Schnitger Corporation

Quickie: MuM says Q3 revenue up 38%

Quickie: MuM says Q3 revenue up 38%

Oct 21, 2019 | Hot Topics

Mensch and Machine Software just announced Q3 results that show revenue was up 38% on a combination of high organic growth boosted by “strong figures” from SOFiSTiK, in which MuM recently increased its stake.

Why does this matter? MuM is probably Autodesk’s largest reseller in Europe and so is a bellwether for its performance — but MuM has also worked hard to diversify beyond Autodesk and so shows other VARs what’s possible in a world of capricious OEMs.

For the year to date, revenue from its own software business, M+M Software, increased 30% as reported to €174 million, up 23% on an organic basis. The VAR business contributed €120 million, up 28%.

I love their press releases. This is verbatim:

Against this background, CEO Adi Drotleff is very confident for the future: ‘Our ambitious 2019 targets – EBIT to grow + 22-33% to EUR 24-26 mln, EPS + 25-34% to 89-95 cents, and 77- 83 cents dividend (PY: 65 / + 18-28%) – are comfortably underlined by the very good nine months figures. Instead of + 15-20% we now expect + 20-30% growth to EUR 222-240 mln for sales. In addition for 2020, we stay with our guidance of + 10-12% sales growth, combined with EUR + 3.5-5.0 mln for EBIT and + 18-24 cents for earnings per share (EPS), as well as a 15-20 Cents higher dividend. ‘

So what does that mean? My interpretation: the year is going better than planned, which leads Mr. Drotleff to raise revenue targets by as much as 10% for 2019. That’s interesting when you look at recent past economic data, which showed an economic slowdown already underway in Europe. It’s possible to infer from these factoids that PLMish software purchased are related to future-looking product development and not directly tied to current production — that matches what I’m hearing right now in the US as well.

Even so, Mr. Drotleff is cautious about 2020, which likely reflects broader uncertainty about trade wars and other big-picture factors that could affect end-customer buying patterns in 2021 and beyond.

Nearer term, MuM’s Q3 results bode well for Autodesk’s Q3. MuM covers only one of Autodesk’s regions, of course, but it’s a good sign that at least one of its geographies is going strong. Autodesk will report in late November.

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