Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| Overall, as Q4 is our biggest contract renewal quarter and thereby represents the quarter with our biggest ARR growth opportunity, we are pleased with the finish of the year |
| So, I am very pleased to say that we have now validated a breakthrough bottoms-up entry point for Digital Twin monetization that is, by contrast, instant on both technically and commercially |
| In keeping with this, Nicholas and his operating teams are to be enthusiastically congratulated for performance, which while surpassing our established annual hurdle of 100 basis points improvement in operating margin including stock-based compensation, earned 100% of their new business-based incentive pool |
| We accomplished a tremendous amount that positions us even better to take advantage of the favorable dynamics for infrastructure and I will see continuing into the foreseeable future |
| And back on SMB, we just become more convinced every year that we have been -- we've neglected that potential in the market and we're very excited about that now |
| So, it's a good opportunity for us |
| And any case, I think you can take away confidence in our principal demonstrated investment premise, consistently delivering profitability after stock-based compensation, which has grown at a compounded rate remaining on the order of 16% per year since 2018, with distinctively transparent cash conversion |
| Our last 12 months constant currency account retention rate is back at 98% and our constant currency recurring revenues net retention rate was 109% led by continued accretion within our E365 consumption-based commercial model |
| And the AI has gotten better and better and the value has gotten more and more over that period of time, but the business has had the fits and starts of the tower cos wanting digital twins, but their own ecosystem of providers in their own internal enterprise systems not being ready |
| And we think, AI has a tremendous potential to make them more productive |
| So while I have been generally emphasizing, maintaining into our 2024 outlook, our favorable overall operational and market consistency and momentum from 2023, this significant change to our acquisition priorities will make a difference |
| Reinforcing confidence in continued such momentum in 2023 Q4 Virtuoso subscriptions attracted over 700 further new logos for the eighth straight quarter of over 600, in addition to over 400 separate new logo SMB accounts where in 2023 Q4 we achieved what I suspect was a competitive displacement through a perpetual license sale |
| We expect an adjusted operating income with stock-based compensation margin, reflecting approximately 100 basis points annual margin improvement |
| Our outlook also reflects our continued margin improvement commitment of approximately 100 basis points |
| Our largest sector public works and utilities continues to be the main growth driver for the company benefiting from infrastructure investments around the world whether in transportation, water utilities or the electric grid |
| Moving to our 2024 outlook, which reflects our confidence in continued favorable market conditions and in the momentum of our growth initiatives, it also assumes a slightly larger than normal range of possible ARR outcomes to account for a commercial model shift in China from ARR, lower acquisition expectations, reduced escalations now that peak inflation is behind us and the incremental upside from asset analytics as Greg discussed |
| With our strong free cash flow generation profile, we expect to organically delever and to increase our balance sheet strength while maintaining our programmatic M&A readiness, our dividend and share repurchases |
| In this context, Power line systems or applications for analysis and simulation of overhead transmission infrastructure continue to perform very well |
| Although this entailed resourceful rebalancing after new mining investment unexpectedly slowed down in midyear, we have ended the year with historically high momentum in our fundamental ARR growth |
| To summarize, we are responding to very healthy end markets with appropriate and by now proven initiatives to sustain 2023's performance with incremental upside now including Asset Analytics |
| North America continued its strong performance |
| So, I'm pleased to report accelerating annual progress, with annual application mix accretion having grown from about 4.5% for 2022 to about 6% for 2023 |
| EMEA had another strong quarter led by public works and utilities across the region |
| Our E365 and SMB initiatives continue to be solid contributors to our subscription revenues growth |
| We are pleased with another strong quarter to finish out a great year |
| In Asia Pacific we had solid growth in Southeast Asia driven by outsourcing to local engineering talent |
| Australia and New Zealand continue to have strength in resources |
| Our professional services revenues for the quarter grew 9% year-over-year in reported and 7% in constant currency |
| Just our overall strategy Josh as we commit to improving our operating margins including stock-based compensation by 100 basis points per year |
| I'm happy to report that many of those DOTs were successful in winning grants |
| Statement |
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| Q4 continued to be impacted by headwinds in China and a greater preference there for perpetual licenses |
| Our license sales went down year after year after year determinably because, of course we refer subscriptions |
| Seequent performed as expected given the slowdown of new mine investments continuing to weigh on its growth rate |
| As to consumption volume, we faced another putative headwind with the demographics of retirement tending to reduce the infrastructure engineering workforce |
| Industrial remained mixed as growth with EPCs continue to slow down especially in Asia Pacific |
| A quarter ago a key question about ARR growth for 2023 Q4 was the degree to which accelerating progress in transitioning our China commercial model to be less directly subscription-oriented could perversely offset overall ARR growth |
| They are struggling to find the people and skills necessary to fulfill the demand |
| When Chinese developed products of our first joint venture cannibalized project-wise installations, we lose ARR in exchange for approximately equivalent one-time net proceeds of the license sale for our underlying platform |
| Nominally, that appears below what was our outlook for 2023 a year ago and at the midrange below our 2023 actual outcome |
| The only offsetting gains in application usage volume could come from competitive displacement opportunities on the margin |
| And we just expect that this is coming down from that level |
| More than one-third of project overruns are related to unexpected ground conditions |
| All hands are needed on this for the reasons we talked about the demographics and the shortage of users and user days in the US, especially but the -- I think the main picture is higher for longer rather than higher |
| And while much of our non-E365 subscription revenue is subject to 606 vagaries across the quarters of a contract year, we have almost none of the multiyear bookings and/or billings, which caused confounding obscurity for many other peer companies |
| But in fact, we plan for a quite consistent underlying robust ARR growth, especially ex-China, but subject as measured though to these effects of the accelerating China subscription transition of somewhat moderated escalation and have lowered expectations for ARR from programmatic acquisitions |
| In line with our plan and as discussed on our last call, our Q4 margin was impacted by relatively higher OpEx compared to Q3, mainly caused by incremental promotional activities and IT system implementation costs associated with our new financial systems |
| It isn't necessarily faster than -- these are organizations that are that have a long legacy and lots of enterprise constraints and their own challenges for talent and so forth |
| On the other hand the preference for local software is real and growing as well as the preference for perpetual licenses in case the geopolitical situation worsens |
| And so we're taking expectations down also underline what Greg mentioned |
| As just mentioned, subscription revenues were impacted by the timing aspects from our continued E365 upgrades |
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