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.

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Hot Topics

ESI Q1: buoyed by BRIC and OpenCFD

EarningsStill working to catch up on what happened while you were at PTC Live? Me too! Honestly, it would be so much simpler if everything just went on hold while we’re these things, right?! Not gonna happen, so catch-up it is. In addition to 3D Systems trying to acquire Phenix, ESI Group reported results for the first quarter.

In a nutshell, revenue was up 2.0% as reported to €21.6 million, characterized as “solid … despite a negative base effect associated with the depreciation of the Japanese yen” by CEO Alain de Rouvray. M. de Rouvray cited growth in the BRIC countries and highlighted ESI’s joint venture with the Chinese Aerospace Group AVIC-BIAM and a “sharp” increase in sales activity in Brazil.

The details:

ESI doesn’t give forward-looking guidance but M. de Rouvray did sound a cautionary note in his prepared remarks: “[Successes in emerging countries] are reassuring in the context of a macroeconomic situation that has become more difficult again, whilst the increasing complexity associated with globalisation requires the Group’s internal reporting structure and processes to be adapted.”

I found it encouraging that OpenCFD is starting to contribute a bit more robustly. Recall that Q4 included €343,000 from OpenCFD, acquired in September. It appears as though it contributed about €420,000 in Q1, which would be a nice sequential increase. I caution, though this is my math, from small percentages on small numbers. But, ballpark, it looks like OpenCFD is doing well under its new owners.


3D Systems moves into metal, snaps up Phenix

EarningsNot surprisingly, while a lot of us were at PTC’s Live Global user conference in Anaheim this week, everyone else was doing … whatever they were doing. And that, it turns out was quite a bit.

3D Systems Acquires (Most of) Phenix Systems

3D Systems makes what are commonly called additive manufacturing printers, where layers of material are built up until the part reaches the size of the desired, finished object. 3D Systems’ printers have, so far, always used plastic which put it a bit behind the curve in a world that increasingly wants to make real parts, not prototypes.

The company just found a solution, announcing that it would acquire a tad under 80% of Phenix Systems, a French provider of direct metal selective laser sintering printers. Phenix manufactures and sells a proprietary printer  that prints “chemically pure fully dense metal and ceramic parts from very fine powders with the granularity of 6 to 9 microns”. [Terms like "chemically pure" and "very fine" need quotes. -- Ed.] To date, these powders include stainless steel, tool steel, super alloys, non-ferrous alloys, precious metals and aluminum oxide (aka alumina). 3D Systems expects to this process to be very attractive to customers in aerospace, automotive and patient-specific medical device companies.

The acquisition of that 80% stake is subject to conditions and is expected to close in July. After that, it gets complicated. 3D Systems intends to launch a take-over bid for the remaining 20% of the shares of Phenix Systems, and then initiate what it calls a “squeeze-out procedure” if it gets to 95% of total shares or voting rights during the second half of 2013. It does not sound friendly and one has to wonder about the dynamics behind the deal.

The maximum price payable by 3D Systems for the 80% block is €13 per share. I wasn’t able to quickly find the total number of outstanding shares, but the NYSE Euronext website lists the company’s market capitalization at €14 million, so it looks as though the first part of the deal totals about €11 million or $15 million. That €13 per share represents a 120% premium on Phenix’s closing price before news of the deal broke.

Phenix has bumpy financial record. So far, 2013 is looking good, but the company reported revenue of €3.75 million in 2012, which was down slightly from 2011, which was down a lot from €5.9 million in 2010. For 2102, Phenix reported a net loss of €1.89 million. Even so, 3D Systems expect Phenix to be accretive to the company’s non-GAAP earnings in the first full year following the close of transaction.

I haven’t seen a Phenix PX machine in action, but experts tell me that it’s pretty unique. It brings a direct metal technology to the 3D Systems portfolio which lets it better serve industrial customers who want to move this technology out of the design shop and into manufacturing.

We should learn more about it all on Monday, at the 3D Systems investor event.


Couldn’t get to Vienna? Recap of SIMULIA conference

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Picture this: we’re in an ancient city of castles, cathedrals and really good cake, meeting to talk about advancements in  cutting-edge technology: simulation. It’s a little like the picture to the right, of St. Stephen’s cathedral reflected in a modern office building. An interesting juxtaposition that works.

