The technology used to conceive, design and fabricate the objects around us is complicated. It may be difficult to understand if you're not a practitioner, yet businesses routinely entrust their most important processes to these tools. Our Hot Topics blog tries to clear up some of the confusion.
If you have comments or ideas for Hot Topics, please contact us.
Especially not in our PLMish world, where supply chains may use several CAD products. A PLM or PDM from one vendor often manages data and processes from competitors’ CAD products. We can talk about the advantages and disadvantages sometime, but the reality is that people are most productive with the tools they’re used to.
What happens when you, an expert in CAD product A, need to modify a part or assembly created in CAD product B? For a lot of people, history-free or direct modeling has taken center-stage, enabling them to move a design forward, regardless of how it was created.
More musings over on the PTC Creo blog …
Happy Monday! It’s going to be a busy week, with earnings and lots of other happenings. Germany’s Mensch und Maschine, one of Autodesk’s largest resellers and a supplier of its own CAM and AEC solutions, announced Q2 results today. Later in the week we’ve got FARO (laser scanning), Nemetschek and RIB Software (AEC), and 3D Systems (CAD and additive manufacturing). Let’s get right to it:
Mensch und Maschine (MuM) headlined its press release with “Q2: Ambitious expectations fully fulfilled” — and, indeed, it seems that they were. Total revenue in Q2 was up 19% year/year to €33 million. Software revenue was €9 million, up 5%, while VAR revenue was up nearly 25% to €23.9 million. This growth in the VAR business bodes well for Autodesk, which is announcing results next month.
One thing many people don’t know about MuM is that it also operates the Open Mind CAM business, which MuM says accounts for 24% of total revenue and 42% of its gross margins. No wonder MuM is investing in its proprietary software, growing headcount and R&D expenditure.
MuM CEO Adi Drotleff says that the first half of the year gives confidence in the plan for the rest of 2014, and that he expects total revenue of €140 million, up 11% y/y.
I also had a chance to catch up with SIMULIA‘s Steve Levine on Friday, to talk about the recent SIMPACK acquisition. Mr. Levine says that the acquisition was part of Dassault Systèmes’ (DS) long-term strategy around multi-body dynamics. DS has partnerships with LMS and MSC, both pioneers in the space, dating back something like 15 years but felt that these companies had let technology lag; SIMPACK (née Intec) continued to innovate and bring new features like human-in-the-loop and more logical connections into the physical simulations. I like how he put it: “SIMPACK demonstrated that there’s another horizon” in MBD, “one that competitors couldn’t get to.” Perhaps most important to many of you, Mr. Levine says that it’s business as usual for SIMPACK customers — you’ll continue to work with the people you’ve always connected with at SIMPACK, as DS will need time to train its CAE support teams in SIMPACK. Ultimately, you can expect tighter integration between SIMPACK and the rest of the SIMULIA offering, and a more global rollout of its capabilities. Too, Mr. Levine said, SIMPACK has historically targeted the automotive, rail and wind industries but has much broader applicability; expect customizations for other industries. What I took from my conversation was true excitement that SIMPACK is now part of the DS family, and some serious investment intentions in bringing it to a wider market.
Finally, earlier this month Flow Science, the New Mexico developer of FLOW-3D CFD software, was named a winner of the 2014 Venture Acceleration Fund (VAF) award. The VAF is awarded annually by Los Alamos National Security, the company that manages Los Alamos National Laboratory, to stimulate the economy by supporting Arizona-based growth oriented companies. How cool is that?! Congratulations!
The good news continues to roll in the PLM universe. Dassault Systèmes (DS) reported Q2 results that weren’t great but that also weren’t all due to acquired revenue. To be sure, quite a bit was, but CATIA featured prominently in the company’s remarks for the first time in a while. There was also more acquisition news …
- Total revenue was up 7% year/year (y/y) as reported to €557 million (up 10% in constant currencies or cc) near the low end of guidance.
- Software revenue was up 4% y/y as reported and up 7% in cc to €496 million. On an organic non-IFRS basis, software revenue was up 7% in cc. CEO Bernard Charlès told investors that organic software sales are accelerating because of “improving dynamics” in key verticals: transportation & mobility and high tech, and in CATIA and SIMULIA. He notes that on an organic basis, software revenue was up 7% in Q2, as compared only 1% on Q1 — leading to 5% growth in the first half of fiscal 2014.
