CIMdata PLM Industry Summary Online Archive
29 April 2010
Financial News
DS Reports First Quarter 2010 Financial Results with New License Revenue Up 19% in Constant Currencies
Dassault Systèmes (DS) reports IFRS unaudited financial results for the first quarter ended March 31, 2010. These results were reviewed by the Company’s Board of Directors on April 28, 2010.
Summary Financial Highlights
(unaudited)
- First quarter financial results slightly above DS objectives
- Non-IFRS EPS up 16% to €0.43 per share
- Non-IFRS operating margin expands 270 basis points
- Net operating cash flow of €133 million
- DS completes acquisition of IBM PLM on March 31, 2010
- DS increases 2010 earnings per share objective for currency exchange evolution
First Quarter 2010 Financial Summary
(unaudited)
In millions of Euros, except per share data |
|
IFRS |
|
Non-IFRS |
|||||||||
|
|
|
|
Change |
|
Change in cc* |
|
Change |
|
Change in |
|||
Q1 Total Revenue |
|
311.9 |
|
1% |
|
1% |
|
312.0 |
|
0% |
|
1% |
|
Q1 Software Revenue |
|
279.7 |
|
3% |
|
4% |
|
279.8 |
|
3% |
|
3% |
|
Q1 EPS |
|
0.32 |
|
33% |
|
|
|
0.43 |
|
16% |
|
|
|
Q1 Operating Margin |
|
15.9% |
|
|
|
|
|
22.1% |
|
|
|
|
|
*In constant currencies.
Bernard Charlès, Dassault Systèmes President and Chief Executive Officer, commented, “Business activity improved across our major brands during the first quarter. We had a good dynamic with high tech and energy companies, in particular, contributing to ENOVIA’s 29% increase in new license revenue in constant currencies. This quarter also highlighted our operating leverage and our strong cash flow from operations.
“Beyond the benefits of the gradually improving economic environment, 2010 marks the beginning of a new stage of growth for Dassault Systèmes, driven by the adoption of our Version 6 online architecture, the expansion of our target audience and our sales channels, uniquely positioned to work closely with our customers.”
First Quarter 2010 Financial Review
(unaudited)
In millions of Euros |
|
IFRS |
|
Non-IFRS |
|||||||||
|
|
Q1 2010 |
|
Q1 2009 |
|
Change in cc* |
|
Q1 2010 |
|
Q1 2009 |
|
Change in |
|
Total Revenue |
|
311.9 |
|
309.7 |
|
1% |
|
312.0 |
|
310.7 |
|
1% |
|
Software Revenue |
|
279.7 |
|
271.8 |
|
4% |
|
279.8 |
|
272.8 |
|
3% |
|
Services and other Revenue |
|
32.2 |
|
37.9 |
|
(14%) |
|
32.2 |
|
37.9 |
|
(14%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PLM software Revenue |
|
208.8 |
|
200.7 |
|
4% |
|
208.9 |
|
201.7 |
|
4% |
|
Mainstream 3D software Revenue |
|
70.9 |
|
71.1 |
|
1% |
|
70.9 |
|
71.1 |
|
1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
91.7 |
|
97.4 |
|
(0%) |
|
91.8 |
|
97.8 |
|
(0%) |
|
Europe |
|
140.9 |
|
137.6 |
|
2% |
|
140.9 |
|
137.7 |
|
2% |
|
Asia |
|
79.3 |
|
74.7 |
|
2% |
|
79.3 |
|
75.2 |
|
1% |
|
*In constant currencies.
First quarter financial results were slightly above the Company’s objectives. New licenses revenue increased 19% in constant currencies. As anticipated, periodic license, maintenance and product development revenue and services revenue were slightly lower, leading to non-IFRS total software and non-IFRS total revenue growth of 3% and 1%, respectively in constant currencies.
- IFRS and non-IFRS new licenses revenue increased 18% on a reported basis and increased 19% in constant currencies to €76.1 million.
- The growth in new licenses revenue was broad-based with the Company’s largest software applications, including CATIA, ENOVIA, and SolidWorks, all showing double-digit new license revenue growth.
- Year-over-year growth in new business activity was reported in each of the Company’s three sales channels, led by its PLM channel for the SMB market.
- IFRS and non-IFRS recurring software revenue, representing 73% of total software revenue in the first quarter, was lower by 1% in constant currencies in comparison to the year-ago quarter.
