Dassault Systèmes announced IFRS unaudited financial results for the second quarter and half year ended June 30, 2022. The Group’s Board of Directors approved these results on July 25, 2022. This press release also includes financial information on a non-IFRS basis and reconciliations with IFRS figures in the Appendix to this communication.
Summary Highlights
(unaudited, all revenue growth rates in constant currencies)
- 2Q22 total revenue and software revenue increased 11% (non-IFRS), driven by strong subscription & support revenue growth of 10% (non-IFRS) and licenses & other software revenue up 14% (non-IFRS)
- 2Q22 3DEXPERIENCE software revenue rose 30% (non-IFRS). Cloud software revenue increased 23% (non-IFRS)
- 2Q22 non-IFRS diluted EPS grew 21% to €0.26, as reported, outperforming our objectives. However, IFRS diluted EPS of €0.09 was impacted by a one-time charge due to concluding a tax dispute for fiscal years 2008-2013 with no cash impact
- 2Q22 cash flow from operations of €417 million, up 7%, and driving our deleveraging ahead of schedule
- FY2022 non-IFRS objectives: reaffirming total revenue growth of 9%-10%, in constant currencies. Raising non-IFRS diluted EPS target to 14%-16% growth to €1.08-€1.10
Bernard Charlès, Dassault Systèmes’ Vice Chairman of the Board and Chief Executive Officer commented:
“The experience economy and the circular economy are converging: this will mark the coming decades. As we look to our next horizon, 2040, industries will no longer develop products but sustainable and personalized experiences centered around the consumer, patient and citizen.
The experience economy goes hand in hand with circularity as it requires designing the entire experience life cycle upstream, integrating use with end of life. Circularity is about frugality – using only what’s necessary – and appreciating all things created by humankind will have an end: the raw materials that compose them can be repurposed, reused and recycled. This will revolutionize design and open up significant new possibilities we can’t yet imagine.
Science-based virtual twin experiences, powered by 3DEXPERIENCE, are unparalleled catalysts and enablers of this global transformation. Based on a multi-scale, multi-physics approach and incorporating real world evidence, our virtual twin experiences empower clients to imagine new methods, new materials and test new solutions. By providing continuity across the WHAT, the HOW and the USE, innovators can anticipate the recycling of products from their design and manufacturing to quantify the environmental impacts and optimize circularity.
IFWE utilize the power of the virtual world to improve the real world, we can advance our purpose – to harmonize product, nature and life.”
Financial Summary
|
In millions of Euros, |
IFRS |
IFRS |
||||||||
|
Q2 2022 |
Q2 2021 |
Change |
Change in constant currencies |
YTD 2022 |
YTD 2021 |
Change |
Change in constant currencies |
|||
|
Total Revenue |
1,383.9 |
1,160.8 |
19% |
11% |
2,708.5 |
2,333.7 |
16% |
10% |
||
|
Software Revenue |
1,250.1 |
1,050.7 |
19% |
11% |
2,455.6 |
2,118.5 |
16% |
10% |
||
|
Operating Margin |
22.5% |
20.1% |
+2.4pts |
23.9% |
19.9% |
+4.0pts |
||||
|
Diluted EPS * |
0.09 |
0.14 |
(32)% |
0.29 |
0.27 |
9% |
||||
|
In millions of Euros, |
Non-IFRS |
Non-IFRS |
||||||||
|
Q2 2022 |
Q2 2021 |
Change |
Change in constant currencies |
YTD 2022 |
YTD 2021 |
Change |
Change in constant currencies |
|||
|
Total Revenue |
1,384.0 |
1,161.5 |
19% |
11% |
2,708.6 |
2,335.1 |
16% |
10% |
||
|
Software Revenue |
1,250.2 |
1,051.3 |
19% |
11% |
2,455.8 |
2,119.7 |
16% |
9% |
||
|
Operating Margin |
32.0% |
32.2% |
(0.2)pt |
33.5% |
33.0% |
+0.4pt |
||||
|
Diluted EPS * |
0.26 |
0.22 |
21% |
11% |
0.54 |
0.44 |
20% |
13% |
||
* 2021 and 2022 figures have been presented in order to reflect the five-for-one share split on Dassault Systèmes’ share effected on July 7, 2021
Second Quarter 2022 Versus 2021 Financial Comparisons
(unaudited, all revenue growth rates in constant currencies)
- Total Revenue: Total revenue grew 11%, IFRS and non-IFRS, to €1.38 billion. Software revenue increased 11%, IFRS and non-IFRS, to €1.25 billion. Non-IFRS subscription & support revenue rose 10%; recurring revenue represented 78% of total software revenue. Licenses and other software revenue increased 14%, IFRS and non-IFRS, to €271.6 million. Services revenue increased 14%, IFRS and non-IFRS.
