AVEVA reports H1 revenue down 12% cc

I thought we weren’t going to get an update on AVEVA earnings until Schneider Electric reports Q3 results — but, no, it came sooner. Yesterday, AVEVA said that revenue for its April to September half-year would be around £333 million, down 15% as reported (12% in constant currencies, cc) from a year ago. AVEVA’s prepared statement says “This is broadly in-line with the Group’s plan for the shape of the year, save for an increased FX translation headwind and two medium-sized subscription deals slipping from Q2 into Q3”. Looking for a silver lining, AVEVA points out that a £20 million deal moved from FQ3 2019 into FQ2, making the first fiscal half of 2019 a challenging comparable even in the best of times. “Adjusting for [this] the organic constant currency revenue decline was 7%”.

Looking ahead to the second half of fiscal 2021, AVEVA said that its order pipeline is “strong, underpinned by a higher volume of contract renewals, including major Global Account contracts, as well as the contracts that slipped from the second quarter … the Board expects to see solid revenue growth in the second half and remains confident in the full-year outlook.”

In a separate announcement, AVEVA said it has lined up the financing it needs to proceed with its acquisition of OSIsoft. That’s not the slightest bit surprising, in general, but this is: The biggest chunk, a $900 million term loan won’t be coming from financial institutions but “will instead be provided directly to AVEVA by Schneider Electric on terms which are identical in all material respects to those originally envisaged, save that the interest margin will be improved versus that previously envisaged … and AVEVA will not now incur lenders’ participation fees”. It must be nice to have an investor with such deep pockets.

In the absence of any other news, it seems like the OSIsoft acquisition is on track to close later in 2020 or early 2021.

The big question, of course, is: Is a 12% (or 7%, depending on how you’re counting) dip in revenue a bad thing? Of course it is — no one wants that. But is it dire? No. During this weird time deals are slow to close as everyone struggles to figure out that their end-markets will want and when. Do we ramp production now or wait? Do we reconfigure to be more carbon neutral or more efficient (while we have some slower production quotas)? Or do we feel so uncertain that we sit on cash, waiting for clarity?

The general uncertainty and unique drivers for each account mean some deals are closing sooner and others are delayed. We’re likely to hear similar comments as other companies report September quarter results over the next few weeks.

AVEVA will release full half-year results on November 5.