ANSS
#Yes, with China right now, and we view this is being temporary, because we still view that as being a good long-term market, we saw a little bit of slowness in some of the state-owned enterprises.
I think you saw that there is a lot of macro environment things going on with China and their stock market, some of the things that the state was doing in terms of that.
That's really kind of the primary part of it.
Oil and gas, pretty straightforward, but those are really the only ones that really stand out.
We've talked for a couple of quarters about Germany.
As Europe was coming up even with, as I mentioned, Eastern Europe and Russia being continuing to be pretty underwhelming right now is that Germany has always been a big bellwether for us and one of our top three markets perennially, and we had talked about some of those things in some of the things we put in place and that's probably one of the leading elements we had coming out.
It's just, if you remember when oil and gas and copper and anything was driving mining and other commodity related industries, as a result of the slowdown in all of those sectors, obviously some of those our end customers; so they tend to either result in those businesses realigning themselves for the realities of the current economic situation and slowdowns.
If you look at it, the most notable ones of the last few years, the mining in Australia, which was largely to support the Asia-Pacific, and if you look at also the mining and oil in South America, and Latin America was one of the areas where we saw probably the lowest performance.
Even that being said, we wound up at the pretty high upper end of the revenue guidance.
So it wasn't like it had a major impact, but we're always trying to note those various [pertabations] we see.
Not that anyone signals a megatrend, but they tend to be a number of things that we are looking at just as we continue to project out the next couple of years.
Well, I would say it's conservatism and I would say it is time lag, because anytime you get people involved, it is a big issue.
Keep in mind, we did a very major thing and the management and absorption of that is important.
Quite frankly, I don't know anybody who hits 100% on all the sales hires.
We've got a really good percentage, but you've got some of that factoring in.
And again, we're still hitting what we had projected at the beginning of the year for the year end and that's even taking into account that we're absorbing an increasing number of these ELAs.
Like I mentioned, we're close to [$]0.5 billion now in deferred and backlog element, so the business is building along those lines.
Now keep in mind, when you go to the named accounts, as somebody mentioned earlier, but I will reiterate, we had ---+ first of all, you find them, second of all, you train them, third of all, you have to then engage with the customer and we are getting that increased engagement.
Somebody mentioned ---+ alluded to the VP kind of access, and that is on a market uptick, but it isn't like the very first time that you meet the VP, they write you a check.
We're talking about planning out, if you will, to 2 through 10-year type of adoption patterns.
So there's that natural ---+ but that natural latency was built into the very guidance that we gave at the beginning of the year, and if you will, we're maintaining it even against some of the additional headwinds and also the benefits of the longer term nature of the enterprise license agreements.
And even though we are only on the very beginning of the ANSYS enterprise cloud usage, we've gotten a lot of interest there.
Now that will be time before people change overall usage patterns also.
But those are all your fairly positive things, but I think they're also fairly much in line with the guidance that we've been giving for the last few quarters.
How are you doing.
I'm going to have to try to process the closure rate.
The pipelines are markedly, markedly up.
I would say in general you look at the manufacturing index and things like that, those are some bellwether, but I think what you have to look ---+ what we've always gauged more towards is the R&D and, if you will, the innovation measures because essentially that's where our software's used, not primarily on the manufacturing and inventory side of things.
So as a result, we've seen a range of companies continuing to try to drive new intervention into their products, first and foremost.
Second of all is they're starting to figure out what, for instance, the industrial internet or Internet of Things might mean in terms of how they evolve or retrofit their products to fit in with that kind of environment.
We've talked about the overall electrification of traditional industries, automotive being one of the more notable ones, but being able to go into that one.
So with those type of things, we still see a lot of innovation.
In keeping with our global presence, we do see a fairly broad-based globalization, but amidst there, there are increasing amounts of fits and starts that continue around the globe as everybody seems to be recalculating things.
But at the end of the day, we don't really see an end of interest in new innovative products or basically flat lining on the new design level.
