ESI on the impact of Covid-19: “It’s a 3-month event”
ESI Group held an investor update today, in which they expanded on the 2019 results reported last month. (You can read my recap here.) I’ll write more about the company’s vision, strategy, etc. as discussed in today’s session, but I wanted to share one very important note ASAP, while I get my thoughts together on the rest.
In a press release yesterday, ESI CEO Cristel de Rouvray said,
In the short-term, the disastrous coronavirus pandemic is expected to somewhat impact our H1. However, the resilience of our business model largely anchored on renewable and mission-critical software licenses will help us manage full-year risks. When industry recovers from this exceptional crisis, digital ways of working will be accelerated globally, fully dependent on ESI’s solutions to virtually anticipate and manage asset performance in-service, much beyond the traditional PLM certification target of the brand-new product.”
Today, she and CFO Olfa Zorgati elaborated on that theme. Ms. de Rouvray said that ESI, as a global company, has already been through the “Covid cycle” in Asia, and saw delays (not canceling) of projects to later in the year. Ms. Zorgati said that she’s seen a temporary dip in software utilization as well as a delay in sales activity, but reiterated that nothing has been canceled. Ms. de Rouvray wrapped up her remarks on Covid by saying that (paraphrasing),
If Asia, which is further along, is a predictor for the rest of the world, this is a 3-month event. There is some business inertia, but our compelling value means we are a protected supplier.
I don’t think ESI is alone in this –compelling value, mission-critical, key to new digital ways of working once this is all behind us– and believe that other PLMish companies are seeing similar patterns.
This week is the end of the fiscal quarter for most of the companies in our little corner of the IT world. If Q1 was a disaster, we should know as early as next week, if companies pre-announce earnings shortfalls. But I honestly don’t see that happening, as China is a relatively small part of most PLMish companies’ revenue and business elsewhere was decent until just a few weeks ago. I think most will follow ESI’s lead: business pushed out into the second half of the year. We might even see an uptick as companies look back over the last few weeks and realize how unprepared they were; perhaps investing in new IT solutions (some PLMish) to help them with supply chain agility, remote working and other strategies to better cope when the next crisis hits.
In the meantime … I hope you’re well, taking care of family, friends, and neighbors — but from a decent distance. I am once again amazed at how our PLMish community comes together to support, well, everyone. Free training classes, extra cloud credits, expanded product try-out periods … I’ve heard from so many vendors who are trying to help that I can’t list them all. If you’re at all interested, now is a great time to try a product you’ve always wanted to, learn something new, or mess around with a design problem that’s been driving you nuts. Or you can watch puppy videos. Why does the one on the right strut as if he owns the world? Because he probably does. Alpha dog. Be well, people.