A wander through PLMish earnings so far

This has been an unusually long and somewhat fraught earnings season. We started with Dassault Systèmes' preannouncement, wandered through the drama around Autodesk's delayed publication of its fiscal 2024 (ended 31 January) annual report and subsequent Q1 filings —though Q2 is on track to be announced on 29 August— and now see something similar happening as Trimble can't file its most recent quarterly reports because of accounting issues around its closing of a joint venture …?

It's been a mixed bag, but there are a few central themes. The biggest is general economic uncertainty, even as inflation seems to be easing. Central banks are (possibly) lowering interest rates — and the boom expected in the second half of 2024 might not materialize, or if it does, it might not be as strong as anticipated at the start of the year. And, of course, we also have geopolitical uncertainties, supply chain disruption caused by war and violence, and likely new regulations across all sorts of industrial and technology landscapes. It's a lot to navigate, and most companies in our PLMish world are cautious about the near term.

In its preannouncement, Dassault Systèmes said that Q2 revenue was affected by postponed big deals in the aerospace vertical; when the company reported final results in July, it said that most of those deals are expected to close before the year ends and that it is confident in a more robust deal pipeline for the second half of 2024. We also learned that?Industrial Innovation revenue grew 4%, with weakness in the CATIA and SIMULIA brands because of increased deal scrutiny. That's annoying and surprising since other CAE brands (Altair and Ansys, below) reported really good results, and CATIA and SIMULIA are strong brands in the marketplace. Revenue from Mainstream Innovation was up 8% as SOLIDWORKS continued to "drive growth" and Centric PLM had "good momentum."? Lots more here: https://investor.3ds.com/?

When we talk about DS, we usually also mention PTC. The companies are getting further apart outside their core CAD and PLM segments, but they also still serve many of the same customer industries. PTC's results were mixed —some due to accounting, some to what the company has called a challenging sales environment over recent quarters— with total revenue in Q3 2024 reported at $519 million, down 4% from last year's $542 million, and below expectations. CAD software revenue was flat as reported (down 2% cc) to $188 million; PLM revenue was down 4% (down 4% cc) to $300 million. [Remember that "CAD" now means all authoring tools, and "PLM" means all "product data management and process orchestration" — so not just Creo in CAD and Windchill in PLM.] It was great during the conference call with investors to hear CEO Neil Barua reiterate that the company's five focus areas [ALM, CAD, PLM, SLM, and SaaS] "are the areas where we can create the greatest customer value and are the areas where we are focusing our resources and attention … The demand drivers for our core offerings are strong, and to unlock this potential, I have started to focus on our operations, taking a fresh look at ways to continue driving improvements … We [are] rebalancing some R&D resources away from creating new standalone IoT and augmented reality applications to instead support growth of our core products … We are now primarily turning our attention to optimizing our go-to-market and G&A activities … we've leaned out the go-to-market management structure, so there are less layers between me and our customers." It seems as though PTC is refocusing on its core, which should make legions of Creo users happy. With one quarter to go in its fiscal year, PTC tightened its guidance a bit, adjusting the top end of its revenue down $20 million to between $2,270 million and $2,320 million — that would be growth of 8% to 11%, with Q4 expected to come in at $598 million to $648 million. Read much more here https://investor.ptc.com/investor-overview/default.aspx?.

Let's quickly catch up on CAE earnings. Ansys is still in the midst of its acquisition by Synopsys, so it doesn't say much. Still, we do know that it reported total revenue of $594 million, up 20% (up 22% cc). Ansys didn't hold a conference call or provide much other information, but I am told that Ansys continues to see interest from the automotive and high-tech industries. A little more info here: https://investors.ansys.com/?

Before we move on, I am asked at least once a week about Ansys' acquisition by Synopsys and why it's taking so long. I think it has to do with the number of countries both companies operate in and, therefore, how many regulators are asking questions. The most recent news made public is that the UK is looking into the deal (see here: https://www.gov.uk/cma-cases/synopsys-slash-ansys-merger-inquiry)/ It just says the UK's Competition and Markets Authority is investigating, but doesn't say who asked for it and why, or when it will be completed. We'll have to stay tuned.

Back to earnings. Altair had a great Q2. Software revenue exceeded the high end of expectations, leading total revenue to beat expectations and causing Altair to raise its cc revenue guidance for 2024. Q2 software revenue was $135 million, up 8% (up 11% cc), and total revenue was $149 million (up 5% as reported and up 8 %cc). Interestingly, most of the upside came from sales of perpetual licenses — that is still the preferred purchasing mechanism for many buyers, and sellers may miss sales if they don't offer these options. For Q3, Altair expects total revenue of $145 million to $148 million (up 8% to 10%), and for the full year, revenue of $648 million to $658 million (up 6% to 7%). More here: https://investor.altair.com/?

Finally, one company less affected by global themes of gloom, doom, and uncertainty is Bentley Systems, which reported strong Q2 results, with most metrics up in the double digits over last year. Why? Because much of Bentley's revenue these days comes from the public sector, which continues to invest around the world on roads and bridges, power grids, and other infrastructure that Bentley's tools help design and build. For Q2, Bentley reported total revenue of $330 million, up 11% (up 12% in constant currencies, cc). For the year, Bentley expects total revenue between $1,350 million and $1,375 million — that would be up 10% to 12% cc. You can read much more here: https://investors.bentley.com/?

Earnings season continues, and there are many companies I haven't time to tell you about, including Cadence —good results, issues in China, some contribution from BETA CAE acquisition, Synopsys — a new quarterly revenue record, no update on Ansys acquisition, also seeing issues in China because of technology restriction … I probably should write a longer post about Schneider Electric and another about Siemens … So many companies, so little time.?

Autodesk reports next week; I'll be back in your inbox/feed for that!