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.

Hot Topics

ANSYS Q4 2014: SpaceClaim isn’t cute or little, but isn’t material either

EarningsAnsys reported record sales for the fourth quarter and full fiscal 2014 last week. Total revenue for Q4 was $254 million, up 8% year/year (y/y) as reported and up 12% in constant currencies (cc), ahead of both the company’s forecast and analyst consensus. Software revenue was $158 million, up 7% y/y and up 11% in cc. On a non-GAAP basis, paid-up license revenue grew 10% in Q4 to $78 million while lease license revenue grew 4% to $80 million. Maintenance revenue of $89 million (non-GAAP) was up 10% and service revenue of $8 million was up 15% y/y non-GAAP.

Looking at the full year, total revenue was $936 million, up 9%. software license revenue was $547 million, up 7%. Revenue from software leases was $318 million, up 7%; perpetual was $246 million, up 7%. Maintenance revenue was $347 million, up 12% and service revenue was $25 million, up 7%.

What led to all of those upward-pointing arrows?

The first thing we need to remember is that ANSYS is an acquisition juggernaut. During 2014 alone, it acquired Reaction Design for combustion simulation and SpaceClaim for model building/tweaking. Reaction Design is small and niche-y, so no one was looking for a big contribution to overall revenue but it appears that SpaceClaim is not performing quite as strongly as expected. ANSYS didn’t give data that could lead us to infer SpaceClaim’s contribution —other than writing in the 10K, filed with the SEC last week, that “[p]ro forma results of operations have not been presented as the effects of the SpaceClaim business combination were not material to the Company’s consolidated results of operations.” Material usually means 10% of total revenue — so we need to rely on commentary to get a hint. During the company’s call with investors, CEO Jim Cashman said that SpaceClaim’s results were “depressed” for the last couple of quarters, “sometimes that happens when there’s that changing of the guard. But I’ll say that once we got through that, once we were able to go through a broader base sales training, and introduction of what this technology means as well as customers realizing that this just wasn’t a cute little third-party addition into our suite but it was a key part of what we’ve going forward, it became something. Interest levels and the pipeline is actually pretty strong right now. We look towards getting back on the take-off trajectory that we had envisioned for this, albeit maybe a few months slower.” As Mr. Cashman would say, “net-net”, the contribution in 2014 wasn’t as high as $95 million, but we didn’t think it was going to be. It’s likely SpaceClaim contributed a couple of points of growth, however, which is still quite relevant when overall revenue was up 9%.

Second, maintenance growth was 10% in Q4 and 12% for the year on a non-GAAP basis. That’s really good, but may not be indicative of either past or future trends. Annual maintenance contracts are sold with new perpetual licenses, so deals signed in 2014 count in the 2014 total along with maintenance contracts sold in previous years. Why does this matter? Because ANSYS reports that it had 35 orders over $1 million and 2 orders in excess of $15 million in Q4 2014, up from 33 $1 million orders a year ago and up from 22 in Q3 2014 — a significant change. ANSYS doesn’t give the total value of the orders, but Mr. Cashman told investors that the average value of these orders was “a little bit above 14%” more in 2014 than in 2013. That’s hugely important — ANSYS has a big portfolio of products; focusing its sales force on big deals allows it to be a more strategic partner across its customers’ many divisions and makes it easier to cross-sell mechanical, fluids, electronics, etc. simulation solutions as those needs are discovered. These huge deals are good for immediate revenue recognition (as license and maintenance) and for the future, as a lease or other recurring revenue cushion. They are, of course, also risky: they may be first on the chopping block if a buyer is feeling tense about the future and they may or may not close at any particular point in time (and for a company so focused on beating each quarter’s target, that’s a huge risk).

The big deal activity also highlights stresses in the partner ecosystem. The big and mega deals are becoming more and more important, going from 94 in 2013 to 109 in 2014, with 7 valued at more than $10 million in 2014, as compared to 4 in 2013. According to the 10K, the proportion of indirect revenue has gone from 26% in 2012 to 25.3% in 2013 to 24.9% in 2014. That doesn’t seem like much of a shift, but means that direct revenue of $703 million in 2014 was up 9.3%, while indirect revenue of $233 million was up 6.9% y/y. ANSYS is trying to address this, with its Elite program but the reality is that large accounts with complex multiphysics needs want to deal directly with ANSYS and not a middleman, no matter how capable. It’ll be interesting to watch how ANSYS keeps its channel engaged.

