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ESI’s FY13 revenue up 16%, minor contribution from OpenCFD


ESI Group reported yesterday that revenue for the 2013 fiscal year (ended January 31) was €109 million, up 16% from last year. This includes a contribution of €343,000 from OpenCFD, acquired in September. Excluding acquisitions, organic revenue growth for the year was 13%.

Q4 is typically very strong for ESI, but the company says that it saw a slight slowing this period, with revenue of €42.4 million up 6% year/year to represent 39% of annual sales — down slightly from the more typical 42% of last year. ESI attributes this to “patently difficult economic factors observed in the United States… [Services revenue] growth was essentially achieved in Europe and Asia, United States remained stable due to budget issues, notably regarding governmental projects.” The share price is down 12% as of this writing, and it’s quite possible that this weakness in North America is the main cause.

For the year, software revenue was €77.5 million, up 13%.  New license revenue was €17.0 million, up 7% while maintenance revenue was €61.2 million, up 12%. Services revenue was up 24% to €31.5 million.

Calendar 2012 was a big year for ESI, marked by acquisitions. The company reports that its IC.IDO (acquired in mid-2011) has seen “buoyant growth following the investments carried out through the Group’s distribution network, notably in Asia”. OpenCFD was a strategic acquisition for ESI, enabling it to “respond to the burgeoning demand in the virtual engineering market for ‘open source’ software by integrating the software and trademark of OpenFOAM”. ESI makes money from OpenFOAM by consulting on implementations and doing custom coding around the open source code set. The company clearly sees potential, though ANSYS CEO Jim Cashman told investors just yesterday that he believes the interest in open source CAE solutions waning, as companies realize that “free software” isn’t actually free because of the cost of hardware, services and other types of support. It’ll be interesting to watch how this develops.

ESI is executing well on selling its broadening portfolio into major accounts, as revenue from the company’s top twenty clients increased by 20%, outpacing  total growth of 16%. ESI says that this is due to a “significant acceleration in the use of virtual prototyping solutions, especially amongst key players in the Automotive, Aeronautical and Energy sectors”.

Finally, sales by geography followed the typical pattern, with Europe accounting for 43% of total revenue; Asia up slightly to 37%; and the Americas down slightly to 20%. Orders booked from BRIC countries edged up a bit, representing 11.9% of the total in fiscal 2013 and compared with 11.5% a year ago.

ESI Group doesn’t give guidance, but analysts are modeling total revenue of €122 million, which would be an increase of 12%.

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