CIMdata PLM Industry Summary Online Archive

10 February 2011

Financial News

Dassault Systèmes Reports Strong Growth in Revenue, Earnings and Operating Margin for 2010

Dassault Systèmes reports IFRS unaudited financial results for the fourth quarter and year ended December 31, 2010. These results were reviewed by the Company’s Board of Directors on February 9, 2011.

Summary Highlights

  • Reached all 2010 objectives
  • 2010 revenue growth in constant currencies of 20% to €1.56 billion (IFRS) and 21% to €1.58 billion (non-IFRS)
  • 2010 new licenses revenue up 30% (IFRS and non-IFRS) in constant currencies
  • 2010 EPS growth of 27% to €1.82 (IFRS) and 34% to €2.50 (non-IFRS)
  • Net operating cash flow of €408 million for 2010
  • Strong sales channels performances and successful integration of IBM PLM
  • Over 16,000 new customers in 2010

Fourth Quarter Financial Summary

(unaudited)

In millions of Euros, except per share data

IFRS

Non-IFRS

Change

Change in cc*

Change

Change in cc*

Q4 Total Revenue

462.7

36%

29%

467.3

38%

31%

Q4 Software Revenue

418.2

39%

32%

422.8

40%

33%

Q4 EPS

0.64

(2%)

0.83

22%

Q4 Operating Margin

27.0%

33.9%

*In constant currencies.

“In short, we had an outstanding finish to a great year. Our sales pipeline entering the fourth quarter strengthened further, leading to new licenses revenue growth of 33% in constant currencies, with all our brands andsales channels contributing to this outperformance. We had a very good level of Version 6 wins in the quarter with both new and existing customers and see an important inflection point ahead in the adoption of our Version 6 PLM 2 applications,” commented Bernard Charlès, Dassault Systèmes President and Chief Executive Officer.

“Dassault Systèmes’ full year financial performance was equally strong. New licenses revenue increased 30% in constant currencies, clearly demonstrating the success of the IBM PLM integration, and non-IFRS earnings per diluted share rose 34% with our non-IFRS operating margin reaching 28.6%. These results highlight the broad interest in our product offer with each of our brands delivering double-digit software growth, our progress in industry diversification, with a robust year in high tech and energy in particular, and good growth in automotive and industrial equipment.”

“To date, more than 600 companies have adopted PLM 2 with our Version 6 for many reasons, and key among these, are the attractiveness of its online features, its real-time collaboration capabilities and the creation, management and protection of intellectual property which Version 6 enables. We are expanding into new domains such as embedded system management with Version 6. In this regard, we were pleased to announce today that BMW has selected Version 6 as its new platform for Embedded Systems architecture, integration and design. In fact, our customers tell us that the best way for them to power open collaboration between suppliers and partners, while protecting intellectual property, is PLM 2 with Version 6.”

“In 2011, we plan to drive even more diversification and expansion into all sectors of the global economy through our search-based applications (SBA) and our focus on innovation through communities. And, as our financial objectives indicate, 2011 should be another year of strong performance with double-digit growth in new licenses revenue.”

Dassault Systèmes completed the acquisition of the IBM PLM operations on March 31, 2010 and these operations were merged into the Company’s operations within its PLM business segment for the nine-month period commencing April 1, 2010. Due to the successful integration of former IBM PLM employees into the Company’s operations, involving many changes in sales territories and responsibilities, it is not possible to track the IBM PLM revenue and profit since the acquisition date. As previously disclosed, the IBM PLM share of Dassault Systèmes software revenue was estimated at approximately €53 million in the 2009 fourth quarter and €151 million for the April to December 2009 nine-month period.

Fourth Quarter 2010 Financial Review

(unaudited)

In millions of Euros

IFRS

Non-IFRS

Q4 2010

Q4 2009

Change in cc*

Q4 2010

Q4 2009

Change in cc*

Total Revenue

462.7

339.0

29%

467.3

339.1

31%

Software Revenue

418.2

301.1

32%

422.8

301.2

33%

Services and other Revenue

44.5

37.9

11%

44.5

37.9

11%

PLM software Revenue

335.4

237.1

34%

340.0

237.2

36%

Mainstream 3D software Revenue

82.8

64.0

22%

82.8

64.0

22%

Americas

132.3

103.3

18%

134.1

103.3

19%

Europe

215.3

160.9

33%

218.7

161.0

35%

Asia

115.1

74.8

36%

114.5

74.8

36%

*In constant currencies.

