Over the years since 2003, Henke Associates has issued quarterly Commentaries and WEEKLIES that dealt with high tech software vendors in the fields of Electronic Design Automation (EDA), Electronics Intellectual Property (Electronics IP), and in the companion fields of mechanical computer aided design (MCAD) and mechanical computer aided analysis (MCAE).
Familiar vendor names have included Cadence, Magma, Mentor Graphics, Synopsys and others in EDA; ARM Holdings, Rambus and others in Electronics IP; and Autodesk, Dassault Systemes, PTC and others in MCAD/MCAE. The vast majority of these articles (now nearing 100) have been separately posted on either EDACafe.com or MCADCafe.com, both specialty electronic newsletters among others issued daily by International Business Systems (IBSystems) of Campbell CA.
Beginning in 2011, the writer occasionally combined reports on EDA and on Electronics IP into one issue of EDA WEEKLY. Readers will recall for example the April 04, 2011 issue, entitled, “The EDA and the Electronics IP Almanac: Q4 2010.” The same combo also appeared on June 27, 2011 for Q1 2011 financials.
But as readers quickly observed in the August 22, 2011 EDA WEEKLY, the G5 Electronics IP financial results for Q2 2011 held the center stage alone, although the recent gyrations of the worldwide economic environment also received its due in coverage.
More rare have been occasions when one article appeared in both the EDACafe.com and MCADCafe.com newsletters, such as the article on ANSYS Multi-physics of last July 2010. This trend is likely to continue going forward as the fields of mechanical design automation & simulation merge more and more with electronics design & simulation.
Occasionally it will also become useful to combine the financial reports from EDA and MCAD/MCAE into one issue of EDA WEEKLY, when the stars line up schedule-wise. Such is the case here in September 2011; the writer will suggest simultaneous September 19 posting of this article in both the EDACafe.com and the MCADCafe.com newsletters.
Accordingly, this issue of the EDA WEEKLY, which is entitled,“The EDA & MCAD/MCAE Almanac: Q2 2011, ” first posted on September 19, 2011, will report on the financial results for nominal Q2 2011 of the following sets of vendors:
Selection History of Vendor Coverage Choices for EDA
For the quarterly EDA Industry Commentaries published in EDACafe.com starting in May 2003, Henke Associates chose nine (9) publicly-traded entities: Altium, Ansoft, Cadence, Magma, Mentor Graphics, Nassda, Synopsys, Synplicity and Verisity.
Subsequently, Verisity and Nassda were acquired by EDA vendors Cadence and Synopsys, respectively, and hence were dropped from independent coverage the quarterly EDA Commentaries. More recently, EDA vendor Synplicity was acquired by Synopsys, and EDA vendor Ansoft was acquired by MCAE vendor ANSYS. Consequently, both Synplicity and Ansoft no longer independently appeared in the EDA Industry reports. Finally, in May 2011, SpringSoft, Inc. replaced Altium Limited on our G5 EDA list.
Selection History of Vendor Coverage Choices for MCAD/MCAE
In the very first MCAD Industry Commentary published in May 2003 in MCADCafé.com, then-recent yearly and quarterly financial performances of a selected group of nine (9) public Mechanical Computer Aided Design (MCAD) and Mechanical Computer Aided Engineering (MCAE) vendor companies were analyzed and compared. The entities initially covered were ANSYS, Autodesk, Dassault Systèmes, UGS PLM, ESI Group, Moldflow, MSC.Software, PTC and Tecnomatix.
As a result of the acquisition of Tecnomatix by UGS that closed April 1, 2005, Tecnomatix was eliminated from coverage thereafter as a separate entity. On May 7, 2007 UGS announced the close of its acquisition by Siemens AG effective May 4, 2007. Thereafter, the business went to market as UGS PLM Software (and later as Siemens PLM Software), a global division of the Siemens Automation and Drives (A&D) Group. Over the years UGS itself had bounced back and forth between being a public company and a private company under different ownerships. Regrettably, we have been able to gain very little insight into UGS' financial performance itself from public Siemens' corporate reports after the Siemens acquisition. Occasionally we will include Siemens PLM Software news items that bear on the industry as a whole. Then on June 25, 2008 Autodesk completed its acquisition of Moldflow Corporation, so thereafter Moldflow was eliminated from separate coverage.
On July 07, 2009 MSC.Software announced that it had entered into a definitive agreement with affiliates of Symphony Technology Group (STG) under which a company controlled by STG would acquire all of MSC's outstanding shares in a one-step cash merger transaction. This acquisition of MSC.Software by STG was finally consummated on October 14, 2009. No financial results for MSC.Software were published for Q3 2009, and none since. Unless and until such data are subsequently made available, MSC.Software has been dropped from financial reporting coverage herein, although occasionally MSC.Software news items that bear on the industry as a whole will be mentioned. Readers may be interested to see the recent MCAD/MCAE Commentary about a late August 2011 interview with CEO Dominic Gallello of MSC.Software at this URL:
Henke Associates recognizes that some MCAD/PLM/MCAE vendors have expanded their offerings into the world of “multi-physics” by moving beyond pure MCAD into other disciplines, such as fluid dynamics and electronic analysis (e.g. ANSYS). These Commentaries will also report on these new areas as appropriate. (The EDA WEEKLY article posted on EDACafe.com on July 19, 2010, entitled, “ANSYS turns 40!” dealt with ANSYS multi-physics, and it is available in the EDACafe.com EDA WEEKLY archives).
Structure of the presentation in this September 19, 2011 issue
The two Groups of vendors, five in EDA and five in MCAD/MCAE, will be reported separately herein. Each group will begin with summary charts of revenues and earnings, followed by individual financial summaries on each vendor in turn. Recent stock performances will also be included, and the current turmoil in the US and worldwide economies will also be mentioned when relevant using individual vendor three-month stock charts and Table 5 below.
Enjoy what you can!
EDA G5 Vendors’ Summary Results Nominal Q2 2011
As always, we begin our EDA review by looking at the Summary Revenue List of the most-recently-reported quarter; this time it’s the nominal Q2 2011 EDA G5 vendor performances (Table 1) below. Note that SpringSoft has been added to Table 1 for the second consecutive quarter, together with its revenue history stated in $US; for the second consecutive quarter, Altium has been removed from the G5 list for the time being; and all group totals have been updated accordingly.
Only two of the G5 EDA vendors (Cadence and SpringSoft) enjoyed nominal Q2 2011 sequential revenue totals greater than their respective Q1 2011 revenues. But their increased sequential revenues, like the other three vendors’ shortfalls, were only in single digit percentages. Indeed, the G5 Total for Q2 2011 only missed equaling the total G5 Q1 2011 sequential revenue figure by less than a percentage point (-0.84%).
Q2 2011’s total EDA G5 revenue ($938+ million) beat its year over year counterpart Q2 2010 total ($800+ million) by more than 17%! All G5 EDA vendors save Magma scored double-digit percentage revenue improvements YOY.
Mentor Graphics revenue fall from its brief visit to the $300 million revenue club in Q4 2010 continued into Q2 2011 with another drop to just north of $213 million. Its 7.1% decrease sequentially was the largest among the Big 3, and its 13.7% improvement over Q2 2010 the smallest among the Big 3.
Right now, Cadence is enjoying the smoothest quarter to quarter upward revenue slope among the EDA G5.
1 Notice that these Table 1 columns above calculate the percentages of one quarter over the other, as labeled, whereas in Table 2 below, the relevant columns provide the numerical dollar differences in earnings between two different quarters as labeled.
Turning to earnings in Table 2 below, we observe (a) that Cadence profit in Q2 2011 was up nicely over Q1 2011; (b) that Mentor Graphics managed some black ink in Q2 2011, despite its reduced revenue level; (c) that Magma fell back into red ink; (d) that SpringSoft delivered more profit than MGC on far lower revenue, and (e) that Synopsys delivered nearly 60% of the G5 Q2 2011 total profit, despite having no tax credit addition in Q2 2011 as it did in Q1 2011.