Dassault Systèmes just hosted its annual SIMULIA user conference for several hundred attendees from around the world, representing automotive and aerospace as well as consumer products, medical devices, specialty consulting and much more.

DS has been on a mission over the last few years to reinvent itself. No longer a CAD or even PLM company, it now is a ‘scientific’ company. That works well with the SIMULIA crowd since they are, after all, applied scientists. The physics flew fast and furious in Vienna, including some really cool experiments on the main stage. Tricks I haven’t seen since high school, like crushing cans and using air from a vortex cannon to blow over a pyramid of paper cups. Unlike in high school, a simulation runs at the same time to show that simulation has come very, very far but that some physics still elude us.

At the same time, DS is trying to leverage all of its brands into something more than the sum of their parts. With its 3DExperiences, DS is bundling CATIA, SIMULIA, SolidWorks, ENOVIA and its other brands as appropriate into solutions that are meant to address a specific workflow or industry need. It’s a confusing sell to may customers, who see themselves as CATIA operators, or Abaqus analysts or SolidWorks users. I’ve seen DS CEO Bernard Charles try to explain this 3 or 4 times over the last year, and in Vienna, I think he finally connected with his audience. Rather than talking up the benefits of 3DExperiences, M. Charles said that they serve to ‘connect the dots’ and that individual products and their users, especially the SIMULIA brands, will continue to get the attention they deserve. By setting Abaqus into a context, the audience was able to follow and even seemed to agree with the vision.

M. Charles also talked up the spate of acquisitions that were announced in the weeks leading up to the event. He spoke about how SIMPOE (he called it ‘best of breed’ for plastics injection simulation) and FE-DESIGN (for topology optimization) will change product design. The deals probably happened too close to the event for many SIMPOE and TOSCA users to make it to Vienna, but the SIMULIA customers I spoke with are very interested in how DS builds out the SIMULIA offering, though their main concern is that DS not lose focus on the core Abaqus.

And what about Abaqus? Product managers rolled out details on enhancements and talked about making the products more straightforward to use. Major enhancements include edge-to-edge and tube-in-tube contacts, calibrating the material in a model with iSight, discreet element modeling for continuous media, more complex assembly handing, electronics cooling meshing enhancements and much, much more. [If your favorite topic isn't in this list, ask SIMULIA. I could only capture so much!]

A big part of the strategy going forward is big picture stuff, rather than enhancements. Abaqus has the (deserved) reputation of being for experts; in order  to make it an integral part of the design process at more companies, SIMULIA plans to leverage cloud computing, improve the user experience and offer more support, tips and training to bring novices into the tools.

Abaqus customers are a bit different from the typical user conference attendee. They’re more technical, focused on solving niche problems rather than addressing business imperatives. That said, there were a couple of terrific sessions on using simulation more effectively in the design process. BMW spoke about using simulation to eliminate the need for physical prototypes of passive restraint systems until the very end of design, and its ability to predict engine failure and improve braking — all critical to the customer perception of the quality of its cars. Ethicon, a Johnson & Johnson company, relies on Abaqus to model the human body in all its complexity and variability — incredibly cool stuff, but a bit unsettling to see a test setup and realize that’s a real spine in there …

One presentation, by a major automotive OEM, showed how their CFD specialists created a slimmed down app for their stylists so that they could determine very early in concept development how a slightly different side mirror, for example, would affect drag and therefore fuel economy. These stylists aren’t CAE specialists so this app had to prepare and assemble geometry, mesh, solve and present results in a way they could understand. This company used iSight to prep geometry and run CD-adapco’s STAR-CCM+ and then serve out results. This method embodies many of the best practices around CAE: use early and often, solve a specific problem with obvious benefit.

Other presentations highlighted just gnarly problems in contact lenses, wind loads, pipe-in-pipe systems, modeling ore deposits and tires. There truly was something for everyone.

Maybe M. Charles said it best in his opening remarks. He told the assembled analysts that “your bosses don’t know what you do. It’s time to make what to do more visible.” The SIMULIA user conference was very much users talking to users; maybe next year, we can invite some managers so they, too, can see how important simulation is in an overall business context. But that would really change the tenor of the meeting — so maybe not. It was great just as it was.