- The IFRS operating margin was 15.9%, expanding 290 basis points. The non-IFRS operating margin expanded 270 basis points to 22.1% compared to 19.4% in the year-ago period reflecting a decrease in expenses due to the ongoing benefits from the Company’s cost and efficiency programs, as well as the favorable impact of currencies. For the year, the Company is targeting to expand its non-IFRS operating margin by approximately 100 basis points.
- IFRS earnings per diluted share increased 33% to €0.32 up from €0.24. Non-IFRS earnings per diluted share increased 16% to €0.43 compared to €0.37 in the year-ago period on operating margin expansion and the favorable impact of currencies.
- The Company completed the acquisition of IBM PLM sales and customer support operations, encompassing DS’ PLM software application portfolio on March 31, 2010. The purchase price was US$600 million less assumed liabilities. In early April the Company entered into a loan facility in Japan for JPY 14.5 billion (the equivalent of 160 million US$), in order to finance a portion of the acquisition of IBM PLM.
Cash Flow and Other Financial Highlights
IFRS net operating cash flow was €133 million for the 2010 first quarter.
Cash, cash equivalents and short-term investments totaled €904.6 million at March 31, 2010 compared to €1,058.0 million at December 31, 2009. Long-term debt was €200 million at March 31, 2010.
Annual Shareholders’ Meeting Date and Cash Dividend Recommendation
The Annual Shareholders’ Meeting has been scheduled for May 27, 2010. The Board of Directors has recommended an annual cash dividend equivalent to €0.46 per share, representing about €54 million in the aggregate, for the fiscal year ended December 31, 2009, stable with the prior year’s dividend per share. The dividend is subject to approval by shareholders at the Annual Shareholders’ Meeting.
Key Business and Corporate Highlights
Dassault Systèmes and IBM Complete Transaction to Integrate IBM PLM Sales Operation into DS. Dassault Systèmes and IBM completed the transaction for IBM PLM’s sales and client support operations, encompassing DS’s PLM software application portfolio. The transaction helps fuel IBM’s focus on PLM integration through middleware, business transformation and application services and dynamic infrastructure. Dassault Systèmes PLM clients will benefit from a strong, unified go-to-market model encompassing the entire DS portfolio and providing a complete PLM value proposition under one umbrella. Fully integrated R&D, sales and support teams will bring DS closer to its customers. This move will streamline customer engagements, improving their overall experience.
VF Corporation Selects Dassault Systèmes’ V6 PLM Solution.
VF Corporation, a global leader in branded lifestyle apparel, has selected DS’ ENOVIA V6 PLM solution as its platform for global apparel development and sourcing.DS ENOVIA was chosen after a competitive review of leading PLM vendors and specialist apparel technology providers. VF sought a proven solution that would enhance collaboration while accommodating the company’s diverse product portfolio, global presence and growth plans.
Meyer Werft Selects Dassault Systèmes V6 PLM Solution. MEYER WERFT, one of the world’s leading cruise ship builders, has selected DS’ V6 PLM platform for collaborative product development. Building cruise ships requires design and production logistics to manage more than 10 million different parts, putting exceptionally high requirements on the features and performance of a PLM system. IBM Global Business Services will provide transformation consulting, implementation and integration services to improve time, quality and cost in the yard’s engineering and manufacturing processes.
Dong Fang Boiler Selects Dassault Systèmes for First-of-a-kind PLM Solution to Support Global Collaboration. Dong Fang Boiler Group CO., LTD. (DBC), one of the largest power station boiler suppliers in China, has selected DS’ ENOVIA V6 solution to build the first collaborative data management platform in China’s power station boiler industry. The solution will enable DBC to perform collaborative data management throughout its product processes, from design and construction to customer services and improve its overall design and production efficiency.
InnerPulse to Utilize Realistic Simulation from Dassault Systèmes to Accelerate Medical Device Innovation. InnerPulse, a medical device company pioneering a novel technology for those patients with cardiac rhythm disorders, has selected Abaqus finite element analysis (FEA) software from SIMULIA to assist in the development of their technology designed in SolidWorks CAD software.
Other Corporate Information
On April 1, 2010, Dassault Systèmes filed its 2009 Document de référence with the French “Autorité des marchés financiers”. The 2009 Document de référence as well as an English language translation of this document are available on the Company’s website.
Business Outlook
Thibault de Tersant, Senior Executive Vice President and CFO, commented, “The first quarter was a rewarding period as we completed the acquisition of IBM PLM, and welcomed our new colleagues to DS offices in 27 countries. Thanks to strong execution and focus on our customers, we did this without disruption to our sales activity, enabling DS to achieve first quarter results well in line with our objectives.
