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

MuM’s VAR business strong — own software, too

EarningsMensch und Maschine Software, Autodesk’s largest European reseller but also a software developer in its own right, just announced Q3 results that were, well, darned good. Revenue was up 14% year/year (y/y) to €32 million. Revenue from the company’s own software was up 11% for the quarter to €8.6 million, while the VAR business contributed €23.7 million, up 16%.

MuM doesn’t release many details on its proprietary software business but from investor presentations, we can infer that the business is about 80% CAM (Open Mind), which amounts to about 25% of the entire business’ revenue.

As we would expect, the software business is by far the most profitable, contributing half of the company’s gross margin even though it accounts for just over a quarter of total revenue. MuM says the software line typically has margins of 17% to 10%, with a target of 22%; the VAR business, in contrast, typically has margins of under 10%. No surprise, then, that MuM is investing in Open Mind, DATAflor (landscaping) and escad (building automation; licensed back from Autodesk).

MuM CEO Adi Drotleff, MuM CEO said in a prepared statement that the “positive business development during the first 9 months makes us confident that the ambitious targets for fiscal year 2014 should be achievable. So, from this actual point of view, sales are expected to be in the order of magnitude of €140 million (+11%). The Q4 sales target thus is €37 million (+14%).”

MuM represents a decent chunk of Autodesk’s business in Europe. If Autodesk can grow across the board as rapidly as did MuM’s VAR business, that would mean Autodesk, too, had a very good quarter. We’ll know more when Autodesk reports sometime in late November.

DS reports solid Q3, led by direct channel & big accounts

EarningsDassault Systèmes today reported results for Q3 that show its direct sales channel continues to perform well, growing the company’s presence within its largest customers. More analysis to come, but the highlights of the earnings release are:

  • Total revenue in Q3 was €562 million, up 14% year/year (y/y) as reported and up 16% in constant currencies (cc). Q2 revenue was €557 million so the traditionally soft summer quarter didn’t fare too badly this year.
  • Software revenue was up 11% y/y as reported and up 13% in cc to €498 million — essentially flat with Q2.
  • New license revenue was €123 million, down sharply from the Q2 level of €140 million, but still up 22% y/y as reported. On an organic basis, DS says non-IFRS new license revenue was up 14%, with “25% growth for CATIA and 35% for ENOVIA” in cc.

It’s also important to note that DS stuck to its targets for the rest of 2014, with a Q4 non-IFRS forecast of total revenue between €670 million and€680 million and full-year non-IFRS revenue of €2.325 billion to €2.335 billion, or growth of 15% to 16% in constant currencies.

Lots more parsing to come. But, for now, back to the Siemens CAE and Test Symposium.

3D Systems warns, cites production delays not demand

Earnings3D Systems just announced that it now expects Q3 revenue of $164 million to $169 million, about $20 million shot of Wall Street’s expectations, and full-year revenue between $650 million and $690 million — far short of the $700 million to $740 million announced in July. At the time, CEO Avi Reichenthal said that 3D Systems expected to “generate a higher portion of our revenue during the second half on rebounding margins. Record bookings for our design and manufacturing printers together with rising orders for our consumer products provides us with confidence in our ability to achieve our 2014 guidance.”

What changed? I won’t be able to listen to the conference call about the preannouncement until later this week, but it seems that delays in consumer printer production and problems in direct metal printing are the culprits. In today’s announcement the company said that

Strengthening sales of the company’s design, manufacturing and healthcare products and services were not enough to overcome the revenue shortfall from the continued manufacturing capacity constraints for its direct metals printers and delayed availability of its newest consumer products.

Mr. Reichenthal further explained, “We are disappointed that we failed to fully capitalize on the robust demand for our direct metal and consumer products during the quarter. While we worked very hard to deliver these products sooner, achieving manufacturing scale, quality and user experience targets took significantly longer than we had anticipated … Now that we have closed these availability gaps, we expect our revenue growth rate to increase”.

But apparently not enough to close the gap for the year. More later on this.

AVEVA World Summit highlights value of the digital asset

Venue small

I was in Berlin last week, a fascinating city to host one of the plant/marine engineering world’s premier events: the AVEVA World Summit.  The Summit brings together designers, constructors, operators and owners from across the world and across industries, to share problems and solutions, and learn from AVEVA what’s coming. AVEVA made no major announcements at the event, but here were a few surprises, and the challenges mentioned by the speakers in Berlin were common themes:

These assets are so big and have such a long life that their complexity dwarfs any one individual’s understanding. If you’re not sure what I mean, watch this video about Det norske’s Ivar Aasen project in the North Sea to get a sense of it. These projects need an IT infrastructure that can gather, store and serve asset data in myriad ways and degrees of complexity.