Geos are always a mixed bag, and 2014 was no exception. In Q4, ANSYS reports that non-GAAP revenue from North America was $91 million, up 12%; from Europe, $87 million, up 3% as reported and up 9% in cc; from General International, $78 million, up 10% and up 15% in cc. ANSYS says that sales In North America were primarily driven by the aerospace and defense, automotive, automotive electronics, and mobile electronics — the Internet of Things, energy efficiency, automotive emissions control/reduction, and the increased electronics content of just about everything continued to cause customers to seek out ANSYS solutions. The company says that it saw ongoing economic and geo-political challenges in Europe in Q4. Even so, the UK and Germany saw 18% and 14% cc revenue growth that partially offset continued weakness in Russia. For the year, ANSYS saw an increase in business in France, Italy and Spain and from chemical and metals industries, driven by the need to improve energy efficiency, sustainability, emissions controls and engineered materials. Finally, the General International Area (GIA) includes strong growth in Japan, Korea and Taiwan partially offset by weaker performance in China and India. Once again, the chemicals and metals, commercial aerospace, networking equipment, wireless, power electronics and smart medical device industries drove growth. For the year and on a GAAP basis, revenue from the US was $320 million, up 10%; from Europe, $318 million, up 8% and from Japan, $109 million, essentially flat as reported.

This balance is good. ANSYS operates in just about every vertical, just about every geo. If the price of oil nosedives, the company’s exposure is limited. If a particular country sees geopolitical or other turmoil, the exposure is limited. Its balance will insulate the company from most types of shocks. Though automotive is still the single largest vertical, that now encompasses the mechanics of the drive train, electronics, infotainment, fuel economy, batteries, materials for lightweighting — all areas in which ANSYS offers solutions.

What does this all say about 2015? ANSYS see the Q4 2014 business climate continuing, but currency deteriorating. The company expects Q1 GAAP revenue in the range of $217 million to $225 million and full year of 2015 GAAP of $945 million to $975 million. That’s roughly $40 million lower than had been modeled; CFO Maria Shields said this was due to currency movements and to the big deals that include more leases than expected —leases spread over a long period, unlike perpetuals where the biggest portion is recognized upfront. Ms. Shields said, “we’ll take the long-term gain for what [other] people might perceive as short-term pain”.

Leases, subscriptions, whatever we want to call them, the transition from perpetual is going to be painful. Luckily for ANSYS, it isn’t the first company to go through this change, so investors are clued-in and know what to expect. The balance across industries, geos, technology types, physics, all bode well for 2015. Now if only we can get people to stop thinking SpaceClaim is “cute” … [I love that quote. I’m not sure I’ve ever thought of a CAD product as “cute” but will have to try!]

Autodesk’s FQ4 caps off a great year

Last night, Autodesk reported results for fiscal Q4 and fiscal 2015 (ended January 31) that, well, beat just about all expectations. I need to study the details but:

  • Total revenue was up 13% percent to $665 million in FQ4, versus an analyst consensus of $650 million and the company’s forecast of $640 million. That’s great — causing the share price to dip this morning is the news that profit fell sharply from $54 million a year ago to $12 million in FQ4
  • Delcam contributed $20 million in FQ4
  • Autodesk reports adding 100,000 subscriptions in FQ4 for a total of 385,000 in FY15, above the 325,000-375,000 net subscribers the company expected to add as recently as November. Included in the FQ4 count is 17,000 subscriptions from the Shotgun Software acquisition last June
  • By business segment, AEC revenue was up 24% to $242 million; Manufacturing was up 23% to $190 million; Platform Solutions/Emerging Business revenue was down 4% to $189 million; and Media/Entertainment revenue was up 5% to $43 million
  • By geo, revenue from the Americas was up 15% to $238 million; from EMEA, up 19% to $273 million; from APAC, up 2% to $154 million
  • CEO Carl Bass said these results “capped off a terrific year,” with “strength in our core AEC and Manufacturing business segments.”
  • For FQ1 the company forecasts revenue in a range of $625 million to $645 million, flat to up 3%
  • For the full year 2016 the company projects revenue to increase 3% to 5% to between $2.58 billion and $2.64 billion. Finally, the company expects to add 375,000 to 425,000 subscriptions in FY16.

