Strengthening Dollar Hurt Enterprise Software Market in First Quarter 2015

ARC Advisory Group (www.arcweb.com) tracks the enterprise software market on a quarterly basis. We track the revenues of fifteen prominent publicly traded enterprise software companies, translate 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 is the quarter ended March, 2015 unless stated otherwise.

The suppliers included in this report recorded combined quarterly revenue of $21 billion, representing a 3.7 percent year-over-year decline rate. The year-over-year change in supplier revenues ranged from a reduction of 12.5 percent to growth of 17.6 percent. Seven suppliers, ClickSoftware, EMC, IBM, IFS, Infor, Oracle and PTC reported year-over-year decreases in software or product revenues. The decline was mainly due to strengthening US Dollar against other currencies. The euro depreciated relative to the dollar by over 17.6 percent from 1Q2014 to 1Q2015.

The percentage figures mentioned in the research and development (R&D) expense column are a factor of total revenues of the company and not just the enterprise portion of revenues considered for some of the suppliers in the report.

Here is the key chart from the report showing the included suppliers and their growth:


Supplier
Q1 2014 Q1 2015 YoY Growth R&D Expense % of Revenue
American Software/Logility (4Q ends April) $25.9 $27.6 6.5% 13%
Autodesk (1Q ends April) $592.5 $646.5 9.1% 30%
ClickSoftware $28.4 $26.7 -5.8% 18%
Dassault Systèmes $688.3 $735.2 6.8% 19%
Descartes (1Q ends April) $40.8 $44.4 8.8% 17%
EMC Information Intelligence Group $154.0 $138.0 -10.4% 14%
Hexagon Technology Division $375.5 $395.0 5.2%
IBM Software Segment $5,661.0 $5,199.0 -8.2% 7%
IFS $107.4 $94.0 -12.5% 10%
Infor (4Q ends April) $685.4 $658.7 -3.9% 15%
Manhattan Associates $113.6 $133.5 17.6% 10%
Oracle Software Segment (4Q ends May) $8,914.0 $8,400.0 -5.8% 13%
PTC $328.7 $314.1 -4.4% 19%
QAD (April) $68.5 $69.3 1.1% 15%
SAP $4,027.5 $4,122.4 2.4% 20%
Total $21,811.4 $21,004.5 -3.7%

Supplier Revenues for Calendar Q1 2014 vs. Calendar Q1 2015 (Millions of Dollars)

The enterprise software market growth has grown consistently except for the last two quarters. The chart below shows the quarter over quarter growth of enterprise market since 1Q15.

FinFig1

Year over Year Enterprise Software Growth

Currency translations effect played a major role during the quarter as was the case in 4Q14. Many companies witnessed negative growth as a result of currency conversion. The chart below shows the performance of Euro vs. Dollar since 1Q2013.

FinFig2

Impact of Euro Translation of Euro-Denominated Revenues

This is a quarterly report, timed after all the companies on the list release their revenues. If you would like a complete copy of this analysis, including the results of the fifteen enterprise software companies covered, please contact chanf@arcweb.com.

 

 

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