•           IFRS and non-IFRS total revenue increased 29% and 31%, respectively, principally reflecting software revenue growth of 32% and 33%, respectively (all figures in constant currencies).

•           IFRS and non-IFRS new license revenue increased 33% in constant currencies on strong contributions from the Company’s sales channels and brands.

•           IFRS and non-IFRS recurring software revenue grew 31% and 33%, respectively, in constant currencies. The growth in recurring software revenue reflected a further improvement in subscription revenue trends and the higher level of new business activity during 2010 compared to 2009. Approximately €11 million of 2010 fourth quarter non-IFRS recurring software revenue related to maintenance reinstatements and other similar one-time adjustments.

•           Services and other revenue (IFRS and non-IFRS) contributed to the growth in total revenue increasing 11% in constant currencies.

•           IFRS PLM software revenue grew 34% in constant currencies. Non-IFRS PLM software revenue increased 36%, with CATIA software revenue higher by 43%, ENOVIA by 32% and Other PLM by 21% (all figures in constant currencies).

•           Mainstream 3D (IFRS and non-IFRS) software revenue increased 22% in constant currencies. New SolidWorks commercial seats licensed increased 22% to 11,983 seats in the fourth quarter.

•           While IFRS operating income increased 36% in the fourth quarter, IFRS earnings per diluted share decreased 2% principally reflecting a lower tax rate in the year-ago period related to non-recurring tax benefits. Non-IFRS earnings per diluted share increased 22% to €0.83 principally reflecting a 43% increase in operating income. The IFRS operating margin was 27.0% in the 2010 fourth quarter. The non-IFRS operating margin increased to 33.9% from 32.6% in the 2009 fourth quarter. 2010 Financial Summary

(unaudited)

In millions of Euros, except per share data

IFRS

Non-IFRS

Change

Change in cc*

Change

Change in cc*

FY 2010 Total Revenue

1,563.8

25%

20%

1,580.0

26%

21%

FY 2010 Software Revenue

1,411.0

28%

23%

1,427.2

30%

24%

FY 2010 EPS

1.82

27%

2.50

34%

FY 2010 Operating Margin

20.6%

28.6%

*In constant currencies.

In millions of Euros

IFRS

Non-IFRS

FY 2010

FY 2009

Change in cc*

FY 2010

FY 2009

Change in cc*

Total Revenue

1,563.8

1,251.3

20%

1,580.0

1,252.8

21%

Software Revenue

1,411.0

1,099.8

23%

1,427.2

1,101.3

24%

Services and other Revenue

152.8

151.5

(3%)

152.8

151.5

(3%)

PLM software Revenue

1,099.5

839.0

26%

1,115.7

840.5

27%

Mainstream 3D software Revenue

311.5

260.8

15%

311.5

260.8

15%

Americas

456.5

386.3

12%

461.8

386.9

13%

Europe

702.9

577.5

21%

709.2

577.7

22%

Asia

404.4

287.5

27%

409.0

288.2

28%

*In constant currencies.

•           IFRS and non-IFRS total revenue increased 20% and 21%, respectively, on software revenue growth of 23% and 24%, respectively, all figures in constant currencies. The Company saw a positive dynamic in the target industries, and growth in investments by automotive and industrial equipment companies compared to 2009. By geographic region and in constant currencies, Europe represented approximately 45% of total revenues, the Americas 29% and Asia 26%.

•           New licenses revenue (IFRS and non-IFRS) increased 30% in constant currencies well supported by the performances of each of the Company’s six brands.

•           Recurring software revenue increased 21% (IFRS) and 23% (non-IFRS) in constant currencies and represented approximately 72% of total software revenue in 2010 compared to 73% in 2009.

