MuM, SAP, Sandvik & Hexagon: four views on Q3

This week we heard from four companies that I don’t usually lump into one blog post: Mensch und Maschine (MuM), the German CAD/CAM/BIM developer and Autodesk partner; SAP, the ERP heavyweight; Sandvik, whose Intelligent Manufacturing business has been hoovering up CAD/CAM companies; and Hexagon, the measurement and autonomy company (that spun off Intergraph and other businesses over the last two years). They sell to many of the same manufacturers, though, so reading them side by side says something about how that customer is spending right now. As always, go to each company’s investor relations website to learn more about each announcement.

Mensch und Maschine: the proprietary business again leads the way MuM titled its release “light and shadow,” and that’s a good description of its Q3. Nine-month revenue was up 7% to €189 million, with M+M Software up 9% and Digitization (basically the Autodesk reselling business) up just 5%. MuM says the Autodesk weakness is a tough comparable, and fewer multi-year contracts have come up for renewal so far this year, with more customers due to renew in 2027.

SAP: AI is now in nearly every big deal SAP crossed €10 billion in quarterly revenue for the first time: revenue was €10.3 billion, up 12% at constant currency. Nine out of ten of SAP’s 50 largest deals included AI and Business Data Cloud. Lots of other factoids, but of most interest: Services revenue fell 4% as SAP shifts consultants toward AI adoption work. On the earnings call, CFO Dominik Asam said SAP wants to move gradually toward consumption-based pricing, to “sell outcomes to customers as opposed to tokens.” He warned that business models that “solely rely on selling more hours” will face increasing pressure from AI.

Sandvik: industrial demand is strong, and software is a quiet contributor Sandvik’s revenue rose 25% organically to SEK 38 billion, led by mining and aerospace & defense customers. We care most about the Intelligent Manufacturing business, which reported orders up about 14%. Sandvik is moving customers of its CAD/CAM software, like Mastercam, to subscriptions, which Sandvik says lowered revenue by about 2% in Q3. Reported organic order growth was 12%, or about 14% without the switch, which “continued to progress well.”

Hexagon: sensors carry the quarter, software lags Hexagon announced results earlier today, reporting its highest organic revenue growth in five years, 13%, on sales of €1 billion. Hexagon’s sensors and robotics solutions were up 20% while software and services grew just 4%. CEO Anders Svensson told investors that today’s hardware sales set up future, higher-margin software and services, and Hexagon is still buying software: Rocscience, with 80% recurring revenue and margins above 40%, adds simulation to Hexagon’s geotechnical monitoring. It and the Waygate Technologies (non-destructive testing) acquisition should close in Q4.

TL;DR: any common themes? Business-model transitions distorted just about all of these numbers. Autodesk’s move to three-year contracts (many of which it pulled forward) confuses the picture at MuM; the transition to AI at SAP, Sandvik’s shift to subscriptions, and Hexagon’s D&E sale (MSC to Cadence) and Octave (fka PPM) spin-off all make reported growth look weaker than underlying demand.

The same end markets are aren’t the same across vendors. Aerospace and defense, general manufacturing, and electronics were strong for both Sandvik and Hexagon; automotive lags, with China weakening. But even that’s not uniform: Hexagon said US automotive investment is strong, driven by reshoring and the 50% tariff on imported cars from January 1, while Sandvik saw North American light-vehicle volumes slightly down. One possible interpretation is that new and retooled plants buy metrology before they ramp up production and start consuming cutting tools. We’ll have to see how other PLMish companies report their end-markets to get more clarity.

And, of course, AI: SAP gave the clearest signal that AI is now affecting buying decisions, not just demos: it’s in 90% of the biggest deals, and consultant-assist and data-migration agents are the surprise hits of the AI roll-out so far. MuM and Sandvik are earlier on that curve, like most PLMish vendors, using AI to make existing products easier to use. For PLMish buyers, the takeaway is that AI is arriving through vendors’ existing platforms and data, which raises the stakes on who owns the product and production data in the first place.

More earnings next week — and Halloween. Wonder if there’ll be any tricks?