Image credit: Monica Schnitger

Note: Dassault Systèmes graciously covered some of the expenses associated with my participation at the event but did not in any way influence the content of this post.


Exa’s Q1 is back on track

EarningsExa Corporation just announced results for its first quarter of fiscal 2014, which ended April 30, 2013. CEO Steve Remondi said that “revenue for the quarter was at the high end of our guidance, increasing 11%, or 14% on a constant currency basis, from a year ago.  Recall the Q4 fell short as customer spending stalled; in Q1 it seems that customer activity returned to more normal levels.

Mr. Remondi is still cautious about the rest of 2014, though: “we are seeing an improvement in product development activity among our customer base [even as] some vertical markets and geographies continue to face economic challenges.”

The details:

For FQ2, Exa sees revenue between $12.5 million and $13.5 million, with a
GAAP net loss of ($0.9) million to ($0.6) million, due to a one-time charge of $0.8 million associated with repayment of the company’s term loan facility. That would be revenue growth of 8% to 14%.

For fiscal 2104 (ending in March), Exa expects revenue between $55 million and $58 million and a GAAP net in the range of a loss of ($0.3) million to income of $0.5 million. That would be revenue growth of 12% to 19%. Clearly, Exa sees growth accelerating as the year progresses.

No geo or vertical data in the earnings material; more details after I listen to the earning call.


AVEVA very happy with F13 results, has “a lot more in the tank”

EarningsCEOs lead interesting lives. In an interview with the CNBC Squawk Box team in the UK, AVEVA’s CEO Richard Longdon was asked if the company’s new Everything 3D (E3D) product was “CAD for smart people”. Well, yes — but the point of E3D is to make advanced design technology and data management available to a wider audience (that we hope is smart). Mr. Longdon tells investors that E3D showcases AVEVA’s leadership and innovation, that E3D “puts clear water between us and any competitor … and there’s a lot more in the tank”.

E3D doesn’t yet factor into AVEVA’s revenue picture but, even without its contribution, AVEVA had a very good fiscal 2013, ended March 30. As the company hinted earlier, revenue was up around the world and in all categories.

The details:

In conjunction with the earnings release, AVEVA announced that it is proposing to return about £100 million to shareholders in a special dividend. Mr. Longdon says that AVEVA will be left with about £100 million in net cash after the distribution, and will generate more cash during the year — so why not take care of shareholders? Mr. Kidd underscored the fact that AVEVA will have plenty of cash on hand for acquisitions, and that its M&A pipeline remains intact.

AVEVA doesn’t give guidance, other than to say that they expect oil & gas to continue to grow with “solid demand” in power, especially nuclear in China and India. London City analysts, however, are modeling total revenue of between £241 million and £264 million, or growth of between 10% and 20%.


Earnings update, AEC edition — a mixed bag

EarningsThis earnings season has been incredibly busy and I have fallen far, far behind in summarizing the highlights. To try to catch up a bit, I’ll be grouping these companies by general product category for you, since that’s so much more useful than chronologically by reporting date.

The PLMish vendors that supply customers in the Architecture, Engineering and Construction world tend to be affected by the economy and government policies in a confusing welter. Housing starts stall when consumers aren’t confident but then, governments build roads and other infrastructure to boost the economy and keep goods and people moving. Up and down at the same time. The four companies below showcase how industry, geographic and government exposure can affect revenue.

AspenTech Returns to Real Growth

Total revenue for the March quarter (the company’s fiscal third) was $79 million, up 29% year/year (y/y) and nicely ahead of guidance of $71 million to $74 million because of better than expected services revenue and advantageous timing for collecting customer payments. Subscription and software revenue was $61 million, up 44% y/y and services and other revenue was $19 million, down 2%. Recall that AspenTech is in the process of transitioning its customers from a traditional up-front license/maintenance payment mode to a subscription model. Given that, in FQ3, perpetual license revenue was only $225,000, that transition may be nearing an end.