The teams working on these projects are specialists brought together for this one job, and often don’t interact again. The technology serving them needs to protect their intellectual property while making visible project-specific information. Too, these specialists need a common language for collaboration. Increasingly, this is visual to offset the linguistic and time zone challenges.

Our aging workforce is a reality. Experienced designers, engineers, estimators, and other trades are leaving the playing field and new entrants (hard to find) expect a different world of work. They think visually, expect instant access to information* and need to have their lack of experience guided by intelligent systems.

It’s a hyper-competitive world, and companies invest for advantage. One Austalian EPC, Atkins, implemented AVEVA’s next-generation Everything 3D product because of its tight integration between CAD and point clouds. Atkins’ Jim Wright used the giant screen AVEVA had installed for the main stage to great advantage, showing how his team creates a competitive advantage by using laser scanning to quickly and accurately survey a brownfield site, saving project schedule and making it possible to explore more design alternatives. Mr. Wright is one of the first E3D users in Australia, and sees his installation growing — in part because of how E3D yields efficiency improvements. He told me that his team was able to “produce support and structural modification details 50% quicker in E3D — it’s early days yet but it shows great promise, and the client is happy”. When you’re the contractor, it’s all about making the client happy.

Atkins smaller

Owner presenters were also looking for ways to be more competitive. In many cases, that means more communication during design and more complete information at asset handover but, as Shell’s Bob Samudio contributed in a recorded message, it can also mean new forms of communication. Shell is working with AVEVA on its mega tablet offering, which aims to make an entire offshore platform available for collaboration on a Microsoft Surface tablet. Last year, we saw the AVEVA team walk through the model, add shadows and a background; this year, AVEVA’s Technology VP Paul Elton used gestures on the touch screen to spin, pan, zoom, scroll and section the model. Deputy Group CTO Arne Winler showed us that AVEVA Net data was behind the model, and that it could be interrogated to highlight all instances of equipment from a particular manufacturer, for example:

touch smaller

One of the Summit’s best moments came at the very, very end, as people were leaving after the Futures session. AVEVA had been showing off their tablet collaboration product using a Shell model. Earlier, we had learned that it had 4.5 kilometers of handrails (yup, on a platform in the Gulf of Mexico), if that gives you a sense of its size. After the formal session ended, two gentlemen came up to the stage and said they had been involved in the platform’s design, and asked if they could play with the tablet. It was so cool to watch their faces as they explored their design, taking sections, changing lighting and walking its hallways. To them, it wasn’t eye candy but the result of hard work.

Digital or virtual commissioning came up more than I’ve ever noticed before. For the EPC, it’s a way to add a new offering and grow their value to the asset operator; for the owner, it’s a way to get to nameplate production that much faster. It sounds, however, as though we’re still early in the evolution of this idea and that no one has a bulletproof methodology.

The cloud (not laser) is starting to get interesting. AVEVA showed a test version of E3D in the cloud during CTO Dave Wheeldon’s session on day 1; there was so much interest that his team held an impromptu provisioning session during lunch on day 2 of the Summit. Using Amazon Appstream, the setup took just minutes and the performance was not noticeably different from that of a desktop E3D session. AVEVA doesn’t see the cloud app replacing every desktop license but expects customers to rely on the cloud for peak demand, roving workers and other special situations. Mr. Wheeldon was clear: the enabling technology ix just now getting to the point where AVEVA can give cloud users the experience they expect; E3D in the cloud is now in a very limited Beta release. Once it goes through a bit more testing it’ll be more widely available –and we can expect other AVEVA products to make their way to the cloud over time. It seems as though there are still technical hurdles, but the biggest challenges are economic: what will a cloud license cost, and how will that compare to a desktop license?

Finally, these giant projects rely on data data data. A process flow diagram becomes an instrumentation diagram; it gets turned into a 3D model which, we hope, ties into procurement, construction planning, commissioning and so on. If there’s a hiccup at any point, the entire chain of data can’t be trusted. AVEVA Net is the company’s solution for information management, validating and linking all types of data and documents. AVEVA Net featured in just about every presentation given at this year’s Summit. We heard time and again how easy it was to configure and implement AVEVA Net but I can’t help wondering how many people are intimidated by this toolkit approach; might it be better if AVEVA were to offer more preconfigured flavors that projects could then customize?

