TEL AVIV (Reuters) - The manufacturing sector and a shift to cloud computing and an increase in three-dimensional (3D) designs look to drive growth in the coming years at computer-aided design (CAD) software maker Autodesk (ADSK.O), a senior official said.
Steven Blum, a senior vice president for global sales and services, said manufacturing is the company’s largest market.
“It’s been a growth driver for us and will be for many years to come,” he told Reuters during a visit to Israel.
Autodesk has already issued a profit warning for the third quarter, saying it anticipates lower demand for its CAD software. It also forecast fourth-quarter revenue of $560-$580 million, lower than analysts’ expectations of $597 million.
Blum said the shortfall was due to a change in its business model and how and when the company recognizes revenue from some large accounts.
Some 40 percent of its business is now in a model of recurring revenue rather than recognizing sales up front.
“We’re looking to move more of our business into that space,” Blum said.
He noted that the global economy has improved somewhat in the past year, with southern Europe weak, northern Europe and Nordic countries strong and emerging markets “inconsistent”
“Overall, things are more stable compared to where we where a year ago,” he added.
Other areas expected to help drive growth are in architecture, engineering and construction and in building information modeling, where typical 2D drawings are turned into 3D designs. That, Blum said, helps cut down on construction waste and saves projects money.
Companies are slowly beginning to move to cloud designs, which Blum believes will be significant for Autodesk in the future. “We’re in the first inning of the ball game,” he said.
As part of growth in cloud, Autodesk believes its Israeli research and development center can help. Blum said the company aims to grow its research and development operations in Israel.
Autodesk is also seeking to reduce piracy and target smaller businesses who cannot afford its software by offering rental licenses.
Reporting by Steven Scheer