ESI last week reported results for Q4 and the fiscal year ended January 31, 2015 that were surprisingly strong, with Q4 total revenue up 8% as reported to €49 million, boosting full year revenue to €110 million, up 1.5%. That’s quite a reversal, given that revenue through the first nine months had been down 3% year/year.
CEO Alain de Rouvray said in prepared remarks, “The final quarter of 2014 reveals
a positive sales dynamic partially overshadowed by transition effects affecting both Licenses and Services over the first three quarters … The year was also marked by a negative currency effect and a difficult political and economic context in BRIC countries. … [T]he success of our immersive virtual reality offering and the interest in our solutions enabling a response to environmental challenges such as air quality and renewable energy illustrate the solidity of our strategy and its diversification potential.”
M. de Rouvray is referring to the lackluster results earlier in the year because of currency effects and postponed deals, as well as a transition away from lower-valued services to those that are likely to lead to future license sales. ESI now wants to help customers change their product development strategies to include more virtual prototyping, which may require new business processes. That’s far more valuable, long-term, to both ESI and its clients does take time.
- License revenue in Q4 was €40.8 million, up 7% as reported year/year (y/y) and in constant currencies (cc)
- Services revenue in Q4 was €8.3 million, up 11% y/y and up 9% in cc
- ESI says it saw “buoyant sales momentum in Europe, notably France, and the solid sales growth recorded in the Americas.”
- For the year, license revenue was €83.3 million, up 3% y/y and up 4% in cc. The company says that repeat business fell a bit at cc, from 87% in 2013 to 86% in 2014. New licenses sold to new customers totaled €17 million, down €0.5 million from the year earlier, due to political and economic difficulties in BRIC countries, especially Russia and China.
- By geo, revenue from Europe was €54 million, up 8% on strong activity in France and Germany.
- Revenue from Asia was €39 million, down 2% due to currency and the difficult business climate in China.
- Revenue from the Americas was €19 million, down 9% due to the shift in focus of the Services business. ESI says that this “abandoning of certain non-strategic and lower margin services was not compensated by the increase in Licenses activity over the year.”
- Finally, revenue from BRIC countries was €14 million, y/y. Gains in Brazil and India could not offset declines in China and Russia.
That’s what we know now. ESI will release more details on April 16, 2015.