Optimistic Innoveda reports Q1 growth

Innoveda has reported financial results for the first quarter ended 31st March 2001: revenue for the quarter grew 89% to $27.3 million from $14.4 million for the comparable 2000 quarter.

Innoveda has reported financial results for the first quarter ended 31st March 2001: revenue for the quarter grew 89% to $27.3 million from $14.4 million for the comparable 2000 quarter.

Operating income, before amortisation and nonrecurring charges, totalled $1.8 million compared with $68,000 in the 2000 first quarter.

Net income, before amortisation and nonrecurring charges, rose to $1.1 million, or $0.03 per share, from a loss of $0.2 million, or $0.03 per share, for the first quarter of the prior year.

Including merger-related amortisation and nonrecurring charges resulting primarily from acquisitions made during 2000, the company reported a net loss of $2.1 million, or $0.05 per share, for the first quarter of 2001 compared with a net loss of $4.4 million, or $0.57 per share, for the same quarter last year.

Innoveda was formed by the March 2000 merger of Viewlogic Systems and Summit Design and acquired PADS Software in September 2000.

Results for fiscal 2000 include contributions from Viewlogic for the entire year, Summit from March 2000 and PADS from September 2000.

On a pro-forma basis, including Viewlogic, Summit and PADS results for the full period, revenue for the first quarter of 2001 increased 15 percent to $27.3 million from $23.8 million in the prior year.

This revenue comparison excludes the company's VirSim product line, which was sold in August 2000.

Operating income for the first quarter equalled $1.8 million compared with an operating loss of $1.6 million for the first quarter of 2000.

Net income for the quarter increased to $1.1 million, or $0.03 per share, from a loss of $1.1 million, or $0.03 per share, for the comparable 2000 quarter.

These results exclude amortisation and nonrecurring charges.

Commenting on the quarterly results, President and Chief Executive Officer William J Herman said: "During the quarter, we achieved strong growth of 24 percent in software and services revenue, the two key metrics by which we measure our performance.

Including maintenance, total revenue growth was 15 percent.

While overall revenue growth was lower than expected for the quarter, expenses were contained and our operating income reflected substantial growth".

Key financial results for the quarter, on a pro-forma basis, were as follows.

Software revenue, representing 56 percent of total revenue, increased 21 percent to $15.4 million from $12.8 million for the same period last year.

Services revenue, which represented 6 percent of total revenue, increased 65 percent to $1.5 million from $0.9 million in the prior year period.

Maintenance revenue was $10.4 million, representing 38 percent of overall revenue, which was a 3 percent increase over the first quarter of 2000.

Gross margin equalled 84 percent compared with 82 percent for the first quarter last year.

Operating margin was 7 percent compared with a loss for the first quarter of 2000.

Looking ahead to the balance of the year, Herman noted, "We are pleased with our results for the quarter, although current economic conditions are causing many companies in our target markets to re-evaluate and sometimes postpone spending on EDA purchases.

While we are planning for a consequent impact in our near-term business resulting from this circumstance, our long-term strategy and business plan remain unchanged.

Innoveda provides industry-leading, differentiated design solutions for some of the fastest growing EDA market segments.

We believe that production for the companies that drive our growth - the consumer electronics, computer, telecommunications and automotive industries - is inherently sound and our customers' need to get highly differentiated products to market before the competition will not lessen.

Consequently, R and D budgets for EDA purchases, while being affected by general economic conditions, should remain less affected than other spending trends".

While the company's goal of continually increasing software and services revenue to drive overall revenue growth and improve profitability remains unchanged, in light of the current economic uncertainty, Innoveda is revising its outlook for the current quarter and balance of the year.

For the second quarter of 2001, the company is planning for overall revenue of approximately $27 million and an operating margin of approximately 5 percent.

For the full year, the company anticipates overall revenue of approximately $120 million and an operating margin of 8 to 10 percent.

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