- New license revenue was €140 million, up 9% as reported and up 13% in cc. Organic non-IFRS cc growth was 7%. DS saw double-digit new license revenue growth in Europe and from the CATIA brand.
- Recurring (term or rental) software and maintenance revenue was €354 million, up 3% as reported and up 12%in cc. CFO Thibault de Tersant said acquisitions, strong maintenance renewal rates, catch-up payments and SIMULIA rentals all contributed.
- Services revenue was up 29% y/y to €61 million, due to the inclusion of RTT in the Q2 results. Without RTT, services revenue continued its planned decline as DS seeks to move this work to integration partners.
- By product line, CATIA revenue was €217 million, up 4% as reported but up 11%in cc, led by demand from transportation & mobility and high tech customers. M. Charlès said that CATIA new license revenue was up 24% (cc) in Q2 as customers continue to expand their installations. M. de Tersant thinks CATIA will continue to do well in H2, but that there is potential for volatility in Asia.
- Once again, the “Other software” category was the growth standout, with total revenue of €106 million. Growth rates matter little for the overall category, since it includes the acquired revenue from 2 months of Accelrys plus smaller contributions from Apriso and RTT. We don’t have many details, but it appears that SIMULIA again grew in double digits, organic DELMIA likely in the single digits, while DELMIA+Apriso was “up substantially”. The SIMULIA brand is said to have revenue up in the double digits on a constant currency basis. The only really negative point about “Other”, according to M. de Tersant, is that GEOVIA is “suffering because of the raw materials crisis — growth will return, but it will take time to roll it into the 3D Experience platform concept”.
- ENOVIA revenue was €65 million, up 1% as reported and up 5% in cc. DS played down this brand in Q2, focusing instead on its strong Q1. The company materials did hint that some deals originally expected to close in Q2 actually came in Q1, weakening the y/y comparison for Q2.
- SolidWorks revenue was €108 million, up 3% as reported and up 8%in cc. The number of units increased 5% from a year ago, to €14,090, after dipping in Q1.
- Regional performance also shows acceleration from Q1 into Q2. Revenue from the Americas was €157 million, up 8% as reported and in up 14% cc. Non-IFRS revenue from the Americas increased 18%, with an improving performance in North America. M. Charlès said that he was “encouraged to note a number of larger deal transactions in a diversified set of industries”.
- Revenue from Europe was €259 million, up 12% as reported and up 13% in cc, with the UK and Sweden cited as strong performers for the second consecutive quarter, and Germany mentioned for the first time in a while.
- Finally, revenue from Asia was €141 million, down 3% as reported and flat in cc. DS highlighted strong growth in South Korea and India.
- There were no mega-deals in the quarter, but deals exceeding €1 million went up in Q2.
Acquisitions continue to big news for DS, which is closing deals at a rate right now of about 1-2 per month. The Accelrys acquisition closed (finally) during the quarter, forming the core of the BIOVIA brand for chemistry, biology and material science applications. Earlier this month DS acquired SIMPACK for its multi-body simulation capabilities (more coming on that soon), and just today, DS announced the proposed acquisition of Quintiq to add logistics and supply chain management to DELMIA.
Quintiq provides on-premise and on-cloud supply chain and operations planning software. Quintiq had revenue of €70 million in 2013, split 60% software/40% services. It has around 250 customers, who use its solutions to plan and schedule production supply chains, plan and optimize logistics and operations. What appears to have attracted DS is Quintiq’s optimization algorithms, which DS says can be applied across many industries and problem sets. The acquisition is expected to be completed in September, and is expected to cost DS €250 million in cash (yup, a 3.6x multiple — but it seems to be at least at break-even and revenue is growing at 20%/year). All 800 people from Quintiq are expected to join DS.
From Quintiq’s perspective, CEO Victor Allis told investors that its solutions cover the spectrum from production planning and scheduling, to logistics routing and dispatch, to workforce scheduling, all on a single platform. Dr. Allis spoke about “sharing a common DNA” with DS, since Quintiq’s solutions enable customers create a complete model of their business operations – which “complements DS’ technologies enabling the complex, digital mock-up of a product”.
