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UGS's Annual Revenue Reaches $1 Billion

The company capitalizes on a growing market and becomes the first PLM vendor to hit the billion-dollar mark.
Product-life-cycle-management software and services provider UGS Corp.'s revenue hit record levels in 2004, jumping 14% to $1.02 billion. The company is building on a history of market knowledge, acquisitions, and customer relationships, industry analysts say.

UGS also reported fourth-quarter 2004 revenue of $294.2 million, an 11% increase over the same quarter a year ago, making it the sixth consecutive quarter of year-over-year revenue growth.

UGS is the first "pure-play" PLM vendor to break the billion-dollar mark, says Kevin O'Marah, VP of AMR Research. Although past revenue reported by EDS and IBM Dassault has been more than $1 billion, they included the services revenue of other divisions within those organizations, O'Marah says.

Customer wins across the automotive and the aerospace sectors--Boeing, Ford, and General Motors; the recent acquisition of Tecnomatix Technologies Ltd., a provider of manufacturing process-management software; and the expansion of the Teamcenter PLM portfolio have all contributed to UGS's revenue growth, says Dick Slansky, senior analyst at ARC Advisory Group. Additionally, UGS is still producing legacy revenue from acquisitions made while part of EDS, Slansky says.

UGS's acquisition of Tecnomatix puts the company at the forefront in pushing digital manufacturing, which will be the next major trend in PLM, Slansky says. Recent enhancements to the Teamcenter offering, such as added digital product-development capabilities, also contribute to UGS's growth in the market.

But Dassault Systemes, which represents 40% of the complete PLM market along with UGS, isn't far behind, Slansky says. "I wouldn't be surprised if Dassault broke the $1 billion mark in their earnings report as well. In essence, we're seeing this because there's a strong growth trend in PLM overall," he says.

UGS also revealed its first integrator alliance deals with Hewlett-Packard and consulting provider Capgemini U.S. LLC since the company split from EDS and launched independent operations nine months ago. UGS and HP will create a global program to jointly offer a "one-stop shop" of enterprise PLM software, designed to help customers integrate individual components, such as hardware, software, services, integration, and support.

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