“While we observed some further encouraging indicators in the quarter, including double-digit growth in our new licenses revenue, the overall environment confirmed our views that the economic recovery will be a progressive one. Within this framework, nonetheless, we were able to deliver operating margin leverage and earnings per share growth. During the first quarter our non-IFRS operating margin expanded 270 basis points and non-IFRS earnings per share grew 16%.
“Based upon this performance and our outlook, we are reconfirming our 2010 non-IFRS revenue growth objective in constant currencies and our operating margin objective. We are increasing our 2010 non-IFRS earnings per share objective range to about €2.19 to €2.28, representing growth of about 18% to 23%, reflecting a more favorable currency environment.”
The Company’s current objectives are the following:
- Second quarter 2010 non-IFRS total revenue objective of about €360 to €370 million, non-IFRS operating margin of about 23% and non-IFRS EPS of about €0.46 to €0.50;
- Reconfirming 2010 non-IFRS revenue growth objective range of about 15% to 17% in constant currencies; (€1.455 to €1.475 billion based upon the 2010 currency exchange rate assumptions below from €1.410 to €1.440 billion previously);
- Reconfirming 2010 non-IFRS operating margin of about 26%;
- Increasing 2010 non-IFRS EPS range on change in currency assumptions to about €2.19 to €2.28, representing growth of about 18% to 23%; (previous range €2.09 to €2.19)
- Objectives are based upon exchange rate assumptions for the 2010 second quarter of US$1.40 per €1.00 and JPY125 per €1.00 and a full year average of US$1.40 per €1.00 and JPY130 per €1.00.
The Company’s objectives are prepared and communicated only on a non-IFRS basis and are subject to the cautionary statement set forth below.
The non-IFRS objectives set forth above do not take into account the following accounting elements and are estimated based upon the 2010 currency exchange rates above: deferred revenue write-downs estimated at approximately €40 million for 2010; share-based compensation expense estimated at approximately €15 million for 2010 and amortization of acquired intangibles estimated at approximately €62 million for 2010. The above objectives do not include any impact from other operating income and expense, net principally comprised of, acquisition (IBM PLM acquisition costs estimated at €12 million), integration and restructuring expenses. These estimates do not include any new stock option or share grants, or any new acquisitions or restructurings completed after April 29, 2010. The above adjustments take into account the current estimated impact of the IBM PLM acquisition. The accounting will be finalized in the Company’s second quarter earnings announcement.
Webcast and Conference Call Information
Dassault Systèmes will host a webcast and a conference call today, Thursday, April 29, 2010. Management will host a webcast at 8:30 AM London time/9:30 AM CET time and will then host the conference call at 2:00 PM London time/3:00 PM CET/ 9:00 AM New York time. The webcast and conference call will be available via the Internet by accessing http://www.3ds.com/company/finance/. The webcast and conference call will be archived for 30 days.
Additional investor information can be accessed at http://www.3ds.com/company/finance/ or by calling Dassault Systèmes’ Investor Relations at 33.1.61.62.69.24.
Non-IFRS Financial Information
Readers are cautioned that the supplemental non-IFRS (previously referred to as “adjusted IFRS”) information presented in this press release is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Company’s annual report for the year ended December 31, 2009 included in the Company’s 2009 Document de référence filed with the AMF on April 1, 2010.
Visit the Company investor website where it sets forth its supplemental non-IFRS figures for revenue, operating income, operating margin, net income and diluted earnings per share, which exclude the effect of adjusting the carrying value of acquired companies’ deferred revenue, stock-based compensation expense, the expenses for the amortization of acquired intangible assets and other income and expense, net (in each case, as explained respectively in the Company’s 2009 Document de référence filed with the AMF on April 1, 2010) and the income tax effect of the non-IFRS adjustments. The tables also set forth the most comparable IFRS financial measure and reconciliations of this information with non-IFRS information.
Information in Constant Currencies
When the Company believes it would be helpful for understanding trends in its business, the Company provides percentage increases or decreases in its revenue (in both IFRS as well as non-IFRS) to eliminate the effect of changes in currency values, particularly the U.S.dollar and the Japanese yen, relative to the euro. When trend information is expressed herein "in constant currencies", the results of the "current" period have first been recalculated using the average exchange rates of the comparable period in the preceding year, and then compared with the results of the comparable period in the preceding year.
This press release constitutes the quarterly financial information required by article L.451-1-2 IV of the French Monetary and Financial Code (Code Monétaire et Financier).
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