CAD provider Autodesk Inc., in step with growth predictions for the broader product lifecycle management market, saw strong results in its second quarter, stimulated by demand for 3D design software and a fired-up sales channel.
For the fiscal quarter ended July 31, 2007, Autodesk reported net income of $91.6 million on sales of $525.9 million. Income was up 6% from $86.9 million in the same period last year while sales jumped 17%, from $449.6 million in the second quarter of fiscal 2006. Diluted net income per share rose $.02 year over year to $0.38.
The industry's shift from 2D to 3D design tools for digital prototyping has inspired Autodesk to shift its reseller incentive program to focus on selling model-based 3D products, including Inventor, Revit, and Civil 3D. As a result, combined revenue from 3D products reached $122 million, representing 23% of total revenue for the quarter. In the same quarter last year, 3D revenue was $91 million, representing 20% of total sales.
The company has also maintained a focus on 2D vertical market offerings, Autodesk said, including design and documentation tools enhanced with industry-specific features. The company serves manufacturing as one of its primary markets, but has a diversified portfolio of customers spanning the construction, government, education, and media & entertainment industries.
"Looking at manufacturing, all of our products are doing well, but Inventor is doing particularly well with the shift to more specialty [and] higher functionality," Autodesk President and CEO Carl Bass told financial analysts during a conference call Thursday evening.
Inventor software features 3D digital prototyping for validating design and engineering data, a capability that eliminates the need to produce physical prototypes. This software simulation is the cornerstone of the digital factory concept that many PLM and CAD/CAM vendors, including Autodesk competitors UGS and Dassault Systemes, are moving toward.
In order to build out its 3D expertise, Autodesk has been on the acquisition path, this month closing its $26 million purchase of NavisWorks, a maker of software for 3D collaboration, coordination, and sequencing. This extends Autodesk's capabilities in areas such as plant design. Also this month, the company made an undisclosed offer on SkyMATTER, maker of 3D modeling software. And in June it made a play for Opticore, which does realistic 3D visualizations and presentation. The deals are expected to close within the next two months, but industry observers don't expect Autodesk's buying spree to end anytime soon.
"They are picking up little, innovative companies that will get tied into the overall portfolio," noted Dick Slansky, an analyst with ARC Advisory Group, in an interview with Managing Automation. The acquisitions are a way to capture more market share, but they leave Autodesk with a confusing array of products, he said.
Autodesk officials, however, are confident that their sales and acquisition strategy will pay off, and they upped their overall guidance for the remainder of the fiscal year. They predict third-quarter revenue in the range of $530 million to $540 million and fourth-quarter sales of $575 million to $585 million. And for fiscal year 2008, net revenue is expected to be $2.14 billion to $2.16 billion, which trumps the initial guidance of $2.07 billion to $2.12 billion.