All of this was nicely tied together in AVEVA’s concept of a digital asset. A project is made up of data in context –a pipe connects things and carries something, a structure holds up an object–  that is built up over the life of the asset and doesn’t stop until the plant is decommissioned. The role of IT in this vision is to support an open data model that includes 3D CAD data but also the other information that is needed for informed decision making. Is the digital asset a reality? Not yet, said Amec’s Colin Fairweather, but we’re getting closer.

Note: AVEVA 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.

Update: I had the length of the handrails wrong in the original post. Pesky units J Thanks for the correction, Steve.

Hexagon reports Q3 revenue up 12% including Vero

About to dash to the day’s sessions at the Siemens CAE and Test Symposium, but thought you needed to know: Hexagon reports that net sales were up 12% to €648.6 million; excluding acquisitions (such as Vero) and currency, total revenue was up 8%. We’ll learn more during the company’s earnings call later, but for now we know that “Intergraph PP&M recorded 9 per cent organic growth” in FQ3, a slight pullback from Q2’s reported “double digit” growth.

In the meantime, this is what it’s like on the Queen Mary in Long Beach, CA, at dusk:

Queen Mary decks

Geometric’s FQ2 revenue up sequentially, sees slowdown in auto, aero

EarningsGeometric Solutions, a provider of component and add-on technologies and services to PLM suppliers and users, announced its second quarter financial results today. Geometric is often a bellwether for the major PLM players — when Geometric says a particular industry delayed projects, that often means PLMish suppliers will also report a slowdown.

So what happened? FQ2 revenue was  2,796.67 million Indian Rupees or $46.1 million, as compared to $46.3 million a year ago. On a sequential basis (Geometric’s reported perspective), revenue was up 4% in Indian rupees and up nearly 3% in US Dollars. Perhaps most exciting is that Geometric reports winning $9.5 million in new business in the quarter, up from $5 million a year ago, the vast majority ($4.75 million) in engineering services in the US.

Dig a level deeper, though, and it’s a complex picture:

  • Automotive led volume growth for the quarter, with revenue of $16 million, up 6% sequentially (q/q) on new engagement with Chinese and European auto makers — but the company reports an “IT spending freeze at a leading North American auto OEM resulted in muted growth in the quarter, which will continue for the remainder of CY 2014″.
  • In the company’s Industrial segment, revenue of $7.4 million was essentially flat q/q. Geometric cites the struggling mining industry and a slowdown in agriculture in North America.
  • Aerospace fell 7% q/q to $3 million, as 2 major contracts (one European, the other North American) were delayed. Geometric now sees those deals closing in Q3.
  • Finally, the company’s Emerging & Software business reported Q2 revenues of $4.5 million, up 4%, and Geometry Technology Solutions reported revenue of $2.5 million, up 13%. These are the parts of the business that deal with PLM providers, creating component solutions and add-ons to Solid Edge and other commercial products. Geometric saw traction for Geometric DFx and MBE solution, with “multiple pilots auto majors, aerospace companies, and high tech companies” and with strong channel partner support CAMWorks and Glovius.
  • Geometric doesn’t typically talk details about it 3DPLM Software Solutions Limited business, the joint venture established in 2002 with Dassault Systèmes for R&D and support of CATIA, ENOVIA, DELMIA, GEOVIA, SIMULIA, 3DVIA, SolidWorks and ACIS. In FQ2, this part of the Geometric portfolio reported revenue of $12.2 million, which per the Geometric materials was down sequentially.

CEO Manu Parpia said that he sees “the PLM software world changing significantly. There is a move from ‘point to point’ solutions to an approach which embraces the enterprise, not only involving software, but requiring the integration with both mechanical and embedded systems engineering services. This is a shift we had long anticipated … [and] the coming shift in technology in the next five years provides us an opportunity which we are uniquely positioned to benefit from. We not only have the skill set, but also a customer base, which comprises of large companies who are likely to be the early adopters as they would like to see the benefits of integrated solutions … The strategy and approach centers around leveraging what we have and build on it, while identifying gaps which we need to fill either by internal investment or through acquisition.”

Geometric is absolutely right: embedded systems, model-based engineering, and integrating product design with the enterprise are all themes heard again and again in 2014. Let’s see if the slowdowns in aerospace, mining, and North American automotive and agriculture are reflected in the PLMish earnings releases coming over the next few weeks. Hexagon reports on Wednesday, DS on Thursday and then we’re off to the races.

I’ll be at the Siemens CAE and Test Symposium in Long Beach the rest of this week, learning from the best about the integration of (yup) CAE and test and getting a glimpse into Siemens’ thinking on its now massive portfolio. I hope to see you there! If you can’t make it, the event hashtag is #CAESymp14.

