Commentary: EDA Industry Update August 2006 -- What did the Last Quarter Bring?


Company by Company Q2 2006 details:
On July 11, 2006 Altium Limited announced the preliminary financial results for its fourth fiscal quarter and full 2005/2006 financial year ending June 30, 2006. Total revenue for the quarter was AUD 15.3 million, an increase of about 22% year-over-year, and 48% sequentially. US revenue grew about 53% both year-over-year, and sequentially. European revenue grew only 7% year-over-year, but 58% sequentially. See Table 3.



Nick Martin, CEO and Founder of Altium Limited, said, "It is exciting to see the 2005/06 financial year conclude in such a positive way for Altium. We see clear evidence of the relationship between our investments in building a world-class sales organization, and the last three consecutive quarters of year-over-year revenue growth. It is gratifying, after several years of strategic technology development, to see customers, in both large enterprises and smaller organizations so enthusiastically adopting Altium Designer."




On August 24, 2006 Ansoft Corporation reported financial results for its first quarter of fiscal 2007, the period ended July 31, 2006. Total revenue for the quarter was $17.3 million, an increase of 17% over the $14.8 million in the same quarter a year ago, but a 30% decline from the $24.7 million in the just previous quarter. License revenue was $8.1 million, up 20% year-over-year but down 48% sequentially. Service and other revenue was $9.1 million, an increase of 15% year-over-year, but only an increase of less than 1% sequentially.

For the quarter North America accounted for 36% of total revenue in the quarter, Asia 51% and Europe 13%. See Table 4.



The Electromechanical segment accounted for 18% of total revenue, versus 15% a year earlier. The High Performance segment accounted for 82%. The top three customers were Mitsubishi, Intel and Hitachi.

Net income for the quarter was $2.3 million, an increase of 96% year-over-year from $1.2 million, but a decrease of 72% sequentially from $8.3 million. There was a two-for-one stock split in the form of a stock dividend that was declared on March 7, 2006 and distributed on May 9, 2006. There was $600K in stock-compensation expense in the second quarter, the first quarter where this item was recognized.

Nicholas Csendes, Ansoft's President and CEO, said, “We are pleased to report strong revenue and earnings growth for the first quarter. For the next fiscal quarter, we anticipate continued revenue growth of around 10-15%.”


On July 26, 2006 Cadence Design Systems, Inc reported financial results for the second quarter, the period ended June 30, 2006. Total revenue was $358 million, a solid increase of 12% over the $321 million a year earlier, and a 9% increase over the $328 million a quarter ago.

Product revenue was $232 million, accounting for 65% of total revenue. This was a 15% increase over the $202 million in the same quarter a year ago, and an 11.5% increase sequentially. Maintenance revenue was $93 million, accounting for 26% of total revenue. This was a 4% increase year-over-year, and a 6% increase sequentially. Services revenue was $33 million or 9.2% of total revenue. This was a 13% increase year-over-year, and a 2% rise sequentially.

Table 5 below presents the breakdown by product segment. The original data provided by Cadence was in terms of percentages of total revenue. Functional Verification and Custom IC Design had solid growth year-over-year. Sequentially Digital IC increased by 42% while Custom IC Design and DFM experienced growth of 9%. For the quarter, Function Verification accounted for 22% of total revenue, Digital IC Design 26% and Custom IC Design for 27%. The other segments each contributed about 8%.



On a geographic basis, North America accounted for 48% of total revenue, Europe 18%, Japan 24% and Asia 10%. On a year-over-year basis NA was up 9.4%, Europe up18%, Japan up 7.2% and Asia up 24%. Sequentially, Japan and Asia revenues were up over 20%, while North American and European revenues were up around 3%.

For the quarter, Cadence had net income of $30.3 million, up 40% from the $21.7 million in the first quarter, and way up from the $483K in the second quarter of 2005. In the year ago quarter, there were around $37 million in charges for amortization of acquired intangibles, restructuring and write-off of acquired in-process technology.

Mike Fister, president and CEO of Cadence, said, “We again had great execution during the second quarter. Our analog, mixed-signal expertise is fueling sales across all our platforms from system validation to digital implementation."


On August 3, 2006 Magma Design Automation Inc. reported the financial results for its first quarter of fiscal 2007, the period ended July 2, 2006. Total revenue for the quarter was $41 million, an increase of 5.5% from the $38.8 million in the same quarter a year ago, but a 7% decline from the $44 million in the previous quarter. License revenue was $34.5 million, accounting for 84% of total revenue. This was an increase of nearly 2% year-over-year, and a decrease of 8.5% sequentially. Services and other revenue was $6.5 million, accounting for almost 17% increase year-over-year, and a 2.6% increase sequentially.

In the quarter North America accounted for 70% of total revenue, Europe 10.5%, Japan 8% and AP 12% (Table 6).



Net loss for the quarter was $10.7 million, compared to a very small net loss of $23K in the same quarter a year ago, and compared to a much larger loss of $6.2 million in the just previous quarter. The costs of Magma's patent litigation with Synopsys continued to have an impact on profitability. Litigation expenses in the quarter were $4.4 million. Non-GAAP income for the quarter was $731K.

Rajeev Madhavan, chairman and CEO of Magma, said, "We performed according to our goals and completed a very successful first quarter. We met all our key financial targets and executed on our plan to invest in R&D."


On July 20, 2006 Mentor Graphics Corporation announced financial results for the second quarter, the period ending June 30, 2006. Total revenue for the quarter was $178 million, an increase of 15% compared to $154 million in the same quarter of 2005, and a 1.2% increase compared to the $176 million in the just prior quarter. System and Software revenue was $101 million accounting for 56% of total revenue. This was a 24% increase year-over-year from $81 million, and an almost 2% decline from the $103 million in the previous quarter. Service and Support revenue was $77 million, accounting for 43% of total revenue. This was a 5% increase both year-over-year and sequentially. In the quarter, revenue from the Americas accounted for 45% of total revenue, revenue from Europe 23%, from Japan 14% and from Pac Rim 18%. Table 7.



Split of revenue by product line was 35% IC Design to Silicon, 25% Integrated Systems Design, 25% Scalable Verification and 15% New and Emerging.

Bookings were at near-record levels for the second quarter, and up about 20% from the second quarter of 2005. IC Design to Silicon bookings doubled over the second quarter of 2005, while Scalable Verification and Integrated Systems Design were both down about 5%, and New and Emerging was down 15%.

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