ESI Q3: full steam ahead

ESI Group yesterday reported third quarter revenue of nearly €22 million, an increase of 25% as reported and up 20% in constant currencies. CEO Alain de Rouvray said that growth was “balanced between the various sectors and geographical zones, with a high rate of repeat business.” The majority of the Q3 growth of €4.3 million was organic, as Efield and OpenCFD contributed only €400,000 in revenue for the quarter. (IC.IDO’s revenue now counts towards ESI’s organic growth, since that acquisition closed in August, 2012. ESI doesn’t disclose it, but I believe IC.IDO’s contributes around €1 million in revenue per quarter.) The details:

• License revenue was €14 million, up 23% as reported and up 19% in constant currencies.
• Services revenue was €8 million, up 27% as reported and up 23% in constant currencies.
• Revenue from the various geographies reflected more or less the typical Q3 spread, as Europe, Asia and the Americas respectively accounted for 38%, 41% and 21% of sales as compared with 40%, 39% and 21%of revenue a year ago. ESI notes that the slightly disproportionate increase in Asia was due to the “signing of important contracts in Japan and China in the automotive sector”.

• For the year to date, total revenue was €67 million, up 23% as reported and up 18% in constant currencies.
• By geography, ESI notes significant growth in Asia (revenue up 22% in constant currency), and in the Americas (up 25% in constant currencies).
• ESI says that revenue from transportation customers (including automotive) was up 15%, aeronautical and space was up 35% and heavy industry, up 10%.

ESI doesn’t offer guidance as such, but M. de Rouvray did say in prepared remarks that the third quarter performance demonstrated “substantial revenue momentum across its entire scope … The buoyant revenues growth over the first three quarters of our financial year affirms our conviction that we will be in line with our multi-year development plan.” Analyst consensus is revenue of €112 million for fiscal 2013, an increase of 19% over the €94 million in reported revenue for fiscal 2012 (ended January 31, 2012). I’m thinking that’s cautious: ESI usually has a very strong fourth quarter – sometimes as much as 40% of revenue – and good momentum. But the economy is slowing in Europe, the fiscal cliff looms in North America and other engineering software providers are seeing a slowdown in Asia … Clearly, another “stay tuned”-type of release. But it’s clear that the signs for ESI, with a month into the calendar fourth quarter, are brighter than for some of its peers.