Lots more after I’ve had a chance to get the replay.

A quick preview on a busy earnings day: ANSYS, 3D Systems, FARO

Carl Bass REAL 2015I’m at REAL 2015, the reality capture/compute/create event hosted by Autodesk in San Francisco. It’s been stunning so far to hear from artists, museum curators, city planners, architects, builders and others how they view today’s emerging technologies — and the benefits they’re seeing from blurring the line created by the screen on our computer monitors.

Before heading off to day 2, let’s take a quick peek at the earnings news coming out today.

ANSYS reported that Q4 revenue was up 8% to $254 million. CEO Jim Cashman said “[w]e had a very strong finish to the year, achieving record revenue and earnings, both of which surpassed the high end of our expectations. Most importantly, we delivered double digit revenue growth in constant currency for the quarter. We also reached an historic milestone for the Company in 2014, surpassing $1 billion in total sales bookings, which contributed to record cash flows that increased 16% over FY 2013 … We achieved widespread success across our three major geographies, with the U.S., Japan and Germany all delivering double-digit GAAP and non-GAAP revenue growth in constant currency in Q4. We also continued to return capital to our stockholders through the repurchase of 1.5 million shares in the fourth quarter, and recently achieved the $200 million near-term share repurchase goal that we announced in our last earnings press release.” Lots more after I listen to the earnings call replay.

3D Systems also reported Q4 and full year 2014 results. For Q4, the company reported record revenue of $187 million, a 21% increase over Q4 2013 “despite significant foreign currency headwinds that reduced total revenue by some $6 million during the quarter”. There are lots of details to parse, but at a first read, the highlights appear to be sales of direct metals and into healthcare, which the company says surpassed industry growth rates, and sales to consumers, where revenue increased 68% y/y. Revenue from EMEA was up 46% y/y, with 28% organic growth. “Channel productivity, primarily in North America, fell well short of the company’s expectations, restricting total organic growth to 7% for the quarter”.

FARO reported last night. Sales in Q4 were up 16% to $104.2 million. CEO Jay Freeland said that “[m]arket demand remained strong in the fourth quarter. We entered 2015 by launching a brand new product for the Company, the FARO Freestyle, an innovative, hand-held 3D Laser Scanner. We also announced the acquisition of ARAS 360, a leader in accident and crime scene reconstruction software. In the year ahead, we will continue driving towards our longer term model of mid-teens organic growth, accelerating product innovation, and capitalizing on market opportunities to expand our offerings.”

Tonight our host, Autodesk, announces its Q4 and fiscal 2015 results. But first, there’s more scanning, photogrammetry, processing and making to talk about. Follow along on Twitter at #REAL2015.

Rand’s CQ4 suffers from a tough comparable in 2013

EarningsRand Worldwide’s fiscal Q2, ending on December 31, 2014 revenue was down as reported year/year (y/y) to $22.4 million — but, excluding one really big sale a year ago, total revenue was up nearly 8%.

You may remember that Rand has been reinventing itself, buying back the shares that were controlled by its venture capital owners. Larry Rychlak, CEO, seems glad to get this behind him: “We are intensely focused on strengthening our business through numerous initiatives to further enhance our customers’ experience, [including] new methods of providing training and product knowledge to our customers, the alignment of our Facilities Management team under the IMAGINiT umbrella to better serve our clients in the AEC space and additional investments in sales and technical resources to further our growth initiatives.”

