 million in the previous quarter. Combined net income would be $2.9 million, compared to $1.8 million in the year ago quarter.
Looking at continuing operations only, total revenue was $14.6 million, an increase of 26% from the year ago quarter and up a few percentage points from the $14 million in the prior quarter. Product revenue, accounting for 55% of total revenue, was up 42%, and services revenue, accounting for 45% of total revenue, was up 11%. Asia generated 48% of total revenue in the quarter.
GAAP net loss for the quarter was $7.8 million, compared to a net gain of $1.5 million a year earlier and a net gain of $1.8 million in the prior quarter. Net income from continuing operations was $2.8 million, compared to $2.0 million in the corresponding quarter of fiscal 2006. Moldflow has determined that the goodwill associated with the Manufacturing Solutions division was impaired and recorded a non-cash charge of $10.2 million dollars in its third fiscal quarter which is included in the reported loss for the quarter. Net loss from discontinued operations was $10.6 million compared to a net loss of $497K in the year ago quarter.
Commenting on the May 10, 2007 announcements, Roland Thomas, Moldflow Corporation's president and CEO said, "Our third quarter results reflect yet another step in our plan showing growth and leverage from our Design Analysis Solutions division. We remain excited by the strength and increased level of sales we see coming from our core business around the world and we believe it provides a solid platform for our more focused business. As Moldflow moves forward with our market leading Design Analysis Solutions business, we will continue to pursue our growth strategy to extend our leadership position in the industry for technically advanced CAE solutions."
On May 9, 2007 MSC.Software Corporation reported financial results for the first quarter of 2007, the period ended March 31, 2007. Total revenue for the quarter was $57.6 million, down 14% from $67.3 million in the first quarter of 2006, and down 13% from the $66 million in the last quarter of 2006. Software revenue was $23 million, a decrease of 21% year-over-year, and a decrease of 17.5% sequentially. Software revenue accounted for 40% of total revenue. Maintenance and service revenue, accounting for 60% of total revenue, was $34.6 million, a decrease of 9% both year-over-year and sequentially. Note Q1 2006 had $2.4 million of PLM revenue ($1.3 million in software and $1.1 in service). Foreign exchange increased revenue by around $1.2 million.
On a geographical basis, the Americas accounted for 32% of revenue, EMEA 34% and Asia Pacific 34%.
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Simulation Enterprise Solutions accounted for 13% of software revenue, versus 15% in the previous quarter.
During the quarter, there 126 deals over $100,000, an improvement from the 112 in the year ago quarter. The average transaction size also rose from $271K to $288K.
On March 29, 2007 MSC.Software announced the appointment of Sam Auriemma as CFO. During his career, he served as CFO for five different companies, ranging in size from $35 million to $500 million. He was most recently Executive Vice President and CFO of FileNet Corporation, which was acquired by IBM in October 2006.
For the recent quarter, MSC.Software had a net loss of $6.25 million, compared to a net gain of $3.5 million in the year ago quarter, and a net gain of $11.2 million in the prior quarter. The loss from continuing operations totaled ($6.4) million compared to income from continuing operations of $3.1 million in the first quarter last year. In the quarter there were restructuring charges of $7.1 million ($3.7 million for severance and $3.4 million for facilities).
Bill Weyand, CEO and Chairman of MSC.Software, said, "Our transition to enterprise sales has presented some execution challenges to MSC as we move our key customers from purchasing engineering tools to implementing enterprise-wide simulation platforms. And these challenges continued to impact our financial performance in the first quarter as this transition is taking longer than expected. We are disappointed with the timing of large transactions and our ability to close and complete these larger deals. Although we are not satisfied with these results, we did see certain positive signs in our business in the first quarter."
Weyand added, "The number of transactions greater than $100,000 increased both quarter over quarter and sequentially, and the average amount of such transactions increased as well. We are seeing positive signs with our new Enterprise Simulation products and did have a number of key wins in the quarter with customers including Kimberly Clark and GE, in the US, Nissan and Honda in Asia Pacific, and Airbus, Alenia, and VW in Europe."