- Software Revenue by Geography (non-IFRS):The Americas grew 8% driven by subscription and represented 39% of software revenue. Europe accelerated to 13% growth with broad-based performance and represented 35% of software revenue. Asia rose 13% this quarter, showing strong resilience in the face of China’s Covid-19 related restrictions. Japan, South Asia Pacific and India grew double-digits. Asia represented 26% of software revenue.
- Software Revenue by Product Line:
- Industrial InnovationIFRS and non-IFRS software revenue rose 11% to €662.2 million, representing 53% of software revenue. CATIA grew double-digits again this quarter with continued strength in cyber systems, reflecting the strong value proposition of its differentiated technology. ENOVIA and DELMIA also demonstrated noteworthy strength this quarter, rising double-digits. DELMIA benefited from increased demand from clients seeking to improve manufacturing efficiency and resiliency.
- Life Sciences software revenue totaled €275.2 million non-IFRS, an increase of 13%, representing 22% of software revenue. On an IFRS basis, revenue rose 14%. MEDIDATA continues to experience strong momentum across its product portfolio, as well as across end markets. Contract research organizations (CROs) displayed an uptick in activity, this quarter. Our Life Sciences sales engagement – incorporating our broader technology portfolio – continued to gain important reference wins.
- Mainstream Innovationsoftware revenue was €312.7 million in IFRS and non-IFRS, an increase of 8%, and representing 25% of software revenue. SOLIDWORKS grew mid-single digits this quarter, relative to a strong comparison base of 25% last year. During the quarter, SOLIDWORKS was negatively impacted by China’s COVID-19 related restrictions, which have lasted longer than expected. Combined with strong first quarter revenue growth, we remain well aligned with our first half objectives. CENTRIC PLM continued to experience strong momentum and advance diversification in food and beverage.
- Software Revenue by Industries: A majority of our end markets grew double-digits again this quarter. Life Sciences & Healthcare, Industrial Equipment, Transportation & Mobility, Aerospace & Defense and Marine & Offshore displayed some of the strongest performance.
- Key StrategicDrivers (non-IFRS): 3DEXPERIENCE revenue increased 30% to 33% of software revenue. Cloud software revenue grew 23% and represented 22% of software revenue. Clients are recognizing 3DEXPERIENCE and cloud unlock the full potential of virtual twin experiences; this has been a key contributor to client wins.
- Operating Income and Margin: IFRS operating income increased 33.2%, as reported. Non-IFRS operating income rose 18.3% to €442.4 million, as reported. Non-IFRS operating margin was 32.0%, a decrease of 22 basis points relative to last year. Consistent with the plan we communicated at the beginning of the year, this reflects continued investments in future growth, including expanding our team. This also includes a more sustained return to travel and in-person marketing events.
- Cash Flow from Operations (IFRS): Cash flow from operations totaled €417.3 million, an increase of 7% relative to last year. Cash from operations was principally used for cash dividend payments of €224 million and for treasury stock repurchases of €76 million.
- Earnings per Share: Non-IFRS diluted EPS grew 21% to €0.26, as reported. However, IFRS diluted EPS of €0.09, a decrease of 32%, was impacted by a one-time charge due to concluding a tax dispute for fiscal years 2008-2013: there was no cash impact. For additional information, please refer to our June 1, 2022 statement: End of a tax dispute relating to fiscal years 2008-2013.
First Half 2022 Versus 2021 Financial Comparisons
(unaudited, all revenue growth rates in constant currencies)
- Total Revenue: Total revenue grew 10% IFRS and non-IFRS to €2.71 billion. Software revenue increased 9% non-IFRS to €2.46 billion, and grew 10% on an IFRS basis. Non-IFRS subscription and support revenue rose 9% to €1.95 billion; recurring revenue represented 79.4% of total software revenue. Licenses and other software revenue increased 12% IFRS and non-IFRS to €506.2 million. Services revenue rose 11% non-IFRS and 12% on an IFRS basis.
- Software Revenue by Geography (non-IFRS):The Americas grew 8% and represented 40% of software revenue. Europe rose 9% to 35% of software revenue. Asia increased 13% to 25% of software revenue.
- Software Revenue by Product Line:
- Industrial InnovationIFRS and non-IFRS software revenue rose 8% to €1.32 billion and represented 54% of software revenue. CATIA grew double-digits, with continued strong momentum in cyber systems. ENOVIA and DELMIA also performed very well in the first half of the year.