Rand no longer holds an earnings call, so we have minimal information — but here it is:

  • Product sales revenue was $11.6 million, down 12% y/y. Excluding that big order in 2013, product sales would have increased by 16% y/y
  • Services revenue was $5.1 million, down 3%. Rand wrote in its SEC filing that “[s]ervices productivity decreased slightly over the equivalent period of the prior fiscal year. The Company is addressing [this] by developing innovative new service offerings, including training delivery methods that it expects will better serve the customer base and improve services productivity levels.”
  • Commission revenue was up 3% to $5.7 million

Rand resells AutoCAD and other Autodesk products, ARCHIBUS, Leica laser scanning equipment as well as its own ASCENT engineering software. These are typically included in Product sales. Like all Autodesk resellers, Rand also sees income from Autodesk’s subscription programs and accounts for this as Commission revenue. Expect to see more of this shift from product to commission for Rand and other resellers as the subscription model increasingly takes hold. (Services is what you’d expect: implementation, training, consulting, custom software development and customization, and so on.)

It’s hard to say what these results mean for Autodesk, which reports next week. On the one hand, it seems that large deals are harder to close — but that may be math, a function of the subscription model, which smoothes the revenue out over a longer period. Perhaps a better perspective comes from looking at Rand’s last six months, when product sales and services revenue were up 1%, and commissions were up 9%.

Hmm ….

MSC acquires Simufact for forming, welding

Simufact-GR-Simufact.welding-Simulation-carrier-residual-stressMSC Software just announced that it has acquired Simufact, maker of Simufact.forming and Simufact.welding, nonlinear simulation software technology for manufacturers. Yes, for forming and welding — it costs a lot of money to trial these manufacturing processes, and Simufact’s solutions have been used for years to simulate these processes rather than physically testing them. MSC’s press release says that Simufact users report reducing physical testing up to 50% by using Simufact’s software. That, in turn, reduces cycle times and, presumably, improves accuracy and repeatability.

MSC CEO Dominic Gallello said that, “customers tell me that poorly-understood manufacturing processes result in products that don’t function as designed and simulated. By connecting Simufact’s manufacturing process oriented tools to design simulation, we can better assist our customers with their drive for ‘first time right’.”

Dr. Hendrik Schafstall, Co-founder and CTO of Simufact talked about the benefits of combining the companies: “Being a direct member of the MSC family offers additional advantages: We will be able to accelerate the technology development; our customers can look forward to greater innovation.” Simufact’s software solutions have been noted within the manufacturing engineering community for their ease of use, their ability to simulate a broad range of physics with great accuracy (thermal/materials/ mechanics), and for being uniquely well suited for process chain simulation.

I first became aware of Simufact years ago, when it was known as FEMUTEC Engineering and offering consulting services to German metal-forming processes to major automotive OEMs. FEMUTEC became an MSC distributor in the late 1990s or early 2000s and built its own capabilities on top of the commercial MSC.SuperForm and MSC.SuperForge. In 2007, the company acquired MSC’s  manufacturing simulation software and became a software supplier; in 2008, the company changed its name into Simufact.

Simufact.forming and Simufact.welding are often used for methods planning and process development because they help engineers and manufacturing planners better understanding their process. Traditionally, companies would trial the materials, tools and processes to get a handle on the best production process for a particular scenario; simulating can help them discover forming flaws, tool forces and the related tool life without actually getting any metal involved until the very end.

This acquisition brings it all back home, and returns an important capability to MSC’s portfolio. We often think of simulation as centered on the design process, and for many people, that’s true — but to really get the best possible product to market, we need to simulate how we make it, too. We need to ensure that production uses the most effective and efficient processes, and discover and promote forming best practices across manufacturing facilities and individuals. Simulation makes this possible as, in manufacturing as in design, we can try out alternatives and document what works.

MSC didn’t release details about the acquisition.

Image courtesy of Simufact.

DS’s Q4 results show that diversification works — no surprise!

Dassault Systèmes recently announced results for its fourth quarter and full-year 2014 (summarized here) that show how well the company’s diversification strategy is working. Start with a growing cushion of repeatable revenue from core products and industries, add acquisitions that branch out into a dozen verticals and as many geos — only a truly global crisis can stop this juggernaut.