On April 25, 2007 PTC reported financial results for its second quarter of fiscal 2007, the period ended March 31, 2007. Total revenue for the quarter was $228 million, an increase of 14% from the $200 million in the same quarter last year, and an increase of almost 3% from the $222 million in the prior quarter. The $228 million was in the middle of the guidance range given last quarter. License revenue was $71 million, accounting for 31% of total revenue. This was an increase of 31% year-over-year, and an increase of 7% sequentially. Service and maintenance revenue was $157 million, accounting for a very high 69% of total revenue. This represented an increase of nearly 8% year-over-year and 1% sequentially. Maintenance revenue growth was 11%, and training and consulting service revenue growth was 3%.
Desktop Solutions total revenue growth of 11% to $146.3 million, driven by license revenue growth of 40% and maintenance revenue growth of 9%, partially offset by a training and consulting service revenue decline of 24%. Enterprise Solutions total revenue growth of 20% to $81.8 million, driven by training and consulting service revenue growth of 23%, maintenance revenue growth of 20%, and license revenue growth of 15%. Total revenue from the reseller channel was $48.9 million, an increase of 24%.
Revenue in North America was 39% of total revenue, Europe 36% and AP 25%.
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In the quarter, 4,850 seats of Pro/E were sold, bringing the cumulative Pro/E total to 358,700 seats. Also in the quarter, 22,950 seats of Windchill were sold, bringing the cumulative Windchill total to 475,100 seats.
May 16, 2007 PTC announced it had acquired NC Graphics Ltd., headquartered in Cambridge, England. NC Graphics delivers software for optimizing tool making and high-speed precision machining processes under the DEPOCAM name. The company was founded in 1977 by Dr. Arthur Flutter and has 15 employees. PTC will offer the NC Graphics technology under the new product name, Pro/TOOLMAKER.
Net income for the recent quarter was $17.4 million, a 62% increase from the $10.7 million in the year ago quarter, and an increase of 15% from the prior quarter.
C. Richard Harrison, president and chief executive officer, said, “Our results reflect our continued success in the market. For the past two years, we have delivered revenue growth that is higher than overall market growth. This is the result of strong execution of our strategy to drive customer success by delivering highly differentiated solutions that are broad, scalable and integral. Additionally, our operating performance reflects continued operating margin expansion and earnings growth.”
On May 7, 2007 UGS PLM Software announced the close of its acquisition by Siemens AG, effective May 4. As a result, the business will go to market as UGS PLM Software, a global division of the Siemens Automation and Drives (A&D) Group. This announcement occurred after the close of Siemens' second quarter.
The companies had announced on January 25, 2007 a definitive agreement for Siemens AG to acquire UGS for US$3.5 billion, including assumption of existing debt. Most recently, the European Commission announced on April 27, 2007 that it had approved the planned acquisition of UGS by Siemens AG, thus completing the standard anti-trust reviews of the transaction.
Tony Affuso, chairman and CEO of UGS PLM Software, said, “This is a great day (May 7) for UGS PLM Software on the heels of an outstanding first quarter. While we are still finalizing our numbers, we had a very strong quarter in Q1, coming in near 11 percent on total revenue growth and 16 percent on software license growth.”
Since UGS had revenue of $272 million in Q1 0f 2006 and $353 million in the fourth quarter of 2006, Tony's figure would translate into around $301 million for the most recent quarter, a sequential drop of 14% from the traditionally-strong fourth quarter.
UGS PLM Software also announced the additions to its management team of two senior leaders from Siemens - each of whom is relocating to UGS PLM Software's global division headquarters in Plano, Texas: Tilo Brandis as president and Peter Bichara, EVP and CFO. Brandis, who has served as chief integration officer of the integration of UGS PLM Software into Siemens A&D, comes to UGS PLM Software from Siemens' Electronics Assembly Systems (EA) division, which he has headed since 2003. Bichara most recently served as vice president of Mergers and Acquisitions for Siemens A&D, including directing A&D's acquisition, divesture and strategic project programs. Before joining Siemens in 2004, he was vice president of strategy and then chief executive officer of one of Bertelsmann AG's operating companies. The majority of the current UGS PLM Software management team remains in place.