•           Services and other revenue (IFRS and non-IFRS) increased in the second half of 2010 but for the year decreased 3% in constant currencies reflecting the lower software activity in 2009.

•           PLM IFRS software revenue increased 26%. PLM non-IFRS software revenue rose 27% with CATIA up 31%, ENOVIA up 29% and Other PLM higher by 16% (all figures in constant currencies).

•           Mainstream 3D reported record software revenue of €311.5 million (IFRS and non-IFRS), with new SolidWorks commercial seats licensed up 18% to 42,205 seats, accompanied by strong sales of its product data management and simulation software. Total SolidWorks commercial and educational seats sold surpassed 1.5 million seats at the end of 2010.

•           Operating income increased 39.4% to €322.0 million (IFRS) and 44.0% to €451.7 million (non-IFRS). The non-IFRS operating margin was well in line with the Company’s objective, increasing to 28.6% for 2010 compared to 25.0% in 2009, reflecting operating leverage. The operating margin also benefited from currency exchange rates and from the impact of a change in tax law that resulted in the classification as income tax of certain French taxes previously accounted for as operating expenses.

•           Net income per diluted share increased 27.3% to €1.82 (IFRS) and 34.4% to €2.50 (non-IFRS) per share on strong operating income growth. Cash Flow and Other Financial Highlights

IFRS net operating cash flow was €408.3 million for 2010, compared to €297.9 million for 2009.

The Company’s net financial position was €845.7 million at December 31, 2010, compared to a net financial position of €858.0 million at December 31, 2009. The Company’s cash and short-term investments and long-term debt were €1.14 billion and €293.4 million, respectively at December 31, 2010 compared to €1.06 billion and €200.0 million, respectively at the end of 2009. For 2010, the Company’s principal uses of cash included cash acquisitions totaling €462.5 million, net of cash acquired and cash dividends of €54.5 million.

Business and Corporate Highlights

Premium German Automaker, BMW, Implements Dassault Systèmes’ V6 PLM Solutions as New Platform for Embedded Systems Architecture, Integration and Design. In a separate press release issued today, Dassault Systèmes announced that BMW has selected its V6 PLM Solutions to develop the future electrical, electronics and embedded software (E/E) architecture of BMW cars to thousands of engineers.

ENOVIA V6 Collaborative Innovation Solution is Helping LG Electronics to Enhance and Integrate Collaboration and Product Data Management. On November 3, 2010 Dassault Systèmes announced that LG Electronics (LG) has successfully adopted Dassault Systèmes’ ENOVIA V6 solution. Designed to enhance and integrate collaboration and product data management, LG’s Mobile Communications (MC) Company’s deployment of ENOVIA V6 has been implemented in its R&D, manufacturing and purchasing processes by LG CNS, an IT consulting and Solutions Company, and Dassault Systèmes. Starting with LG’s MC business unit, ENOVIA V6 will be implemented enterprise-wide to support the entire product development process.

Bell Helicopter Improves Collaboration and Time-to-Market with Dassault Systèmes V6 PLM Platform. On November 9, 2010 Dassault Systèmes announced that Bell Helicopter, a Textron company, is using its V6 PLM platform to improve collaboration and decrease the amount of time it takes to bring a new helicopter to market. As part of an effort to improve business processes and update systems across the company, Bell Helicopter is leveraging Dassault Systèmes’ full range of brands, including ENOVIA V6, CATIA V6, DELMIA V6, 3DVIA V6, and SIMULIA V6. The project will eventually be deployed to 6,000 users.

Apparel Manufacturer Mammut Sports Group AG Adopts Dassault Systèmes’ ENOVIA V6 Solution. On November 18, 2010 Dassault Systèmes announced that Switzerland-based Mammut Sports Group AG has selected Dassault Systèmes’ ENOVIA V6 solution to manage its development processes from initial product design through to sourcing, manufacturing and sales. The company needed to group information related to all its products in one database and replace manual, time-consuming methods for data search and consolidation that left room for error when communicating internally and with external suppliers.

