5 on a Friday: Construction app sees investment; earnings from AspenTech, Rockwell, SAP, Software AG
Interest in digitizing the construction industry remains high. On Monday, ConstructSecure announced that it secured a $96 million investment led by Summit Partners. “The investment will help enable further product development and support ConstructSecure’s expanded mission to help clients deliver successful capital projects by elevating the capabilities of their partners and mitigating risk across capital project lifecycles.” You might be asking, who? Why? ConstructSecure says it is being used on “over $35 billion of combined assets and projects worldwide, with contracting partners in 62 countries” to qualify and manage contractor relationships — that means making sure the companies and individuals are certified to do the tasks or functions they’ve applied for, then monitor their safety and other incidents –basically, to reduce the people-related risks on a construction project. ConstructSecure will use the investment to grow its platform and team.
Earnings really kicked off this week; I’m still working on a longer piece on PTC’s FQ1 — but here are quick summaries of other companies’ results:
Sticking with AEC, Aspen Technology reported second-quarter fiscal 2022 results that were overall down from a year ago but up sequentially: License revenue was $116.million, down 35% year/year, while maintenance revenue of $48 million was up just $1.4 million over Q2 F2021. But these results are up sequentially, when FQ1 license and maintenance revenue were $81 million and $46 million, respectively. CEO Antonio Pietri said these results “reflected continued improvement in both customer demand and business conditions in many of our key end markets … We are confident that the strategic imperative for our customers to operate assets more efficiently and sustainably will drive increased spend that will generate double-digit growth for AspenTech over time.” Mr. Pietri also said the proposed acquisition of Aspen Tech by Emerson is “on track to close in our fourth fiscal quarter … The combination of [Emerson’s] OSI and Geological Simulation Software businesses [with AspenTech] will strengthen … and collectively enhance our unique ability to improve the profitability and sustainability of our customers.” Last thing from AspenTech’s earnings call: Mr. Pietri mentioned that customers are again asking for enterprise license agreements after many years of wanting site licenses. He believes this is because AspenTech’s solutions are critical in refineries’ and other assets’ sustainability initiatives. The data is captured, and improvements are made plant-by-plant, but the point of it all is to look across ALL assets, which you can’t do without enterprise commitments — hence, these licenses. Mr. Pietri told investors, “we would typically see one every so often, but now within a year, we’ve seen three. My sense is that it will be a more common occurrence as our customers focus on accelerating the capture of their commitments to reduce emissions. The [enterprise] agreements are still based on the token licensing model — we just give them enough tokens to do a complete rollout of the technology.” We’ll have to watch for other comments on buyer trends.
Rockwell Automation also announced results — which you can peruse here — but I was listening for mentions of PTC. CEO Blake Moret highlighted the “continued traction we see with our PTC partnership. The capabilities and versatility of the combined solution have contributed to our software portfolio differentiation and have become a great way to win with customers. I’m very happy with how these digital offerings are contributing to our recurring revenue base, including contributions from our organically developed software, PTC and our recent acquisitions.” But software, whether built/sold in partnership with PTC, homegrown, or acquired a la Plex, isn’t the bulk of Rockwell’s business. Mr. Moret said that one of the major areas of concern for the rest of 2022 is supply constraints — when would they eas, how would they affect costs and prices — something the rest of our PLMish world isn’t as exposed to.
SAP basically echoed its earlier pre-announcement of fiscal 2021 results this week, with growth in cloud revenue and interest that bodes well for our PLMish space. A couple of other interesting notes from this one: SAP.iO is a program the company announced in 2017 to help internal and external innovators partner with SAP to bring products to market. So far, over 375 companies have signed on to work with SAP — and now, that’s available to entrepreneurs in China, especially those focused on intelligent manufacturing. And that not-developed-here ethos continued, as SAP announced its intent to acquire a majority stake of Taulia, a working capital management solutions provider. Finally, for fiscal 2022, SAP expects non-IFRS cloud revenues to grow 23% to 26% in constant currencies, leading to total cloud and software revenue to be up 4% to 6% in constant currencies.
Finally, Software AG. With so much interest in integration, APIs, low-code/no-code, platforms-that-do-it-all, and collecting data for analytics … Software AG should be cruising to growth but it had been struggling in a market that didn’t really understand how to work with what is essentially a software component business. New CEO Sanjay Brahmawar told investors that business accelerated significantly in Q4, with the “digital business growing bookings 15% year-on-year … Our digital growth is being driven by our subscription shift with subscription and SaaS bookings reaching 88% of our digital total in both Q4 and the full year. This is up from 84% in Q4 last year and 81% across the full year 2020. Our ability to sell subscription and SaaS offerings is helping our execution engine to fire on all cylinders. We won 106 new logos in Q4 2021, bringing our annual total to a record 312.” FYI: Mr. Brahmawar told investors that Software AG would hit revenue of €1 billion in 2023 — ambitious, given that revenue in 2021 was €684 million, up 3% year/year.
Next week we hear from Hexagon and Dassault Systèmes, among others. Whee!