CIMdata PLM Industry Summary Online Archive

29 October 2008

Financial News

DS Reports 2008 Third Quarter Financial Results Well in Line With its Objectives

Dassault Systèmes (DS) reported U.S. GAAP unaudited financial results for the third quarter and nine months ended September 30, 2008. These results have been reviewed by the Company’s Board of Directors.

Key Figures

> Access to the Webcast Presentation

>Access to the PressRelease (.pdf)

> 08Q3 Earnings Presentation (.pdf )

> Newswires Conference Call Text (.pdf)

>Access to Conference Call

> Conference Call text (.pdf)

Third Quarter 2008 Summary Financial Highlights

  • Q3 GAAP software revenue up 12% and GAAP total revenue up 10%, both in constant currencies
  • Q3 non-GAAP software revenue up 12% and non-GAAP total revenue up 10%, both in constant currencies
  • Q3 GAAP EPS up 38% to €0.36; Q3 non-GAAP EPS up 26% to €0.49;
  • 2008 non-GAAP Objectives: Continuing to target software revenue growth objective of 12% in constant currencies; Raising EPS objective.

Third Quarter 2008 Financial Summary


In millions of Euros, except per share data




Growth in cc*


Growth in cc*

Q3 Total Revenue







Q3 Software Revenue












Q3 Operating Margin



* In constant currencies.

Bernard Charlès, Dassault Systèmes President and Chief Executive Officer, commented, “Dassault Systèmes software revenue growth of 12% in constant currencies during the quarter reflected the increasing momentum of our strategy of diversification into new industries. Further, we saw particular strength coming from our collaboration and simulation software offerings in both the PLM and Mainstream 3D markets. Thanks to our brands and applications strategy, the strengthening of our sales channels, particularly in the mid-market, and growth in our customer base, we were able to deliver third quarter revenue at the high end of our objectives notwithstanding the economic crisis which started to impact our operations early September.

“Based upon our year-to-date performance and fourth quarter outlook, Dassault Systèmes is positioned for solid growth in software revenue and earnings for 2008 reflecting the valuable and measurable benefits our software applications bring to an increasingly diverse group of customers throughout the world. Our goal remains the same – to be a strategic partner to all our customers, in order to help them enhance their products and product innovation processes.”

Third Quarter 2008 Financial Highlights

  • GAAP and non-GAAP total revenue increased 10% in constant currencies.
  • By geographic region and in constant currencies, total GAAP revenue in Europe was up 12% (non-GAAP up 11%), the Americas increased 15% (non-GAAP up 16%), and Asia increased 1% (non-GAAP flat) on lower results in Japan. Revenue grew above 25% in constant currencies in the faster growing markets comprised primarily of China, India, Brazil, Eastern Europe and Russia.
  • GAAP and non-GAAP software revenue increased 12% in constant currencies. Non-GAAP software revenue growth of 12% reflected non-GAAP recurring software revenue growth of 18% and new licenses revenue growth of 1% (all figures in constant currencies). Recurring software revenue accounted for 67% of total software revenue in the quarter.
  • GAAP and non-GAAP PLM software revenue increased 11% in constant currencies. In non-GAAP, ENOVIA software revenue increased 19% in constant currencies, SIMULIA software revenue was up double-digits in constant currencies and CATIA software revenue increased 9% in constant currencies.
  • Mid-market PLM growth was healthy reflecting the Company’s continued progress in the transformation and expansion of its PLM mid-market sales channel.
  • GAAP Mainstream 3D software revenue increased 14% in constant currencies. Non-GAAP Mainstream 3D software revenue increased 13% in constant currencies on growth in SolidWorks installed base recurring revenue and sales of SolidWorks design, product data management and analysis software.
  • DS consulting services revenue delivered double-digit revenue growth in constant currencies and operating margin improvement in the third quarter. In total, Services and other revenue, representing 13% of total revenue, was flat in constant currencies during the third quarter, principally reflecting the effect of winding down certain historical channel management activities.
  • GAAP operating margin was 16.7%. Non-GAAP operating margin expanded to 23.7%, up from 22.5% in the year-ago quarter on non-GAAP operating income growth of 12%.
  • Financial revenue and other improved in the third quarter in relation to both the second quarter and the year-ago third quarter. Specifically, financial revenue and other increased to €9.9 million in the third quarter, up from €1.7 million in the year-ago period. Third quarter 2008 financial revenue and other was principally comprised of net interest income of €3.4 million and net exchange gains of €6.3 million.
  • GAAP earnings per diluted share increased 38% to €0.36. Non-GAAP earnings per diluted share increased 26% to €0.49 primarily reflecting an increase in non-GAAP operating income of 12% as well as a strong increase in financial revenue and other principally due to end-of-period foreign currency translation impacts.
  • New business activity by industry included, among others:
  • Consumer Packaged Goods: Procter & Gamble in the Americas;
  • High Tech: Panasonic and Toshiba in Asia; L-3 Communications in the Americas;
  • Business Services: TUV Rheinland in Europe and American Bureau of Shipping in the Americas;
  • Industrial Machinery: Komatsu and Sanyo Machine Works in Asia and Stara S.A. in the Americas;
  • Automotive and Aerospace: EDAG and Piaggio Aero in Europe.