- Life Sciences software revenue grew 13% to €529.1 million (non-IFRS), representing 22% of software revenue. On an IFRS basis, Life Sciences software revenue increased 14%. MEDIDATA delivered excellent, double-digit growth in the first half and against a strong comparison base. MEDIDATA continues to experience strong momentum across its product portfolio including MEDIDATA Rave, MEDIDATA AI and MEDIDATA Patient Cloud, as well as across end markets including pharmaceutical and biotechnology companies and contract research organizations (CROs).
- Mainstream Innovationsoftware revenue increased 10% to €610.0 million non-IFRS and 10% IFRS to €609.8 and represented 25% of software revenue. SOLIDWORKS grew high single-digits against a high comparison base. At CENTRIC PLM, strong momentum was accompanied by gains in diversification in food and beverage.
- Software Revenue by Industries: Life Sciences & Healthcare, Aerospace & Defense, Industrial Equipment, Consumer Packaged Goods & Retail and Marine & Offshore displayed some of the strongest performance.
- Key Strategic Drivers (non-IFRS):3DEXPERIENCE revenue increased 23% to 31% of software revenue. Cloud software revenue grew 22%, and represented 22% of software revenue. 3DEXPERIENCE and cloud are critical enablers of the virtual twin experience. They accelerate innovation and transformations and enable clients to scale rapidly. These have been significant factors in driving our win rates.
- Operating Income and Margin: IFRS operating income increased 39.3%, as reported. Non-IFRS operating income rose 17.5% to €906.4 million, as reported. Non-IFRS operating margin increased 44 basis points to 33.5%.
- Earnings per Share: IFRS diluted earnings per share increased 9% to €0.29. Non-IFRS diluted EPS grew 20% to €0.54, as reported.
- Cash Flow from Operations (IFRS): Cash flow from operations totaled €1.048 billion, an increase of 1% relative to last year. Cash from operations was principally used for treasury share buy-back, employee shareholding plan and stock option exercise of €378 million, loan repayment net of proceeds of €235 million and cash dividend payments of €224 million.
- Balance Sheet (IFRS): Dassault Systèmes’ net financial debt at June 30, 2022 decreased by €405 million to €485 million, compared to €889 million at December 31, 2021, reflecting cash, cash equivalents and short-term investments of €3.158 billion and debt related to borrowings of €3.642 billion at June 30, 2022. Dassault Systèmes is well ahead of schedule on its deleveraging objective.
Dassault Systèmes’ Chief Operating Officer Commentary
(revenue growth rates in constant currencies, data on a non-IFRS basis)
Pascal Daloz, Dassault Systèmes’ Chief Operating Officer, commented:
“We are pleased with our second quarter and half-year results. Our strong performance was driven by broad-based growth across geographies, product lines and industries. We have demonstrated once again the resilience of our strategy against a challenging macroeconomic and geopolitical backdrop, with an impact from Russia and China. In Industrial Innovation, CATIA, ENOVIA and DELMIA delivered double-digit growth. DELMIA benefitted from increased interest in manufacturing transformation. In Life Sciences, MEDIDATA maintained its strong velocity. In Mainstream Innovation, Centric PLM delivered excellent performance.
Today’s challenging environment - from inflation to raw material and workforce shortages - reveals the value and mission critical nature of our industry solutions. We empower clients to adopt new business models, increase resiliency, design and produce in a circular economy and to deploy rapidly at scale. Our strong customer adoption, across all three sectors of the economy, offers many proof points this quarter.
We are also supporting our customers as they innovate for the future. With our 3DEXPERIENCE IFWE Loop, we create a multiplier effect by connecting value creation and value experienced to cover the full experience lifecycle. This allows us to broaden our offering as well as expand our audience, ultimately increasing the value we create for clients.
We succeed when our clients succeed: we thank our clients for their continued trust and our team for their passion and dedication to our success.
Dassault Systèmes’ Chief Financial Officer Commentary
(revenue growth rates in constant currencies, data on a non-IFRS basis, cash flow IFRS)
Rouven Bergmann, Dassault Systèmes’ Chief Financial Officer, commented:
“We delivered strong second quarter results, wrapping up a good first half of the year and putting us on the trajectory to achieve our 2022 objectives. Our financial performance demonstrates the strength and durability of our business model as well as reflects continued momentum in demand from our clients. Second quarter total revenue grew 11%, at the high end of our guided range. Subscription and support revenue growth accelerated to 10%, above our guided range. Recurring revenue represented nearly 80% of software revenue in the first half of the year. Licenses and other software revenue increased 14% during the quarter.
Our second quarter diluted earnings per share rose 21% to €0.26, outperforming our objective. We reported operating margin of 32.0%, within our target range, as we continued to invest in our future growth, including achieving our net hiring targets again this quarter. Cash flow from operations rose 7% to €417 million in Q2.