This slide, from the investor presentation for Q4 2014, highlights how DS has changed:

Screen Shot 2015-02-16 at 11.29.17 AM

Many still think of DS as the automotive/aerospace supplier it was ten years ago. Those industries now make up less than half of total end-user spend*, and new industries are assuming a growing importance. That’s visible in the revenue pie, above, but also in the decision-making that drives acquisition and go-to-market strategies: if one industry team needs to fill a hole, how would that acquisition help in other markets?

Of course, we can’t deny the importance of the auto and aero customers — a large, installed base that includes some of the most demanding companies in the PLM world. The fact that DS was able to grow revenue in those accounts by something approaching 20% is also impressive. In a perfect world, DS would map products and industries –or somehow communicate what, exactly, created that “close to 20% growth”– but we can only surmise that some of the newer brands are contributing to growth in the traditional verticals.

For 2015, CFO Thibault de Tersant forecasts total revenue growth of 11% to 12% in cc, led by double-digit (cc) organic new license revenue growth. That nets out to total revenue of right around €2.7 billion. Why so optimistic? Q4 was good, with strong sales of SolidWorks, and what the company terms “accelerating” new license sales in general. For Q1, DS sees revenue of €610 million to €620 million.

But that’s the future. To recap the highlights of the Q4 and 2014 earnings release (more detail in DS’ materials):

  • Total revenue in Q4 was €673 million, up 19% year/year (y/y) as reported and up 16% in constant currency (cc). On an organic cc, non-IFRS basis, revenue was up 5%. (That’s got so many qualifiers, I’m not sure what to compare it to. But it is certainly more in line with what PTC reported, absent the whole changing-to-subscriptions thing.)
  • Software revenue was €592 million, up 16% y/y as reported and up 13% in cc. On an organic, cc, non-IFRS basis, software revenue was up 7%
  • DS seems to think V6 is going great guns, but the data they’ve released makes it look a bit stalled. A year ago, DS said that V6 transactions represented 27% of PLM new license revenue for the year; in Q4, it was 25%. These could be apples-and-oranges comparisons, of course, since the company also said that V6 2014 new license revenue was up 30% in 2014 …
  • New license revenue was €199 million, up 27% as reported and up 12% on an organic, cc basis. That’s probably roughly a 15% organic growth rate as reported.
  • Maintenance and other recurring revenue was €389 million, up 11%
  • By product, CATIA software revenue was €230 million, up 7%; ENOVIA revenue was €78 million, up 7%; SolidWorks software revenue was €126 million, up 21%, and Other software revenue was €158 million, up 33% (all growth rates as reported). I truly wish DS would split Other into its constituent parts –at least the big ones; it’s silly to have an “Other” that’s bigger than 2 of the 3 other categories
  • DS did say that it saw double-digit software revenue growth for SIMULIA, but that this was offset in part by softer results in mining and manufacturing.
  • Within Other software, of course, are the Accelrys and Quintiq acquisitions. DS says Accelrys, rebadged and combined with other DS assets into the BIOVIA brand, saw 2014 revenue up about 5% cc, with new license revenue up more than 20% cc. Accelrys reported $169 million in total revenue for 2013 so we could guess at total BIOVIA revenue of $150 million, but it’s just a guess. Quintiq had revenue of €70 million, but was acquired in Q3 2014 so had far less impact on the overall results.
  • SolidWorks sold 15,312 seats, up 6% y/y, which doesn’t completely jibe with the revenue being up 21%. DS said there were several facets to SW’s growth: unit sales, multi-product sales, maintenance revenue. But I think it’s this last one: the mix shifted, leading to the average selling price increasing during the year.
  • By region, revenue from the Americas was €198 million, up 33% as reported and up 24% in cc due to acquisitions and the fact that DS is fiddling with its direct sales channel. Revenue from Europe was €318 million, up 17% and up 15% in cc, with Germany and Southern Europe singled out as strong performers. Finally, revenue from Asia was €157 million, up 9% and up 10% in cc. M. de Tersant said that Asia’s results were led by China, Japan and Korea.

