Wrapping up 2020 earnings with Ansys, Autodesk, and Bentley
I have been trying to get to writing long-form pieces about how 2020 ended for Ansys, Autodesk, and Bentley ever since the companies reported but it’s been crazybusy. We’re nearing the end of March, which means companies will start their earnings cycles all over again in April, so it’s time to just get on with this. Here, in alphabetical order, are quick digests for these three companies, and then some thoughts on what it all means.
Ansys’ Q4 was solid, with the company closing an unspecified number or giant deals, including the second largest on record at $79 million. Those deals drove up pretty much all metrics —revenue for the quarter and year as well as many of the other measures Ansys looks at to compare lease, perpetual and other types of license arrangements. The real problem with Ansys’ earnings release wasn’t 2020, it was conservative guidance for 2021. The company expects total revenue for the year of between $1,771 million and $1,856 million, up 8% at the midpoint. For Q1, the guidance is for revenue of $326 million to $351 million — but we’ll know soon enough how that turns out.
- Total GAAP revenue for 4Q was $624 million, far above expectations and up 28% from a year earlier. For the year, total revenue was $1,681 million, up 11%
- Software revenue was $382 million in Q4, up 42%. For the year, software revenue was $781 million, up 12%
- Within software, lease revenue in Q4 was $263 million, up 58% as reported and up 55% in constant currencies (cc). perpetual revenue was $119 million, up 16% (up 13% cc)
- Maintenance and services revenue was $242 million in Q4 and $901 million for the year, up 12% and 10% respectively
- Within this last bucket, maintenance revenue was $225 million, up 12% (up 9% cc) and services revenue was $17 million, up 1% as reported but down 1% cc
- By geo, Q4 revenue from the Americas totaled $319 million, up 45%; from EMEA, $185 million, up 19% (up 11% cc) and from Asia, $120 million, up 8% (up 5%cc)
Autodesk’s financial quarter and year end on January 31, so it’s able to provide a one-month-later perspective on all things Covid-related, but expresses the same caution over reopening as the rest.
- Total revenue in Q4 was $1.04 billion in Q4, 16% (also up 16% cc)
- In Q4, Design revenue was $899 million, up 13 % (up 14% cc); Make revenue was $82 million, up 28% (up 27% cc). As you might expect, Design products include AutoCAD, AutoCAD LT, Revit, Inventor, Maya, and 3ds Max; “Make” includes Assemble, BIM 360, BuildingConnected, PlanGrid, Fusion 360, and Shotgun. Confusingly, Fusion 360, which includes both Design and Make functionality, is classified as Make.
- By vertical in Q4, AEC revenue was $450 million, up 18%; Manufacturing was up 17% to $236 million while Media & Entertainment was up 15% to $60 million. AutoCAD and AutoCAD LT revenue was $287 million, up 11%
- Subscription revenue in Q4 was $950 million, up 22% (up 22% cc)
- Maintenance revenue was $30 million, down 62% (down 61% cc) as the company continues to shift customer to subscriptions
- By geo, revenue from the Americas was $416 million, up 14%; from EMEA, $409 million, up 13% (up 14% cc); and from Asia, $215 million, up 23% (up 22% cc)
- Direct channels represented about 34% of total revenue in Q4, continuing the upward march we saw in all of F21: 31% in Q3, 30% in Q2, 30% in Q1, and 31% in Q4 2020. Autodesk’s direct channels include sales to named accounts but also the e-store, where an unknown proportion of transactions take place — though the company said digital sales are “accelerating”.
Bentley reported Q4 results that were ahead of expectations, though the earnings call mostly focused on the Seequent subsurface modeling acquisition — and with a $1 billion price tag, that’s completely reasonable.
But about Q4:
- Total revenue in Q4 was $220 million, up 8%, and total revenue for 2020 was $802 million, up 9%
- Subscription revenue was $178 million, up 9%, in Q4;for the year, it was $679 million, up 12%
- Perpetual license revenue was $21 million, basically flat in Q4; for the yer, it was down 4% to $57 million
- Services revenue was $20 million inQ4 and $65 million for the year, up 8% and down 5% for the year
- For the year, revenue from the Americas was $396 million, up 11%; from EMEA, $254 million, up 7$; and from Asia, $152 million, up 6%. In reading the annual report, I learned that about half of the year’s organic growth in the Americas is due to ProjectWise and civil design sales/expansions; in EMEA, it was driven by ProjectWise and offshore structural analysis products; and in Asia, by “expansion of our recurring revenues from our existing accounts in Australia and China. Approximately 50% of our organic performance expansion was driven by ProjectWise and civil design products”. That’s interesting color — we’ll have to compare it to next year’s report to see what’s changed.
Looking ahead, all of the companies expect a slow start to 2021, with improvement as the year goes on. Bentley expects total revenue of $895 million to $920 million in 2021, or growth of 12% to 15% (not including Seequent). Autodesk forecasts fiscal 2022 revenue between $4265 million and $4345 million — up 13% to 15%. Ansys, to recap, expects total revenue for the year of between $1771 million and $1856 million, up 8% at the midpoint.
OK. So what does it all mean?
The first observation is hardly new — but is reinforced by these three reports. Big deals show the power of a big, diverse menu of offerings. During its earnings call, Ansys said that it had closed “nearly 100 deals over $1 million …including eight deals in the eight figures. One of those agreements was the second-largest deal in the history of the company, a five-year $79 million contract with an enterprise customer” — Ansys didn’t say, but speculation is that it’s an aerospace customer who likely draws on many of Ansys’ simulation disciplines. Autodesk‘s deals also appear to be getting larger: “We signed a record number of new enterprise business agreements (EBAs) in the fourth quarter. In fact, they were equal to the number we signed in the entirety of the previous year”.
A big menu means a lot of reasons to call on a customer, but also adds risk that the many signatures needed for a megadeal slow down the approval process. Ansys said, “our years have become increasingly backend loaded due primarily to the timing of large deals. This steady progression has allowed our sales and operations teams to support an increasingly higher magnitude of business in the fourth quarter of each year”. That makes forecasting risky since deals that slip out of Q4 can’t be counted in the current fiscal year.
Subscriptions continue to gain traction — but not everywhere, for every product category or customer type, as the results above show. Autodesk continues to play with how customers buy licenses. On the plus side, the company said it “grew total subscriptions by 8% to 5.3 million” during fiscal 2021. On the less-than-plus side, it seems as though the transition to named users isn’t going as well as the company had hoped: “We anticipate many of our remaining multi-user subscribers will make the transition to named users as the pandemic recedes, and we are now extending our 2:1 multi-user trade-in to August 2023 to enable that.”
Last, on licenses, Autodesk is also “exploring consumption-based models to meet the needs of customers requiring flexible license usage”. That’ll be huge since it sounds as though it’ll be a true pay-for-what-you-use option — likely not the cheapest alternative for heavier users, but a great way for intermittent users to buy from Autodesk.
Now, about 2021. The year may be nearly 1/4 over (eek!) and we may all be feeling optimistic about vaccines, reopening, and the potential of spring (here in the Northern Hemisphere, at any rate) but the business climate is far from certain. Ansys said, “We are seeing a continuation of Q4’s cautious optimism in our customer base, with the expectation that the economic pressures of the pandemic will start to ease in the second half of 2021, but tempered by concerns with virus mutations and vaccine rollout schedules … we’re assuming greater uncertainty in the timing of sales activities than we would have had this been a non-COVID year. We are also planning for 2021 to be heavily backend loaded, similar to, or even slightly more pronounced than 2020”.
The first quarter ends in 14 days, so we should know soon enough.