Exa & ESI: Positive signs in CAE
CFD has been hopping lately, with Exa announcing results from its first quarter as a public company, while ESI acquired OpenCFD from SGI and announced its own results for the most recent quarter. Here’s a quick overview of the recent activity:
Exa‘s July quarter was solid, with total revenue up 9% to just under $12 million. Excluding currency, total revenue was up 14%. License revenue for the quarter was $10.2 million, up 7%, while project revenue was $1.6 million, up 28% (up 39% in constant currencies). Exa typically first engages with a prospect via projects, as the customer works with Exa to explore the capabilities of its offerings and their applicability to the client’s problems, so the uptick in projects represents future revenue potential. CEO Steve Remondi said that there were dozens of projects currently underway and in the pipeline in both the company’s traditional automotive base and in new markets such as aerospace.
I always learn something on these calls. Exa IPOed earlier this summer, raising over $60 million. During today’s call, CFO Ed Furlong said that the company saw net cash of $34.6 million, after “underwriting discounts, commissions and other offering expenses of approximately $4 million”. We’ve seen it before, but it bears reinforcing: An IPO is not cheap and the company doesn’t always see the majority of the cash raised.
Exa said that it sees full fiscal 2013 revenue of between $52 million and $53.5 million, or growth of about 15% . For Q3, Exa guided to revenue of $13 million to $14 million.
ESI announced earlier this week that it had acquired OpenCFD Ltd. from SGI and yesterday announced results for its second quarter. ESI CEO Alain de Rouvray said “the integration of OpenCFD Ltd. is aligned with our acquisition strategy, as it anticipates and accompanies the expected evolution of the market towards the use of ‘Open Source’ software.”
Of course, the acquisition also gives ESI access to the OpenFOAM user base and the opportunity to cross-sell its other (non-open source) products to them. I wonder, though, how companies that subscribe to the open ethos look at commercial products — they likely need more than CFD, so what are they using? Are they good candidates for ESI’s offering? If you have an opinion, share it in the comments section.
ESI didn’t disclose how much it had paid for OpenCFD or how much it expects it to add to revenue, other than to say it was accretive (profitable). SGI hadn’t said much about OpenCFD since the acquisition a year ago, under former CEO Mark Barrenechea. It’s likely that OpenCFD simply didn’t fit the vision of current SGI CEO Jorge Luis Titinger, who has been revamping the company’s offerings to target specific markets and work with independent software vendors to “provide complete solutions for big data, storage, and scale up computing to our customers”, as he said during SGI’s most recent earnings call. OpenCFD wasn’t mentioned at all, but it doesn’t seem to be a natural fit under this strategy.
For its own second quarter, ESI said it saw continued demand from its installed base for both licenses and services, especially for engineering studies from industries “subject to heightened competitive and regulatory pressure”. For Q2 (ended July 31), total revenue was €23.5 million, up 22%. License revenue was up 19% to €15.8 million while services revenue was up 30% to €7.8 million. IC.IDO and Efield contributed around €1.1 million to the quarter.
ESI will release more information about its first half performance on September 27.