Indeed, the G5 total Q2 2011 earnings of over $87 million nearly equaled its Q1 2011 tax-inflated counterpart, and it exceeded Q2 2010 by a healthy $12.5 million, despite Cadence’s large profit in Q2 2010.
Of course, the actual financial performances of the EDA G5 in Q2 2011 reported herein, were, like those of their Electronics IP brothers reported on in the August 22, 2011 EDA WEEKLY, unable to mitigate the negative effects on G5 EDA stock prices and market caps, compared to the negative effects of the right wing’s ridiculous opposition in late-July–early-August to raising the US debt ceiling – leading to lower overall equity market gyrations for weeks afterward. See the comments in the Stock Prices and Market Caps section in the sequel (included as the final entry in this September 19, 2011 issue).
1 Notice that Table 1 columns far above calculate the percentage of one quarter over the other, as labeled, whereas in Table 2 just above, the relevant columns provide the numerical dollar differences in earnings between two different quarters as labeled.
G5 EDA Vendor by Vendor Details for Q2 2011
On July 28, 2011 Cadence Design Systems, Inc. (NASDAQ: CDNS) announced its financial results for calendar Q2 2011, ended July 2, 2011.
Cadence reported second quarter 2011 revenue of $283.270 million, up 24.7% compared to revenue of $227.064 million reported year-over-year for the same period in 2010, and up 6.4% compared to $266.102 million in sequential Q1 2011.
Guidance for Q2 2011 provided three months ago was for revenue in the $270 million to $280 million range.
On a GAAP basis, Cadence recognized net income of $26.908 million, or $0.10 per share on a diluted basis in the second quarter of 2011, down 44.9% year-over-year compared to net income of $48.807 million, or $0.18 per share on a diluted basis in the same period in 2010. (Recall that GAAP net income for the second quarter of 2010 included +$67 million in acquisition-related tax benefits). Cadence Q2 2011 earnings were $20.585 million above the $6.323 million in sequential Q1 2011.
Guidance for Q2 2011 provided three months ago was for EPS in the $0.04 to $0.06 range.
"Demand for our products and services in the second quarter continued to be strong with run rates on renewals increasing," said Lip-Bu Tan, Cadence president and chief executive officer. "We saw acceleration in adoption of our end-to-end digital solution at advanced nodes and very positive response to our new Cadence System Development Suite."
"The Cadence team produced excellent operating results in Q2 as we met or exceeded expectations for our key operating metrics," added Geoff Ribar, senior vice president and chief financial officer. "With the ongoing strength in our business we are adjusting upward our outlook for fiscal 2011."
Supplemental Cadence Charts
These charts are self explanatory. Notice the recent increase in the percentage of the top line of the “Revenue Mix by Product Group” chart that includes IP.
Revenue Mix by Geography (% of Total Revenue)
Revenue Mix by Product Group (% of Total Revenue)
Cadence Business Outlook
For the third quarter of 2011, the company expects total revenue in the range of $280 million to $290 million. Third quarter GAAP net income per diluted share is expected to be in the range of $0.04 to $0.06.
For the full year 2011, the company expects total revenue in the range of $1,115 million to $1,135 million. On a GAAP basis, net income per diluted share for fiscal year 2011 is expected to be in the range of $0.20 to $0.26.
Cadence self description
Cadence enables global electronic design innovation and plays an essential role in the creation of today's integrated circuits and electronics. Customers use Cadence software, hardware, IP, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. The company is headquartered in San Jose, California, with sales offices, design centers, and research facilities around the world to serve the global electronics industry. More information about the company and its products and services is available at
On August 25, 2011 Magma® Design Automation Inc. (NASDAQ:LAVA) reported revenue of $35.31 million for its fiscal 2012 first quarter, (our nominal Q2 2011) ended July 31, 2011, up 8.45% from the $32.56 million reported in the year-ago first quarter, but down 7.18% from the sequential Q1 2011 revenue of $38.04 million.
Guidance for nominal Q2 2011 revenue provided three months ago, was a revenue range of $36.0 million to $36.5 million.
"In the quarter (nominal Q2 2011), we continued to provide the most integrated and differentiated products that enable our customers to cost-effectively design the most complex SoCs," said Rajeev Madhavan, Magma chairman and chief executive officer. "While revenue came in just below the bottom end of our guidance range, we achieved our operating margin and EPS guidance for the quarter. Regarding our revenue in nominal Q2 2011, we experienced a delay at an OEM partner which pushed out an order for revenue. Absent this issue, revenue would have been in the middle to the top end of the (guidance) range.”
“The positive reaction we experienced at June's Design Automation Conference to our Silicon One Initiative indicates we are on the right track in providing leading edge semiconductor design solutions to our customers. Silicon One is an initiative intended to bring focus to making silicon profitable for customers by providing differentiated solutions and technologies that address business challenges facing semiconductor makers today — time to market, product differentiation, cost, power and performance. We are happy to report that we completed three key silicon solutions that are being used today by major customers in each segment: System-on-Chip, Analog/Mixed Signal and Memory.”
“Additionally, we continue to see strong design activity in the customer base which is a solid indicator of the health of the EDA market,” said Madhavan.
In accordance with generally accepted accounting principles (GAAP), Magma reported a net loss of $0.101 million or $0.00 per share (basic and diluted) for nominal Q2 2011, compared to a net loss of $3.258 million or $(0.06) per share (basic and diluted) for the year-ago nominal Q2 2010, and down from a positive net income of $1.75 million in the just prior nominal Q1 2011.
In nominal Q2 2011, Magma generated cash flow from operations of approximately $4.0 million. Magma added a net of 14 additional employees during nominal Q2 2011.
For Magma's fiscal 2012 second quarter (nominal Q3 2011), ending October 30, 2011, the company expects total revenue in the range of $37.5 million to $38.0 million. GAAP net loss per share is expected to be in the range of $(0.01) to $0.
For Magma's entire fiscal year 2012, ending April 29, 2012, the company expects total revenue in the range of $158.0 million to $160.0 million. GAAP net income per share is expected to be in the range of $0.04 to $0.06.
Magma self description
Leading semiconductor companies worldwide use Magma's electronic design automation (EDA) software to produce chips for a wide variety of vertical markets including tablet computing, mobile devices, electronic games, digital video, networking, military/aerospace and memory. Silicon One, Magma's technology solutions for emerging silicon, address time to market, product differentiation, cost and performance while making silicon more profitable. Magma products include software for digital design, analog implementation, mixed-signal design, physical verification, circuit simulation, characterization and yield management. The company maintains headquarters in San Jose, Calif., and offices throughout North America, Europe, Japan, Asia and India. Magma's stock trades on NASDAQ under the ticker symbol LAVA. Follow Magma. Visit Magma Design Automation on the Web at www.magma-da.com. Magma is a registered trademark of Magma Design Automation. All other product and company names are trademarks and registered trademarks of their respective companies.
On August 18, 2011 Mentor Graphics Corporation (NASDAQ: MENT) announced financial results for the company’s fiscal second quarter ended July 31, 2011, which is labeled Nominal Q2 2011 for EDA WEEKLY reporting purposes.
The company reported nominal Q2 2011 revenues of $213.740 million, up 13.7% year-over-year over Q2 2010 revenue of $187.934 million, but down 7.1% from just prior Q1 2011 revenue of $230.035 million.
Guidance for Q2 2011 offered 3 months ago was for $210 million in revenue.
Earnings in Q2 2011 were $4.334 million, compared to a year ago loss of $14.247 million in Q2 2010, and a loss of $2.353 million in sequential Q1 2011.
GAAP earnings per share in Q2 2011 were $0.04, vs. $(0.13) in year ago Q2 2010, and $(0.02) in sequential Q1 2011.
Guidance for Q2 2011 GAAP EPS provided 3 months ago was $(0.06).
