Vectorworks - End of Perpetual Licensing?

[Aaron Bourgoin]

If true, what does the message in this tweet portend for Graphisoft product?

https://twitter.com/Jonathanreeves7/status/1605888020770496512?s=20&t=07K-RV0CTGJqtTkNSCKzfQ

[thesleepofreason]

I think that reasoning might have been valid before 2007 when Nemetschek acquired control of GS but not today. Yes, the risk taking of users might be what has gotten AC to where it is and yes investing time and money into AC today might still be considered done at a premium. But that is null and void as GS is nothing more than one of Nemetschek's many horses in just one of many races and at the end of the day all that matters is their total tally.

I can see potential for us users asserting some control as we are relatively few and of which relatively many are truly devoted to AC with a sense of community. But this will get diluted quickly as the marketing operation is in full swing and subscriptions are made easily available.

[DGSketcher]

I think we are loosing sight of the main issue... The point of perpetual licences are they provide a safety net for any business that can't sustain the costs associated with a rolling licence, for example through financial difficulty or planned redundancy e.g. retirement and the need for on going data access.

I have been there back in the 2008 financial crash. Without the perpetual licence my business wouldn't have survived or recovered. AC would have been abandoned for a cheaper way of working.

[Rex Maximilian]

My concern, and we've already seen with the "re-autenticate" your GSID or full license goes to demo mode situation, is that they will nullify our legitimate, full license keys.

[thesleepofreason]

A quick look at Nemetschek's financial figures sure fills you with a sense of foreboding as they seem to have gotten a real taste for annual recurring revenue.

Revenue from subscription (EUR million) has gone from 13,7 in 2017 to 132,0 in 2021.

And headlining the Q3 2022 financial statement "Continued Double-Digit Growth in Q3 2022 Driven by High Demand for Subscription and SaaS". 

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Recurring revenue was again the main driver of growth and reached a new record level as a result of the strong demand for subscription-based and SaaS models in particular.

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In order to present the future growth dynamics and the success more transparently in the ongoing transition of the business to subscription and SaaS models and therefore in view of the total recurring revenues, the Nemetschek Group is introducing the key figure ARR (Annual Recurring Revenue). At 29.2%, the ARR growth in Q3 was significantly higher than the overall Group’s revenue growth (19.8%), which is a strong indication of the continued high growth potential over the next 12 months

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Growth drivers were the revenues from subscription-based and SaaS models, as was the case in previous quarters. They grew by 57.5% (adjusted for currency effects: 47.1%) to a new record of €54.4 million in Q3, making an outsize contribution to the increase in recurring revenues. Accordingly, the share of recurring revenues, an important strategic indicator that includes subscription/SaaS as well as revenues from service contracts, grew further in Q3 and accounted for 68% of the Group’s revenues (same quarter previous year: 63%). In the first nine months of the year, revenue from subscriptions/SaaS increased to €146.8 million, representing growth of 57.8% compared to the corresponding previous-year period (adjusted for currency effects: 49.5%).

In the Design segment, revenue in Q3 2022 grew by 11.4% (adjusted for currency effects: 6.4%) to €96.9 million. After the first nine months of 2022, revenue was €287.4 million (+11.5%, adjusted for currency effects: +7.7%). The strong growth in subscription revenues (constant currency growth: Q3: +50.8%, 9M: +51.5%) is a testament to the success of the segment’s strategy of offering subscriptions and licenses in parallel. The EBITDA margin in Q3 2022 was 31.8% and almost at the previous year’s level (32.2%). During the first nine months of the year, EBITDA margin improved to 33.0% (previous-year period: 32.6%).

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[OBRA BRUSSELS]

It is quite disturbing news that Nemetschek goes this path, I really hope they keep a different strategy for AC and stick to the current system. I would definitely not step into a subscription plan. An architect's time behind a computer designing is relatively small, it does not or hardly pay off for the many, many small firms. 

[jl_lt]

Hi! just passing by and to not let this topic sink among a sea of other things. 

Another suggestion, in the long tradition of sensasionalist tabloids, would be to change the title from Vectorworks to Archicad, so it gathers a little bit more attention.

[jl_lt]

Hello, Graphisoft board of shareholders and desicion makers,How are you feeling today? 

[Aaron Bourgoin]

nervous.

[DGSketcher]

Good Question considering the Nemetshek share price is up all of 6% since Huw took the helm at Graphisoft nearly four years ago... Press Release

In the four years previous (2015-19) the shares went up 400%

[mthd]

Hi, I just stumbled across this very interesting post and Chief Architect software did something  similar earlier this year. Upgrade and keep SSA active or your perpetual license stops at that point.

Autodesk, Vectorworks & Chief Architect are now following this trend for CAD software.

Don’t you think it would be good for competition in the future, driving up the development of CAD software when all these companies could be saying “Pick me pick me” ?

It appears that GS could do the same for AC since it owns VW as we all understand.

If you were the CEO for GS would you follow suite with AC or would you keep offering perpetual licenses ?

Illustration: I buy a 2015 Ford Mustang and I own it and if don’t keep upgrading each year, I can’t own a 2025 Ford Mustang outright, I can only rent one ?

True software is not as tangible as a motor car but the bottom line is earnings, so that could control the outcome as is usually the case.

SSA systems can and does keep customers on board and loyal to a CAD product. 

In the end we humans are not perpetual because we cannot work forever with the CAD product so eventually our CAD product will no longer be perpetual beyond it’s retirement version. You may only keep it perpetual for a time if you actually have children who choose to work with the CAD you chose.

Many CAD companies vying for a yearly subscription fee could also drive the fee down with all the competition. AC 30 solo version for $X USD per year ? I can already get Revit Lt for $420 USD per year or $665 AUD per year for a 3 year period.

They may indeed damage their source of income and we consumers may come off as the eventual winners anyway ?

[DGSketcher]

Do you ever feel the Capitalists are colluding? It almost feels like CAD is creating its own version of OPEC. We can hope for a price war, but you can be assured there will be a drop in quality. Capitalism doesn't seem to have a moral compass anymore... 😕

One further thought, if there was a price war and they all got down to $1 per seat, assuming they wanted to stay in business, what would be the differentiator then?

[Laszlo Nagy]

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@mthd wrote:

It appears that GS could do the same for AC since it owns VW as we all understand.

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Just a small comment:

Graphisoft does not own Vectorworks. They are different companies with different products and different executive teams.

The Graphisoft and Vectorworks companies are both owned by the Nemetschek Group holding company.

[mthd]

Whoops ! Nemetscheck is the parent company not Graphisoft. 

I hope they can keep Archicad perpetual for as long as we want it to be and not phase out perpetual licensing over time ?

[dnathanc]

Occasional user of Archicad via subscription here, and just received pricing for a single perpetual license - up almost 40% from two years ago, and the service agreement is over 20% higher.  I know, inflation and all, but good lord.  Is this GS's way of steering people to subscription thinking and eventual acceptance?

[mthd]

Unfortunately inflation is definitely a big problem around the globe. That increase sounds excessive and it’s usually dependent on the Graphisoft partner as well. What region are you in ?

I had to cut my project home software for quantity surveying out of the equation as that comes from the US. The Australian dollar is low at present and I couldn’t afford to keep it up to date.

[Martin Jules]

It was a bad news considering its rise in strength:

It could have gone with ArchiCAD, as its sister, to beat Revit through their perpetual license plans.

[Laszlo Nagy]

Archicad won BIM Product of the Year 2023 last year at The Hammers 2023 (Construction Computing Awards):

https://constructioncomputing.co.uk/articles/?article_id=13599