To to help gauge progress in this transition, the company came up with what it calls “Term Contract Value” (or TCV), the renewal value of its multi-year subscription contracts. You can compare it to the value of an initial license plus some number of years of maintenance; basically, the total amount a customer will pay over several years, turned into today’s dollars. On that basis, AspenTech says that the license portion of TCV was $1.58 billion at the end of the quarter, up 13% y/y. Since maintenance is generally bundled into the transaction, it can be included in TCV; on that basis, total TCV was $1.83 billion at the end of the third quarter, up 15% y/y.

It’s hard to tell how good that 15% growth is, since the quarter’s new sales were added in even as this quarter’s recognized revenue was removed. I’m looking more at the recognized, GAAP-basis revenue growth of 29%. Presumably, once the vast majority of customers are on the subscription scheme, AspenTech will turn investors’ focus to the GAAP data, since it’s actually really good.

AspenTech reports not seeing any real change in customer buying patterns on a global basis. Energy, chemicals and engineering and construction represented over 90% of revenue. The company doesn’t give much color about its geographies, but CEO Mark Fusco did say that he has not seen problems in Europe which has “had a pretty good year so far. Given their pipeline for the fourth quarter, they’ll finish strongly. Overall, we really haven’t seen a degrading of demand or degrading of the pipeline.”

The company said that events in Venezuela delayed large renewals with 2 government-owned oil and chemical customers. Apparently, the customers owed money on previous contracts, which meant that new renewals couldn’t happen — but these are long-term AspenTech customers, they paid up after the quarter ended and everyone expects the renewal to happen soon. We’ve heard a lot about Brazil; this was the first mention I noticed of Venezuela.

Given how well the first three quarters have gone AspenTech raised its fiscal 2013 revenue guidance to $305 million to $308 million, above prior guidance of $295 million to $302 million.

Finally, AspenTech announced that CEO Mark Fusco would be retiring later this year, turning over the reins to Antonio Pietri, former Executive Vice President of Worldwide Field Operations at AspenTech.

Hexagon’s Profit Up Sharply, Revenue Not So Much

Hexagon is a more complex company that AspenTech and is affected by a broader set of end-industry issues. March quarter (its Q1) revenue was €586 million, up 4% y/y. The main headline for Hexagon was that its profitability improved, as net profit rose 17% y/y to €90 million.

The company, which markets a diverse offering including Leica Geosystems scanners and software, and Intergraph’s plant design software and GIS solutions, said that the majority of growth in Q1 came from emerging markets and that markets outside Western Europe and NAFTA now account for more than 40% of sales.

By geography, customer interest in the engineering solutions improved in Europe in Q1 and a large order in Africa lifted the region to 5% growth y/y to €250 million. A recovery in the US construction sector plus strong demand in South America boosted demand in the Americas, but the sequestration and general uncertainty slowed sales to the US defense market, netting out to no growth for the quarter with revenue of €184 million. China continues to fuel growth in Asia, reporting double digit organic growth in the quarter. On the minus side, weak demand from Australia’s mining sector led to total revenue of €153.2 million and 6% growth overall in Asia.

To help investors visualize all of this, Hexagon used this graphic to explain why each region’s revenue grew (or not):

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This is a walk down or waterfall chart that’s typically used to show how revenue is affected by things like actual sales, acquisitions and currency changes. This detail is a great idea, and really helps drive home the diverse factors that affect Hexagon. (Click on the image for a larger view. Source.)

The technology business, which includes Intergraph, reported revenue of €198 million for Q1, up 3% as reported and up 4% in constant currencies.

Hexagon doesn’t release specific data by brand, but did say that Intergraph PP&M saw “record quarterly sales and profitability” and that Integraph SG&I continues to struggle, as profit improved in Q1 2013 but “sales contracted due to the diminishing US defense business”.

Hexagon doesn’t offer guidance, but analysts expect revenue of €640 million for Q2 and €2.572 billion for the year.

Nemetschek Sees 2013 as “Quite Positive”

“Indicators for 2013 are in line with expectations, which are quite positive.” – Nemetschek CEO Tanja Tamara Dreilich

Nemetschek reported “a solid start to the new year” as revenues was up 5% to €44 million on good growth driver in its core markets in Europe and in the US. Growth in maintenance revenue led the way, up 9% to €21 million; license revenue was €21 million, up 2%. More impressive to investors was the tight cost control, which led to increased earnings before interest, taxes, depreciation and amortization (EBITDA) — up 15% to €11 million.

