Two major PLM players this week reported declining revenue in the most recent quarter. Yet, even as sales sagged, Dassault Systemes and Parametric Technology Corp. (PTC) both voiced optimism for 2010. France-based Dassault reported €291.7 million in revenue for its fiscal third quarter ended Sept. 30, a year-over-year decline of 8%, from €318.3 million. Net income slumped 13% to €38.5 million. While Dassault claimed success in executing its internal lean initiatives, which it said will save the company €120 million in 2009, it still suffered a lull in new software license activity. In particular, Dassault’s PLM software business was down 7% in the quarter, to €194.7 million. President and CEO Bernard Charles told financial analysts on a conference call today that the revenue was highly impacted by the size of contracts. “As I said [and as] we have observed in Q2, the number of transactions was in fact increasing, but the size was smaller,” he said. Geographically, Dassault was hit by 16% revenue declines in the Americas and Asia, while European sales slipped 7%. Charles noted, however, that Dassault’s ENOVIA V6 PLM platform, rolled out less than a year ago, has already been deployed in approximately 150 customer sites, a good foundation for 2010, he said. Dassault forecasted fourth-quarter revenue of €325 million to €355 million, with full-year revenue of €1.24 billion to &euro:1.27 billion. Earnings are expected to be €1.76 to €1.91 per share. Dassault execs also noted what they characterized as a boon to customers: the announcement earlier this week that Dassault will spend $600 million to buy the IBM division dedicated to selling Dassault products to large enterprises. The move simplifies the acquisition of a PLM product through a single contract, the company said. IBM continues to have an integration partnership with Dassault, which will be critical to the company’s plans to move V6 into the cloud. “We believe cloud [computing] is becoming so critical, and I think V6 is ready for that,” Charles said. “To leverage IBM’s expertise in that area for us is very critical.” PTC also praised the move, saying it puts Dassault’s competitors on equal footing in IBM-related activities. “SAP, Siemens [PLM], PTC, and Dassault will now compete on an equal playing field,” said Richard Harrison, PTC’s chairman and CEO in a conference call with analysts to announce PTC’s fourth-quarter results earlier this week. “Dassault had the advantage of IBM, which is great partner, and they no longer will have that. It will make our job of talking about the benefits of our [products to] customers easier when we don’t have to overcome the benefit of IBM and their footprint in these accounts. So it is positive news for the market.” Still, PTC was not immune to unfavorable economic conditions, as overall revenue for its fourth quarter totaled $246.3 million, down 18% from $300.2 million in the same quarter last year. For the fiscal year, PTC reported net income of $31.5 million on sales of $938 million, off markedly from earnings of $79.7 million on revenue of $1 billion in the prior fiscal year. PTC noted that segments of its product portfolio, including Windchill, saw increased license revenue in the quarter, with 19 large deals totaling $50 million in software and services revenue. “Looking forward to FY’10, we are establishing a revenue target of $980 million and a non-GAAP EPS target of $0.96,” said PTC CFO Neil Moses, in a statement. “We expect that the actions we took in FY’09 to right-size our business to the current economic conditions, partially offset by some incremental investment in the business in FY’10 in support of our long-term growth objectives, will allow us to improve our non-GAAP operating margin to approximately 15%.” The GAAP EPS target for FY’10 is $0.43. For its fiscal first quarter, already under way, PTC expects $230 million to $240 million in revenue with non-GAAP EPS of $0.12 to $0.18, Moses said.