Direct Answer
140 SEC filers are classified under the Standard Industrial Classification code that describes the design & engineering software industry, and their latest annual reports show $630.2 billion of combined revenue and a median operating margin of -5.5%. Investors should still evaluate its revenue model, industry-specific KPIs, valuation framework and the risks that can change the group's economics.
Industry Overview
Design and engineering software companies sell computer-aided design, simulation and product lifecycle tools to manufacturers, builders and designers. Subscriptions and long project use give recurring revenue. The first numbers to compare across companies here are annual recurring revenue, net retention and seats and customers.
Key Industry Metrics
- Annual recurring revenue: Annualized subscription value for design and simulation tools. It shows how much revenue repeats, and growth follows customers' engineering headcount and adoption of cloud tools.
- Net retention: Spending from existing customers versus a year earlier. Above 100% suggests customers add seats, modules and simulation, and below 100% shows project slowdowns or tool consolidation.
- Seats and customers: The number of users and organizations paying. Seats follow customers' engineering staff, so changes in hiring or automation of design work can reshape growth.
- Operating margin: Profit after operating costs as a share of revenue. Long-lived engineering tools produce steady cash, and margin shows how much remains after development and sales spending.
- Industry mix: Revenue by customer industry, such as manufacturing, construction or aerospace. Mix shows exposure to cyclical sectors, since budgets in factories and construction move with capital spending.
Primary Macro Drivers
- Manufacturing and construction spending: Companies building factories, products and structures purchase design and simulation tools, so activity in these industries supports seats and recurring revenue.
- Digital twin and simulation adoption: Virtual models of products and plants let engineers test before building, supporting adoption of higher-value simulation and lifecycle modules.
- Cloud migration: Moving engineering tools to the cloud broadens access and enables subscription upgrades, supporting net retention and customer count.
- AI-assisted design: Tools that generate or check designs raise engineer productivity, which can support higher-priced tiers but may reduce seats needed.
Major Risks
- Cyclical customer budgets: Customer engineering budgets shrink when manufacturing and construction slow, delaying new seats; watch net retention and industry mix.
- Competition: A few established vendors dominate, and rival tools can win new projects on price or features; watch seat growth and win-rate commentary.
- Switching and bundling: Teams that learn one system rarely change, but bundling by large vendors can displace point tools; watch retention and the share of modules per customer.
- Seat compression: If software lets fewer engineers do the work, seat counts can fall even as value per user rises; watch seats, pricing metrics and net retention.
Industry Characteristics
| Characteristic | Profile |
|---|---|
| Cyclicality | Mixed |
| Capital Intensity | Low |
| Regulatory Intensity | Low |
| Industry Maturity | Mature |
| Geographic Importance | U.S. / Global |
Design & Engineering Software Filers in the SEC Record
140 companies with annual reports in the dataset are classified by the SEC in the Standard Industrial Classification code 7372. Their latest fiscal years end between 2024 and 2026, and together they reported $630.2 billion of revenue. Median revenue growth over the prior year was 13.5%. Median operating margin was -5.5% and median net margin -2.3%. Median total liabilities were 44% of total assets, and 65 of 140 reported a profit in their latest year.
| Company | Revenue | Growth | Operating margin | Net margin | Year |
|---|---|---|---|---|---|
| Microsoft Corp | $281.7 billion | 14.9% | 45.6% | 36.1% | FY 2025 |
| Oracle Corp | $67.4 billion | 17.3% | 30.6% | 25.2% | FY 2026 |
| Salesforce, Inc. | $41.5 billion | 9.6% | 20.1% | 18.0% | FY 2026 |
| Block, Inc. | $24.2 billion | 0.3% | 7.1% | 5.4% | FY 2025 |
| Adobe Inc. | $23.8 billion | 10.5% | 36.6% | 30.0% | FY 2025 |
| Intuit Inc. | $18.8 billion | 15.6% | 26.1% | 20.5% | FY 2025 |
| Servicenow, Inc. | $13.3 billion | 20.9% | 13.7% | 13.2% | FY 2025 |
| Shopify Inc. | $11.6 billion | 30.1% | 12.7% | 10.7% | FY 2025 |
The 8 largest of 140 by revenue. Source: each company's own annual report as filed with the SEC (XBRL data), figures in U.S. dollars. A company's SIC code reflects its main business as the SEC records it, so it can differ from how an index provider or analyst classifies the company, and a diversified group appears under only one code.
Where to Go Next
The Design & Engineering Software guide describes how the industry earns money, what to measure and what can go wrong. To see how it compares, read the neighbouring industries in the same sector, then apply the same checks to a specific company.
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Frequently Asked Questions
What are the main KPIs for the Design & Engineering Software industry?
Key performance indicators for the Design & Engineering Software industry include: Annual recurring revenue, Net retention, Seats and customers, Operating margin, Industry mix. Which matter most depends on the company's model, so compare them across several companies rather than relying on one.
How cyclical is the Design & Engineering Software industry?
The Design & Engineering Software industry exhibits mixed cyclicality characteristics. Some segments move with the broader economy while others maintain more stable demand, making stock selection within the group particularly important.
What are the biggest risks in the Design & Engineering Software industry?
The primary risks for Design & Engineering Software companies include: Cyclical customer budgets, Competition, Switching and bundling, Seat compression. Investors should assess each company's exposure to these factors and its track record of navigating them.