The CAD Insider

Autodesk Layoffs May Be Its Biggest Ever

Laid off office workers. Two on the end have received a good severance package. (Stock photo).

Autodesk just announced that it will reduce its workforce by 1,150, or around 13%.

The bomb was dropped in the company’s quarterly financial call, when we also found out it had lost $120 million.

While not specific about what divisions, programs or locations will suffer, new CEO Andrew Anagnost announced the restructuring from “a position of strength,” defending upcoming strategic cuts against “peanut butter cuts,” which are cuts applied evenly across the whole company.

The restructuring plan is expected to cost anywhere from $135 to $145 million in the next quarter. How much of that will be severance pay is not known.

The last big layoff at Autodesk was in February of 2016 when the company, under Carl Bass, announced a 10% workforce reduction and let go 925 people.

Sales people will be affected, an expected result of more online sales. Term licensing and automatic renewals, more common in software sales and now in CAD, lessen the need for human intervention.

Autodesk’s army of resellers will also be feeling a pinch. This should be no surprise, says Andrew. Our resellers have been told there to expect change. Everyone knows we are going for a 50-50 mix. [50% direct sales, 50% reseller sales.]

The $120 million loss in the last 3 months makes 10 straight quarters in the red. Financial analysts have been forgiving of Autodesk, even optimistic, cutting the company a lot of slack, figuring it will one day catch up to the big pot of deferred revenue created in the shift from perpetual to term licensing. But is their patience running out? In today's Q&A, one analyst finally asked when the company expects finally expects to be coming back to profitability.

“We see FY 2018 as the trough,” was the response.

Autodesk is predicting a rise from the trough the following year. They didn’t mention Adobe this time, but the need to be like Adobe is obvious. Adobe dropped perpetual for term licensing and it took 11 quarters before revenue caught up. However, unlike Autodesk, Adobe managed to stay profitable every quarter.

Autodesk took a 12% plunge immediately after the announcement.

Revenue was $515 million, an increase of 5% over the same period last year.

While revenue was flat in the US and the rest of the Western Hemisphere, but Asia Pacific (APAC) region increased by 8%. Another increase like that will put APAC in the lead, passing the Americas.

Everyone have a great day, concluded the moderator.

What Are We…Bastards?

Autodesk users who bought for keeps find themselves in a new class of customer.
(Characters from Game of Thrones, picture from Overpowered Entertainment, meme created on ImgFlip.com)

Users come to Autodesk University to sharpen their skills, learn from instructors and each other. Many are already power users, having used Autodesk software for decades. In a time when few users get to go anywhere, much less Las Vegas, those that have attended multiple AU wear their badges proudly, many decorated with ribbons attesting to their skills and associations. This year, it cost $2,175 for the full conference pass. They are used to some gratitude from Autodesk for their attendance and years in service.

At AU2017, things were going to be different. There was a new sheriff in town. Andrew Anagnost had risen to the top, replacing the avuncular Carl Bass. Andrew was the architect of Autodesk’s total switch to term licensing. Many of those in the audience have paid up front for their software and expect to not keep paying. They were about to feel less welcome.

“Someone who is not paying us is not a customer,” said Andrew.

Not a happy customer. Autodesk critic, Steve Johnson, reacts to Autodesk CEO definition of customer as one who keeps paying.

For many, it was like children who learn they are adopted. Do Mommy and Daddy still love them? If they weren’t customers, what were they? Bastards?

On Twitter, Autodesk critic Steve Johnson (also in attendance) felt the burn. Having spent thousands of dollars on Autodesk software, was it only the newborn of noble blood who remained in Autodesk’s good graces?

