EarningsExa announced Q1 results on Thursday that were good, not great. Revenue was just under $14 million, at the low end of the company’s guidance but still up 10% year/year (y/y). Exa CEO Steve Remondi told investors that a few passenger car and heavy vehicle projects in North America and Europe delayed projects at the end of the quarter, which led to lower than expected project revenue. But, he said, some have started in Q2 and others morphed into new projects that could start soon. More important, said Mr. Remondi, the company has converted a number of customers from project (one-time revenue) to license subscriptions (recurring revenue). That bodes well for future periods and led Mr. Remondi to raise the lower end of guidance for the full year as software license revenue growth will now be in the double digits for the rest of FY15.

The details for the quarter ended April 30, 2014:

  • Revenue for Q1 was $13.8 million, up 10% year/year (y/y) as reported and up 10% in constant currencies (cc).
  • License revenue was $11.7 million, up 9% as reported and up 8% in cc
  • Project revenue was $2.1 million, up 17% as reported and up 18% in cc
  • By geo, 49% of revenue was from Europe, 29% from Asia, and 22% from the Americas. The company said y/y growth in Asia outpaced other regions.
  • Exa breaks out revenue by country in its filing with the US Securities and Exchange Commission. From that, we can see that the growth standout in Q1 was Germany, where revenue was up 21% as reported to $2.7 million. Revenue from France fell 12% as reported to just under $2 million.
  • Revenue from Japan was up 17% as reported to $2.4 million. Mr. Remondi said that Japan is rebounding after a slow 2013 and 2014: “we saw Japan really take off [in Q3 and Q4 last year. In] Q1 we saw that continue, especially in the heavy vehicle and off-highway segments.” Exa has grown its sales team in Japan, but is also benefitting from a strengthening market and economy.

Exa’s largest vertical, passenger vehicles, continues to be strong as those customers work to comply with fuel efficiency and emissions requirements in North America, Europe and Asia.

Mr. Remondi said that Exa’s fiscal 2015 started stronger than these results show: “Our business momentum continues to build and we remain confident that we will be making significant progress towards our growth target this year, as customers move to simulation instead of prototyping in order to create products that meet customer requirements more quickly and more efficiently.”

The company guided to Q2 revenue between $14.2 million and $14.8 million and FY15 revenue of $61 million to $63 million — a $0.5 million increase in the lower end. That would be growth of 12% to 16% in Q2 and 14% or so for the year.