ESI reports revenue up 8% in 2019
ESI reported results yesterday for the 12 months ended 31 December 2019 and for the 11 months from 1 February 2019 to 31 December 2019. Since ESI is shifting its financial year to reflect the calendar, we’ll just focus on the 12 month pro forma results. As a side note, ESI said that regulators didn’t want them to share too much about the 11-month period. Hmm.
Enough preamble. 2019 was a solid year of transformation for ESI, where refocusing and shifts of all sorts don’t seem to have adversely affected results. The details:
- Total revenue for the 12 months was €146 million, up 8% as reported and up 6% in constant currencies (cc)
- License revenue was €116 million, up 8% (up 6% cc)
- Within license revenue, €97.8 million is classified as “repeat“, ESI-speak for renewals and add-on sales to existing customers. Repeat revenue was up 8% over last year
- “New business” (revenue from new customers or the sale of new solutions to existing customers), was up 11% to €18 million
- You’ll note from those factoids that the bulk of revenue is “repeat”. That’s both a strong endorsement from existing customers and a bit worrisome in that ESI may be struggling a bit to find new customers — but the good news there is that “new” is growing faster than other categories
- Services revenue was €30 million, up 5% (up 4% cc). Within services,
- Within the services total, revenue from engineering studies, the proofs of concept projects that are critical for future software sales, was up 4% to €18 million. Field services, where ESI provides training and other services, was up 12% to €5 million. Contracting, where ESI does work for clients, was down 17% to €2 million — but CEO Cristel de Rouvray pointed out that this was not a strategic part of the business. Revenue from special projects (the industry consortia, for example that ESI participates in) was up 5% to €5 million. Finally, “Other”, mostly revenue related to the roll out of customers’ virtual reality solutions were related services was up 60% to just over €1 million
- By geo, revenue from EMEA was €71 million, up 9% (up 9% cc); from Asia, €53 million, up 7% as reported and up 4% cc; and from the Americas, €22 million, up 6% (up 1% cc). Ms. de Rouvray said that ESI shifted two deals from perpetual to recurring in the Americas, which partly explains the flatness — she sees momentum building in the Americas which doesn’t appear in the results
- CFO Olfa Zorgati said that revenue from Asia in 2018 included ESI’s portion of revenue from the resale Gamma products in India. That relationship concluded in 2018, so excluding that to create an apples-to-apples comparison, revenue from Asia was up 6%
- By industry, ESI reports that its 4 core industries account for 88% of revenue and that revenue from ground transportation was up 6%; aerospace was up 17%; heavy industry, up 3%. Energy, the fourth, was up 1% which ESI attributed to “an industry-wide shift to renewable energy where our efforts have shifted to service projects, laying the ground for future license sales”. In other words, combustion simulation won’t be used, and it takes time to sell electrification solutions
Ms. de Rouvray was pleased with FY19 and the results of all of the changes she and Ms. Zorgati have implemented: “we implemented our plan for sales focus and operational excellence, aiming for growth and increased profitability … ESI has the credibility, as evidenced by the growing scientific and industrial accolades and customer testimonials welcoming our new Hybrid-Twin solutions. We are actively leveraging their influence to grow and attract the next wave of top accounts, and we expect our performance to keep increasing steadily.”
Full results will be announced on March 23.