By division, Design reported moderate growth in Q1, with revenue up 3% to €35 million. Build, much smaller at €4 million, was up 14%; Manage was up 1% to €1 million. Multimedia was up 15% to €7 million, in part due to a new agreement signed with Adobe.

Based on the expectation that construction in Germany is expected to be up about 2%; in the US, up about 8% and China, up 7%, Nemetschek now see revenue up 6% to 9% in 2013 to about €190 million.

Trimble’s Q1 Short of Expectations

Trimble’s news for Q1 was definitely mixed: revenue of $556 million was up 11% y/y but fell far short of expectations, as the US sequestration budget cuts, harsh weather in Europe and North America that delayed both the agricultural and construction seasons, and worsening economic conditions in Australia dragged down growth.

As consumers and taxpayers, we may that all this sequestration stuff is just political talk. Trimble tried to figure out its actual impact, and thinks that sales to the government (usually $50 million/year) plus the direct and indirect funding for its customers who provide goods and services to all levels of government led to a significant stall in its progress. As just one example, revenue from the Field Solutions business was up 30% year/year outside North America, but declined in North America. (And that’s taking into account the slow start to the construction and planting period in Europe.)

Taking a broader view, revenue from the Engineering & Construction business was $267 million, down 1% sequentially but up 7% y/y. Strong sales of building and construction products globally, and heavy, highway products in US were offset by softer sales in Europe and Australia. The survey instruments business was negatively affected by the weather and economic concerns in Europe, political issues in China and a mining recession in Australia, and by sequestration in the US.

The Field Solutions business reported revenue of $148 million, up 36% sequentially but flat y/y as moderate growth in agricultural products sales was offset by a decline in the sale of GIS products. Mobile Solutions revenue was $110 million, up 41% y/y due to organic growth and acquisitions. Advanced Devices revenue was $32 million, up 15% y/y.

By region, revenue from North America (the company’s largest region) was up 15%; up 2% in Asia; up 10% in Europe and up 3% the rest of the world.

While CEO Steven Berglund doesn’t think that market fundamentals have changed, he did show short-term caution, saying that “the uncertainties we encountered in the first quarter have led us to a conservative perspective.” The company now expects revenue between $570 million and $580 million for Q2.

Mr. Berglund believes that sequestration will not go away any time soon. As a result, “GIS will struggle throughout the entire year” while “survey may have some recovery in international markets”. On the plus side, he sees a strong comeback in the agriculture- and construction-related parts of the business as the weather improves and as momentum continues to build in building construction. “We think that in the back half, we can compensate for any lingering sequester effects.”

In a post-earnings release note, Google last month released SketchUp 2013, the first update of since it acquired SketchUp from Google a year ago. Trimble bills SketchUp 2013 as “the antidote to complicated, expensive CAD software”. Check out the update here. http://www.sketchup.com/

Trimble is both alphabetically last and emblematic of what AEC companies, in general, are reporting now: the construction market is improving on a region-by-region basis and other businesses areas are seeing and dealing with their own challenges. Government-related parts of the business are struggling in the US but may be doing well elsewhere. Some industries are booming (like oil and gas) while others … not so much.

Tomorrow we’ll dive into more detail on AVEVA, which is very focused on the process, plant and marine worlds.


Big news: DS acquires Apriso for manufacturing management

First day back from a lot of travel –ask me about Vienna, the SIMULIA user conference and the General Clinton Canoe Regatta, pictured below, when you next see me– and there’s lot’s of news — oh, and a big acquisition to cover, too.

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Dassault Systèmes announced that it intends to acquire Apriso, make of the FlexNet suite of manufacturing operations solutions, for about $205 million. The deal, subject to regulatory approval, should close in July. Apriso first hit the scene in the early 1990s; DS says that 2012 revenue was about $50 million and that recent revenue growth has been 15% per year.

FlexNet, Apriso’s flagship product, enables enterprises to collect data from across their manufacturing operations, aggregate and analyze it to figure out what facilities and processes are delivering the best results — and then apply those best practices elsewhere. Apriso calls this Manufacturing Process Intelligence; its offering includes a reporting analytics platform (the data warehouse and integration tools), front-end visualization tools for reporting and analysis and sets of predefined screens, reports and other tools to help companies quickly analyze their data.

