The second report in a few days shows that it’s getting tougher out there. On Friday, AVEVA reported that currency was taking its toll and that its sales force realignment was taking time to prove positive benefit. Yesterday, ESI Group reported that FQ2 2014 revenue fell 1% as reported due to exchange rate effects, changes in its services go-to-market and the postponement of deals to FQ4. They may operate in very different parts of the engineering continuum, but we’re starting to see a theme: deals postponed, currency, caution.
ESI’s FQ2 details:
- Total revenue was €22.5 million, down 1% as reported but up nearly 2% in constant currencies (cc).
- License revenue was €15.5 million, up 1% as reported as up 4% in cc.
- ESI said that new business (as measured in products and customers) up 6% y/y as reported and up 9% in cc (though no real numbers were given). ESI said this growth was driven new accounts in the United States, Japan and South Korea, focused on virtual manufacturing and virtual reality (IC.IDO).
- Service revenue was €7.0 million in the quarter, down 5% as reported and down 3% in cc. ESI said this is due to a refocusing on high-end services, chiefly in the US.
- By geo, revenue in cc was 41% from Asia; 42% from Europe and 17% from the Americas. Revenue from the BRIC countries fell from 14.3% to 13.3% of total as contracts in Russia and China were pushed out to the end of the fiscal year. Last year, revenue was 40% from Asia, 41% from Europe and 19% from the Americas.
CEO Alain de Rouvray said that he expects the impact of currencies and the repositioning of the services offering to attenuate during the rest of the fiscal year: “These effects … are not expected to undermine the Group’s business momentum, leaving intact the potential for revenue growth over the full year. We will therefore continue to follow with confidence our roadmap.”
That last bit, the confidence, was missing from AVEVA’s statement last week. ESI may release more information in a few week; AVEVA’s holding an investor day on Wednesday — is this a trend or are these isolated instances?