Rand Worldwide, the Autodesk reseller and provider of proprietary solutions, just announced that revenue for the fiscal year ended June 30 was up slightly, but the accounting effect of the sale of its international operations led to a sharp decline in net income.
The company reported total revenues of $82.5 million for the year, up from $81.1 million for fiscal 2012. Product revenue (from the sale of Autodesk, Archibus, Leica, Autonomy and its own ASCENT brand) was $41.9 million, down from $44 million in fiscal 2012. In the company’s Annual Report, filed today with the SEC, it says that “Product sales of the core Autodesk resale business decreased 6.1%, [while] the company’s ASCENT division grew its product revenues by 15.1%.”
Services revenue was $21.8 million, up from $19.1 million, due to nearly a million dollar increase in software development projects and “$637,000 in increased service revenues from Rand Secure Archive services, and $792,000 from its CFD consulting business which the Company acquired in August 2012”. That CFD consulting business, Informative Design Partners (IDP), was started by some of the team behind Blue Ridge Numerics after Autodesk acquired it.
Finally, commission revenue (from Autodesk subscriptions and sales to specific named/government accounts) was $18.9 million, up from $18.1 million a year ago. Rand says that its renewal rates on Autodesk subscriptions are “among the highest in the sales channel, allowing for modest year-over-year growth in commission revenues”.
Rand sold its Singapore, Malaysia and Australia operations during FQ4 at a loss of $370,000. By selling these units, Rand lost their revenue contribution and also lost the tax benefit from these operations, which led to Rand reporting net income from continuing operations of $2.4 million in fiscal 2013, down sharply from $8.1 million in the prior year.
CEO Marc Dulude said in a press release that “the closures of our foreign operations will allow us to focus our resources on strengthening our presence in North America where we have seen better profitability and where we have the largest market presence. We are particularly pleased that we were able to grow our Service revenue 14% over the prior fiscal year and we will continue to exploit the depth and breadth of our technical experience to continue this growth.”
It’s hard to tell what this news portends for Autodesk (which holds an investor day later this week). Usually, we can use Rand’s earnings for Q4 and commentary on the year ahead to start thinking about Autodesk — but Rand no longer holds earnings calls or provides forward-looking guidance, so that’s off the table.
But for Rand, this news is good. I never understood why it had operations in a few far-flung regions; this focus on its North American businesses makes sense. Diversifying from its Autodesk base is also good, since we’ve seen Rand’s relationship with its OEMs falter in the (distant) past — different regime, partner and time, but it’s a good lesson, none the less.