DS plans to add Apriso to its DELMIA portfolio to build a “comprehensive view of their business, from idea to design, to production and global product availability for consumers worldwide”.

I think this makes a lot of sense. Combining Apriso’s manufacturing process analysis tools with design and engineering enables a very broad view of innovation. Adding in the ability to see whether and how efficiently the new widget can be produced leads to a better-informed business decision that ties together market needs, in-house expertise and the ability to execute. In theory, no more botched product launches.

Apriso’s customers include a long list of blue chip names. One, Saint-Gobain, offered a quote to the press release that speaks to the power of this combination:

“Innovation is critical to winning in the competitive world of automotive glass,” said Pascal Ober SAP Competency Center director of Saint-Gobain’s Innovative Material sector. “We use Apriso to manage the distribution and execution of quality, logistics, manufacturing and compliance processes across over 60 sites worldwide. We view the ability to innovate both products and manufacturing/logistics processes as critical. Dassault Systèmes will now have a comprehensive solution for product and process innovation all the way through execution.”

While this makes sense from a product perspective, the business aspects are also quiet interesting. DS is paying $205 million or so for a company with revenue of about $50 million, a 4x revenue multiple. That’s quite a premium to what it appears to have paid in recent acquisitions. That said, Apriso is probably a more direct add to both revenue and profit than some of the recent deals, since Apriso’s current direct sales model can be more readily translated to DS’ own, much larger direct channel.

The key will be in the integration. Once you have the data collected and analyzed by Apriso, how can DS’ 3D Experience platform use it to avantage? What’s the customer benefit to buying FlexNet from DS rather than an independent Apriso?

Apriso holds two user conferences next month, so we’ll hear from customers (and perhaps DS) on their views of the future.

DS is hosting an investor call about the acquisition. I’ll update if warranted.

Image credit: Monica Schnitger


Earnings update, 3D printer edition — looks good!

http://cubify.com/This earnings season has been incredibly busy and I have fallen far, far behind in summarizing the highlights. To try to catch up a bit, I’ll be grouping these companies by general product category for you, since that’s so much more useful than chronologically by reporting date.

Look for reports on the AEC-specific companies (Hexagon, Nemetschek and Trimble) to come sometime soon

ExOne disappoints investors, reports loss as revenue grows

3D printer company ExOne reported that higher operating expenses led to a first quarter loss of $1.9 million, even as revenue jumped to $7.9 million (from $2.7 milllion a year ago and WHAT last quarter), fueled by the sale of four 3D printing machines during the quarter. Even so, the company continuous its expansion plans,

CEO Kent Rockwell sees this as a bump in the road: “We continue to be very encouraged with the opportunities that present themselves for our 3D printing capability… [W]eakness in Europe slowed the purchase decisions of our customers in that region, while customer demand in Japan is clearly strengthening with the economy. And in North America, we also received our first order for an M-Flex machine in the quarter.”  The company now ExOne said it expects full-year revenue of $48 million to $52 million, with two-thirds of that coming in the second half.

3D Systems buoyed by acquisitions, printer sales

3D Systems is a much more complex company, since it sells 3D printer, printer supplies and, increasingly, software. 3D Systems reported first quarter results on April 30, with revenue grew 31% year/year to $102 million as printer and other product revenue grew 61% and unit sales were up 81%. Within that product total, printer revenue was up 43% to $32 million. Software products contributed $4.2 million in the quarter (and Geomagic only for 1 month).

CEO Abe Reichental told investors that the company saw 38% renveue growth in Europe and 45% in Asia, “some of it obviously is aided by the recent software acquisitions, but what we’re seeing generally is that even in some of these more uncertain economies, the demand for our products and services remains very high. It’s primarily related to very robust R&D spending by the companies that within our universe and a greater demand for our systems and services for outright advanced manufacturing applications.”

Since the earnings report, 3D Systems has ben incredibly busy. They’ve rebranded a number of products to carry the Geomagic label and announced that the company and some employee shareholders plan to sell $250 million in shares. The proceeds will be used for yet more acquisitions and to fund normal operations.