“Second quarter (Q2 2011) bookings (quantity not provided) were a record by a significant margin, up 25% from the previous record for a second quarter. Earnings per share were well ahead of guidance (see above), further increasing our confidence in our outlook for the year,” said Dr. Walden C. Rhines, chairman and CEO of Mentor Graphics® Corporation. “Systems business was a key driver of strength in the quarter. Traditional PCB design software bookings were up nearly a third and bookings in new and emerging products nearly tripled, led by the Capital electrical systems design software . Scalable verification, which is used by both systems and IC customers, had bookings growth of 60%.”
In the multi-physics simulation space, the company announced the new FloEFD™ for Siemens NX product for computational fluid dynamics simulation. In embedded software, Mentor introduced a unified embedded software debugging platform from pre-silicon to final product, and the Mentor® Embedded Sourcery™ CodeBench product, a next-generation, integrated development environment based on the open-source GNU toolchain.
“Record bookings for a second quarter and continued strong cost controls led to another excellent quarter for the company,” said Gregory K. Hinckley, president of Mentor Graphics. “Leading indicators of the business remain very strong, with new customers up 15% in number and 35% in value over the previous second quarter. We see no slowdown in EDA spending.”
 At the INTEGRATED ELECTRICAL SOLUTIONS EXPO held in Detroit, MI in early June 2011, Mentor Graphics Corporation announced an expansion of the company’s Capital® product suite. Already offering an electrical system and wire harness design flow for the automotive, aerospace and defense industries, the Capital suite now includes three new products that extend that flow both upstream and downstream. With the introduction of new tools addressing configuration complexity, harness manufacturing and vehicle documentation and maintenance, Capital now delivers coverage from product definition to service technician. The new tools are said to have high commercial value for platform OEMs, wire harness manufacturers and service organizations. Martin O’Brien, General Manager of the Mentor Integrated Electrical Systems Division, commented, “After several years of investment in foundation technology and products for electrical systems and wire harnesses, we are now announcing a second phase of our strategy. These new products represent an increase in tool scope to cover all phases of electrical design creation through to product fulfillment, and highlight the approach taken by Mentor to support electrical platform engineering.”
The entire EDA WEEKLY of July 25, 2011, entitled, “Back to the Future,” was devoted to another Division of MGC; here is the URL in case you missed that article:
Mentor Graphics Outlook for Q3 2011 and the Year
For the third quarter of 2011, as guidance the company expects revenues of about $245 million, and GAAP earnings per share of approximately $0.18. For the full year, the company now expects revenues of approximately $1.004 billion, and GAAP earnings per share of approximately $0.68.
Mentor Graphics description
Established in 1981, Mentor Graphics Corporation (NASDAQ: MENT) is a world leader in electronic hardware and software design solutions, providing products, consulting services and award-winning support for the world's most successful electronics, semiconductor and systems companies. Corporate headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777. World Wide Web site:
On August 04, 2011 SpringSoft, Inc. (TAIEX: 2473) announced consolidated revenue of NT$561.083 million, net income of NT$134.453 million, and earnings per share of NT$0.65 for calendar Q2 2011 ended June 30, 2011. (NT$ = New Taiwan dollars).
These numbers translate (using SpringSoft US$ published data for the first 3 months and the first six months of 2011) to the following in US$: Q2 2011 consolidated revenue of US$19.269 million, Q2 2011 net income of US$4.620 million, and Q2 2011 earnings per share of US$0.02.
Second‐quarter revenue increased 2.1% from the prior quarter and 8.4% year‐over‐year despite NT dollar appreciation against US dollar. Operating margin for the quarter was 28.2%, higher than the 26.7% in the previous quarter and 23.6% in the year‐ago quarter.
Income before tax also increased 4.5% from the prior quarter and 0.9% growing sales contribution from the America, but still in line with our forecast.
“We have achieved our first half sales target and the 2H forecast still looks promising at this moment,” said Johnson Teng, COO of SpringSoft.
“We have also announced a new product, ProtoLinkTM Probe Visualizer, a solution for increasing visibility and simplifying debug for FPGA‐based prototype boards. The usage of prototype boards to verify critical design is increasing significantly. However, board deployment is often delayed because there is a lack of the visibility needed to adequately debug designs. SpringSoft’s ProtoLink Probe Visualizer changes this paradigm with the ability to accelerate debug on FPGA‐based prototype board,” Teng said.
SpringSoft self description
SpringSoft, Inc. is a global supplier of specialized automation technologies that accelerate engineers during the design, verification and debug of complex digital, analog and mixed‐signal ICs, ASICs, microprocessors, and SoCs. Its award‐winning product portfolio features the Novas™ Verification Enhancement and Laker Custom IC Design solutions used by more than 400 of today's leading IDM and fabless semiconductor companies, foundries, and electronic systems OEMs. Headquartered in Hsinchu, Taiwan, SpringSoft is the largest company in Asia specializing in IC design software and a recognized industry leader in customer service with more than 400 employees located in multiple R&D sites and local support offices around the world. For more information, visit www.springsoft.com.
On August 17, 2011 Synopsys, Inc. (NASDAQ: SNPS), a successful vendor of software and IP for semiconductor design, verification and manufacturing, reported results for the third quarter of its fiscal year 2011, or nominal Q2 2011 for our purposes.
For nominal Q2 2011, Synopsys reported revenue of $386.795 million, compared to $336.929 million for year-ago Q2 2010, an increase of 14.8%. But Q2 2011 was also below by 1.78% the just prior sequential nominal Q1 2011 quarter of $393.670 million.
Guidance 3 months ago for nominal Q2 2011 was for revenue of $378 million to $386 million.
"Synopsys delivered strong revenue, earnings per share, and cash flow in the third quarter, and we are confident that we will exit fiscal 2011 with a great deal of strength," said Aart de Geus, chairman and CEO of Synopsys. "Design activity continues unabated, driven by demand for mobile devices, cloud infrastructure, and electronics content in many every-day products. Synopsys is integral to the success of these end markets."
On a generally accepted accounting principles (GAAP) basis, net income for nominal Q2 2011 was $52.082 million, or $0.35 per share, up 32.43% year-over-year compared to $39.327 million, or $0.26 per share, for nominal Q2 2010.
Just-prior nominal Q1 2011 profit was $81.114 million, or $0.53 per share, 155.9% of Q2 2011. And here again we witness one of those distortions due to a tax situation from another period, albeit a positive distortion: Synopsys’ net income for nominal Q1 2011 included a one-time $32.8 million, or $0.21 per share, tax benefit associated with a settlement with the IRS for audits for fiscal years 2006 through 2009.
Guidance for Q2 2011 EPS provided three months ago was a range from $0.25 to $0.31.
Synopsys also provided its financial targets for the next quarter (our nominal Q3 2011) and full Synopsys’ fiscal year 2011. These targets do not include future acquisition-related costs that may be incurred in fiscal 2011. These targets constitute forward-looking information and are based on current expectations.
Nominal Q3 2011 Targets:
- Revenue: $386 million - $392 million
- GAAP expenses: $329 million - $341 million
- Other income and expense: $0 - $1 million
- Fully diluted outstanding shares: 146 million - 150 million
- GAAP earnings per share: $0.26 - $0.31
- Revenue from backlog: greater than 90%
Full Synopsys Fiscal Year 2011 Targets:
- Revenue: $1.531 billion - $1.537 billion
- Other income and expense: $3 million - $4 million
- Fully diluted outstanding shares: 148 million - 152 million
- GAAP earnings per share: $1.46 - $1.51
- Cash flow from operations: greater than $400 million
On September 2, 2011 Synopsys, Inc. announced that it had completed the acquisition of nSys Design Systems Private Limited (nSys), an independent provider of verification IP (VIP). With this acquisition, Synopsys is increasing its investment in VIP technology to address the growing verification challenges designers face as they create more and more complex systems on chips (SoCs) to serve the demand for 'smart' electronics. The terms of the deal, structured as an acquisition of substantially all the assets and employees of nSys, have not been disclosed.