 

You Won't Like What the New Autodesk CEO is Saying – But You Need to Hear It

Good morning, America… or is it? CEO Andrew Anagnost kicks off Autodesk University with thoughts of an overcrowded earth and the impending loss of jobs. Not yours, though --  if you pay attention. (Picture from Autodesk video of AU2017)

Autodesk University, named for the classes it offers, is where 10,500 of Autodesk’s faithful have converged, crowded into the Sands convention center in Las Vegas, waiting for the show to begin. It may be record attendance. Strange when you consider the city’s biggest attractions seem to be gambling, drinking and prostitution. Only a few weeks ago, a shooter in the Mandalay Bay hotel rained bullets from on high, like the angel of death, over a music concert across the street -- the worst mass shooting in US history.

We're here in spite of that. The show must go on. It’s 10AM Tuesday morning and it is about to go down. A deejay charges the atmosphere with electronic music. The crowd is pumped. The new CEO, Andrew Anagnost, addresses the crowd.

“Good morning,” says Andrew. But immediately he questions himself. “Or is it?”

Andrew won’t mention the massacre specifically – but he will take the take the gloom that hangs over Las Vegas and apply it to the world at large. It is a world of robots taking your jobs, of a crumbling infrastructure, an unrestrained population. We’re projected to have 10 billion people by 2050 (it has 7.5 billion now). Infrastructure is crumbling.

“While we are having parties, were we dangling our feet over the chasm of job destruction?” He is talking about the upcoming robot revolution.

The new CEO is obviously not afraid of shocking a crowd to its senses. This is not like previous Autodesk Universities. The crowd is hushed.

It was Andrew’s wake up call to the Autodesk faithful. He was going to build on that, deliver his view of the world, provide solutions, build hope…

But we’re going to need to recover. The message just delivered weighs heavy. It is a reminder of our anxieties. Users all feel the pressure of trying to keep up and a fear of falling behind. AU is their chance to reenergize, to jump ahead into the lead, once again. Take a bunch of classes, taught by the best instructors, get certified, fill up with the latest software and technology, and emerge once again: top dog.

Too Many People? We Can Help with That

Not a cause for alarm -- an opportunity. Autodesk, the design, simulation and manufacturing software vendor that refers to itself as an "automation company,” suggests its products can help house, move and improve the lives of the billions we will be adding to the Earth over the next couple of decades.

After the crowd is properly subdued comes the message of hope. To house the billions yet to come, we’re going to have to build a thousand buildings a day. Software applications can be automated the design process. The current AEC process is flawed, full of one-off designs, painstakingly and wastefully built on site, outdoors. Why can’t they learn from what manufacturing has known for years? Bring it inside, use robots, automate the sh*t out of it.

We see an architect using generative design, able to make customized living arrangements, using pre-built walls.

The Dutch firm Van Wijnen hunkered down during the recession, armed themselves with the latest tools and technology, then jumped back in with digital workflow. It serves as an example of what companies can do when they make the jump, catching the next wave of technology.

The waves that are coming with increasing frequency. You might be afraid the wave will take you under…and it might. But let’s look that the bigger picture, Autodesk is telling us.

ATMs Make for More Tellers

The ATM machine, first introduced in 1967, was going to get rid of bank tellers. It didn’t. In the 20 years after 1995, when ATM machines quadrupled to 400,000, the number of bank tellers actually increased. Why? Automation let banks do more with less, the banks thrived, opened more branches. So, more tellers.

Publishing: Andrew acknowledges many journalists are wondering about their future. Everybody can publish now, The amount of written material online has skyrocketed. The technology has actually made more of us into content creators.

Movies, instead of a few movies at a $100 million each, there are countless movies and video by independents. There has never been more to watch. And more of us are watching. The market has expanded.

Manufacturing, if you think robots are going to cost jobs, you’re wrong. Technology makes more jobs. Robots need people to take care of them. “China will have a shortage of 3 million skilled robot operators.”

“Autodesk is not only going to help you survive it, we’re going to help you thrive in it.”

 

SOLIDWORKS Propping up Dassault Systemes

The $310 million Bernard Charles paid to acquire the American startup SOLIDWORKS in 1999 continues to pay big dividends for the French CAD giant, Dassault Systemes. In the last quarter, the company disclosed that SOLIDWORKS revenue grew 16 percent, making it the top performing brand in DS portfolio (measured in constant currencies). Licenses for SOLIDWORKS grew by double digits in Q3, with over 15,000 new customers so far in 2017. Many new customers are “3D to 3D win,” said Charles, referring to users migrating to SOLIDWORKS from other MCAD products.