Stratasys/Objet merger ahead of plan

Fresh off its acquisition of Objet, Stratasys reported that non-GAAP revenue was $98 million, up 18% over the revenue of the combined companies a year ago. [This is confusing to many since most companies report acquired revenue as if it were new. Stratasys has opted for a much useful approach, adding together Stratasys and Objet for the last year. --Ed.] Unit sales were up 5%, even as hardware revenue went up 15%, indicating that customers are buying higher ASP products.

Mr. Reis said that he was”pleased with our record first quarter results. We generated strong revenue growth while continuing to focus on the major task of merger integration. We continue to integrate our sales and marketing organization and we are ahead of schedule and cross-training our combined reseller channel and dealer network.”

Stratasys guided to revenue of $430 million to $445 million for the year, also backweighted – but, for once, not because of the economy. According to David Reis, CEO, ”revenue growth is expected to be stronger toward the end of the year as Stratasys progresses with its integration plan and realizes revenue synergies from selling the combined product portfolio.”

OK. That’s it for now. I’m off to the SIMULIA Community Conference in Vienna and am looking forward to keynotes from the company, BMW and Ethicon; as well as dozens of other presentations. I believe the Twitter hashtag for the event is #SIMULIA13 but I’ll update once I know for sure.

Image courtesy of Cubify, in honor of the latest, (terrific) Start Trek.


Autodesk links PLM and ERP, buys Tinkercad

Roopinder;s photo of Carl BassPLM 360 + NetSuite = Control for SMBs?

Last week, Autodesk and NetSuite announced that they had entered into a strategic partnership to link Autodesk PLM 360 and NetSuite ERP, with the aim of offering PLM and ERP to small and medium-sized companies that might have neither. PLM is all about product –design, manufacturing, quality– while ERP helps run the company –financials, HR, inventory, suppliers, customers. By creating bi-directional links, data from either environment is used to advantage in both. Imagine designing a widget in Inventor, for example. Its design is controlled in PLM 360, with an eventual release to manufacturing. But nothing is ever static, so a change order is opened that requires action from both design and manufacturing. Connecting PLM and ERP ensures that both parts of the enterprise are fully informed and can collaborate on factors such as cost, quality, speed and demand forecasting. Wider visibility should yield a better result, from both a product perspective and that of the broader enterprise.

I think this partnership is fascinating. Can’t speak yet to its actual utility, but I like the idea. Autodesk says that 70% of the companies starting a PLM 360 implementation didn’t have a PLM before, and I’d bet that many of them didn’t have an ERP either. By implementing both as software-as-a-service, targeted at solving specific business problems, Autodesk and NetSuite offer a low total cost of ownership, easy entry and, through this partnership, a relatively painless integration. It’s another way Autodesk differentiates itself: It could have partnered with SAP, whose cloud-based ERP offering seems to be selling very well, but that would have sent the wrong signal. SAP has, after all, been (rightly or wrongly) blamed for many a failed ERP implementation because it was just so darned big and complicated. Autodesk wants to be seen as nimble, targeted, big-value-for-not-big-bucks; SAP might have had more initial clout, but would have been the wrong partner.

What do you think? Do you have any experience with NetSuite?

Autodesk acquires Tinkercad

Proving just how many things Autodesk can do at once, this weekend the company announced that it is acquiring Tinkercad, a low-cost, browser-based 3D design app that had been around for a couple of years. Then, in March, Tinkercad announced that it would shut its doors and that its developers would instead focus on their new Airstone Labs venture to turn “batch simulation into a real-time environment where the user can interactively test different product designs” on an “integrated software and hardware service, built from the ground up to utilize massive high performance supercomputers with hundreds of thousands of CPU cores”. The Tinkercad developers were moving on, leaving dedicated users behind.

With this acquisition, Autodesk intends to merge some of the Tinkercad technology and user experience into the Autodesk 123D products and will keep the Tinkercad service available as part of its consumer portfolio. Exact details TBD; the acquisition should close in about a month. Wired magazine reports that the Tinkercad developers will not be joining Autodesk.

