Schnitger Corporation

Earnings: AspenTech, Hexagon, Nemetschek

We’re in the midst of earnings season; keeping up is proving more challenging than usual. Here are a few quick thoughts on recent reports:

•Aspen Tech announced results today that show continued momentum from fiscal 2010 (ended in June).  For the first quarter, Aspen Tech reported solid progress on a number of fronts, including a nearly 100% increase, year/year, in bookings in FQ1 and in deals over $1 million. However, the transition from perpetual to subscription isn’t easy, and total revenue of $43 million in FQ1 still led to an operating loss of $20 million.   The company feels that it is on track to meet its full year objective of upper single digit to double digit growth in license revenue, as customers more widely adopt the new aspenONE model.

•Hexagon reported results last week that show its customers are seeing more positive signs in the GIS and metrology markets.  Third quarter net sales were SEK 3.16 billion, up 20% from SEK 2.63 billion a year ago.  (1 Swedish Krona is roughly $0.15, so Q3 2010 sales were about $475 million). The company’s geosystems segment has seen a slow but steady recovery while the metrology segment, which saw a much deeper downturn, is displaying a strong recovery.  Interesting notes:  China is Hexagon’s largest country, accounting for 21% of sales in Q3 2010. The company’s largest market, however, is Europe where Hexagon reports that the recovery continues in the UK, Germany, France, Spain and Italy, with demand for equipment used in infrastructural investments and in industrial segments such as automotive and aerospace.  North America accounts for 22% of revenue; Hexagon sees weakness in the recovery in the construction sector.  Going forward, the company expects Western Europe and North America to continue to recover; Asia, Eastern Europe, Russia and Africa to grow while South America is “expected to display strong growth”.  Note: These results do not include Intergraph since that acquisition closed after the end of the September quarter.

•Nemetschek reports that revenue for the year to date have almost returned to pre-meltdown levels of 2008.  In Q3, total revenue is up 17% over last year, to €37 million.  For the first three quarters, license revenue is up 21% to €53 million while long-term maintenance revenue is up 6% to €49.1 million.  The company confirmed its mid-year revenue forecast of 9% growth.

The general trend is positive: customers are buying licenses again and are renewing maintenance contracts.  As can be seen from these brief notes, the recovery is not even across geographies or industries, so each software vendor will see different results, depending upon its mix of products, verticals and geographies.

Stay tuned for more detailed write-ups on PTC’s year-end and Dassault Systèmes’ Q3 results.

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