Yes, yes, yes, ANSYS announced Q1 results today and we’ll get to that. What’s really got you buzzing is the second press release out of ANSYS this morning:
For those who follow simulation but not CAD, SpaceClaim has ruffled a lot of feathers since 2007 by saying that CAD software should be easy to use and history-free. This message, directly or indirectly (hah!), led PTC to Creo Direct, NX to Synchronous Technology, DS to LiveShape and Autodesk to Fusion. Starting from scratch, SpaceClaim was also able to create a clean, lean UI to streamline the user experience, something all the other CAD vendors have also done. Coincidence or competitive pressure? You decide.
No matter how you see sequence and intent, SpaceClaim changed the conversation in CAD.
This sounds like an appreciation of a technology that has died — far from it. ANSYS says it is committed to moving SpaceClaim forward, to “develop, support and innovate for SpaceClaim Engineer and its modules”. SpaceClaim co-founder Danny Dean told customers in a blog post that SpaceClaim “with ANSYS’s resources behind us, will be better positioned to deliver industry changing products faster than we have been before”.
- ANSYS acquired SpaceClaim yesterday (April 30). Yup, the deal is done, though the integration of the two businesses is just getting underway.
- ANSYS paid $85 million in cash for a company that is expected to have revenue of around $14 million in 2014 — that’s a revenue multiple of more than 6.
- SpaceClaim was started in 2005 by Mike Payne (PTC, SolidWorks, now Kenesto), Danny Dean (PTC, Applicon, now SpaceClaim SVP, R&D), David Taylor (Computervision, PTC, now CADstack), and Blake Courter (PTC, Gravelsoft, now Grabcad). Just look at the pedigrees! No wonder they were able to secure backing from technology venture capitalists, including North Bridge, Kodiak, Borealis and Needham.
- SpaceClaim has around 50 employees, all of whom have joined ANSYS except CEO Chris Randles and CFO Gregory Stott.
- SpaceClaim has sold around 50,000 seats since first commercial shipment, and customers in over 4,500 accounts, including 18 major global OEMs. There is some overlap with ANSYS, but also potential for ANSYS sales into greenfield accounts.
- ANSYS and SpaceClaim have been partners since 2007, marketing ANSYS SpaceClaim Direct Modeler to analysts who needed to create an easily editable CAD model for CAE.
- ANSYS expects SpaceClaim to have revenue of about $14 million in 2014 (so will add something like $7 million to $8 million to ANSYS’ fiscal 2014).
- ANSYS says that the transaction will not affect its own CAD neutrality, an important point given that the majority of its customers are likely not SpaceClaim users.
I learned from ANSYS VP, Marketing Josh Fredberg that the company looks at OEM relationships (like the one with SpaceClaim) as “dating before marriage”. How is the relationship? Are we going in the same direction? Yes? Let’s make it permanent. He said that there was no specific reason for doing this deal now, other than SpaceClaim’s business is taking off and ANSYS wanted to be sure that it steered SpaceClaim in CAE-friendly directions.
What I found most interesting in the materials ANSYS prepped for the announcement are these two items
SpaceClaim “Drives Growth Through Expanded Customer Base and Cross-Selling” because it “Expands user base from analysts/expert users to 5 million design and systems engineers”
Large Market Opportunity:
25 million engineers in manufacturing
1.1 million commercial CAD seats in maintenance
SpaceClaim addressed the needs of 5 million+ engineers
[from the investor presentation, page 6 and 9. ANSYS text in italics.]
We can’t argue that SpaceClaim’s direct modeling lets engineers and designers build and edit models, and ANSYS and SpaceClaim have a proven workflow to get the models from CAD to CAE. But these factoids imply that SpaceClaim can take ANSYS from an expert user base of 475,000 seats (last data point I have, from their 2011 investor conference) to a much broader commercial base, as many as 5 million. That’s a 10x stretch. Not all engineers think they need or can afford simulation. Even those who are interested often find that CAE is too complicated.
But this is a long game, a strategic acquisition: If ANSYS can take SpaceClaim to even a fraction of the engineers who don’t currently use any CAD tool, they’ve created an opportunity for follow-on sales of other technologies, like CAE. Then, if ANSYS can create a CAE workflow that “hides the ugly” and simplifies the front-end, as Mr. Fredberg puts it, they can get simulation into many more hands. ANSYS intends to build a center of excellence around SpaceClaim, to focus on pre-processing and meshing with the ultimate goal of hiding the ugly so that users can concentrate on their design, not learn the intricacies of simulation software.
“Hiding the ugly” is a great term but it’s a not a revolutionary idea. The industry has been working towards this, in baby steps, for years. Let’s see if the combination of ANSYS and SpaceClaim can pick up the pace.