Shifting topics, M. Charlès offered DS’ take on the cloud –closer to Autodesk than to PTC– saying that DS’ cloud efforts are expanding its footprint, not taking desktop customers to the cloud. “Cloud/mobile is a market expansion opportunity for us, particularly in new industries”. Existing customers seem to be expanding on-premise, while new ones are investigating both offerings.
DS reaffirmed its current financial targets for the rest of 2104. Excluding Quintiq, Q3 revenue will be between €560 million and €570 million, while 2014 growth is still expected to be 14% to 15% in constant currencies, or a revenue range of €2,290 million to €2,300 million. DS will update to include Quintiq after the deal closes.
In all, DS’ Q2 results are decent. It’s nice to see growth in CATIA, especially since DS says it’s due to both expansion in current installations and sales to new customers, perhaps in new verticals. What’s exciting about DS is how many levers are moving all at once, with automotive, high tech, life sciences, fundamental CAE and operational planning all in one breath. Not visible in these earnings releases, which are all about the surface sizzle, is that the traditional parts of DS are working to execute on M. Charlès’ vision. ENOVIA, CATIA and SIMULIA are core parts of the long-term vision, even if they don’t often get the visibility of new, shiny directions.
Note: DS reports in IFRS (the European version of the US GAAP, generally accepted accounting principles), non-IFRS, and non-IFRS constant currency. We try to stick to IFRS wherever possible, since that’s comparable to how other companies report — but those figures don’t necessarily highlight what DS wants highlighted. Looking just at CATIA, for example, the company’s own materials say the brand grew at 4.2% or 11% (overall) 24% (new licenses) year/year. Which matters more? DS, of course, highlights the 24%. What DS does is perfectly legit and allows them to make specific claims; we want to compare results across an industry so often highlight different data points.
Remember how the bar was set for all earnings calls a few weeks ago, when Alcoa raised the bar for all financial results to come? Well, PTC just did the same to the PLMish universe — and announced an acquisition, too. Lots more after the earnings call in the morning, but FQ3 revenue was $337 million, up 7% as reported and up 5% on a constant currency basis. That’s near the top end of guidance, which was revenue of $325 million to $340 million, with license revenue of $80 million to $95 million, $75 million in services revenue and $170 million in support revenue. As reported, license revenue was $92.7 million, while service was $70.2 million.
That acquisition? It’s privately-held Axeda Corporation, developer of solutions that connect machines and sensors to the cloud. We’ll learn more during the earnings call, but PTC’s press release says they choose to Axeda because of its technology, extensive customer base and powerful partnerships. The transaction is expected close this quarter. PTC paid about $170 million in cash for the company; PTC didn’t offer 2013 or 2014 revenue, but said that Axeda should “add $25 million to $30 million of revenue in FY’15″.
More after the call.
DS also reports in the morning — it’s going to be a busy day!
I grew up in a time when comedy could be silly and goofy, and when laughs could be scored without demeaning anyone (except, perhaps, the comedian). In college, our comedy TV lineup was Saturday Night Live on commercial TV and then, on public TV, Monty Python’s Flying Circus. Why were a group of men dressed as women, yelling about Spam on public TV, which was then very serious and stuffy – mostly nature programs? But I digress …
The Pythons are getting older and decided that this year would mark their last appearances as 5/6 of the original troupe (Graham Chapman died in 1989). John Cleese, Terry Gilliam, Eric Idle, Terry Jones, and Michael Palin took their scripts out of storage, dusted off their silly hats and put on several weeks of performances in London in a “mostly live” concert-like setting. They decided to broadcast the last show around the world, so that those of us not lucky enough to be in London could watch in local movie theaters. My husband and I went to last night’s rebroadcast and it was everything we wanted: Pythons doing many of our favorite skits live, archival footage of other classic bits, a little singing, a little dancing and some men in dresses. There may have been a Spanish inquisition, but I don’t want to give anything away.
If you’re a Python fan, go! And go a bit early — we arrived a few minutes before curtain time and walked in on a featurette about how the Pythons put it all together. We’re sorry we missed the beginning.
