Schnitger Corporation

MuM says 2017 is off to a “pleasant” start

MuM says 2017 is off to a “pleasant” start

Apr 24, 2017 | Hot Topics

What a nice way to start a week: an earnings report that includes the word “pleasant”. Too often, it’s all business gobbledy-gook; we all know what “pleasant” means. Not stressful, satisfactory, generally positive, moving in the right direction … Of course, all is tempered by the transition to subs, but it was, in all a very pleasant quarter.

The details:

  • MuM’s total revenue was €45.5 million, down 10% from a year ago, as the reseller part of the business continues to work through the change to subscriptions for its Autodesk products. Revenue from the VAR Business was €32.6 million, down 16%, which the company says was “as anticipated”. We need to remember that Autodesk ran a several promotions last calendar year to get customers onto subscriptions, which makes comparables unusually tough. Revenue will decline until the perpetuals are completely washed out of the comparables (as we’ve discussed often, the initial payment on a perpetual is far bigger than that on a subscription) but Autodesk believes it is at the low point now, so that should also be true for MuM
  • Revenue from M+M Software was €12.8 million, up a solid 11%. As has been the case the last several years, the company says that M+M Software sales break down roughly 85% CAM with 15% of revenue from the Gardening & Landscaping and Electrical CAD offerings

CEO Adi Drotleff is quoted as being “optimistic for the further course of the year” in the press release, but focusing on profitability in this time of revenue declines: “Our EBITDA [earnings before interest, taxes, depreciation and amortization — in other words, the profit from selling stuff] target range of EUR 17.5 to 18.5 mln (PY: 15.76 / +11% to +17%), given in the annual report 2016, is clearly underlined by the start of 2017, particularly as the most difficult quarterly comparison was Q1/2016 due to the positive sale impact in advance of the Autodesk transition to a rental model last year. Net profit is expected to come in between EUR 8.5 to 9.3 mln (PY: EUR 6.59 mln / +29% to +41%), EPS 52-57 Cents (PY: 40). Assuming we achieve these targets we plan to increase the dividend to 45-50 Cents, while in the annual shareholders’ meeting on May 10, 2017, the dividend proposal for fiscal year 2016 will be 35 Cents (PY: 25).”

OK. That was some serious biz-speak. Mr. Drotleff is saying that the M+M Software business will continue to grow, and it’s more profitable that the VAR business, which is shrinking. But even that will return to more profitable levels as revenue starts to tick upwards again towards the end of the year. Focus on all of the “+”symbols in the paragraph above — those are very pleasant year/year growth rates.

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