Geometric’s FQ2 revenue up sequentially, sees slowdown in auto, aero

Geometric Solutions, a provider of component and add-on technologies and services to PLM suppliers and users, announced its second quarter financial results today. Geometric is often a bellwether for the major PLM players — when Geometric says a particular industry delayed projects, that often means PLMish suppliers will also report a slowdown. So what happened? FQ2 revenue was  2,796.67 million Indian Rupees or $46.1 million, as compared to $46.3 million a year ago. On a sequential basis (Geometric’s reported perspective), revenue was up 4% in Indian rupees and up nearly 3% in US Dollars. Perhaps most exciting is that Geometric reports winning $9.5 million in new business in the quarter, up from $5 million a year ago, the vast majority ($4.75 million) in engineering services in the US. Dig a level deeper, though, and it’s a complex picture:

• Automotive led volume growth for the quarter, with revenue of $16 million, up 6% sequentially (q/q) on new engagement with Chinese and European auto makers — but the company reports an “IT spending freeze at a leading North American auto OEM resulted in muted growth in the quarter, which will continue for the remainder of CY 2014”.
• In the company’s Industrial segment, revenue of $7.4 million was essentially flat q/q. Geometric cites the struggling mining industry and a slowdown in agriculture in North America.
• Aerospace fell 7% q/q to $3 million, as 2 major contracts (one European, the other North American) were delayed. Geometric now sees those deals closing in Q3.
• Finally, the company’s Emerging & Software business reported Q2 revenues of $4.5 million, up 4%, and Geometry Technology Solutions reported revenue of $2.5 million, up 13%. These are the parts of the business that deal with PLM providers, creating component solutions and add-ons to Solid Edge and other commercial products. Geometric saw traction for Geometric DFx and MBE solution, with “multiple pilots auto majors, aerospace companies, and high tech companies” and with strong channel partner support CAMWorks and Glovius.
• Geometric doesn’t typically talk details about it 3DPLM Software Solutions Limited business, the joint venture established in 2002 with Dassault Systèmes for R&D and support of CATIA, ENOVIA, DELMIA, GEOVIA, SIMULIA, 3DVIA, SolidWorks and ACIS. In FQ2, this part of the Geometric portfolio reported revenue of $12.2 million, which per the Geometric materials was down sequentially.

CEO Manu Parpia said that he sees “the PLM software world changing significantly. There is a move from ‘point to point’ solutions to an approach which embraces the enterprise, not only involving software, but requiring the integration with both mechanical and embedded systems engineering services. This is a shift we had long anticipated … [and] the coming shift in technology in the next five years provides us an opportunity which we are uniquely positioned to benefit from. We not only have the skill set, but also a customer base, which comprises of large companies who are likely to be the early adopters as they would like to see the benefits of integrated solutions … The strategy and approach centers around leveraging what we have and build on it, while identifying gaps which we need to fill either by internal investment or through acquisition.” Geometric is absolutely right: embedded systems, model-based engineering, and integrating product design with the enterprise are all themes heard again and again in 2014. Let’s see if the slowdowns in aerospace, mining, and North American automotive and agriculture are reflected in the PLMish earnings releases coming over the next few weeks. Hexagon reports on Wednesday, DS on Thursday and then we’re off to the races.

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I’ll be at the Siemens CAE and Test Symposium in Long Beach the rest of this week, learning from the best about the integration of (yup) CAE and test and getting a glimpse into Siemens’ thinking on its now massive portfolio. I hope to see you there! If you can’t make it, the event hashtag is #CAESymp14.