Quickie: AVEVA updates on June quarter & seems optimistic about the future
As we’re starting to see across our PLMish landscape, the June quarter wasn’t horrible — it wasn’t great, and companies that rely on hardware or perpetual license sales suffered more than those whose main revenue source is subscription-type revenue — and there’s still some optimism for the rest of 2020.
As you know, AVEVA announces detailed results twice a year and offers hints for the other two quarters. This one was a hint.
The company said it saw subscription revenue grow by 30%, maintenance revenue was flat, and perpetual license sales and services revenue was down “substantially”, to sum to an organic revenue decline of 3.5%. Not at all surprising, given AVEVA’s planned move to subs, and the pressures created by Covid.
AVEVA noted but didn’t identify “substantial order wins in the power generation, marine, water, food, and life sciences end markets, together with wins in oil & gas across a wide range of customers”. What does this mean? That digitalization efforts continue despite Covid — and perhaps even accelerated a bit as companies across industries see the benefit of remote working (say for plant supervision) and better connecting workers, regardless of the immediate work from home rules.
As for the rest of AVEVA’s fiscal year, which stretches into 2021, “the order pipeline is solid and is expected to benefit from large contract renewals in the second half of the financial year”. So strong, in fact, that AVEVA said it will pay a full-year dividend (for last fiscal year) in August. And, interestingly, AVEVA specifically called out the fact that “the Group has made no redundancies in respect of Covid-19 and has not furloughed any staff”.
In all, it seems like it was a decent quarter. The company closed deals from across its end-industries, even in oil and gas, which has seen many companies curtail expenditures in light of lower demand and uncertainty about oil price wars. Maintenance revenue was flat maintenance, which means defections were offset by new contracts, sort of the best one can hope for right now. A strong pipeline and enough optimism about the near-term to pay a dividend, when that cash could be hoarded to offset future revenue shortfalls. And, keeping staffing intact implies optimism for the future.