Cash flow and other financial highlights

Net operating cash flow in the 2008 third quarter increased to €67.5 million compared to €62.9 million in the year-ago quarter. Cash and short-term investments totaled €829.6 million and long-term debt totaled €200.8 million at September 30, 2008.

Nine Months 2008 Summary Financial Highlights

  • YTD 2008 GAAP software revenue up 15% and GAAP total revenue up 12%, both in constant currencies; YTD 2008 GAAP EPS up 25% to €1.06
  • YTD 2008 non-GAAP software revenue up 14% and non-GAAP total revenue up 11%, both in constant currencies; YTD 2008 non-GAAP EPS up 13% to €1.36
  • YTD 2008 net operating cash flow up 9% to €261.6 million

Nine Months 2008 Financial Summary


In millions of Euros, except per share data




Growth in cc*


Growth in cc*

YTD Total Revenue







YTD Software Revenue












YTD Operating Margin



* In constant currencies.

Key Business and Corporate Highlights

In a separate press release issued today, DS announced that Procter & Gamble Company (P&G), the world’s largest consumer goods company, has chosen to implement DS’s ENOVIA solution as its enterprise-wide PLM backbone. P&G will leverage Dassault Systèmes’ portfolio to create a global platform to support product development. P&G also uses 3DVIA, SIMULIA, DELMIA and SolidWorks solutions from Dassault Systèmes.

In September, DS held its ENOVIA Customer Conference for the Asia Pacific region in Tokyo, Japan with more than 500 of the region’s leading executives attending. Featured customers included Toshiba in E&E Nikon in semiconductor; Larsen & Toubro in Power, Process & Petroleum/Shipbuilding and Pacific Brands in apparel.

DS SolidWorks introduced SolidWorks® 2009 which delivers a speed increase plus more than 260 customer-driven enhancements. This new software release offers significant performance improvements, continues to focus on ease of use and is designed to extend the gap between SolidWorks software and other software products in the 3D Mainstream market. Among other enhancements, SolidWorks 2009 includes: SpeedPak, a new approach to large assembly handling that dramatically reduces the amount of computer memory needed, while maintaining full graphic detail and associativity; and, Simulation Advisor, which helps users analyze their designs for hidden flaws, guiding them through every stage of the simulation.

DS SolidWorks also announced SolidWorks Enterprise PDM 2009. The new version of the product data management solution introduces deeper integration with SolidWorks® 3D CAD software, expanded bill of material (BOM) functionality, and Item-Centric product data management.

DS announced the availability of its PLM portfolio, Version 5 Release 19, for its CATIA, DELMIA, SIMULIA, ENOVIA and 3DVIA brands. V5R19 enhancements are focused on expanding PLM deeper into production cycles, accelerating PLM adoption for mid-size companies, broadening IP lifecycle management and further integrating PLM within the enterprise ecosystem.

DS introduced Isight for Abaqus, a new product from SIMULIA that leverages technology from recently acquired Engineous Software. Isight for Abaqus is an add-on product for Abaqus FEA software that provides design exploration and optimization technology, enabling designers and engineers using Abaqus to perform rapid trade-off studies of real-world behavior and accelerate product development.

In mid-September, DS announced 3DVIA Shape 2.0, the latest release of its free 3D modeling software featuring an all new and expanded 3D remix capability, which enables users to complete 3D scenes using models contributed by other users on the content library.

DS recently announced the completion of its new “green” global headquarters, “Dassault Systèmes Campus,” with employees moving to the campus starting early November. Dassault Systèmes Campus has earned the French HQE(High Quality Environment) label.

Other Corporate Information

On October 16, 2008, Dassault Systèmes’ voluntary delisting from Nasdaq was completed. Dassault Systèmes has filed a Form 15F with the SEC to deregister and terminate its reporting obligations under the Exchange Act. The de-registration will become effective 90 days after the filing of the Form 15F. The Company does not plan to publish a Form 20-F for the fiscal year ended December 31, 2008.

