Highlighting momentum in the Collaborative Product Data Management (cPDM) and digital manufacturing segments of its business, UGS Corp. marked its eleventh consecutive quarter of revenue growth, reporting results for the first quarter of 2006 that were on par with its performance during 2005. For the quarter ended March 31, the Plano, TX, PLM vendor posted revenues of $273.8 million, an 8% spike from the same period last year, or a 13% increase on a constant currency basis. While EBITDA for the quarter was $48.1 million, a 3% boost from the like 2005 quarter, UGS registered an operating loss of $5.5 million due in part to the impact of acquisition-related intangible amortization costs of $39.3 million. Software revenue maintained its trend of double-digit growth during the quarter, climbing 11% over the first quarter of 2005 to reach $205.2 million (including license and maintenance revenues). Services, on the other hand, remained nearly flat on a year-to-year basis, hitting $68.6 million this quarter compared to $67.8 million in the like 2005 period. UGS executives attributed the slowdown to the increased number of engagements handled by the company's channel partners. They said UGS was still within its goal of keeping service revenues at 25% of total revenues. Overall, UGS officials were pleased with the company's performance during the quarter. Specifically, they cited UGS's ability to score large enterprise deals during the first quarter as well as mounting momentum in the cPDM sector as the main drivers of the company's continued growth. "A consistent theme throughout the quarter is our ability to sign enterprise deals worth over $1 million," noted Tony Affuso, UGS chairman, CEO, and president, in remarks to financial analysts on an earnings call. "We inked a double-digit number of those contracts this quarter with companies around the world." Among the major wins were deals with Northrop Grumman Ship Systems (NGSS) and PeguForm Group, of Germany, for UGS's Tecnomatix digital manufacturing software, and Sandvik Mining and Construction of Sweden, for the UGS Teamcenter PLM backbone. Reflecting a trend among PLM vendors, UGS's cPDM offerings continue to aggressively encroach on sales of its CAx (computer-aided engineering, design, and simulation) software. Total CAx revenues were down 2.4% from the like period last year to $161 million, although that figure equated to a 2% increase in constant currencies. Officials advised financial analysts that growth in this area of the business would continue to remain on a single-digit pace, despite opportunities for replacement software and upgrades among a large installed base. cPDM, on the other hand, was the standout, with total revenue including acquisitions increasing 29% (8% without acquisitions) to $113 million -- a 33% boost in constant currencies compared to the first quarter 2005. While analysts likened UGS's strong showing in cPDM to similar, recent quarterly results from its key competitors, including Dassault Systemes (Surenes, France), UGS's Affuso was quick to zero in on what he said was a UGS advantage -- full product-line integration. Dassault, which recently agreed to buy PLM competitor Matrix One Inc. (Westford, MA), has yet to begin the process of integrating disparate PLM offerings, Affuso pointed out. UGS, on the other hand, which marked its five-year anniversary this month of its acquisition SDRC, is much farther down the path of combining multiple product lines, he said. "The key issue [for Dassault] is getting their product integrated ... and that's going to take them five to eight years to get it together," Affuso maintained. "Five years into it, we've declared our vision, we've really got the job done with a common user interface, a common database, and a single sign-on." In that vein, Affuso said Teamcenter 2007, the forthcoming and latest release of its integrated cPDM platform, is on schedule to ship to early adopters later this year. UGS is also seeing momentum in its cPDM business in non-traditional areas outside of manufacturing, he noted. The company signed 14 deals in non-traditional areas this quarter alone, he said, including those in the apparel and retail grocery sectors. Affuso also turned the spotlight on the company's digital manufacturing product line. He said one year after closing its acquisition of Tecnomatix, a leader in this area, UGS is winning key enterprise contracts and gaining ground. Specifically, Affuso said the NGSS deal was UGS's largest contract in the first quarter. After a 14-month benchmark study, NGSS opted to replace its existing digital manufacturing platform from a major, undisclosed competitor, with Tecnomatix, UGS officials said. Finally, UGS also singled out its fledging Velocity mid-market PLM solution, introduced last year, as a budding bright spot. The company said in the fourth quarter of 2005 that it aimed to grow its channel partner network by 50% in 2006; Affuso said UGS added 20 new channel partners in this quarter alone and was already halfway to meeting its goal for the year. While Affuso declined to provide specific sales figures for Velocity, he said UGS would continue to invest in the channel. "We're playing catch-up compared to Autodesk and Solidworks' established channels, but there's no shortage of resellers wanting to sign up," Affuso said.