Industrial engineering software firm Aveva (AVV) saw first quarter revenue slide 3.5% as the Cambridge-based company put up a robust showing during the teeth of the Covid-19 pandemic.

What was particularly interesting is that the virus outbreak appears to be hastening clients’ switch to cloud-based subscriptions rather than traditional licence and maintenance contracts, a transition that Aveva is happily supporting.


So while the near-£11 billion UK company said that maintenance revenue was broadly flat and perpetual licences and services reduced substantially, subscription revenue jumped 30%.

Aveva added that its order pipeline for the remainder of the financial year was ‘solid’ and that it expected to benefit from ‘large contract renewals’ in the second half of the financial year, helping lift shares in the UK’s biggest technology sector business nearly 2.5% to £42.585.

No update was given on how profits are looking at this stage, though net cash fell from £114 million to £110 million.


The longer-term issue facing the company, and its investors, is how structurally shifting market dynamics might impact Aveva.

Positives include exposure to industries like power and energy, where networks are becoming increasingly complex given the shift towards more volatile renewable energy sources, especially in light of things like a growing number of electric vehicles on roads.

But this must be balanced against major long-term challenges to the oil and gas industry where many reserve exploration programmes have been scaled back given unpredictable pricing dynamics. And there is also the growing public pressure to reduce fossil fuel usage, which could impact demand from a sizeable part of Aveva’s customer base in the medium and longer-term.

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Issue Date: 29 Jul 2020