"Addressing the growing SoC design and verification challenge is a key focus for Synopsys," said Manoj Gandhi, senior vice president and general manager of Synopsys' Verification Group. "With leading SoC designs deploying more complex protocols, VIP is becoming a critical component of the verification environment. Having the nSys team join our current VIP R&D team will help Synopsys accelerate and drive the next level of innovation in VIP technology."
VIP provides functional models of on- and off-chip protocols that verification engineers use to test all of the interfaces on an SoC before manufacturing. It enables the engineer to verify how an interface conforms to published standards and also allows the engineer to verify the interactions among various interfaces on an SoC.
The expanded portfolio of VIP from Synopsys will cover all of the widely used interface protocols and many emerging titles. It will also offer a new protocol compliance test-suite product line. Supported verification methodologies include VMM (verification methodology manual), OVM (open verification methodology) and UVM (universal verification methodology).
"Synopsys has led the industry in SystemVerilog, performance, capacity, methodology and bug-finding technology innovations for the past 15 years," said Atul Bhatia, CEO and founder of nSys Design Systems. "My team and I look forward to joining Synopsys so we can work together to deliver a VIP solution that can address customers' ever-growing SoC verification challenges."
Synopsys self description
Synopsys, Inc. (NASDAQ: SNPS) is a world leader in electronic design automation (EDA), supplying the global electronics market with the software, intellectual property (IP) and services used in semiconductor design, verification and manufacturing. Synopsys' comprehensive, integrated portfolio of implementation, verification, IP, manufacturing and field-programmable gate array (FPGA) solutions helps address the key challenges designers and manufacturers face today, such as power and yield management, system-to-silicon verification and time-to-results. These technology-leading solutions help give Synopsys customers a competitive edge in bringing the best products to market quickly while reducing costs and schedule risk. Synopsys is headquartered in Mountain View, California, and has approximately 70 offices located throughout North America, Europe, Japan, Asia and India. Visit Synopsys online at http://www.synopsys.com/.
G5 MCAD/MCAE Vendors' Summary Financials Q2 2011
Measured in $US except where indicated, Table 3 below reveals that the combined total revenue of the G5 MCAD/MCAE Vendors was US$1642.5 million in nominal Q2 2011, up 5% from the $1564.3 million total in the just prior Q1 2011, and a robust 20.3% above the total year-over-year figure of $1323.6 million for Q2 2010.
Indeed, the G5’s US$1642.5 for nominal Q2 2011 and US$1564.3 million for nominal Q1 2011 were $210.7 and $132.5 million, respectively, both figures well above the average quarter for the 2010 year ($1431.8 million). All that each quarter of 2011 has to be is $52.5 million larger than the equivalent quarters in 2010, for the full year 2011 MCAD/MCAE revenue total to eclipse the G5’s revenue total of 2008, a feat which both 2009 and 2010 failed to accomplish.
Table 3 further reveals that every member of the MCAD/MCAE G5 experienced an excellent nominal Q2 2011 relative to the previous year’s counterpart, with each vendor (save ESI in Euros) scoring at least a double digit year-over-year (YOY) percentage increase in revenues, led by Dassault’s 25.75% increase measured in $US:
1 Notice that these Table 3 columns calculate the percentage of one quarter over the other, as labeled, whereas in Table 4 below, the relevant columns provide the numerical dollar differences in earnings between two different quarters as labeled.
2 In Table 3, FX rates used for ESI Group were the same FX rates used for Dassault Systemes.
Turning to earnings in Table 4 below, we see that the total G4 earnings in nominal Q2 2011 were narrowly larger than the total Q1 2011 sequential total, with all reporting vendors except PTC narrowly ahead. Of course, all of the group’s vendors reporting earnings were nicely above their YOY counterparts.
3 Notice that these Table 4 columns calculate the numerical dollar differences in earnings between two different quarters as labeled, whereas in Table 3, the relevant columns provide the percentage of one quarter over the other, as labeled.
The MCAD/MCAE G5 Individual Results Nominal Q2 2011
On August 4, 2011 ANSYS, Inc. (NASDAQ: ANSS) announced outstanding performance for the second quarter of 2011. Revenue growth in Q2 2011 continued across all three major geographic regions, all major product lines and a broad array of industries. The strong revenue growth contributed to higher-than-planned results for several financial criteria in the second quarter of 2011 as compared to the second quarter of 2010.
Highlights of Q2 2011
- Closed Apache Acquisition and Raised Guidance for 2011
- Revenue $162.258 million, +18.0% vs Q2 10 $137.767 million
- GAAP diluted earnings per share of $0.48 vs Q2 2010 of $0.38
- Operating cash flows of $78.9 million, 31% over Q2 2010
- GAAP operating profit margin of 39.9%
"The strong second quarter numbers are a reflection of continued momentum built upon our long-term foundation of technological leadership and sustained performance. Despite the macro-economic volatility, we focused our efforts on the things we can control and made considerable progress. Our diversified global business and unparalleled technical solutions continue to be key differentiators as we move ahead," commented Jim Cashman, ANSYS President and Chief Executive Officer.
"On August 1, 2011, we marked another milestone in achieving our vision of Simulation Driven Product Development™ as we completed the acquisition of Apache Design Solutions," said Mr. Cashman. "The addition of Apache builds on our formidable electronics base by adding a suite of power analysis and optimization software that is crucial in the design of power-efficient, high-performance, noise-immune integrated circuits. Our solutions position us to capitalize on the fast-growing market for mobile devices, as well as high-end electronics that are proliferating across many industries." Mr. Cashman continued, "This acquisition also adds a market-leading, comprehensive team of talented and dedicated employees, whom we welcome to the ANSYS family."
ANSYS' second quarter and year-to-date financial results are presented below. GAAP results reflect:
- Total GAAP revenue of $162.258 million in the second quarter of 2011 as compared to total GAAP revenue of $137.767 million in the second quarter of 2010; total GAAP revenue of $320.3 million in the first six months of 2011 as compared to total GAAP revenue of $273.8 million in the first six months of 2010;
- Guidance on revenue for Q2 2011 provided 3 months ago was for a range of $155 million to $161 million;
- A GAAP operating profit margin of 39.9% in the second quarter of 2011 as compared to 38.0% in the second quarter of 2010; a GAAP operating profit margin of 39.7% in the first six months of 2011 as compared to 37.3% in the first six months of 2010;
- GAAP net income of $45.431 million in the second quarter of 2011 as compared to $35.493 million in the second quarter of 2010; GAAP net income of $87.7 million in the first six months of 2011 as compared to $67.9 million in the first six months of 2010;
- GAAP diluted earnings per share of $0.48 in the second quarter of 2011 as compared to $0.38 in the second quarter of 2010;
- Guidance on diluted EPS for Q2 2011 provided 3 months ago was a range between $0.41 and $0.46; and
- GAAP diluted earnings per share of $0.93 in the first six months of 2011 as compared to $0.73 in the first six months of 2010.
The Company's GAAP results reflect stock-based compensation charges of approximately $5.3 million ($4.0 million after tax) or $0.04 diluted earnings per share for the second quarter of 2011 and approximately $10.5 million ($8.0 million after tax) or $0.08 diluted earnings per share for the first six months of 2011.
Management's Financial Outlook for rest of 2011
The Company has updated its 2011 revenue and earnings per share guidance below. Both the revenue guidance and earnings per share guidance are provided on a GAAP basis.
Third Quarter and Fiscal Year 2011 Guidance
The Company currently expects the following for Q3 2011 ending September 30, 2011:
- GAAP Revenue in the range of $166 — $174 million
- GAAP diluted earnings per share of $0.40 - $0.47
The Company currently expects the following for the fiscal year ending December 31, 2011:
- GAAP Revenue in the range of $671 - $687 million
- GAAP diluted earnings per share of $1.80 - $1.91
These statements are forward-looking and actual results may differ materially.