Siemens adds Camstar to its digital enterprise vision

EarningsSiemens announced yesterday that it is acquiring Camstar Systems, a provider of manufacturing execution systems (MES) to the electronics, semiconductor and medical device industries. Camstar is a privately owned company of 230 people, headquartered in Charlotte, North Carolina. According to Camstar, it had been experiencing phenomenal, 100% year/year growth and seeks to boost this under the Siemens banner.

Siemens says that Camstar has 210,000 users in 18 countries, and that it fits into Siemens’ strategy of the digital enterprise, where each physical object has a digital twin. It furthers the concept laid out at the annual analyst event in Boston a few weeks ago, where Siemens PLM is taking on an increased role within Siemens AG, as it assumes  responsibility for the Siemens SIMATIC IT, IBS, Preactor, and WinCC products in addition to the traditional Teamcenter, NX, Solid Edge, Tecnomatix, NX Nastran, et al. brands. Siemens’ Helmuth Ludwig, EVP, Digital Enterprise Realization, explained it this was: Siemens PLM is now responsible for Siemens’ digitalization strategy for manufacturing operations. To him, this means a focus on the “seamless integration of the product and production lifecycles, from the perspective of production execution — which brings together and builds on Siemens’ expertise with automation, manufacturing operations management and PLM.

The transaction is expected to close in November and terms of the acquisition will not be disclosed.

I’m jetlagged, in a grey-skeyed Berlin, but ready for several action-packed days at the 2014 AVEVA World Summit (#AVEVAWorld, if you’re following along on Twitter). More on the Camstar acquisition soon. Now, coffee. A lot of coffee.

Fall is here!

Autumn leavesToday is Columbus Day, the official height of leaf peeping season and, for some, a holiday. I’m heading to Berlin for the AVEVA World Summit, a 2+ day deep dive into the world of plant/ship design, construction and operation. I hope to see many of you there.

But first, a quick musing on Columbus Day. We’ve long argued over whether he actually was the first European to set foot on the Americas — and, even if he was, did he deserve to be honored since he didn’t actually realize where he was? That may all be going away, as several  cities in America are using today to focus on the indigenous peoples Columbus met when he landed. Wherever you come down on Mr. Columbus, get out there and enjoy the day!

Nemetschek acquires Bluebeam for $100 million

EarningsDid you think the week was going to go by without any acquisitions? Nemetschek squeezed this one in, just before the start of the weekend.

The company just announced that it will acquire Bluebeam Software, maker of Bluebeam Revu and other AEC-focused PDF creation, markup and editing tools. If you’re not familiar with Bluebeam, you’re not in AEC. Revu converts CAD drawings into dynamic PDFs with the goal of eventually doing away with paper; for example, it links photographs to specific locations on a marked-up PDF to make thing like punch lists easier to create and use.

Nemetschek says that Bluebeam has 650,000 users worldwide, and recorded revenue of about $22 million in fiscal 2013, “which corresponds to a 48% growth over the previous year. In the first half of 2014, Bluebeam continued on an accelerated growth path and generated revenues amounting to US $16.5 million”. That, plus a profitable operating result for the first half of fiscal 2014, led Nemetschek to pay $100 million in the deal.

Nemetschek is using its own cash plus taking out a loan to finance the deal. The acquisition is expected to be close in October 2014.

What does Nemetschek get out of this? Cool tech to sell to its current Design (Allplan, Graphisoft and Vectorworks) customers and an established presence in US. Bluebeam should benefit from Nemetschek’s strong European network and a growing Asian team.

Nemetschek says Bluebeam will continue to be led by its current management as an independent brand.

PTC says FQ4 at or above expectations, restructures anyway

Hot off the presses from PTC:

Screen Shot 2014-10-01 at 5.19.00 PM

Basically, PTC says that FQ4 revenue will be at or above the high end of earlier guidance ($340 million to $355 million), and that Axeda will add another $4 million to $5 million in revenue on top of that.

Even so, the company last week decided to restructure its workforce, “in support of integrating businesses acquired in the past year”. This includes terminating a bunch of people, to a sum of “$34 million … all of which is attributable to termination benefits”.

We’ll learn more on November 5, when PTC publishes Q4 earnings or on the 6th, when it hosts its earnings call.

It’s a definite case of no news/good news/bad news. No news is when you make your forecast; good news is when you’re at the high end. But bad news is when people lose their jobs — even if it is in the cause of growing the company in new directions.