For 2014, total revenue was €2294 million, up 11% as reported and up 14% in cc. Excluding acquisitions and divestitures, total revenue was up 5% on a non-IFRS, cc basis. Software revenue was €2035 million, up 8% as reported and up 11% in cc and up 6% on an organic non-IFRS cc basis. New license revenue was €579 million, up 16%. CATIA revenue was €839 million, up 2%; ENOVIA revenue was €263 million, up 5%; SolidWorks revenue was €448 million, up 9%; Other software revenue was up software revenue was up 29% as reported to €529 million.

You’re tearing your hair out. Currency, IFRS, non-IFRS, brands, products, geos. What does it all mean, I can hear you shouting at your computer? The core brand, the thing the “CATIA company” no longer wants to put front and center, grew at 2%. ENOVIA, the backbone of V6, was up just 5%. Is CAD dead? Is the PLMish world ending? Is this a bad thing, a good thing? It’s a good thing, and here’s why: CAD isn’t just CAD any more. To meet today’s workplace reality, whatever we’re calling it has got to include collaboration, quick and easy Google-like searches, simulation, sketching, rendering and a whole host of other ancillary applications. We need the tools to design and create, quickly, manufacturably, and with the customer’s needs in mind. Do mechanical engineers need to do mining? No, but mining engineers might want to tweak a supplier’s design to make it suitable for their environment. We can’t work in isolated silos any longer, and the tools we use need to make those transitions as seamless as possible.

Is 2% growth good? No, it alone won’t make investors happy. But 2% on top of a steady base of recurring revenue means there are new people out there, buying CAD (and high-end CAD, at that). Add in growth in SolidWorks, and we’ve got quite a few people buying CAD. Now take the CAD models created by these users and push them outwards to new uses, or let them take input from new sources, and we’ve got some serious innovation potential.

As I wrote last year, it’s sometimes difficult to see the logic behind DS’s acquisitions. And DS does a lot of them, for a lot of money. But sometimes a deal is struck to buy a whole company to get a specific employee, a particular patent or technology, or, perhaps, a fully-fledged product. It’s hard to know from the outside. For now, at least, the acquisitions are bringing DS the growth it needs, with access to new types of customers, new markets, and new technologies.

Images courtesy of DS, from the 14Q4 Earnings Presentation.

*End-user spend is what customers spend on technology, not the revenue seen by the developer. It’s the vendor’s revenue plus any reseller or agent markup.

MuM’s Q4 revenue up 15%

EarningsYesterday’s gloomy Trimble news wasn’t the start of a trend, it would appear. Today,  Mensch und Maschine, the Autodesk VAR and developer of software under the OPEN MIND and other brands, reported that Q4 revenue was up 15% to €37 million, boosting sales for 2014 up 11% to €140 million. Revenue from the Software business was up 10% to €39 million while the VAR business contributed €102 million, up 12%, for the year.

Given what the company sees right now, it forecasts 2015 sales of at least €150 million, and sees its prior target of €200 million still achievable by 2018.

CEO Adi Drotleff summed it up this way: “I am very happy that we could get back to double digit sales growth in 2014. Due to strict cost discipline, we have increased earnings highly disproportionately, making another huge step in our business model transition towards more value.”

We’ll get more details when the company releases final audited results on March 16, 2015.

And a quick update to yesterday’s news that Bentley has acquired Acute3D, which supplies the engine inside Autodesk’s 123D Catch. Bentley tells me:

“Over the years Bentley has acquired many companies that have had relationships with Autodesk—and, in fact, Bentley is the largest 3rd party developer for Autodesk in the AEC markets—and we continue to manage those relationships in a straightforward and professional matter. The same can be expected with respect to Acute3D acquisition.”

And Autodesk says:

“Autodesk had purchased perpetual rights to Acute3D technology and significantly improved upon that source code base over several years. As a result the Acute3D acquisition will not have an impact on Autodesk products or technology. We’re seeing increasing recognition from our customers of the value of reality computing technologies across all industries, so we see this acquisition as further validation of the power of reality capture technologies such as Autodesk 123D Catch, Autodesk ReCap and Autodesk Memento to enable customers to make the real world computable.”

— sounds to me like absolutely nothing will change.