ANSYS is unable to predict the likely duration and severity of the current disruption in the domestic and global economies. [NOTE: Aspects of such economic disruptions are reviewed by the EDA and MCAD/MCAE writer both herein and in other EDA WEEKLY publications]. Should these economic conditions continue to deteriorate further, it could result in ANSYS not meeting the guidance provided above and ANSYS' operating results and financial performance could be adversely affected.
Conference Call Information
ANSYS held a conference call at 10:30 a.m. Eastern Time on August 4, 2011 to discuss its second quarter results. The archived webcast can be accessed, along with other financial information, on ANSYS' website at http://investors.ansys.com
ANSYS, Inc. self Description
ANSYS, Inc., founded in 1970, develops and globally markets engineering simulation software and technologies widely used by engineers, designers, researchers and students across a broad spectrum of industries and academia. The Company focuses on the development of open and flexible solutions that enable users to analyze designs directly on the desktop, providing a common platform for fast, efficient and cost-conscious product development, from design concept to final-stage testing and validation. The Company and its global network of channel partners provide sales, support and training for customers. Headquartered in Canonsburg, Pa., U.S.A., with more than 60 strategic sales locations throughout the world, ANSYS, Inc. and its subsidiaries employ over 2,000 people and distributes ANSYS products through a network of sales offices and channel partners in 40+ countries. Visit www.ansys.com for more information.
On August 18, 2011 Autodesk, Inc. (NASDAQ:ADSK) reported financial results for the second quarter of its fiscal year 2012, which is our nominal Q2 2011.
“We achieved better than expected profitability driven by solid revenue performance and continued cost controls”
- Revenue for nominal Q2 2011 was $546.3 million, an increase of 15.54% year-over-year compared to nominal Q2 2010 revenue of $472.8 million, and an increase of 9.08% over just-prior nominal Q1 2011 of $528.3 million.
- Revenue guidance for nominal Q2 2011 provided three months ago was a range of $530 million to $545 million.
- GAAP operating margin was 17% for Q2 2011 and Q2 2010.
- GAAP net income for nominal Q2 2011 was $71.2 million, an increase of 18.86% year-over-year compared to nominal Q2 2010 net income of $59.9 million, and an increase of 2.74% over just-prior nominal Q1 2011 net income of $69.3 million.
- GAAP diluted earnings per share for Q2 2011 were $0.30, compared to just $0.25 in the corresponding quarter a year ago.
- GAAP diluted earnings per share guidance for nominal Q2 2011 provided three months ago was a range of $0.25 to $0.29.
- Cash flow from operating activities was $132 million for Q2 2011, or 17.86% more than the $112 million in the second quarter last year.
“We experienced strong demand across all geographies and business segments with growth led by our Asia Pacific region,” said Carl Bass, Autodesk president and CEO.
“Our manufacturing business segment had its largest revenue quarter ever and continues to be our fastest growing segment. Our AEC business segment returned to strong growth in the second quarter as the building and construction industries continue to standardize on Building Information Modeling. And our newly launched design and creation suites are off to a terrific start, helping drive our overall revenue growth.”
Second Quarter Operational Overview
EMEA (Europe, Middle East, and Africa) revenue was $212 million, an increase of 12% compared to the second quarter last year as reported and 13% on a constant currency basis. Revenue in the Americas was $191 million, an increase of 13% compared to the second quarter last year. Revenue in Asia Pacific was $143 million, an increase of 24% compared to the second quarter last year as reported and 16% on a constant currency basis. Revenue from emerging economies was $88 million, an increase of 23% compared to the second quarter last year as reported and 18% on a constant currency basis. Revenue from emerging economies represented 16% of total revenue in the second quarter.
NOTE: All constant currency calculations are said to remove the impact of foreign currency fluctuations and any hedge gains or losses recorded to revenue within the current and prior period as a result of Autodesk’s hedging program.
Revenue from the Platform Solutions and Emerging Business segment was $199 million, an increase of 12% compared to the second quarter last year. Revenue from the Architecture, Engineering and Construction business segment was $158 million, an increase of 19% compared to the second quarter last year. Revenue from the Manufacturing business segment was $136 million, an increase of 20% compared to the second quarter last year. Revenue from the Media and Entertainment business segment was $54 million, an increase of 9% compared to the second quarter last year.
“We achieved better than expected profitability driven by solid revenue performance and continued cost controls,” said Mark Hawkins, Autodesk Executive Vice President, Chief Financial Officer.
“We also posted strong growth in maintenance billings, deferred revenue, and cash flow from operations. Our balance sheet remains sound with cash and investments of approximately $1.6 billion, deferred revenue at a record high, and no debt,” Hawkins concluded.
The following statements are forward-looking statements that are based on current expectations and assumptions, and involve risks and uncertainties, some of which are set forth below.
Nominal Third Quarter 2011
Net revenue for the nominal third quarter of 2011 is expected to be in the range of $535 million and $550 million. GAAP earnings per diluted share are expected to be in the range of $0.25 and $0.29.
The above outlook assumes an effective tax rate of approximately 23% for GAAP results.
Earnings Conference Call and Webcast
Autodesk hosted its second quarter conference call on August 18 at 5:00 p.m. EDT. The replay of the broadcast is available at http://www.autodesk.com/investors. This replay will be maintained on Autodesk’s website for at least 12 months. The Supplemental financial information and prepared remarks for the conference call have also been posted to the investor relations section of Autodesk’s website.
Autodesk self description
Autodesk, Inc., is a leader in 3D design, engineering and entertainment software. Customers across the manufacturing, architecture, building, construction, and media and entertainment industries – including the last 16 Academy Award winners for Best Visual Effects – use Autodesk software to design, visualize, and simulate their ideas. Since its introduction of AutoCAD software in 1982, Autodesk continues to develop the broadest portfolio of state-of-the-art software for global markets. For additional information about Autodesk, visit www.autodesk.com. Autodesk and AutoCAD are registered trademarks or trademarks of Autodesk, Inc., and/or its subsidiaries and/or affiliates in the USA and/or other countries. Academy Award is a registered trademark of the Academy of Motion Picture Arts and Sciences. All other brand names, product names, or trademarks belong to their respective holders. Autodesk reserves the right to alter product and service offerings, and specifications and pricing at any time without notice, and is not responsible for typographical or graphical errors that may appear in this document.
On July 28, 2011 Dassault Systèmes (Euronext Paris: #13065, DSY.PA) reported IFRS unaudited financial results for the second quarter ended June 30, 2011. This is our nominal Q2 2011.
Q2 2011 Summary Highlights
- Software revenue growth up 18% (IFRS) in constant currencies
- Net operating cash flow of €148 million ($US 213 million)
- Version 6 deployments and signings included Jaguar Land Rover, Cessna, Alstom Transport and Benetton Group
- Introduction of first Dassault Systèmes solution on the Cloud
- Upgrading 2011 Financial Objectives on based on Q2 Performance
Second Quarter 2011 Financial Summary
Worldwide revenue for Dassault Systemes for nominal Q2 2011 was € 428.6 million, 11.15% above the € 385.6 million in YOY nominal Q2 2010.
Using average fx rates supplied by Dassault (and verified by fx-rates.com) of 1.44 €/$ for Q2 2011, and 1.27 €/$ for Q2 2010, this translates to $US 617.2 million in Q2 2011 revenue, or 11.3% more than $US 544.3 million in Q2 2010 revenue.
Worldwide net income for Dassault Systemes for nominal Q2 2011 was € 64.3 million, 32.0% above the € 48.7 million in YOY nominal Q2 2010.
Using the same average fx rates supplied by Dassault of 1.44 €/$ for Q2 2011, and 1.27 €/$ for Q2 2010, this translates to $US 92.6 million in Q2 2011 net income, or 49.6% more than $US 61.9 million in Q2 2010 net income.
