Here we go: MuM starts PLMish earnings, Q2 revenue down 9% y/y

Jul 22, 2020 | Hot Topics

Mensch und Maschine Software (MuM) today said that its first-half “solidly remained on the growth path – in spite of significant retarding effects from Corona in Q2”, with revenue up 9% to €130.4 million. MuM’s own software businesses saw revenue up 1% to €38 million, while its VAR business saw revenue up 12% to €93 million. That said, H1 growth is due to Q1, when revenue was up 25% year/year; Q2 revenue was down 9%.

Still, a 9% year/year decline in Q2 wasn’t awful. MuM’s business is typically 2/3 industrial — and we know many factories and machines shops shut and reopened in rolling waves as Covid spread around the world. The remaining 1/3 of revenue comes from AEC-related products; we know some of those projects continued during shutdowns but not all.

Chairman Adi Drotleff is confident for the second half of 2020: “After the solid first half-year, with new profit records in spite of Corona and the very successful cost elasticity test of the M+M business model, we just need a moderate recovery of customer demand in the second half-year to achieve our profit and dividend targets for 2020. Therefore we are still aiming to increase net profit by +18-24% to 117-123 Cents per share and to pay out a 100-105 Cents dividend after 85 Cents in the previous year.”

Notice that Mr. Drotleff doesn’t even mention a revenue target for 2020. Earlier in the year, it had been around €270 million, still achievable given the H1 performance and the moderate recovery Mr. Drotleff hopes for in H2. For 2021 and beyond, he sees revenue growth rebounding to 8% to 12% per year.

What does it all mean? This is going to be a weird earnings season, I think. Companies’ results will depend on their end-industry mix and geography — and on what closed and reopened, when. It’s going to weight tiny proportions of cloud-related revenue more highly than on-prem. For those that have them, hardware businesses are likely to drag down overall results. Subscriptions (as is the case with Mum’s Autodesk-related VAR business) will smooth out otherwise bad news. But a 9% year/year decline in Q2 when many forecasted the world ending is, honestly, pretty darned good.

It’s about to get busy: Schneider Electric reports tomorrow (so that means a mini-statement from AVEVA) as does Dassault Systemes. Hexagon reports on Friday.