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License Revenue Hammered at PLM Vendors

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Source: Chris Chiappinelli at www.manufacturing-executive.com

(MANUFACTURING EXECUTIVE, JULY 31, 2009) In what has become a common refrain in these recessionary times, two product lifecycle management software vendors this week reported downbeat quarterly results, as potential customers balked at buying new licenses.

Paris-based Dassault today reported revenue of €310.9 million in its second quarter, ended June 30, a year-over-year decline of 5%. Hardest hit was the company’s new license sales, which dropped 31% to €69.4 million from €101.2 million a year earlier. Dassault earned something of a reprieve with a strong performance in periodic licenses, maintenance, and product development revenue, which soared 14% to €201.9 million in the quarter, as reported under International Financial Reporting Standards (IFRS).

Still, less revenue translated into less income for the PLM stalwart, with net income of €25.7 million 41% lower than its tally in Q2 of 2008.

Dassault’s management characterized the quarter as in line with expectations.

“The second quarter unfolded as anticipated,” said CEO Bernard Charles, in a statement. “Revenue, margin, and earnings results came in at the high end of our objective.” As for the market Dassault and its competitors faced, he said, “On balance, business conditions during the second quarter were similar to the first quarter with customers remaining cautious with respect to new business investments.” Among large companies, activity has begun to pick up, he added.

In the Americas, sales actually ticked up 1% in the quarter, reaching €96.5 million, while the Asia market contributed 4% less year over year, accounting for €70.2 million. Dassault’s biggest market saw the biggest drop, as sales in Europe fell 8% to €144.2 million.

For the third quarter, the company predicted revenue of €285 million to €300 million. By comparison, last year’s Q3 revenue totaled €318.3 million.

For Dassault’s America-based competitor PTC, the most recent quarter also held its share of hazards. Reporting earlier this week on its fiscal third quarter, ended July 4, PTC revealed a 17% drop in total revenue to $226.2 million. Like Dassault, PTC’s biggest counterweight was license sales, which fell to $49.5 million in the third quarter, 38% below the prior year’s total of $79.9 million.

The revenue decline drove the bottom line down, with net income of $3.8 million 74% below the earnings a year earlier.

Like Dassault’s, PTC’s guidance for the fourth quarter and the full year reflects a pessimistic view of the market. PTC predicted revenue of $235 million to $245 million in the fourth quarter, which would compare with $299.5 million in the prior year. For the full year, the company expects to sink below the billion-dollar mark, with total revenue of $931 million. In the last fiscal year, PTC brought in $1.07 billion.

 

 

Ben Hanson Ben Hanson is one of WhichPLM’s top contributors. Ben has worked for magazines, newspapers, local government agencies, multi-million pound conservation projects, museums and creative publications before his eventual migration to the Retail, Footwear and Apparel industry.Having previously served as WhichPLM’s Editor, Ben knows the WhichPLM style, and has been responsible for many of our on-the-ground reports and interviews over the last few years. With a background in literature, marketing and communications, Ben has more than a decade’s worth of experience, and is now viewed as one of the industry’s best-known writers.