Bernard Charlès, Dassault Systèmes President and Chief Executive Officer, commented, “Dassault Systèmes delivered a very solid second quarter set of results. In particular, new licenses software revenue growth was up 36%, led by ENOVIA with a 49% increase, and a strong dynamic for the Company as a whole in high growth countries. CATIA had an excellent quarter with software revenue up 13% in constant currencies with Version 6 deployments, more active aerospace and automotive markets and a strong performance in the SMB channel.”
“June was an important period for product launches, including our Version 6 Release 2012 and the introduction of our first Cloud services providing affordable and flexible usage for organizations and projects of any scale. Version 6 Release 2012 with its open architecture offers many improvements to enable companies to achieve efficient and secure inter-operability with their various enterprise systems. Exalead, acquired one year ago, further enables this data inter-operability through its ability to find, integrate and analyze data wherever it resides in a simple, quick and cost effective manner thanks to its powerful search capabilities”
Additional Facts and Figures
- IFRS total revenue increased 17% principally reflecting strong software growth and to a lesser extent growth in services and other revenue. By region, growth was highest in Asia followed by the Americas and Europe. (All growth comparisons in constant currencies.)
- IFRS software revenue grew 18% on sharply higher new licenses revenue, which increased 36%. ENOVIA was the strongest with a 49% increase in new licenses revenue.
- IFRS nonrecurring software revenue grew 12% benefiting from strong subscription rental trends, increase in new licenses activity and higher rental revenue.
- IFRS PLM software revenue increased 20%. PLM software revenue growth benefited from a significant increase in new license revenue activity, including larger transaction sizes and strong activity in the PLM Value Solutions channel.
- Mainstream 3D software revenue increased 11% in constant currencies on strong new licenses revenue and growth in maintenance revenue.
New SolidWorks commercial seats licensed in the second quarter increased 22% to 11,893 seats.
Earnings growth benefited from operating leverage offset in part by strong currency headwinds. IFRS earnings per diluted share increased 30% to €0.52. The IFRS operating margin was 21.7% in the 2011 second quarter.
Cash Flow and Other Financial Highlights
Net operating cash flow was €147.6 million for the 2011 second quarter, compared to €132.3 million in the year-ago period. IFRS net operating cash flow was €281.3 million for the 2011 First Half, compared to €265.6 million for the 2010 First Half. During the 2011 second quarter, the Company received cash of €98.9 million in connection with stock options exercised, completed share repurchases in the amount of €61.2 million, and paid cash dividends of €65.8 million in total. Stock options exercised were primarily in connection with the 2011 expiration of several major ten-year stock option programs.
Additional Business and Corporate Highlights
Premier Defense Contractor, Lockheed Martin, Optimizes Assembly, Integration and Test Processes with Dassault Systèmes DELMIA Simulation Solutions. Dassault Systèmes’ DELMIA solutions are being used for product and process simulations at Lockheed Martin Space Systems Company. The DELMIA solutions are also a major software component of the new Lockheed Martin Collaborative Human Immersive Lab (CHIL), an advanced technology virtual reality and simulation laboratory that offers a smarter, reduced cost, and lower risk opportunity in building space systems, including satellites, exploration spacecraft, launch vehicles and missile defense systems.
Alstom, a world leader in transport infrastructure, power generation and transmission, has selected Dassault Systèmes Version 6 PLM platform to improve end to end business processes. As a first step in this major transformation, Alstom Transport will leverage Dassault Systèmes’ ENOVIA Version 6 to unify its different sites under a unique, worldwide platform enabling its employees to efficiently collaborate on customer projects. Alstom is consolidating its PLM system in order to streamline information sharing, increase its manufacturing capacity and reduce time-to-market.
Benetton Group has selected Dassault Systèmes Version 6 PLM solution as its platform for global development and sourcing. Dassault Systèmes’ ENOVIA Version 6 will provide Benetton with deep domain-specific apparel design and production capabilities and industry-leading global sourcing management that will enable Benetton to achieve lead time reduction, optimize its sourcing operations, streamline product line complexities and enhance collaboration while accommodating the Benetton Group’s diverse product portfolio.
Embraer SA, the world’s fourth-largest plane maker, is deploying a complete 3D solution for the design and manufacturing of its Phenom and Legacy 500 executive jets at its Melbourne, Florida, US and Sao Jose dos Campos, Brazil plants. Digital Factory is a 3D source for product information aimed at reducing design and manufacturing costs by creating a single set of plans, design models, work and product instructions, all integrated into a secure, collaborative platform.
Dassault Systèmes Goes Cloud with Version 6. In June, Dassault Systèmes announced its new online Version 6 platform, its new store, 3DStore online (swym.3ds.com/#3DStore), for lifelike experiences and applications, and its first online cloud business services. Dassault Systèmes also announced its strategic investment in Outscale, a start-up providing SaaS operator services. With Version 6 cloud-based solutions, users can get what they need, when they need it. Offered as a flexible subscription model, without upfront investments in additional infrastructure, long-term volume commitments or administrative burden, Version 6 Online solutions are designed to adapt to the needs of organizations or projects of any scale.
Dassault Systèmes Goes Cloud with Amazon Web Services. Dassault Systèmes and Amazon Web Services (AWS), an Amazon.com company and leader in elastic cloud infrastructure, are working together to enable companies of all sizes to get started quickly with Dassault Systèmes Version 6 solutions on AWS.
Dassault Systèmes Launches Version 6 Release 2012 and Introduces New Levels of Openness and Lifelike Experience. This release demonstrates Dassault Systèmes’ focus on delivering an open collaborative platform to its customer base and beyond. Release 2012 introduces new interoperability solutions between Version 6 and other PDM systems, and new levels of integration between Version 6 and ERP solutions. It broadens the value of digital assets into new solutions such as immersive retail store experiences and global production system planning with 3DVIA Shopper and DELMIA Global Production System Planning.
Thibault de Tersant, Senior Executive Vice President and CFO, commented, “The second quarter exceeded our expectations on very healthy demand for our software solutions, with the upside coming both from new licenses revenue and recurring revenue. We are upgrading our 2011 financial objectives for the full €20 million second quarter revenue over-performance, leading to a 2011 revenue growth outlook of 11 to 12% in constant currencies, and earnings per share growth of about 8 to 12% in spite of currency headwinds.”
“With respect to second half growth comparisons, let me remind you that our 2010 third quarter revenue was well above our historic seasonal revenue trend. For the 2011 third quarter and second half, our objectives incorporate a sequential revenue outlook range in line with historic patterns. Secondly, with respect to recurring revenue, we had an important level of maintenance recoveries in the 2010 second half, as we outlined last year, which were one-time in nature.”
“Overall, we are well positioned going into the second half of the year, and despite the uncertainty of the global economic environment, we have increased confidence in our 2011 financial objectives thanks to our second quarter results.”
The Company’s current objectives* are as follows:
- Third quarter 2011 non-IFRS* total revenue objective of about €405 to €415 million, non-IFRS operating margin of about 27% and non-IFRS EPS of about €0.60 to €0.65;
- Upgrading 2011 non-IFRS revenue growth objective range to 11% to 12% in constant currencies; (increasing the reported revenue range to €1.70 to €1.72 billion from €1.67 to €1.70 billion previously);
- Reconfirming 2011 non-IFRS operating margin slightly in excess of 29%;
- Upgrading 2011 non-IFRS EPS range to €2.69 to €2.80 from €2.64 to €2.75 previously; representing growth of about 8% to 12% from 6% to 10%, previously;
- Objectives are based upon exchange rate assumptions for the 2011 second half of US$1.45 per €1.00 and JPY120 per €1.00 and a full year average of US$1.43 per €1.00 and JPY117 per €1.00.
