Q4 earnings wrap: Altair, Ansys, Autodesk, Bentley, Hexagon, PTC, Siemens DI Software — and what I want to know about Q1

Apr 10, 2024 | Hot Topics

The earnings news cycle is about to kick off again, and I owe you a recap of what we learned about the December quarter. I always start these earnings seasons with high hopes and a plan to get out timely recaps … and every quarter, something derails me. So let’s recap the last cycle and hope we’re, for once, ahead.

Overall, calendar Q4 and 2023 were good to our PLMish companies. It sounds as though demand for PLMish (meaning CAD, CAM, CAE, BIM, PLM, and all of the rest of the alphabet soup) remained stable as the year drew to a close — but that buyers are going to be careful about their spending in the first half of 2024 as they wait to see how wars, global economic forces, and elections change their end-customers’ buying patterns. For those selling subscriptions, renewal rates are strong; small enterprises are spending more cautiously than large, and the outlook for new business is mixed. Add that all up, and most companies are guiding to 2024 revenue that’s up but not ridiculously so, absent acquisitions. I suppose the best way to characterize it is to use “cautious optimism.”

In alphabetical order for the big public companies in our space:

Altair announced results in February and held an investor day last month. Q4 software revenue was up 8% year/year, propelling total revenue to $172 million, up 7% (up 6% in constant currencies, cc). For 2024, Altair forecasts total revenue of $668 million, which would be up 9%. How the company plans to accelerate growth was laid out at the investor event: sell more aggressively into Simulation & Analysis, which the company sees as growing at 10%, into HPC (growing 7%), and focus hard on Data Analytics/AI, which it says is growing at 17%. Adding up its market opportunities, the company sees low double-digit growth in software revenue, driven by market growth, cross-selling AI/data analytics/CAE and HPC, and products like the newly announced SimSolid for electronics. 

Ansys reported Q4 results, but because of the potential acquisition by Synopsys, they gave few details and didn’t hold an investor conference call. Total 4Q revenue was $805 million, up 16% (up 15% cc) — that’s near the top end of previous guidance, which had been $769 million to $819 million, and gives us some idea of a possible trajectory for 2024: most estimates I’ve seen are for total revenue in 2024 of $2.5 billion, which would be up 11%. In its prepared remarks, Ansys highlighted automotive and high-tech as performing well in Q4, while automotive, aerospace & defense, and industrial performed well for 2023 overall.

Autodesk reported in February for the year ended January 31, 2024. Reported results were ahead of expectations in key metrics, as many customers renewed their products early to stay ahead of price increases. The company also officially announced that it will roll out its indirect model transition in North America starting in the July quarter (its 2Q of FY 2025). Revenue in Q4 was $1,469 million, up 11% as reported and up 14% cc. FY 2025 revenue is expected to be $6,040 million, up about 10%.

Bentley’s biggest news was the transition of Greg Bentley to Chair of the Board when COO Nicholas Cumins becomes CEO as of 1 July — but they also reported results. And those results are never simple. For Q4, total revenue was $311 million, up 8% (up 7% cc); for 2023, total revenue was $1,228 million, up 12% (and up 12% cc) — so it would appear things are slowing. But that’s misleading: many Bentley customers are shifting from their prior contracts, where revenue was recognized upfront, to E365, which is recognized ratably. Perpetuals now make up just 4% of Bentley’s revenue — but Bentley has no plans to get rid of them, citing their importance to SMB customers and as a buying preference in Asia. In Q4, Bentley reported adding 400 new SMB customers and 700 new Virtuosity logos. For 2024, the company expects total revenue of $1,362.5 million, which would be an increase of 11% cc. Interestingly, this guidance assumes a lower contribution from acquisitions; it sounds like Bentley is going to digest what it has. 

I actually covered Dassault Systèmes’ earnings release when it happened, here: https://schnitgercorp.com/2024/02/07/dassault-systemes-reports-q4-2023-all-in-on-subs/ 

Hexagon reported total revenue of €1,435 million, up 5% in constant currencies and on an organic basis (cco). By business area, Geosystems revenue was up 3% cco, Autonomy & Positioning was up 11% cco, Safety & Infrastructure was down 4% cco, Manufacturing Intelligence was up 7% cco (Q3 up 8%), and Asset Lifecycle Intelligence was up 8% cco. That’s a lot; focusing on Manufacturing Intelligence (the former MSC Software, Vero, etc.), MI saw “strong growth in automated inspection solutions” and “solid demand for enterprise quality management software”; the company also mentioned 6% growth in China. As for the Asset Lifecycle Intelligence business (the former Intergraph PPM, etc.), the company reported “good demand, especially for design and engineering and cybersecurity software,” “strong demand for SDx, our cloud-based asset lifecycle software platform,” and that “industry diversification [is] driving growth.” Hexagon doesn’t provide yearly guidance but did offer at its last investor event that its mid-term financial targets are for 8% to 12% average revenue growth per year, of which 5% to 7% is expected to be organic. That would put 2024 total revenue at around €1,600 million or so at the midpoint. 

PTC’s fiscal year ends on September 30, so calendar Q4 was its fiscal first quarter. PTC reported FQ1 results that were ahead of expectations and then stuck to its outlook for fiscal 2024, disappointing many investors. FQ1 revenue was $550 million, up 18% (16% cc) with software revenue of $515 million, up 20% (up 16% cc). “CAD” software revenue (which includes all authoring tools, not just Creo) was $200 million, up 8% (up 6% cc), “PLM” software revenue was $315 million, up 28% (up 26% cc) — such hefty growth in part because this category contains ServiceMax and Codebeamer. On the earnings call, the company said that organic growth was primarily driven by Windchill, with “strong percentage growth in ALM, thanks to Codebeamer.” Other interesting bits: “CAD” continues to be driven by the on-premise offers at this point, with new CEO Neil Barua saying, “our Creo on-premise business is solid and rocking and rolling … [that said,] we already are taking Windchill+ and some Creo+ customers along in the [10 year] journey [to SaaS].”

Siemens is too complicated to cover in this short format, but for now, know it also has a September 30 year-end, with FQ1 typically not the strongest. With that said, Siemens reported that Digital Industries revenue of €4.6 billion was down by 1% on an organic basis. Within that, Digital Industries Software (SDIS) revenue was €1.185 billion, up 4% (up 8% cc). After that, the numbers are less precise: PLM software revenue was up 13% with the SaaS transition progressing “at a high pace,” and EDA was flat year/year after an exceptionally strong FQ4 with stable growth. Like everyone else, Siemens is focusing on Cloud ARR, which it says is more than doubling every year, to now 33% of DI Software’s total (against an FY24 target of 40%).

I know this has left out many of your favorites —where’s Nemetschek? Trimble? Procore? Synopsys? Cadence? and and and— but it should get us started for the calendar Q1 reports that begin next week.

Of all these companies, only PTC said the selling environment is challenging, although it sounds more like “reasonable caution in an uncertain environment” to me. PTC CEO Barua said on their most recent call that “approval cycles [are] just taking a lot, and have been for several years. It’s not worse or better since I’ve been here, and [is] how we’re looking at Q2.” As we move into the next earnings season, we’ll be looking for info on sales cycles, approval processes, and macroeconomic and geopolitical pressures in addition to the usual “what’s selling and why.”

These companies provided much more data than I’ve covered here. If you’re interested, visit their respective Investor Relations sites for more details.