Strong license growth lifts Tekla

Tekla Group has announced that license growth of about 30% contributed to overall revenue growth of 14% for the year through September 2010, with total revenue of €41 million. Third quarter revenue was €13.62 million, an increase of 16% over a relatively weak Q3 2009.

The company, based in Finland, typically sees 80% of revenue come from international sales. For the year so far, Tekla reports that its business was strong in the Nordic countries, the Middle East and India and “picked up” in several Western European countries. The United States continued as Tekla’s largest individual market but the company characterized the US economy as “stagnant” with “sluggish” sales.

Tekla’s smaller segment is its Infrastructure & Energy business, which sells into energy distribution, water and sewer and civil engineering concerns, mainly in Scandinavia and the Baltic. This business is typically more stable for Tekla; for the year to date, revenue was up 8% to €10 million while Q3 sales were €3 million, up 7% over last year, with roughly 33% of revenue from international operations.

The company’s much larger business is Building & Construction, which sells Building Information Modeling (BIM) software to architects, contractors, engineers, steel detailers and fabricators and others. This business saw YTD revenue increase 17% over last year to €31 million, with 95% coming from outside Finland. Q3 revenue was €11 million, up 19%. Tekla says that demand has “fluctuated strongly in license-based sales”, with ”favorable development” this year. The company says that about 80% of license sales in the year so far were generated by its structural steel engineering and detailing offerings.

At the beginning of the year, Tekla believed that it would see revenue growth of about 15%; the company reaffirmed this in its November 3 earnings call. This growth would put the company just shy of its 2008 revenue level.

One thing I definitely did not know before this earnings call: Accounting rules in Finland require that salaried employees who work for 12 months of a year with one month’s vacation have their salaries allocated during the 11 months of actual work. This means that costs in Q3 are lower for Finnish companies, since that’s when most people take holidays. Who knew?

On a separate note, to those of you celebrating Thanksgiving this week: safe travels and have a happy Thanksgiving!