*The Company’s objectives are prepared and communicated only on a non-IFRS basis and are subject to the cautionary statement set forth below:
The non-IFRS objectives set forth above do not take into account the following accounting elements and are estimated based upon the 2011 currency exchange rates above: deferred revenue write-downs estimated at approximately €1 million for 2011; share-based compensation expense estimated at approximately €15 million for 2011 and amortization of acquired intangibles estimated at approximately €82 million for 2011. The objectives outlined above do not include any impact from other operating income and expense, net principally comprised of acquisition, integration, restructuring and relocation expenses and certain one-time gains in financial revenue and other, net. These estimates do not include any new stock option or share grants, or any new acquisitions or restructurings completed after July 28, 2011.
Dassault Systèmes self description
As a world leader in 3D and Product Lifecycle Management (PLM) solutions, Dassault Systèmes brings value to more than 130,000 customers in 80 countries. A pioneer in the 3D software market since 1981, Dassault Systèmes applications provide a 3D vision of the entire lifecycle of products from conception to maintenance to recycling. The Dassault Systèmes portfolio consists of CATIA for designing the virtual product - SolidWorks for 3D mechanical design - DELMIA for virtual production - SIMULIA for virtual testing - ENOVIA for global collaborative lifecycle management, EXALEAD for search-based applications and 3DVIA for online 3D lifelike experiences. For more information, visit http://www.3ds.com.
CATIA, DELMIA, ENOVIA, EXALEAD, SIMULIA, SolidWorks and 3D VIA are registered trademarks of Dassault Systèmes or its subsidiaries in the US and/or other countries.
On March 14, 2011 the ESI GROUP (Compartment C of NYSE Euronext Paris) reported financial results for its 2010/2011 fiscal year, the period ending January 31, 2011. The chart below was presented first:
It has been the practice of the writer of the MCAD/MCAE Commentary to call the ESI Group’s “Quarter N”, as our nominal “Quarter N+1”. Thus the ESI Group’s fiscal Q4 ending January 31, 2011 was our nominal Q1 2011 for consistent reporting purposes.
By using the annual sales figure of 59 million euros from the above ESI chart reported on March 14, 2011, and subtracting the three previous quarterly revenue amounts, we calculated the nominal Q1 2011 figure for the just-prior June 2011 issue of the MCAD/MCAE Commentary as 34.9 million euros.
|Likewise, the report from ESI for its first quarter of 2011/12 published on June 15, 2011 will become our nominal Q2 2011 here for consistent reporting purposes.|
The ESI Group Headlines for Nominal Q2 2011
- Sales were up 8.8% over nominal Q2 2010 to €17.3 million, CORRESPONDING TO $US 24.912 MILLION, using the same fx rate as Dassault of 1.44.
- Further robust organic growth
- High rate of repeat business for Licenses remained at 81%
- Substantial increase in Licenses New Business
- Strong growth in Services activity
Alain de Rouvray, ESI Group’s Chairman and CEO, comments: “ESI Group enjoyed a good first quarter of 2011/12 (nominal Q2 2011), keeping up the trend of growth seen last fiscal year. The Licenses business achieved strong increase in New Business, while also maintaining a high rate of repeat business.”
“The Services business also showed a vigorous growth. We are pleased with this first quarter (nominal Q2 2011) achievement, which is traditionally weak and not very representative of the full year, and are confident about delivering a robust performance in the full fiscal year.”
Nominal Financial year 2011:
NOTE WELL: The inherent seasonal nature of ESI Group’s Licenses business is traditionally reflected by the majority of full-year revenues being recognized in the fourth quarter of the year.
Sales for nominal Q2 2011 totaled €17.3 million, up +8.8% in actual terms or +7.7% by volume (at constant exchange rates) relative to nominal Q2 2010. The change in the sales breakdown by region shows growth in Europe and the Americas, with a slight drop in sales in Asia due to the renewal of major contracts being put back to the next quarter. Europe therefore accounted for 39% of quarter’s sales, the Americas for 20% and Asia for 41%.
License sales came to €11.6 million, up +5.5% in actual terms or +4.0% by volume. The rate of repeat business remained high at 81% of License sales compared with 80% in the corresponding nominal quarter of 2010. Licenses New Business saw strong growth of +24% thanks to new clients and the sale of new products at existing clients, particularly in Asia and Europe.
In keeping with the trend observed in nominal Q1 2011, the Services business achieved robust growth of +16.1% in actual terms or +15.9% by volume to €5.7 million. Services therefore accounted for 33% of the current quarter’s sales compared with 31% last year.
ESI self description
ESI is a pioneer and world-leading player in virtual prototyping that take into account the physics of materials. ESI has developed an extensive suite of coherent, industry-oriented applications to realistically simulate a product’s behaviour during testing, to fine-tune manufacturing processes in accordance with desired product performance, and to evaluate the environment’s impact on product performance. This offer represents a unique collaborative and open environment for Simulation-Based Design, enabling virtual prototypes to be improved in a continuous and collaborative manner while eliminating the need for physical prototypes during product development. Present in over 30 countries, ESI employs over 800 high-level specialists throughout its worldwide network. ESI Group is listed on compartment C of NYSE Euronext Paris. For further information, go to www.esi-group.com.
On July 26, 2011 PTC (NASDAQ: PMTC) reported results for its third fiscal quarter ended July 2, 2011. This is nominal Q2 2011 for our EDA WEEKLY reporting purposes.
- Nominal Q2 Results:
o GAAP revenue of $291.783 million and GAAP EPS of $0.13, vs. $242.998 million and $0.09 EPS in nominal Q2 2010. Revenue up 20.08% YOY.
o Guidance 3 months ago was nominal Q2 2011 range of revenue between $275 to $285 million, and GAAP EPS range of $0.16 to $0.20.
o Nominal Q2 2011 Net Income of $15.526 million vs. $10.718 Million, up 44.86% year over year.
o Revenue contribution from MKS Inc, which PTC acquired on May 31, 2011 was $6.0 million on a GAAP basis
o GAAP operating margin of 8.4%
o Relative to nominal Q2 guidance ($275 - $285 million) currency fluctuations negatively impacted revenue by $0.5 million.
- Nominal Q3 Guidance:
o GAAP revenue of $318 to $328 million and GAAP EPS of $0.25 to $0.29
o Assumes $1.45 USD / EURO
- FY'11 Targets:
o GAAP revenue of $1,147 to $1,157 million and GAAP EPS of $0.63 to $0.67
The Q3 GAAP guidance includes a tax rate of 15% and 121 million diluted shares outstanding.
Nominal Q2 2011 Results Commentary
James Heppelmann, president and chief executive officer, commented, "PTC had a strong nominal Q2, with organic revenue of $285.8 million exceeding the high-end of our guidance. Our organic license revenue of $79.4 million was up 18% on a year-over-year basis, an increase from the 15% growth we experienced in nominal Q1 '11. The momentum in our Desktop business continued with 41% year-over-year organic license growth. This was our 6th consecutive quarter of year-over-year improvement in Desktop license revenue and in our Channel business. We were pleased to see the strength of our Enterprise business increase, with organic license revenue up 40% sequentially and note that our year-over-year organic Enterprise license revenue growth reflects the very strong quarter we had in nominal Q2' 10. We also continue to see robust adoption of our PLM solutions, as is reflected in our 22% and 21% year-over-year increases in organic maintenance and services revenue, respectively. Importantly, we continue to experience the dilutive impact of strong Desktop revenue on our Enterprise sales capacity, and as we highlighted at our recent investor event in June, will begin to ramp sales capacity in response to the broadening demand for PTC's products. Overall, we delivered 20% total revenue growth compared to the year ago period." On a constant currency basis, total revenue growth and license revenue growth were both 13% compared to nominal Q2 '10.”
"Our momentum in the PLM market continued with the addition of 2 new strategically important 'domino' accounts during nominal Q2," Heppelmann continued. "Since 2009, we have won 27 domino accounts and we continue to expect to win a cumulative total of 30 domino accounts by the end of FY'11. Dominoes represent the largest of many competitive displacement opportunities, and we believe they demonstrate that PTC is gaining share and becoming recognized as the industry leader for both our technology and product development process expertise."
