MuM didn’t see problems in Q2; reports record half-year

Mensch und Maschine (MuM) today reported results for the second quarter—and the good news is that it was the strongest H1 in the company’s history. Of course, it is not selling megadeals to aerospace and defense companies as Dassault Systemes is, but I’m taking today’s report to mean that not all PLMish sales suffered at the end of the June quarter.

MuM’s report said that total revenue for the half year was €176 million, up 1%. The company’s own brands, M+M Software, reported revenue of €58 million, up 6%, while the Autodesk-related reseller business (rebranded as Digitalization) reported revenue of €118 million, down 1%.

Doing a tiny bit of math, that means that Q2 total revenue was €75 million, up 5% year/year; M+M Software revenue was €27 million, up 6%; and Digitalization revenue was €48 million, up 5% (those segment revenue numbers assume Digitalization is a rebrand and not a shuffling of revenue sources). You can see from this that Q2 was weaker than Q1, which is typical for MuM since Autodesk’s fiscal year ends during MuM’s fiscal first quarter, bumping up MuM’s Q1.

MuM is somewhat of a canary in the coal mine for Autodesk resellers: it’s a public company, so we know more about it, and it’s one of Autodesk’s largest VARs in Europe. When MuM says something about its business dealings with Autodesk, we should listen. One of the headlines in MuM’s press release is that “New Autodesk partner model coming mid September” followed by the news that “After successful go-live of a new ERP system, M+M is now ready to switch to the new Autodesk partner model as announced by mid September.” Autodesk changes things when it chooses to, and they’re not necessarily easy for its channel partners to adopt — changing an ERP system, as anyone who has ever done it (or been near anyone who has), is extremely difficult. I wonder how many other VARs are struggling to meet Autodesk’s new business requirements. Editorial over.

What MuM was saying with “new partner model” is that as of 16 September, Autodesk will quote and invoice buyers in Europe — and buyers will pay Autodesk directly. VARs will continue to handle quote requests, support, and training. You can see the announcement here: https://www.autodesk.com/eu/campaigns/newwaytobuy This is the next part of Autodesk’s global rollout of its agency model, which started in Australia and New Zealand last year and is implemented in North America as of June.

How will this change affect MuM? TBD. In its 2023 annual report, MuM said that it “welcomed” this change because “it will only reduce material costs and sales, but will have no influence on gross profit or earnings and will therefor increase returns on sales”. To that end, MuM’s outlook for the rest of 2024 is as follows: ”Since the first half of 2023 had been much more profitable than the second half and a more consistent pattern is expected this year, M+M [are] sticking with [prior] EPS target[s]. For 2025 they continue to expect a stronger EPS growth … Over the two-year period 2024/25E, the average EPS target path thus remains at the +17% per year achieved in 2022/23.” EPS, earnings per share, is a bottom line result of [revenue in] – [costs out]. That 17% annual increase from 2022 to 2025 is a very confident prediction. We’ll have to watch this play out in the Q3 and Q4 results.

TL;DR? Dassault Systemes announced that it didn’t meet its Q2 revenue targets because large deals slipped out of Q2. That led to a lot of questions about what the industry as a whole is seeing. Now we know that at least one other player, Mensch und Maschine, representing both its own products and Autodesk’s, reported no such troubles.

And we learned that MuM, at least is ready for the agency model change.

Never boring.