Trimble had a tough Q4, revenue down 6% y/y

EarningsWell, this is a bit of a shock after the mostly upbeat results we’ve been getting from engineering software companies: Trimble’s Q4 revenue was $564 million, down 6% and at the low end of the company’s guidance. Wall Street consensus was $579.4 million, so this is quite a bit below expectations. Full year 2014 revenue was $2.4 billion, up 5%.

Lots to parse as the company reports on divisions, geos, currencies and whatall, but here’s what we know so far:

  • Engineering and Construction revenue was $329 million, down 1%
  • Field Solutions revenue was $81 million, down 27%
  • Mobile Solutions revenue was $124 million, down 1%
  • Advanced Devices revenue was $31 million, down 2%.

Foreign currency did affect topline results, with an unfavorable 2% impact.

For 2014, total  revenue of $2,396 million included

  • Engineering and Construction revenue of $1.3 billion, up 10%
  • Field Solutions revenue of $422 million, down 11%
  • Mobile Solutions revenue of $487 million, up 5 %, and
  • Advanced Devices revenue of $139 million, up 9%.

CEO Steve Berglund said in the press release that Q4 results were affected by “a stronger dollar, deferred revenue accounting effects associated with new acquisitions, and the short term reaction to the decline in oil prices”.

The company also gave guidance for Q1 2015: Trimble expects revenue to be between $590 million and $620 million.

Details to come.

Bentley acquires maker of 123D Catch technology

EarningsThe AEC acquisitions keep rolling — and, so far this year, show a fascinating extension into newer traditional realms. Bentley Systems just announced that it has acquired Acute3D, the French provider of Smart3DCapture software.

Smart3DCapture turns photos into 3D models in applications such as city-scale 3D mapping and cultural heritage digitization but also in industrial applications. Does this sound familiar? It should — Smart3DCapture is, according to Acute3D, “is at the heart of Autodesk 123D Catch (formerly known as Photofly), a cloud service with now several millions of frequent users, and of the new Autodesk ReCap Photo solution”. [I’ve asked Bentley to comment on the relationship with Autodesk and Acute3D’s other OEM clients will update if there’s anything to say. See below.] 

Bentley says that it plans to take this to the next step, marrying observations of existing conditions with design and construction modeling. UAVs (aka drones) and other rapid imaging systems make capturing data fast and affordable, so processing photographic data for construction progress reports, for example, is the next logical step. Bentley already owns Pointools for laser scanning and has various tools for managing photogrammetric data, but the cloud rendering capability (and the fact that even a cell phone can create images of sufficient quality) should put this into the hands of a broader audience.

Bentley’s CTO Keith Bentley points out that [r]ather than a voluminous cloud of discrete points, Acute3D produces a 3D ‘reality mesh’ – intrinsically in the same geometric idiom as engineering models, readily aligning the real-world context.” Meshes are more intuitive for humans than point clouds and more easily understood by CAD-like products.

Acute3D is a very young company, founded in 2011 and already is working on projects as diverse as large-scale 3D city modeling from both aerial and street view photography, and current conditions capture for construction sites, manufacturing facilities, mining operations, pipelines, and oil and gas exploration.

Acute3D co-founder Dr. Jean-Philippe Pons said, “When [we] founded Acute3D, our vision was to make widely available, at industrial precision, what we now describe as reality modeling. With our team, we are very pleased to be joining Bentley to complete our reach. Together, we have already shared and embarked upon many new initiatives to incorporate reality modeling within design and construction modeling. Voila!”

Liberty Bell Capture

Voila, indeed. I’ve used Smart3DCapture as implemented in Autodesk’s 123D Catch and found it to be an amazing way to record a scene or object and use it for downstream modeling. The image above is my 123D Catch of the Liberty Bell in Philadelphia, taken with whatever iPhone I had at the time. The lighting was tough; it’s a major US historical artifact and is showcased in a building with relatively dim lighting overall but a glass wall behind the Bell. 123D Catch did a great job of processing the lighting conditions, registering the photos and creating a mesh of the scene.