MCAD Vendor Stock Performances
The combined year-over-year stock prices of the MCAD vendors declined 5.6% in absolute dollars, and declined 5.5% in average price over the first quarter of 2006. This compares to an average increase of 8.2% for the major stock indexes over the same period. PTC was the only firm with a year-over-year gain in stock price at 16.4%. The largest decliner was MSC.Software at -31%. The others had a drop of low to middle single digits. On a sequential basis, the combined stock prices rose 3.3% in absolute dollars, and 2.7% in average price. The major stock indexes were essentially flat relative to the prior quarter. ANSYS was the sequential growth leader at nearly 17% with Moldflow and PTC trailing with 8.2% and 5.4%, respectively. MSC.Software and Autodesk had the largest quarterly drop at nearly -10% and -7%, respectively.
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Forecast Guidance from Individual MCAD Providers
UGS PLM Software and ESI-Group did not give guidance for the next quarter. The five firms who did provide guidance forecast a combined revenue growth of 16% year-over-year, and 3.8% sequentially. See Table 9.
Relative to the same quarter last year, ANSYS is the most optimistic, projecting 41% growth. Note that the ANSYS acquisition of Fluent was completed on May 4, 2006. On a sequential basis Moldflow is forecasting a drop of nearly 20%, but this is related to the firms' strategic decision to discontinue its Manufacturing Solutions Operations. Revenue in the current quarter for Moldflow's ongoing operations was $14.6 million.
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As guidance ANSYS expects revenue in the next quarter to be in the range of $87 million to $89 million. This compares to $87.8 million in the quarter just reported and compares to $62.3 million in the same quarter a year ago. For the year ANSYS expects revenue to be in the range of $363 to $366 million. This compares to $263.6 million in the previous year.
CEO Cashman said, "Looking ahead, our first quarter results lay the groundwork for continued momentum in 2007, and as such, we are increasing our outlook for the year. We believe that we are well positioned to invest and capitalize on the global market opportunities for growth, leveraging our extensive customer base, strategic vision, technology leadership, and solid business model, to drive technological and operational excellence."
For guidance Autodesk expects revenues for next quarter to be in the range of $520 million to $530 million. This compares to $509 million in the quarter just completed, and to $450 in the same quarter last year. Net revenues for the quarter after that are expected to be in the range of $520 million to $530 million. For the full fiscal year 2008, net revenues are expected to be between $2.115 billion and $2.150 billion.
As guidance Dassault expects revenue in the next quarter to be in the range £298 million to £302 million. For the full year Dassault expects revenue to be in the range £1.275 million to £1.285 million, an 11% increase over the £1.158 billion in the prior year.
Thibault de Tersant, Senior Executive Vice President and CFO, commented, “The first quarter was rewarding with non-GAAP revenue, non-GAAP operating margin and non-GAAP EPS coming in above our objectives. We are raising our full year 2007 non-GAAP revenue growth objective in constant currencies to about 13% to take into account a portion of the over-performance during the first quarter. Thanks to our first quarter as well as anticipated operating leverage, we are maintaining our full year 2007 non-GAAP operating margin and non-GAAP EPS objectives, in spite of having to absorb additional currency impact, as we have updated our dollar and yen currency exchange rate assumptions.”
Moldflow is adjusting full year fiscal 2007 guidance to reflect the results of continuing operations. It now expects revenue from continuing operations for the fiscal 2007 year to be between $54.9 million to $55.3 million dollars, which represents year-over-year growth of 13% to 14% when compared to fiscal 2006. For fiscal 2006, the company reported total revenue of $65.6 million. In fiscal 2006 $48.5 million or 74% was from the Design Analysis Solution division and $17.1 million or 26% was from the now discontinued Manufacturing Solutions Division. Applying 13.5% growth to the upcoming quarter yields a forecast of around $14.5 million.
At this time, MSC.Software will not affirm or issue guidance. Management will evaluate this decision to provide guidance in the future, as it continues to move through what it characterizes as a “transition period”.