Heppelmann added, "We had 27 large deals (license + services revenue of more than $1 million) in nominal Q2 '11, compared to 24 last quarter and 14 in nominal Q2 '10. We believe this is an indicator of the strength of our pipeline for business opportunities with new and existing customers. During the quarter we recognized revenue from leading organizations such as BAE Systems, ESPRIT Europe GMBH, Force Protection, Jabil, Poclain Hydraulics, Robert Bosch, Sears, the US Department of Energy and Weatherford International."
Jeff Glidden, chief financial officer, commented, "From a profitability standpoint we had a very strong quarter. We delivered $48 million in cash flow from operations during the quarter, and we ended nominal Q2 with $261 million of cash, including $16 million from MKS, flat with the end of nominal Q1. As expected, we resumed our stock buyback program with a total of $40 million in stock repurchased during the quarter."
"With the launch of Windchill 10.0 this spring and Creo 1.0 in June, we have had an exciting year from a product portfolio perspective," said Heppelmann. "In addition, the acquisition of MKS adds important breadth and depth to our already robust product portfolio, and further extends PTC's long-term growth opportunity. Given the market momentum we are experiencing and the extent of our technology leadership position, we remain confident in our ability to achieve our longer-term goal of 20% non-GAAP EPS CAGR through 2014. Based on the market momentum we are seeing, the strength of our pipeline and investment to increase sales capacity, we continue to be excited about our FY'12 growth opportunity. We will provide formal FY'12 guidance when we issue our nominal Q3 results in October."
"For nominal Q3, the GAAP revenue target is $318 to $328 million and the GAAP EPS target is $0.25 to $0.29”.
Other Important Information
We have identified payments by certain business partners in China that raise questions of compliance with laws, including the Foreign Corrupt Practices Act, and/or compliance with the Company's business policies. We are conducting an internal investigation and have voluntarily disclosed this matter to the United States Department of Justice and the Securities and Exchange Commission. Based on the findings to date, we do not believe that these matters will have a material adverse effect on our results of operations or financial condition.
PTC self description
PTC (NASDAQ: PMTC) provides discrete manufacturers with software and services to meet the globalization, time-to-market and operational efficiency objectives of product development. Using the company's PLM and CAD and related solutions, organizations in the Industrial, High-Tech, Aerospace/Defense, Automotive, Retail/Consumer and Life Sciences industries are able to support key business objectives such as reducing costs and shortening lead times while creating innovative products that meet customer needs and comply with industry regulations.
Stock Prices and Market Caps
No doubt that keen readers of this September 19, 2011 issue of the EDA WEEKLY have already noticed the sets of two 3-month stock price graphs following the individual presentations of each vendor’s nominal Q2 2011 financials (for each of the G5 EDA vendors as well as for each of the G5 MCAD/MCAE vendors).
As an example, we repeat here the two stock curves for The MCAD/MCAE vendor Parametric Technology Corporation (PTC),whose NASDAQ symbol is PMTC:
Notice how the value of the PMTC stock traded in the narrow region around $22 to $23 till about mid July 2011, before starting a slight slope downward. Indeed, the green line in the second graph, representing the entire NASDAQ Composite, stayed above 0% even longer before starting down. It wasn’t long before any drift downward from normal valuation impacts was overtaken and accelerated in late July as the right-wing in the US Congress began its dangerous game of brinksmanship over refusing to raise the US debt ceiling. While the debt ceiling was eventually raised, it was at a dear price with respect to future government spending.
The negative antics in Congress arguably started a series of oscillations in the stock markets of the US and elsewhere from which at press time the markets have shown no signs of recovering. Additional bad news, such as the S&P lowering its credit rating of the US Government to AA+ from AAA, and no net new US jobs in August, have kept the downward pressure on the markets, and of course on the stocks of the EDA and MCAD/MCAE vendors reported on in this issue of the EDA WEEKLY. From the graphs in the foregoing that ended on September 02, 2011, all ten of the vendors possessed lower stock prices than at the beginning of June, although 4 of the 10 stocks ended the period with a percentage loss slightly less that the respective index on which each trades (Synopsys, ANSYS, Dassault, and ESI Group).
To add some precision to the information yielded by the aforementioned stock graphs alone, the writer has constructed Table 5 below. For the ten vendors discussed in this issue of the EDA WEEKLY, each vendor’s stock price on or about the beginning of the three month period (more precisely June 7, 2011) is listed , followed by the maximum price achieved during the 3-month period and the date on which it occurred, followed likewise for the lowest price/date, then the price at the end (September 6, 2001), then the ending price as a percentage of the maximum price, the ending price as a percentage of the beginning price, and finally the Market Cap for each vendor on Sept 6, 2011.
For example, Cadence stock stood at $10.44 at the close of trading on June 7, reached a peak price per share of $10.72 about a month later on July 7, sank to a minimum price of $8.12 per share on August 18, and ended on Sept 6 at $8.79 per share. The end price of $8.79 per share of Cadence stock was only 82% of its maximum value of $10.72 reached only two moths earlier; and, the end price of $8.79 was only 84.3% of the price the period started with on June 7 of $10.44. With a Market Capitalization of $2.37 billion on September 6, the worth of Cadence measured by Market Capitalization alone was down by $445,000 over the three months’ elapsed period (assuming the number of shares outstanding on June 7 and on September 6 was the same).
Some vendors did worse than others, of course (Magma, SpringSoft and even Autodesk lost a third of their value measured by Market Capitalization, assuming the number of shares remained the same). While it too lost value, ANSYS did better than the others, giving up only 4% of its Market Cap during the period. If one looks for the least decline in Market Cap percentage from its maximum value during the period, however, Synopsys suffered the least reduction of 7.5%.
Time available before the press deadline does not permit further mining and/or verification of the information in Table 5.
About the Writer:
Since 1996, Dr. Russ Henke has been active as president of HENKE ASSOCIATES, a San Francisco Bay Area high-tech business & management consulting firm. The number of client companies served by Henke Associates during those years now numbers close to fifty. Engagement lengths have varied from a few weeks up to ten years and beyond.
During his previous corporate career, Henke operated sequentially on "both sides" of MCAE/MCAD and EDA, as a user and as a vendor. He's a veteran corporate executive from Cincinnati Milacron (Research Scientist), SDRC (President & COO), Schlumberger Applicon (Executive VP), Gould Electronics (President & General Manager), ATP (Chairman and CEO), and Mentor Graphics (VP & General Manager).
Henke is a Fellow of the Society of Manufacturing Engineers (SME) and served on the SME International Board of Directors. Henke was also a board member of SDRC, PDA, ATP, and the MacNeal Schwendler Corporation, and he currently serves on the board of Stottler Henke Associates, Inc.
Henke is also a member of the IEEE and a Life Fellow of ASME International. In April 2006, Dr. Henke received the 2006 Lifetime Achievement Award from the CAD Society, presented by CAD Society president Jeff Rowe at COFES2006 in Scottsdale, AZ. In February 2007, Henke became affiliated with Cyon Research's select group of experts on business and technology issues as a Senior Analyst. This Cyon Research connection aids and supplements Henke's ongoing, independent consulting practice (HENKE ASSOCIATES). Dr. Henke is also a contributing editor of the EDACafé EDA WEEKLY, and he has published EDA WEEKLY articles every four weeks since November 2009; URL's available.
Since May 2003 HENKE ASSOCIATES has also published a total of ninety-eight (98) independent COMMENTARY articles on MCAD, PLM, EDA and Electronics IP on IBSystems' MCADCafé and EDACafé.
Further information on HENKE ASSOCIATES, and URL's for past Commentaries, are available at http://www.henkeassociates.net.
March 31, 2011 marked the 15th Anniversary of the founding of HENKE ASSOCIATES.