Laser scanning is perfect for highly detailed, intricate situations — but it does require dedicated hardware, at least right now. Photogrammetry-based solutions are evolving quickly as cloud computing makes it possible to analyze several/dozens/thousands of photographs of a subject, all taken from different viewpoints, and detect pixels corresponding to a particular physical point in the scene. Once that’s been calculated, the relative orientations of photos are calculated and the software stitches the images together to create an accurate 3D representation of the scene. It’s all made possible by a combo of photogrammetry, computational geometry algorithms and cloud compute capability.

Terms of the deal were not disclosed but it seems that most of the Acute3D team will be joining Bentley.

Update: I asked Bentley and Autodesk to comment on whether this changes anything that’s visible to users. Bentley tells me:

“Over the years Bentley has acquired many companies that have had relationships with Autodesk—and, in fact, Bentley is the largest 3rd party developer for Autodesk in the AEC markets—and we continue to manage those relationships in a straightforward and professional matter. The same can be expected with respect to Acute3D acquisition.”

And Autodesk says:

“Autodesk had purchased perpetual rights to Acute3D technology and significantly improved upon that source code base over several years. As a result the Acute3D acquisition will not have an impact on Autodesk products or technology. We’re seeing increasing recognition from our customers of the value of reality computing technologies across all industries, so we see this acquisition as further validation of the power of reality capture technologies such as Autodesk 123D Catch, Autodesk ReCap and Autodesk Memento to enable customers to make the real world computable.”

— sounds to me like absolutely nothing will change.

3D Systems + Cimatron a done deal — circle get tighter

Earnings3D Systems announced today that it has completed its acquisition of Cimatron for $97 million. We all knew it was coming, after the deal was first confirmed back in November, but it’s still a bit of a shock to realize that there are just two large, pureplay CAM companies left. Delcam is now part of Autodesk, Vero/Planit Holdings was snapped up by Hexagon, OPEN MIND is part of Mensch und Maschine, Missler seems to be moving towards ERP/PLM — that really leaves Tebis and MasterCam/CNC Software trying to make a go of it as standalone CAM vendors.

First, 3D Systems. Cimatron brings 3D Systems complementary subtractive manufacturing technology to its base of additive processes. That’s the future of making things: using additive and subtractive technologies in tandem as needed, for certain types of materials and end uses. Cimatron also extends its parent company’s sales coverage and creates cross-selling opportunities. In all, 3D Systems says it expects the acquisition to generate cash and improve non-GAAP earnings for 2015.

Importantly, the press release had 3D Systems CEO Avi Reichental welcome “Danny Haran and his entire global team to 3DS as we complete the digital thread from design to digital fabrication.” Mr. Haran becomes 3D Systems’ EVP and CEO, Software.

What can we say about what this means for CAM software, in general? My take on it is three-fold, but I’m interested in your comments. First, CAM is often an undervalued part of product creation. Designers get the glory and the cool toys while manufacturing is the land of machines. The software to run those machines is often supplied by the machine’s maker and the CNC operator has to make do. Some forward-thinking companies involve the CNC programmer in the design process to make sure that what’s being designed can be fabricated, but that’s not the norm.

Second, there are literally millions of machine shops on the planet; it’s really hard for a software vendor to reach these buyers without a large channel or direct presence — and that’s expensive. Integrated companies like Autodesk, DS, Siemens, etc. have a huge advantage because they may be calling on the account for another reason and can add in a CAM discussion. Too, they have marketing budgets that let them create a presence, so even if machine shop isn’t also a CAD user, they’re likely to be aware of the vendor. Hard for a small company to do that.

Finally, CNC machines last a really, really long time. Many are used for 20 years here in the US, then sold on to another part of the world where they’re seen as relatively new — and it’s possible that the same software license is used throughout the machine’s entire life.

So we’ve got undervalued products, a hard-to-reach target audience and really sticky software — a tough combo for CAM companies trying to go it alone. That doesn’t, of course, mean that they can’t. Tebis, MasterCAM and others have solid products and serve their customers quite well. But I have to wonder: is there a ceiling to how big these companies can become (if that’s their ambition)? Will we see these last independent players snapped up, too?

Your turn. What do you think?