Quickie: ANSYS Q3 a bit light, sees modest growth in 2017

ANSYS just reported results for Q3 that were a wee bit light on revenue and a bit tentative on 2017 — but, overall, not bad. And there’s an acquisition, too. First, the details:

• Total revenue was $246 million, up 3% as reported and up 2% in constant currency (cc) — at the lower end of guidance of $244 million to $253 million
• Software revenue was $140 million, essentially flat
• Revenue from leases was $86 million, up 9% as reported, up 7% cc
• Revenue from perpetual licenses was $54 million, down 13% (down 14% cc).
• Maintenance revenue was $100 million, up 9% as reported and cc
• Service revenue was $6 million, up 7%
• By geo, revenue from North America was $95 million, down 2%
• Revenue from Europe was $71 million, flat as reported and down 2% cc
• Revenue from Asia was $80 million, up 3% as reported (up 2% cc)

General comments made by ANSYS in advance of their conference call: North American results were affected by interest in leases — like other companies have reported, this negatively impacts current-period revenue but creates future visibility. The company says that automotive was solid, but energy continues to be affected oil and gas project slowdowns. Europe was affected by “pockets of lingering economic and geo-political issues, and mixed sales execution”, including in the channel. Finally, continued strong performance in Japan, drove the results in Asia-Pacific, including. More details after I’ve had the chance to listen to the earnings call replay.

CEO Jim Cashman is quoted in the earnings press release as saying, “Revenue growth, which was at the lower end of our revenue range, was impacted by an increase in leasing and lower year-over-year perpetual revenue due largely to a challenging comparison to Q3 2015. Our lease license revenues grew 7% in constant currency and our maintenance revenue grew 9% in constant currency, contributing to our recurring revenue base strengthening to 76% of revenue for the quarter. Germany, Japan, China and Taiwan led the performance, while we saw slower growth in North America and parts of Europe.”

ANSYS also announced the acquisition of German KPIT medini Technologies AG, a provider of systems safety analysis solutions. According to its website, the company’s flagship product, medini, helps users implement functional safety analysis activities and integrates them into existing engineering workflows. ANSYS says that a combined ANSYS-medini solution “enables companies to have one system simulation solution for the entire product development cycle. This will allow companies to more effectively manage their system engineering processes, as well as to perform in-depth sub-system and component engineering development in a single comprehensive platform – achieving functional safety, reliability and quality targets faster and more cost-effectively.” I need to learn more — had not heard of medini before today.

ANSYS also revised its targets for Q4, now seeing revenue in the range of $263 million to $272 million. That would make the 2016 total revenue $981 million to $990 million — recognizing the lighter than expected Q3 and the uptake of leases. Prior guidance had been $10 million higher, to right around $1 billion. Finally, ANSYS also revealed its 2017 target of GAAP revenue in the range of $1.020 billion and $1.060 billion. At all midpoints, that would be revenue growth of just 5%.

OK. Back to Bentley’s The Year in Infrastructure.