All together now, “Always look on the bright side of life …”
PLMish results start in earnest this week, as both PTC and Dassault Systèmes talk about their June quarter results. But AVEVA kicked things off in their uniquely British way last week, updating us on how things are going so far in fiscal 2015 — and all seems to be to plan. With typical understatement, the announcement says “we have not seen any noticeable shift in the trends reported [in May] in either our end markets or from a geographical perspective”. What, you may ask, was that? Was it good? Bad? Somewhere in between?
The second half of fiscal 2014 was a confusing picture of growth and weakness: EMEA was up slightly on strength in Central and Western Europe tempered by weakness in Russia and the Middle East. The Americas were dragged down by problems in Brazil even though shale gas in North America is “booming”. Asia was the overall standout as China was “tough” but India, “good”, and South Korean shipyards continued their expansion from traditional shipbuilding into offshore oil & gas. Diversity in both geo and end-industry that appears to be continuing into the summer.
The company said that the March to June quarter is “seasonally the least significant” since many large contract renewals happen later in the year and the new “One AVEVA” go-to-market approach won’t really kick in until the second half of the fiscal year.
The one downbeat note in the announcement was that the continued strengthening of the British pound will likely hinder growth this year, since fully 90% of AVEVA’s revenue comes from outside UK. Even so, “[t]he Group … continued to see solid cash generation in the first quarter, resulting in net cash of £129 million at 30 June 2014.” That’s impressive, considering that it was £204 million a year ago, before distribution of a £100 million special dividend, and up from £118 million at the end of the 2014 fiscal year in March.
Bottom line: “Our expectations for the Group performance on a constant currency basis for the full financial year remain unchanged.” London City analysts expect the strong British Pound and other currency effects to cut something like 5% off revenue for the year, mainly in the first half, but still on average expect revenue to be 256 million, up 8% year/year.
In slightly other news, the Financial Times is once again reporting that AVEVA is a takeover candidate, this time by companies as diverse as Emerson, General Electric and Siemens on the major industrial conglomerate side, and “peers in product life cycle management such as Dassault Systemes”. I’ve even heard Autodesk and PTC mentioned. Every company is always a takeover candidate, so don’t get too excited about this – AVEVA comes up fairly often since it’s been growing well, is profitable, is executing on a product roadmap and has blue-chip customers. I’m not hearing anything that makes this a more imminent deal than anything rumored over the last 15 years.
Let’s see what PTC and DS have to say on Thursday — maybe more acquisitions there, too?
Early today, Hexagon announced that it is acquiring Vero Software, the UK CAM company that itself is a composite of brands like Alphacam, Edgecam, Radan, SURFCAM, VISI, Cabinet Vision, and WorkNC. To call it “Vero” isn’t complete but it does the job: Vero was publicly traded until 2010, when it was bought by Battery Ventures, a US venture capital firm, and taken private. Vero then merged with Planit in 2011, adding Alphacam, Cabinet Vision and Edgecam to its brands, and tripling the size of the business. Then, in 2013, it acquired Sescoi and the Surfcam assets of Surfware Inc. Phew. Let’s just call it Vero, ok?
Vero’s brands make it, in total, the third largest CAM vendor in the world. Their solutions include design software as well as programming and controlling machine tools, across a variety of materials and machine types.
Hexagon says that Vero will help it “close the gap of making quality data fully actionable by extending the reach of the newly developed MMS (metrology planning software) to include CAM (manufacturing planning software)”. Metrology is the practice of measuring things; in this context, measuring the exactness of a manufactured part and comparing it to specifications, a CAD model or other parts to gauge whether the manufacturing process was successful. This type of measurement is, for many companies, the last step in the production process and is increasingly planned into the production timeline.
Hexagon is canny in its acquisitions, buying up nuggets that it can add to other offerings to make something bigger than expected. Says Hexagon CEO Ola Rollén, “Vero Software has the expertise, knowledge and resources to deliver even higher levels of productivity to our customers … [T]he synergies from our combined technologies will advance our strategy, supporting the growing need to integrate all data and processes across the manufacturing lifecycle.” One can see immediate products resulting from combining Hexagon Metrology’s MMS solutions with Vero CAM solutions, much like Delcam’s Powerinspect, for example. Further out, whole quality programs could be built around the joint offerings, involving Vero’s many channel partners as evangelists.