Ran-tech Engineering & Aerospace, an Aerospace and Defense Part Supplier to Airbus and Boeing, is utilizing Dassault Systèmes’ V6 platform to manufacture parts, design fixtures and collaborate throughout the company. On December 15, 2010 Dassault Systèmes announced that Ran-tech will be utilizing DELMIA V6 Machining solutions to virtually create and control all production processes and CATIA V6 Design for innovative product authoring.

Dassault Systèmes Reinforces its Field Operations with Jeff Ray promoted to Executive Vice President, Geography Operations, Newly Created Position. On January 5, 2011 Dassault Systèmes announced that Jeff Ray, formerly SolidWorks CEO, will oversee the company’s geographies in order to empower the Dassault Systèmes local teams to serve customers’ and partners’ growing needs and fully exploit the market growth potential. In tandem, Bertrand Sicot has been named SolidWorks CEO. These changes were effective as of January 5, 2011.

Dassault Systèmes Five-Year Financial Objectives Outlined at Capital Markets Day on June 15, 2010. Dassault Systèmes publicly outlined its growth plan targeting a five-year goal to more than double non-IFRS EPS in comparison to 2009. The presentations and webcasts are available on Dassault Systèmes website at http://www.3ds.com/company/finance/overview.

Business Outlook

Thibault de Tersant, Senior Executive Vice President and CFO, commented, “During 2010 we achieved all our key financial and business objectives. It was a year of good execution, with the integration of IBM PLM, the expansion of our addressable markets with the acquisitions of Exalead in search-based applications and Geensoft for embedded systems management, and the investments in strengthening our infrastructure and all our teams, with our employee base growing 15% in 2010. With these results, we had a promising start for our five-year financial objectives.

“Working with customers in more than 80 countries across a diverse set of industries, Dassault Systèmes has a strong global presence. We are also focused on continuing to develop our local teams to serve our customers and are already well positioned thanks to the extraordinary value brought by our employees, representing more than 90 different nationalities, and to the leadership of Jeff Ray who was recently appointed to lead Geography Operations.

“Looking forward, both our fourth quarter sales as well as the pipeline of opportunities we have entering 2011 support our view of a pattern of progressive improvement in customer investments. At the same time, we believe the overall global economic environment could continue to be volatile. Taking into account these factors, we are targeting new license revenue growth of about 15% in constant currencies, a healthy increase in our recurring revenue, even with the important level of one-time maintenance recoveries we had in 2010, and further improvement of our operating margin.”

The Company’s initial 2011 financial objectives are the following:

•           First quarter 2011 non-IFRS total revenue objective of about €390 to €400 million, non-IFRS operating margin of about 25% to 26% and non-IFRS EPS of about €0.53 to €0.57;

•           2011 non-IFRS revenue growth objective range of about 9% to 11% in constant currencies; (€1.68 to €1.71 billion based upon the 2011 currency exchange rate assumptions below);

•           2011 non-IFRS operating margin of about 29.0%;

•           2011 non-IFRS EPS range of about €2.64 to €2.75, representing growth of about 6% to 10%;

•           Objectives are based upon exchange rate assumptions for the 2011 first quarter and full year of US$1.40 per €1.00 and JPY120 per €1.00.

•           The Company noted that in preparing its revenue growth objectives it took into account the fact that approximately €11 million of 2010 fourth quarter non-IFRS recurring software revenue related to maintenance reinstatements and other similar one-time adjustments. 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 2011 currency exchange rates above: deferred revenue write-downs estimated at approximately €1 million for 2011; share-based compensation expense estimated at approximately €15 million for 2011 and amortization of acquired intangibles estimated at approximately €80 million for 2011. The above objectives do not include any impact from other operating income and expense, net principally comprised of, acquisition, integration and restructuring expenses. These estimates do not include any new stock option or share grants, or any new acquisitions or restructurings completed after February 10, 2011.

Webcast and Conference Call Information

Dassault Systèmes will first host a meeting in Paris which will be webcasted and then host a conference call today, Thursday, February 10, 2011. 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.

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.

To access the unabridged press release with financial tables, please click HERE.

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