Overall revenue for Dassault Systemes declined 7 percent to EUR​€​751 million for the quarter.(Chart from TenLinks.)

SOLIDWORKS has proved to be the best investment for Dassault Systemes, and with SOLIDWORKS 2018, the division continues its strong growth.

Meanwhile, CATIA, Dassault’s flagship enterprise CAD system, suffered a small decline with revenue down 1 percent. The company blames disappointing sales in China. South Korea and India sales were up, for a 6 percent increase in Asia-Pacific for the quarter.

GEOVIA, the division with mining software, was the next cited for highest growth with 12 percent, coming off a “deep and difficult” period in the mining industry. Dassault Systemes bought Gemcon in 2012 for $360 million.

 

Big Aero and Auto

A deal at Boeing was Dassault Systemes’ biggest ever, according to Charles. The company seems to be losing ground in the automotive sector with a couple of big auto account defections—Daimler Mercedes in 2014 and Yamaha earlier this year—but counted among its wins Scania, a maker of heavy trucks and buses, and a subsidiary of Volkswagen Scania had cast a roving eye at PTC’s PLM but ended up staying with ENOVIA. There also have been stumbles at Jaguar Land Rover.

Both Boeing and Scania were previous customers, so Dassault Systemes appears to be locking down big customers with long-term commitments as well as expanding the scope of its product use at these companies.

The company hopes to complete the $400 million Exa acquisition. The fluid simulation company Exa lists a $73 million revenue for 2016.

Bottom of the 9th, PTC Hits One to Win It

A great fourth quarter give PTC a 2 percent increase in revenue for the year, despite the losses for the previous four quarters. PTC has not had a quarter this good since Q3 of 2015, over two years ago, when it made a $17 million profit. Are PTC’s investments in advanced technology finally paying off? CEO Jim Heppelmann certainly seems to think so.

A great fourth quarter puts PTC in the black for the year. (Chart by TenLinks.)

Another high point at the financial call was the subscription mix, which is at 72 percent of revenue for the quarter.

“We’re a year early on reaching the goal of 70percent,” saidHeppelmann, who then promptly raised the goal to 85 percent. The company strives for moving to full subscription by Q2 for 2018 for the Americas and Western Europe.

The company couldn’t stop talking about ThingWorx (mentioned 39 times) and Vuforia(seven times). By comparison,CAD was mentioned 22 times, including Creo by name once. Windchill got six shout-outs while PLM in general got 30, putting PLM in second place.

CAD and PLM continue to be the main breadwinners, and Creo revenue may have surprised by growing 14 percent for the year.That is many times more than market growth for CAD, according to Heppelmann.

“Growth for PTC was rock solid and has seven consecutive quarters of double-digit bookings growth in our retailer channel,” he said.

Some of the growth in the CAD business may be attributable to PTC’s aggressive plan to go after IoT and AR business, a plan questioned by many CAD insiders but one that may now be paying dividends. Firms may sense PTC is in the right place for high technology beyond CAD, such asIoT and AR, and forcing their CAD departments to follow suit.

The IoT is taking off. Customers that have bought into Vuforia and ThingWorx are doubling down.

“For the full year, expansions comprised 70 percent of ThingWorx bookings,” Heppelmann said.

Hislong-term goal is for PTC to be a $2 billion, subscription based, industrial software company by 2021. He noted their emphasis on industrial software, not CADor design, for which PTC has traditionally been known. The company projects made $1.16 billion in FY2017, so making $2 billion in 2021 would require an 11percent growth each year over year for the next four years.

Geographically, Europe gave PTC the best gains, with 39 percent. Americas grew 10 percent. PTC seemed to think it was lucky to have Asia Pacific show positive growth at all and only because of turnaround in Japan following a management shakeup.