Enterprise Software Market Reported Nominal Growth in Q3 2018

Summary

Worldwide enterprise software market showed nominal growth in the third quarter of 2018.  The market expanded on the back of relentless innovation and available capital.  Once again, exchange rates played a role, with a marginal weakening of the euro relative to the dollar.  The 1.1 percent exchange rate fluctuation provided a little drop to revenues reported in euros that ARC subsequently translated to US dollars for this report.

Suppliers included in this report recorded a combined quarterly revenue of nearly $22.8 billion, representing a 2.6 percent year-over-year growth.

Supplier Revenues for Enterprise Software Market

This ARC Advisory Group report discusses the most recent quarterly revenue results of the major publicly traded enterprise software companies.  We translated financial results reported in foreign currencies to US dollars using an average exchange rate for the given reporting period.  The suppliers’ reporting period for this analysis was the quarter ending in September 2018, unless stated otherwise.

While this report focuses on the enterprise software portion for the respective companies mentioned, the R&D expenses shown are a factor of total company revenues.

American Software (Logility) reported a total revenue of $28.0 million for the quarter ended in October 2018.  This represents a healthy increase of 7.0 percent from the same period last year.  License revenues declined by 16.2 percent to $2.0 million, whereas services and other revenues increased by 10.7 percent to $14.4 million and maintenance revenues increased by 7.6 percent.  Cloud Services annual contract value increased approximately by 46.0 percent to $14.5 million for the quarter, compared with $9.9 million in the same quarter of the previous year.  

Autodesk reported a total revenue of $662.0 million for the quarter ended in October 2018.  This represents an increase of 28.5 percent from the same period the previous year.  Revenue from the architecture, engineering, and construction (AEC) segment increased by 35 percent to $264.0 million.  Revenue from the AutoCAD product family and AutoCAD LT was $191.0 million, an increase of 34.0 percent compared with the third quarter last year.  Revenue from the manufacturing product family was $159.0 million, an increase of 20.0 percent compared with the same quarter last year.  Finally, the revenue from media and entertainment (M&E) product family was $44.0 million, an increase of 16.0 percent compared with the second quarter last year.  EMEA revenue was $267.0 million, Americas $269.0 million, and APAC $126.0 million.  Subscription plan annualized recurring revenue (ARR) was $1.93 billion, an increase of 105.0 percent compared with the same period last year.  Total ARR was $2.53 billion, an increase of 31.0 percent compared with the third quarter last year, as reported on a constant currency basis.

Dassault Systèmes achieved a total revenue of $967.1 million for the quarter, representing a 9.5 percent year-over-year growth rate.  Software-related revenue (new and recurring licenses and maintenance) increased by 9.1 percent to $858.2 million and services revenue increased by 12.7 percent to $109.0 million.  By product line in euros, CATIA revenues increased by 5.9 percent, ENOVIA increased by 4.3 percent, and SOLIDWORKS increased by 5.7 percent.  Geographically, revenues from the Americas increased by 7.0 percent, Europe by 5.4 percent, and Asia by 11.1 percent in reporting currency.  The company’s strong revenue results are due to industry diversification and positive contributions by all product lines.  

Descartes reported revenues of $70.0 million for the quarter ending in October 2018.  This represents a 12.9 percent growth over the same period in the prior year.  Services revenues increased by 14.6 percent to $68.4 million.  Quarterly revenues from the US increased from $36.1 million to $42.2 million, EMEA from $19.4 million to $19.9 million, Canada from $3.8 million to $5.1 million, and APAC from $2.7 million to $2.8 million.

Hexagon’s Industrial Enterprise Solutions division consists of manufacturing- and engineering-focused businesses: Hexagon Metrology and Intergraph PP&M.  The division focuses on engineering software for creating and leveraging information critical for planning, constructing, and operating plants and process facilities, as well as for CAD (computer-aided design) and CAM (computer-aided manufacturing) software and metrology systems.  The division reported $568.6 million in revenue for the quarter.  This represents an increase of 9.6 percent year over year.  In reporting currency (euro), the company increased its revenues by 10.7 percent.  Geographically, 41.0 percent of revenues came from the Americas, 31.0 percent from EMEA, and 28.0 percent from Asia.  

IBM’s software segment reported a revenue of $4.1 billion in external sales for the quarter.  This represents a decrease of 5.7 percent over the same period last year.  Under the company’s new segment reporting structure, total software no longer exists as a segment.  Instead, the company’s software revenue is included within the technology services & cloud platforms, cognitive solutions, and systems segments.  Revenues from the solutions software (part of cognitive solutions) and integration software (part of technology services & cloud platforms) decreased by 5.7 percent and 2.0 percent, whereas operating systems software (part of systems segments) slightly increased by 1.0 percent.      

IFS reported $129.0 million in revenue for the quarter, representing a 13.3 percent year-over-year increase.  License revenue increased by 38.3 percent, maintenance by 9.1 percent, and consulting by 6.0 percent.  IFS, the global enterprise applications company, acquired WorkWave LLC (“WorkWave”).  The addition of WorkWave means that IFS now offers the most complete, connected service management solutions for all sizes of service-centric businesses.  IFS has made several acquisitions in the service market this year, which are helping accelerate the company’s growth. 

Infor reported a revenue of $799.4 million for the quarter ending in October 2018.  This represents a 3.1 percent growth from the prior year.  Revenues from license fees increased by 12.1 percent, product update and support declined by 1.8 percent, and consulting services and other fees increased by 2.6 percent.  From a regional perspective, revenues from the Americas contributed 63.0 percent, EMEA 31.0 percent, and Asia Pacific 6.0 percent to Infor’s revenues.

Manhattan Associates’ revenues decreased by 6.9 percent year over year to $142.4 million.  Revenues from the Americas declined by 8.8 percent, EMEA increased by 14.8 percent, and APAC decreased by 24.1 percent.  Digital commerce and technology modernization programs continue to drive significant long-term growth opportunities for the company.  Global license revenues declined by 38.7 percent to $11.5 million.  Services revenues increased by 5.0 percent to $121.3 million.  Hardware & other revenues decreased by 48.7 percent to $9.5 million.  

Oracle’s Software segment recorded $7.85 billion in revenues for the quarter ended in November 2018.  This represents a 0.8 percent increase over the same period the previous year.  Cloud services and license support increased by 3.0 percent, whereas cloud license and on-premise license declined by 9.0 percent. Applications revenues increased by 5.2 percent to $2.8 billion, and platform and infrastructure revenues decreased by 1.5 percent to $5.0 billion.  From a regional perspective, total software revenues increased by 0.9 percent in the Americas, decreased by 3.4 percent in EMEA, and increased by 5.8 percent in Asia Pacific.

PTC reported revenues of $312.5 million for the quarter ending in October 2018.  This represents an increase of 2.0 percent year over year.  Subscription & license revenue increased by 69.1 percent to $142.4 million.  Support revenue declined by 16.5 percent.  Professional services revenue declined by 39.8 percent.  ARR was $544.0 million, an increase of $205.0 million or 61.0 percent from the same period last year.

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Keywords: Enterprise Software, Quarterly Supplier Revenues, Asia Pacific, Europe, Middle East & Africa, Latin America, North America, ARC Advisory Group.