Exa also sees caution, constrained spending
Exa Corp. today announced results for the quarter ended October 31, 2012 that mirror what we’ve heard elsewhere: caution and constrained spending, especially in October as the quarter drew to a close; and in Japan where tensions are growing with China and in Europe due to the general slowdown.
CEO Steve Remondi said that “customers became incrementally more cautious with expenses going into calendar year-end due to increased macroeconomic uncertainty, particularly in manufacturing”. Mr. Remondi added that many of his customers have shifted projects into 2013 and start new budget cycles in January, so he is “optimistic that these delays will be short-lived”. He also added that Exa did not lose deals to competitors.
- Total revenue was $12.7 million, up 9% as reported and up 13% in constant currencies. This total was slightly below the $13 million to $14 million of guidance given on the September earnings call.
- License revenue was $10.4 million, up 5% as reported and up 9% in constant currencies.
- Project revenue was $2.3 million, up 32% as reported and up 38% in constant currencies.
- 31% of revenue was from the US. [Am not sure I heard this correctly and it isn’t in today’s SEC filing; will update if incorrect. — Ed.]
The company reported a GAAP net loss of $36,000 for FQ3 — a direct result, the company says, of its revenue shortfall in the quarter.
Mr. Remondi reports that demand for new licenses is “robust” and should accelerate in 2014, the company’s next fiscal year. The company is cautious about how much of that acceleration will be visible in January, so guided low even though it expects renewals to be strong — the question is how many new licenses will be added and when. Exa now expects total revenue in the fourth fiscal quarter of 2013 (ending January 31, 2013) to be $13.0 million to $14.0 million. For the full year the company expects total revenue of $48.8 million to $49.8 million, which would be growth of about 7.5% as reported and 10.5% in constant currencies.
Exa’s shares were down 4% today, likely in anticipation of this news. It’s not all bad, though: What Exa is seeing is very similar to what Autodesk (most recently) and others reported for the September/October quarter. Mr. Remondi is more optimistic than other CEOs, telling investors that engineers are asking for more licenses of PowerFlow as they look to grow their installations. The uncertainty is exactly when customer companies will fund those requests. I would have to add an “if” to that statement — after all, funding is never guaranteed — but he’s right that CFD is so essential today that these investments are more likely than not to be funded … eventually. We’ll find out how soon that all happens when Exa reports on its fiscal fourth quarter in late winter.
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