Well, it can create incremental revenue because essentially if somebody is on a lease basis, they basically get enhancements to the products that they have leased, but they'll get those generally across the portfolio.
Now, some of that starts to enter a little bit more as we discussed with the enterprise license agreements, where there is an increased flexibility that helps people predict, over a multi-year period, usage patterns that they might not be able to predict but allows them to flexibly meet that, which gives them the confidence to kind of, I would say, move forward instead of doing an exhaustive study to determine exactly what they need and when.
So we will have some of that.
But in answer to that, is that what we've usually said is that it tends to bend the curve up.
Maybe that's a bad expression these days, but it bends the curve, it does not dislocate the curve, traditionally.
But we do see that increased usage from the capability.
But that's ---+ keep in mind, we've had a normal cadence for the last decade of almost every six months having a fairly significant feature release, and it's continued to be one of those things that has helped propel us to this point, and we think is essential for going ---+ keeping that progress going over the next couple of years.
I think also ---+ the other thing I would mention, of course, is that as a testament to that, you also look at the historical renewal rates, which continue to be historically strong, and that's one of those things, it's really that vote of confidence in getting continued access to those capabilities, I think, that keeps those strong on both the lease and the service side of things.
Thank you.
Well, the one thing I want to mention is sometimes ELAs are really covered under ---+ I mean, you can kind of draw a proxy by the, by those seven figure deals that we talk about, because ELAs are always in the healthy side of that, but I will tell you that sometimes the kind of agreements that we have here, where we're not even allowed to really mention some of those.
So I will tell you the one that we were able to kind of put through there and you will see you will be able to get at least a windage and elevation on that from that.
The other thing is that ---+ the other thing is tendency.
ELAs, they tend to more often happen beginning and end of years as people are synchronizing on their various calendars and budget cycles.
Above.
By the way, when I say above, I won't say 2X above, but it's significantly above.
I'm sorry, I'm just trying to give you little bit more color on that.
Hang on a minute.
Yes, plus $2.5.
Yes.
<UNK>, on, I think it was the last call, someone asked about are we going to trend our model kind of in line with what other people in the industry are doing relative to moving to everything subscription, and I commented that historically, we have tended to have models that are flexible and meet the needs of many of our customers.
So if you looked at the commentary around geography, if you look at the performance of Asia-Pac for example, Asia-Pac, places like India, China, Korea, when they are growing very fast, they are really perpetual license buyers.
They are not subscription license buyers predominantly, particularly in those major accounts and we have in those geographies.
So the reality is, while in some geographies ELAs and subscription is becoming more of an acceptable norm, in other parts of the world they are still perpetual buyers and we're going to continue to offer them perpetual licenses.
$30 million.
Okay.
Actuary like to thank you all for your participation in our call today and for your ongoing support and coverage of ANSYS.
We are proud of what we've accomplished in the first half of 2015, but as we've discussed on the Q&A session here, we have got a lot of work ahead of us to deliver on our goals for the full year.
So with that, in addition to thanking you, I would like to thank the entire ANSYS team for their commitment to driving the results that we've had and that we are moving toward.
I would also like to welcome the Gear team to the ANSYS family.
In short, we feel that we are very well positioned to continue to drive the growth.
I'd probably cite two very significant reasons.
First, we have increased visibility from some of the larger multi-year enterprise opportunities that are in the pipeline for the back half of the year, and also the general growth of the pipeline that we have alluded to on this Q&A.
Secondly, we've been successful in the more aggressive approach to sales hiring that we referenced on the last couple of calls, and of course, we've discussed that here.
In short, we have unparalleled product offerings.
We've got a great long-lived record with our customers, extremely high recurring revenues and the opportunity to augment our growth through new features and the kind of the exciting technologies from acquisitions, as well as our own internal R&D innovations.
So continued sights in the near term, we are growing our direct sales force, we have a renewed focus on our indirect channel.
I think you saw some of those results in Germany, where we have a very hybrid model, and we are committed to driving solid financial results to generate continued value for our shareholders.
So with that, I will sign off.
Thank you very much and talk to you again next quarter.