Richard Smith, Vero Software CEO commented “All of our efforts over many years have positioned Vero and our products as leaders in the industries we serve … I firmly believe that Hexagon’s size and global reach will provide stability and support our growth into the future.” No word on whether Mr. Smith and other Vero leaders will join Hexagon or if this will affect the channel partners representing many of the brands under the Vero umbrella.
This acquisition is subject to regulatory approvals but is expected to close in August. After the acquisition, Vero will continue to run as an autonomous business unit within Hexagon Metrology. Terms were not released but Hexagon did say that Vero’s sales for 2013 were about €80 million and that Vero would “positively contribute to Hexagon’s earnings”. We might learn more on Hexagon’s Q2 earnings call in early August.
Altair today announced that it is acquiring Visual Solutions, makers of the VisSim graphical block diagram language for modeling and simulating complex dynamic systems, including embedded systems.
Visual Solutions says it has over 250,000 users worldwide, scientists and engineers in process control, aerospace, mechatronics, electric motor control, pulp and paper, nuclear, wind and hydro power, data communications, economics, HVAC, and biomedical applications, who rely on VisSim’s for real-time execution of high fidelity models.
As more users move towards modeling and simulating the controller along with the plant being controlled, and automatic generating the controller codes, technologies like VisSim become more critical. VisSim itself lets users define and simulating large-scale complex dynamic systems; VisSim add-ons extend this functionality to include real-time hardware-in-the-loop prototyping and control, C code generation, and the modeling, simulation, and building of embedded systems.
I did a bit of research into this area several years ago and learned that this workflow, from simulation through to code, is critical. Block diagram tools like VisSim (as well as LabView, MapleSim and MATLAB/Simulink, among others) let users drag and drop blocks into a work space and join them to create algorithms. These algorithms are simulated and, once everything meets requirements, used to generate C code for embedded chips. The magic is that users are simulating at the system level and can quickly debug before ever generating code for their control systems. Easier to create, faster to simulate, less error prone in execution.
Terms of the transaction were not disclosed, but it is expected to close by the end of July.
Over at the PTC Creo blog this week, I’m musing on how to recapture the value of legacy data — all those CAD models you created in the past, now stored on drives all over the place (or archived in a PDM/PLM if you’re so inclined), gathering the equivalent of digital dust.
They’re a treasure trove: Good ideas, abandoned for some reason. Product variants that never made it into production. A starting point for the next design iteration. How much of an investment do you have tied up in those parts, doing nothing for your business?
The hard part has always been figuring out the best way to move these ideas forward, from CAD modeller to CAD modeller, as technology changed and you implemented new solutions. [If you're not a CAD person, think about Wang documents stored on 5 inch floppies; how would you get that into the word processor you're using today? Same general idea.] Some teams migrate all of their parts each time they update CAD authoring tools; others take a piecemeal approach. One takes a long time and probably results in higher quality output; the other takes more time if all added together, but gets the team moving more quickly in the meantime.
The AEC world continues to expand and contract at the same time, as the big providers branch out into new areas by acquiring smaller companies. Trimble is a perfect example, making more than 100 acquisitions since 2000 (spending over $3.2 billion in the process). These additions took Trimble from being “the GPS company” to BIM, construction site management, farming and public safety. Today, Trimble announced another acquisition, of The Omega Group, taking Trimble deeper into the world of intelligent GIS (Geographic/Geospatial Information Systems).
The Omega Group provides of cloud-based and on-premise tools to integrate mapping, analytics and mobile technologies for public safety agencies. Think of your local police or fire department, and how they have to respond to emergencies and prepare for both critical events (big highway accidents) and more routine, non-threatening activities (parades). Omega’s solutions let agencies design action plans, allocate resources, and monitor execution on desktops, dashboards and mobile devices.
Trimble’s end-goal for this acquisition appears larger than public safety. Omega’s solutions of GIS, big data analytics and mobile seem to have cross-application uses, and once can see them cropping up in other solution sets over time. Of course, this deal also puts even more of Trimble head-to-head against even more of Intergraph, so expect more contract award news, faster releases and a bigger presence from both companies.
(Trimble took earlier aim at Intergraph with its mining acquisition last month.)
Financial terms were not disclosed, which isn’t surprising. Something like 85% of Trimble’s acquisitions are small, with revenue under $25 million. We should learn more when Trimble reports results in a few weeks.