Enterprise Software Market Continued to Grow in Q4 2018

By Rajkumar Paira

Category:
ARC Report Abstract

Summary

The worldwide enterprise software market continued to show growth in the fourth quarter of 2018. The enterprise software market has expanded on the back of relentless innovation and available capital.  Once again, exchange rates played a role, with a nominal weakening of the euro relative to the dollar.  The 3.1 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 combined quarterly revenue of nearly $26 billion, representing 3.3 percent year-over-year growth.

Enterprise Software Market Supplier Revenues

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 December 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 total revenue of $27.0 million for the quarter ended January 31, 2019.  This represents a decline of 10.3 percent from the same period last year.  License revenues decreased by 71.2 percent to $1.7 million.  Professional services and other revenues decreased by 1.6 percent to $10.2 million, whereas subscription revenues increased by 42.7 percent to $3.7 million, and maintenance revenues increased by 1.7 percent to $11.4 million.  Cloud Services Annual Contract Value (ACV) increased approximately 48.0 percent to $16.1 million for the quarter ended January 31, 2019 compared with $10.9 million in the same quarter of the previous year.  

Autodesk reported total revenue of $737.0 million for the quarter ended January 31, 2019.  This represents an increase of 33.0 percent from the same period the previous year.  Revenue from the Architecture, Engineering, and Construction (AEC) segment was $293.0 million, an increase of 23.1 percent compared with the fourth quarter last year.  Revenue from manufacturing product family was $176.0 million, an increase of 15.0 percent compared with the fourth quarter last year.  Combined revenue from AutoCAD and AutoCAD LT was $209.0 million, an increase of 88.3 percent compared with the fourth quarter last year. Finally, the media & entertainment (M&E) segment was $55.0 million, an increase of 37.5 percent compared with the fourth quarter last year.  Revenue in the Americas was $300.0 million, an increase of 29.3 percent; EMEA was $299.0 million, an increase of 35.3 percent; and APAC was $138.0 million, an increase of 38.0 percent compared with the fourth quarter last year.  Subscription plan annualized recurring revenue (ARR) was $2.2 billion, an increase of 87.0 percent compared with the same period last year. Total ARR was $2.75 billion, an increase of 34.0 percent compared with the fourth quarter last year as reported.

Dassault Systèmes achieved total revenue of $1.18 billion for the quarter, representing a 10.5 percent year-over-year growth rate.  Software-related revenue (new and recurring licenses and maintenance) increased by 8.3 percent to $1.03 billion.  Services revenues increased by 28.4 percent to $149.7 million.  By product line in euros, CATIA revenues increased by 1.1 percent, ENOVIA increased by 34.6 percent, and SOLIDWORKS increased by 16.6 percent.  Geographically, revenues from the Americas increased by 8.3 percent, Europe increased by 14.7 percent, and Asia increased by 19.6 percent in reporting currency.  The company’s strong revenue results from industry diversification and positive contributions by all product lines.  

Descartes reported revenues of $71.0 million for the quarter ending in January 31, 2019.  This represents 11.6 percent growth over the same period in the prior year.  Services revenues of $62.9 million represent a 2.1 percent year-over-year increase.  Quarterly revenues from the US increased from $33.0 million to $42.6 million, EMEA decreased from $23.5 million to $20.6 million, Canada increased from $4.3 to $5.0 million, and APAC increased from $2.77 million to $2.84 million.

Hexagon’s Industrial Enterprise Solutions (IES) division consists of the 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 $623.3 million in revenue for the quarter.  This represents an increase of 5.1 percent year over year.  In reporting currency (euro), the company increased its revenues by 8.4 percent.  Geographically, 33.3 percent of revenues came from the Americas, 38.2 percent from EMEA, and 28.5 percent from Asia.  

IBM’s Software segment reported revenue of $5.45 billion in external sales for the quarter.  This represents an increase of 0.4 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) increased by 2.0 percent, operating systems software (part of systems segments) decreased by 20.0 percent, and integration software (part of technology services & cloud platforms) declined by 3.0 percent. 

IFS reported $164.7 million in revenue for the quarter, which represents a 14.7 percent year-over-year increase.  License revenue increased by 22.0 percent, maintenance by 13.0 percent, and consulting by 10.0 percent.    IFS, a global enterprise applications company, acquired WorkWave LLC (“WorkWave”).  The addition of WorkWave means that IFS now offers what appears to be a complete, connected service management solution for all sizes of service-centric businesses. IFS has made several acquisitions in the service market this year, helping accelerate the company’s growth.  

Infor reported revenue of $789.8 million for the quarter ending January 31, 2019.  This represents a 1.4 percent growth from the prior year.  Revenues from license fees increased by 10.5 percent, product update and support fees decreased by 3.0 percent, and consulting services and other fees decreased by 0.4 percent.  From a regional perspective, revenues from the Americas contributed 59.2 percent, EMEA 32.1 percent, and Asia Pacific 8.7 percent to Infor’s revenues.

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Manhattan Associates’ revenues increased marginally by 0.2 percent year over year to $144.4 million.  Revenues from the Americas declined by 1.3 percent, EMEA increased by 7.1 percent, and APAC increased by 3.5 percent.  Digital commerce and technology modernization programs continue to drive significant long-term growth opportunities for the company.  Management stated that the demand for omni-channel, store, and distribution management solutions continued to increase.  Global license revenues declined by 9.5 percent to $13.3 million.  Services revenues increased by 9.5 percent to $84.5 million.  Cloud subscriptions revenues increased by 113.4 percent to $6.8 million. Hardware & other revenues decreased by 72.1 percent to $3.3 million.  

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

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