On a related note, Autodesk’s CEO Carl Bass spent Saturday at Maker Faire in San Francisco. Roopinder Tara wrote this about Mr. Bass’ session on CAD for Kids (that’s Mr. Bass, in the picture above):

How often does a CEO of a billion dollar company give up a Saturday to guide kids? Carl Bass, CEO of Autodesk, is doing just that. Before a standing room only crowd at Maker Faire, he delivers a heartfelt plea for one and all, the young and their parents, to use his company’s software, to help make things, some thing, anything — whatever their heart might desire, it seems. To help them, he’ll make his software, some of it sold to professionals for thousands of dollars, available for free –or really cheap. … 

The tools he has offered are substantial and generous. What is he hoping to gain? To me, it seem nothing less than a resurgence of creativity and productivity, starting with the young, but applied on a scale that Autodesk address, this could be BIG! Give me your kids, I’ll give them the means…starting with software, but with 3D printing, a lot more. Let’s see that they can make. Why can’t they make anything they want? Including making America great again.

Image courtesy of CAD Insider.


Autodesk: Q1 was “tough”, no plan to end perpetual sales

EarningsAutodesk reported results last night that highlighted how tough the economy is, and perhaps will be for a bit longer than earlier-reporting companies had hoped. Until now, just about everyone pointed to tepid demand that got worse as we moved from January into February and March. That seems to have worsened in April, as CEO Carl Bass said that Autodesk’s “weak April led to a disappointing finish to the quarter”. If April continued the weak streak, how will that affect everyone’s Q2 results? We’ll have to wait and see but let’s take a look at what happened during Autodesk’s quarter ended April 30, 2013.

The big headline, of course, is that total revenue in Q1 was $570 million, a drop of 3% percent year/year, and at the very bottom end of earlier guidance of revenue between $570 million and $590 million (and below the analysts’ consensus of $584 million). In February, Autodesk had guided to overall revenue growth of about 6% for fiscal 2014; last night, that was pulled back to 3% growth. As CEO Carl Bass told investors, “The macro sentiment was just tougher in general [in Q1, it was] just a tougher selling environment.”

He didn’t say that Autodesk is seeing anything unusual in a competitive way, but did say that customers are starting to think about how they buy software: “The news from Adobe during the quarter about ending perpetual licenses, and the lead-up to that, certainly has our customers asking questions about it. There’s clearly a decline in desktop PCs but, on the other hand, our customers still need workstation-quality devices in order to do their day jobs. They continue to buy software and hardware to do it. But I think there is some doubt about the business models, the delivery models, and the platforms going forward. It’s too early for me to declare that this is an ongoing thing, but I do think there are a number of points in there like that.”

Some of the earnings details (look here for the complete package of material):

Autodesk is taking “what we saw in April [and] don’t try to assume that things are going to get better. We think it’s more prudent to plan with what we see” and now forecasts revenue of $550 million to $570 million; for the year, a 3% increase would be about $2,380 million.

All of this presumes a stronger-than-normal second half, which CFO Mark Hawkins says is possible because of relatively weak comparables to last year, growth from Suites and LT and the focus on subscription. Mr. Bass added that the company’s major account business is becoming increasingly back-end loaded, “not a characteristic I particularly love, it just happens to be a fact. It has somewhat to do with our end of year, and our customers’ end of year spend”.

Performance in Q1 and that outlook are sure to drag the stock down at the opening bell this morning (it’s down 6% as I write this at 7AM ET). But mitigating the forecast are improvements in the company’s sales execution and other reactions to the Q1 results. The company had been talking about changes it had made that caused confusion and lowered productivity. Mr. Bass told investors that the after-effects of these changes are “diminishing … we probably saw slightly more effect from overall macro and less from our internal sales things, but there’s probably still some lingering effects”.  Too,  Mr. Bass said, “we’re not particularly pleased with the results this quarter, and we put in a bunch of plans already to rectify it. So, we see kind of small incremental improvements we can make to drive better results for the rest of the year, and so, we will continue to tweak those.”

What does it all mean? Some teeth-gnashing, as we all wait for governments to get their finances in order, industrial demand to pick back up, and nerves to steady. But it’ll smooth back out. Autodesk is taking risks to position itself on the cutting edge of both user experience and tech platform — but they’re measured risks that are likely to pay off once customers resume more normal buying habits.