MuM starts PLMish earnings on a strong, but mixed, note
Mensch und Maschine reported its July/August/September results a few days ago. If you recall, Mensch und Maschine is both an Autodesk reseller and a supplier of its own software. As of mid-September, Autodesk changed the rules for its European resellers: Rather than the reseller handling a customer transaction and paying Autodesk out of the cost of sales, Autodesk now invoices customers, takes receipt of payment, and then pays the reseller a commission. That means lower revenue to the reseller but (I hope) the same commission.
MuM says it saw a “final reselling boost before the switch to the new Autodesk partner model.” And that boost was substantial: “the final reselling boost [was] responsible for a +39% peak in Q3 revenue.”
MuM reports totals year-to-date, with total sales for the first nine months of the year up 12% to €270 million. Within that total, M+M Software revenue was €82 million, up 4%, while the VAR business (rebadged as Digitalization) was up 15% to €188 million. Subtraction tells us that Q3 revenue was €94 million, up 39% from last year; M+M Software revenue was probably flat as reported to €25 million, and the VAR business reported revenue of €70 million, up a solid 60% or so over Q3 2023. All of that led to MuM’s overall record profitability on the EBIT and net income lines.
We need to remember that the changed relationship between Autodesk and its reseller partners means this is likely the highest revenue MuM’s VAR business will report — from here on, MuM will be compensated as an agent, which means that it’s not going to recognize the entire total of a sale on its revenue line, but will/should still see the same margins since it will get the agent fee, which will flow down through the income statement. [And beware: That means ratios that tie the bottom line to the top line will start to look amazing: net income/sales will look a LOT bigger since sales will be lower — MuM is a great company but won’t suddenly become doubly as profitable as it is right now. All resellers, not just MuM. Math.]
OK. So what can we infer from this? It’s a complicated picture. First, the main news is all Autodesk-related, which buries the fact that M+M Software actually didn’t do so well in the historically weak Q3; will that recover in Q4? Second, that huge bump in Autodesk-related sales could have been caused by a number of factors: I wonder how many customers brought their Autodesk product orders forward in Q3 just to get ahead of whatever chaos there might be in the invoicing-Autodesk/support-from-MuM transition, and I wonder if/how that affects MuM’s Q4 results; we shall see. I also wonder if users also took advantage of the opportunity to extend 3-year contracts — these are still available in North America but I’m not sure if/when that goes away in Europe.
Unfortunately, I was not at Autodesk University last week, so I don’t have in-person color from the event to add to this note. But I do know a number of people who attended and can add that the customers and partners they spoke with, especially in AEC, confirmed MuM’s Autodesk-related renewal momentum, with expectations running hot for Q4. They also tell me that most Autodesk customers are OK with the agency change and haven’t seen much change at all; the resellers have had a lot of time to get used to the idea and seem resigned to positive about it.
Bottom line: MuM’s Q3 bodes well for Autodesk and the other resellers in this space. None of these transitions are easy, but customers and partners seem to be doing well.
We’re about to enter the bulk of PLMish earnings; I wonder what the other companies will say. Does the weakness in M+M Software extend to other CAM suppliers? Or does the robustness of the VAR business mean AEC is going gangbusters across the board? We’ll soon find out!