Turning to our 2022 objectives, we are maintaining our total revenue growth objective of 9%-10%. We are raising our 2022 diluted EPS objective to 14%-16% growth, reaching €1.08 to €1.10, incorporating a portion of our second quarter over-performance, as well as a positive currency impact and lower tax rate.”
Financial Objectives for 2022
Dassault Systèmes’ third quarter and full year 2022 financial objectives presented below are given on a non-IFRS basis and reflect the principal 2022 currency exchange rate assumptions for the US dollar and Japanese yen as well as the potential impact from additional non-Euro currencies:
|
Q3 2022 |
FY 2022 |
||||
|
Total Revenue (billion) |
€1.295 to €1.320 |
€5.485 to €5.535 |
|||
|
Growth |
12-14% |
13-14% |
|||
|
Growth ex FX |
8-10% |
9-10% |
|||
|
Software revenue growth * |
8-10% |
9-10% |
|||
|
Of which licenses and other software revenue growth * |
6-10% |
9-11% |
|||
|
Of which recurring revenue growth * |
~9% |
~9% |
|||
|
Services revenue growth * |
11-13% |
8-10% |
|||
|
Operating Margin |
31.1% – 31.8% |
33.4% – 33.7% |
|||
|
EPS Diluted |
€0.24 - €0.25 |
€1.08 - €1.10 |
|||
|
Growth |
6-11% |
14-16% |
|||
|
US dollar |
$1.10 per Euro |
$1.10 per Euro |
|||
|
Japanese yen (before hedging) |
JPY 130.0 per Euro |
JPY 132.2 per Euro |
|||
|
* Growth in Constant Currencies |
|||||
These objectives are prepared and communicated only on a non-IFRS basis and are subject to the cautionary statement set forth below.
The 2022 non-IFRS financial objectives set forth above do not take into account the following accounting elements below and are estimated based upon the 2022 principal currency exchange rates above: no significant contract liabilities write-downs; share-based compensation expenses, including related social charges, estimated at approximately €170.9 million (these estimates do not include any new stock option or share grants issued after June 30, 2022); amortization of acquired intangibles and of tangibles reevaluation, estimated at approximately €383.5 million, largely impacted by the acquisition of Medidata; and lease incentives of acquired companies at approximately €2.7 million.
The above objectives also do not include any impact from other operating income and expenses, net principally comprised of acquisition, integration and restructuring expenses, and impairment of goodwill and acquired intangible assets; from one-time items included in financial revenue; from one-time tax effects; and from the income tax effects of these non-IFRS adjustments. Finally, these estimates do not include any new acquisitions or restructuring completed after June 30, 2022.
Corporate Announcements
- July 7, 2022: Leading Online Retailer Cabinets.com Selects Dassault Systèmes’ 3D planner “HomeByMe for Kitchen Retailers” to Transform the Kitchen Market
- July 1, 2022: Beatrix Martinez Appointed Vice President, Investor Relations, Dassault Systèmes
- June 29, 2022: Medidata Announces Rapid Expansion of its Sensor Cloud Network with the Addition of Ten Health Technology Innovators
- June 27, 2022: Medidata Launches New Clinical Operations Technologies to Address Critical Issues in Clinical Trial Oversight
- June 17, 2022: Software République unveils its first milestones for intelligent, secure and sustainable mobility
- June 16, 2022: Dassault Systèmes’ Capital Markets Day: On Trajectory to Achieve 2024 Objectives, Outlining Long-Term Growth Opportunities
- June 1, 2022: Statement: End of a tax dispute relating to fiscal years 2008-2013 with no cash impact
- May 30, 2022: HANNOVER MESSE and Manufacturing in the Age of Experience 2022: Dassault Systèmes to Showcase Virtual Twins Accelerating Sustainable Innovation and Future-Proof Manufacturing
- May 12, 2022: Dassault Systèmes, the H. HARTMANN Institute and the Institute Rafaël Launch the VORTHEx Project, the World’s First 3D Simulator for Radiotherapy
- April 27, 2022: Advancing Its Digital Factory Program, Faurecia Optimizes Automated Guided Vehicle Logistics with Dassault Systèmes’ 3DEXPERIENCE Platform
Webcast and Conference Call Information
Tuesday, July 26, 2022, Dassault Systèmes will host a webcasted presentation at 9:00 AM London Time/ 10:00 AM Paris time, and will then host a conference call at 9:00 AM New York time / 2:00 PM London time / 3:00 PM Paris time. The webcasted presentation and conference calls will be available online by accessing investor.3ds.com.
Additional investor information is available at investor.3ds.com or by calling Dassault Systèmes’ Investor Relations at +33.1.61.62.69.24.
Investor Relations Events
- Third Quarter 2022 Earnings Release: October 26, 2022
- Fourth Quarter 2022 Earnings Release: February 2, 2023
