AVEVA cruises along, positive about FY2019

Schneider Electric announced results today, which means that we have a hint about how things are going at AVEVA.

AVEVA says that it “delivered low double-digit revenue growth in the first nine months of the financial year”, meaning the period ended December 31, 2018.

The company says that this wasn’t all due to market demand. Some of that double-digit growth was due to accounting, as AVEVA recognized revenue upfront for rental contracts. That’s not nefarious; it’s the way the new accounting rules are meant to work — but it does give a bump in revenue when compared to prior years, when that wasn’t allowed. To give a sense of scale, in AVEVA’s H1 report, that revenue recognition change amounted to about 5% of growth.

The company released very little other info –nothing about end-industries, geos, or products– but said that “the outlook for full year remains positive”.

The reason for the announcement is that AVEVA’s parent company, Schneider Electric, today released earnings for 2018. It didn’t add anything new to AVEVA’s statement, but Schneider CEO Jean-Pascal Tricoire told investors that it is making “good progress on developing joint value proposition with AVEVA”, which includes “a coordinated go-to-market approach” for automation products, including EcoStruxure.

EcoStruxure is Schneider/AVEVA’s platform for energy management and industrial control. Depending on what one implements, it includes engineering, asset planning, operations, performance management, and control and information management solutions. EcoStruxure is (today) an AVEVA product, sold to and through Schneider Electric’s direct and indirect channels.

Investors will judge the success of Schneider’s acquisition of AVEVA in large part on the success of these joint offerings. And that comes down to how the companies bundle hardware, software and services; how EcoStruxure is adapted for end-verticals and geographies; and how ready its customers are for digitization. Mr. Tricoire said that Schneider “never sells by product”, but customizes bundles of hardware and digital technologies to each customer’s specific needs. He seems committed to making those bundles ever more plug-and-play, since that’s easiest to sell, support and use.

We’ll learn more about AVEVA, specifically, when it reports results after its year-end in March.