PTC's revenue forecast for the next quarter is between $235 million and $240 million. This compares with $228 million in the quarter just completed, and $217 million in the same quarter a year earlier. For the fiscal year ending September 30, 2007, PTC expects revenue to be about $950 million, versus $865 million in the prior fiscal year.
The US Economy:
Total combined revenue for the G8 MCAD vendors in the nominal year 2006 was $6.1 billion, up a robust 18% from the $5.2 billion in 2005. The same G8 MCAD vendors then generated combined revenues of $1.61 billion in Q1 2007, a healthy increase of 18% from the $1.37 billion in the first quarter of 2006. The forecasts for total G8 2007 revenue remain bullish.
This performance is all the more remarkable when one considers the recent general decline in US economic fortunes.
For example, US manufacturers cut 19,000 jobs in April 2007, the tenth consecutive month of reductions in this essential sector so vital to MCAD, CAE and EDA businesses. Just 32% of 84 US manufacturing industries were hiring in April, the lowest in nearly four years. Overall the US Labor Department reported that in April, only 88,000 new jobs were added to non-farm US payrolls, the worst figure in 29 months. Through April, US jobs are running some 43% below the figure at this time last year.
The US Trade Deficit surged in March '07, up 10.4% from the February level. So far this year, the US trade deficit is running at an annual rate of $723 billion, just a tad below the $765 billion deficit set in 2006, the fifth consecutive year of record trade deficits. Growth of the US economy, as measured by the GDP, slowed to an anemic rate of just 1.3% in Q1 2007, per recent reports. The new March trade deficit number may end up lowering that Q1 GDP figure to just a mediocre 0.7%.
Retail sales at stores open at least a year, known as same-store sales, fell by a record 2.4% in April, the worst since 1970. Wal-Mart's same-store sales fell by 4.6% while Target's dropped by 6.1%. Gasoline prices surged in mid-May to a record nationwide average of $3.07 per gallon, nearly 20 cents higher than two weeks earlier, according to the Lundberg Survey. Regular gas in CA rose to $3.66 per gallon.
Average worker wage growth was again second-rate in April, rising just 4 cents to $17.21. Wages are up only 3.7% in the past year. Perversely, Wall Street loves it when workers are squeezed, which is one important reason the Dow closed at another record high on May 18, its 24th record close this year. The Standard & Poor's 500-stock index came within striking distance of its record high.
However, the tech-laden NASDAQ continues to labor along at half its record high.
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About the Authors:
Since 1996, Dr. Russ Henke has been president of HENKE ASSOCIATES, a San Francisco Bay Area high-tech business & management consulting firm. The number of client companies for Henke Associates now numbers more than forty. During his corporate career, Henke operated sequentially on "both sides" of MCAD and EDA, as a user and as a vendor. He's a veteran corporate executive from Cincinnati Milacron, SDRC, Schlumberger Applicon, Gould Electronics, ATP, and Mentor Graphics. Henke is a Fellow of the Society of Manufacturing Engineers (SME) and served on the SME International Board of Directors. He is also a member of the IEEE and a Life Fellow of ASME International. In April 2006, Dr. Henke received the 2006 Lifetime Achievement Award from The CAD Society, presented by CAD Society president Jeff Rowe at COFES2006 in Scottsdale, AZ. In February 2007, Henke also affiliated with Cyon Research's select group of experts on business and technology issues as a Senior Analyst. This Cyon Research connection aids and supplements Henke's ongoing, independent consulting practice (Henke Associates).
An part of the HENKE ASSOCIATES team since 2001, LA-based Dr. John R. (Jack) Horgan co-authored this May 2007 Electronics IP Industry Commentary. Dr. Horgan's prior corporate career has included executive positions at Applicon, Aries Technology, CADAM and MICROCADAM, as well as a stint at IBM. Dr. Horgan is also an editor of EDAcafe Weekly.
Since May 2003 the authors have now published a total of fifty-three (53) independent articles on MCAD, PLM, EDA and Electronics IP on IBSystems' MCADCafé and EDACafé. Further information on HENKE ASSOCIATES, and URL's for past Commentaries, are available at http://www.henkeassociates.net.
