Enterprise Software Market Revenues Shrink in Q3 2016

On a quarterly basis, ARC Advisory Group releases a report that discusses the quarterly results of the major publicly traded enterprise software companies. The aggregated supplier revenue results and commentary provide market participants and other interested parties with a timely snapshot of the market’s performance. The latest report shows the worldwide enterprise software market continued its year-over-year decline in the third quarter of 2016.  The euro was nearly stable with respect to the US dollar by around 0.3 percent in Q3 2016.  This slight percentage exchange rate fluctuation provided stability to revenues reported in euros that ARC subsequently translated to US dollars for this report. Suppliers included in the report recorded combined quarterly revenue of $21.4 billion, representing a 1.3 percent year-over-year decline.

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 September 2016, unless stated otherwise. The R&D expense is a factor of total revenues of the company and not just the enterprise portion considered for this report.

A combination of negative currency translation effects due to the strength-ening dollar and the downward trend in revenues from on-premises soft-ware resulted in negative year-over-year revenue development for most enterprise software suppliers in Q3 2016, as presented in this quarterly ARC report.  In contrast, cloud/subscription revenues continue to grow.  This business model change negatively impacts revenue recognition at the outset and requires multiple periods to reach break-even levels.  The recent unfavorable exchange rates will likely have a significant impact on enter-prise market revenues for the rest of 2016.  ARC expects the year-over-year negative impact to continue until the comparative exchange rates stabilize.

If you are interested in the complete report, which analyses the growth of the industry in multiple segments, please contact Conrad Hanf (mailto:chanf@arcweb.com). Suppliers included in this report include American Software (Logility) (Q2 ends October), Autodesk (Q3 ends October), Aveva (Q2 ends September), Dassault Systèmes, Descartes (Q3 ends October), Hexagon (IES), IBM (Software Segment), Infor (Q2 ends October), Manhattan Associates, Oracle (Software Segment) (Q2 ends November), PTC, QAD (Q3 ends October), and SAP. Due to acquisitions leading to a company becoming privately held, ClickSoftware and EMC are not listed. Additionally, IFS is also removed as Q3 results are not released yet.

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