January 31, 2013
The EDA and MCAD/MCAE Almanac - Nominal Q3 2012 Part B: MCAD/MCAE Industry
by Russ Henke - Contributing Editor
Posted anew every four weeks or so, the EDA COMMENTARY delivers to its readers information concerning the latest happenings in the EDA industry, and at least once a quarter also covers similar happenings in the MCAD/MCAE space, reporting on vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA & MCAD/MCAE companies are presented. Brought to you by EDACafe.com. If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback?
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Introduction
This is the JANUARY 31, 2013 edition of the COMMENTARY entitled, “The EDA and MCAD/MCAE Almanac – Nominal Q3 2012 - Part B: MCAD/MCAE Industry.”
NOTE:
The EDA Industry for Nominal Q3 2012 was reported on in the December 31, 2012 Part A Issue:
Over the almost 10 years since early 2003, Henke Associates has regularly posted articles in IBSystems’ Newsletters EDACafe.com and MCADCafe.com. These postings dealt with varied topics about the EDA and MCAD industries, but they were anchored by Quarterly Commentaries, WEEKLIES, and Almanacs that discussed the financial and related corporate issues of 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 engineering & analysis (MCAE).
IP and MCAD/MCAE Commentaries tended to run daily for a full calendar 90 days. Familiar vendor names have included Cadence, Mentor Graphics, Synopsys and others in EDA; ARM Holdings, Rambus and others in Electronics IP; and ANSYS, Autodesk, Dassault Systemes, PTC and others in MCAD/MCAE.
Readers of Part A of the Q3 2012 EDA & MCAD/MCAE Almanac no doubt repeatedly scoured through Part A in vain for the traditional Revenue and Net Income charts for at least the EDA Vendors covered in Part A. But these two Tables were slated to appear only in Part B after the data on the four MCAD/MCAE vendors of Part B could join with the like data of the EDA Vendors of Part A.
So Table 1 below contains the revenue data for the most recent five (5) consecutive quarters, beginning with Q3 2012 and working back to Q3 2011, for both sets of vendors. We were delighted when Google Finance began using this same pattern to report the financial results of various public companies.
1. All the vendors in each group of four in EDA and MCAD/MCAE posted higher revenues in Nominal Q3 2012 vs. Nominal Q2 2012, with the exceptions of Altium in the EDA list and Autodesk on the MCAD/MCAE list. Still, both sets of vendors managed slightly larger revenue totals in Nominal Q3 over Nominal Q2.
(Altium's Q3 falloff in revenue was significant for it, but not in the grand total of 4 EDA vendors. Autodesk suffered a revenue decline in Q3 vs. Q2 of over $20 million, but on such a large revenue base that the shortfall was insignificant percentage-wise (-3.64%). Still, both management and shareholders of most all vendors like to see revenue growth every quarter, even if that growth is small).
2. The MCAD/MCAE group continued to enjoy revenue leadership in Q3 2012 over the EDA Group, but its lead narrowed slightly (by couple percentage points) in Q3 2012 vs. Q2 2012 to 58.08% higher in Q3 2012, down from 59.78% higher in Q2 2012.
3. Whereas Q1 2012 was universally less that Q4 2011 for all members of the G4 MCAD/MCAE vendors, growth resumed in Q2 2012 over Q1 2012 for each of the MCAD/MCAE vendors except AUTODESK. Despite ADSK being down slightly from Q1 2012, the SUM of the MCAD/MCAE vendors began recovering in revenue in Q2 over Q1, a trend that continued in Q3 2013, the total G4 revenue was up again but ADSK was again down relative to its previous quarter.
ADSK needs to reverse its trend of giving up $20 million in each quarter, or pretty soon it'll add up to real money! (Q4 is a good quarter to do just that). The latest guidance was no more accurate than a revenue range of $570 to $605 million for Q4 2013. Even the low end of the guidance would represent an increase over Q3's revenue ($548 million), so it looks like the negative trend will end. We will find out in mid-February when Q4 2013 results are announced for Autodesk.
4. For the year 2011, the order of revenue totals for the Big 3 EDA companies remained the same as in most recent years: Synopsys was number 1, followed by Cadence and then MGC. However, each of the Big 3 EDA vendors eclipsed the billion dollar mark in revenue for the first time in 2011. Now three quarters into 2012, the same Synopsys – Cadence - MGC order persists. and most likely will persist for all of Nominal 2012. Only Mentor, which sits at $757.63 million after 3 quarters, could somehow fall below the billion mark in revenue for the 2012 year, an unlikely event since Q4 is historically the best quarter of Mentor's year.
6. In MCAD/MCAE, Dassault Systemes won the most full year 2011 revenue title, followed closely by Autodesk, PTC and ANSYS in that order. The same order of total revenue rank prevails so far three quarters into 2012.
7. Among the eight vendors, recall that Cadence had the best YOY % revenue growth Q1 2012 vs. Q1 2011 at nearly 19%, and ANSYS delivered a close second at just over 17%.
But for Q2 2012, ANSYS replaced Cadence as the fastest growing percentage leader YOY Q2 2012 vs. Q2 2011 in revenue among the eight vendors listed. However, for Q3 2012 vs. Q3 2011, we have a surprise leader: Synopsys, at +16.46%! Cadence fell to 2nd place in Q3, and ANSYS (the only MCAD/MCAE vendor of the four with positive growth Q3 YOY, grabbed 3rd place. {It is interesting to note that Synopsys' and Cadence's growth and size were enough to drive the entire group of 4 EDA vendors into 4th place on this Q3 list}.
8. Last quarter (Q2 2012) we noted that Dassault’s Euro revenue growth rate of +17.34% YOY comparing Q2 2012 to Q2 2011, was completely obliterated in the conversion to dollars by the reduction in the multiplier of the Euro to $ conversion factor to 1.22 from 1.439 a year ago. We then asked the rhetorical question,"Is it any wonder why Dassault uses ‘constant currencies’ for its own public reporting?". Dassault received a slightly positive boost from the Euro/$ exchange rate during Q3 2013.
1 Notice that these Table 1 columns calculate the percentage 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.
TABLE 2 CONTINUED MCAD/MCAE EARNINGS (CONTINUED)
3 Notice that these Table 2 columns calculate the numerical dollar differences in earnings between two different quarters as labeled, whereas in Table 1, the relevant
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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 – Oakley, OH), SDRC (President & COO – Fairfax, OH & Milford, OH), Schlumberger Applicon (Executive VP – Burlington, MA), Gould Electronics Imaging & Graphics (President & General Manager – San Jose, CA), ATP (Chairman and CEO – Campbell, CA), and Mentor Graphics Corporation (VP & General Manager – PCB Division San Jose, CA & Professional Services Division – Wilsonville, OR).
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. (San Mateo, CA). He also serves as VP Business Development of Stottler Henke, focused on commercial applications of artificial intelligence.
In addition, Henke is 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; all URL's available.
Since May 2003 HENKE ASSOCIATES has also published more than 100 independent COMMENTARY articles on MCAD, PLM, EDA and Electronics IP on IBSystems' MCADCafé and EDACafé; most URL’s available.
Information on HENKE ASSOCIATES is available at
http://www.henkeassociates.net
March 31, 2013 will mark the 1yth Anniversary of the founding of HENKE ASSOCIATES.
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-- Russ Henke, EDACafe.com Contributing Editor.