Dassault Systèmes continues to maintain its American Depository Receipt (ADR) program, which will enable investors to retain their ADRs and facilitate trading on the U.S. Over-The-Counter (OTC) market.

Dassault Systèmes will continue to publish its financial reports, statements and press releases in English as well as information for investors on its website ( pursuant to section 12g3-2(b) of the U.S. Securities Exchange Act.

The Company intends to continue reporting and publishing quarterly unaudited financial information in U.S. GAAP for the fourth quarter 2008 reporting period in addition to reporting and filing IFRS quarterly financial information as required by the French securities regulation. Starting with fiscal year 2009, DS will solely report and publish its financial information in accordance with IFRS.

IFRS Financial Information

Dassault Systèmes expects to issue a press release on October 30, 2008 summarizing its financial results under IFRS for the three- and nine-month periods ended September 30, 2008. This press release, which will be available in both French and English, will also be posted to the Company’s website.

Business Outlook

Thibault de Tersant, Senior Executive Vice President and CFO, commented, “Our third quarter financial performance came in well in line with our objectives, in fact, at the high end with software revenue up 12% in constant currencies and earnings per share rising 26%, demonstrating the inherent earnings leverage of our business model.

“Turning to our outlook, we expect 2008 to be a year of strong, organic software growth for DS. We have factored into our fourth quarter and full year outlook the signs of weakening we saw in September due to the economic crisis. However, thanks to our diversification strategy, sales channels expansion, recurring revenue model and year-to-date results, we continue to target a non-GAAP software revenue growth objective of 12% in constant currencies. Additionally, we are increasing our 2008 non-GAAP EPS objective range to €2.15 to €2.20 from €2.10 to €2.17 previously. Our fourth quarter objective assumes a US dollar to euro exchange rate of $1.45 per €1.00, reflecting the fact that the US dollar continues to be very volatile at this point in time.”

The Company’s objectives are prepared and communicated only on a non-GAAP basis and are subject to the cautionary statement set forth below. The Company’s objectives are the following:

  • Fourth quarter 2008 non-GAAP total revenue objective of about €385 to €395 million and non-GAAP EPS of about €0.79 to €0.84;
  • 2008 non-GAAP software revenue growth objective of about 12% growth in constant currencies from 12-13%; 2008 non-GAAP total revenue growth objective of about 9% in constant currencies from 9-10%;
  • 2008 reported non-GAAP revenue range of about €1.340 to €1.350 billion from €1.320 to €1.330 billion;
  • 2008 non-GAAP operating margin improvement objective of 50 to 100 basis points (up to about 27%) from 80 to 130 basis points;
  • 2008 non-GAAP EPS objective of about €2.15 to €2.20 per diluted share from €2.10 to €2.17 per diluted share;
  • Objectives based upon exchange rate assumptions for the 2008 fourth quarter of US$1.45 per €1.00 and JPY 145 per €1.00 and 2008 full year exchange rate assumptions of US$1.50 per €1.00 and JPY 157 per €1.00;

The non-GAAP objectives set forth above do not take into account the following accounting elements: deferred revenue write-downs estimated at approximately €4 million for 2008; stock-based compensation expense estimated at approximately €21 million for 2008 and amortization of acquired intangibles estimated at approximately €45 million for 2008. The above objectives do not include any impact from other operating income and expense, net comprised of income and expenses in connection with the relocation of the Company’s corporate headquarters and restructuring expenses, which totaled €6 million in the third quarter and €8.5 million year-to-date. These estimates also do not include any new stock option or share grants, or any new acquisitions or restructurings completed after October 29, 2008.

Webcast and conference call information

Dassault Systèmes will host a webcast and a conference call today, Wednesday, October 29, 2008. Management will host a webcast at 8:30 AM London time/9:30 AM CET time and will then host a conference call at 2:00 PM London time/3:00 PM CET/ 10:00 AM New York time.

The webcast and conference call will be archived for 30 days. Additional investor information can be accessed at or by calling Dassault Systèmes’ Investor Relations at

Non-GAAP financial information

Readers are cautioned that the supplemental non-GAAP 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 U.S. GAAP measurements. Also, our supplemental non-GAAP financial information may not be comparable to similarly titled non-GAAP measures used by other companies. Further specific limitations for individual non-GAAP measures, and the reasons for presenting non-GAAP financial information, are set forth in the Company’s annual report for the year ended December 31, 2007 on Form 20-F filed with the SEC on April 4, 2008 and in the paragraph below.

In addition to the individual non-GAAP measures described in our most recent Form 20-F, our unaudited U.S.GAAP 2008 quarterly financial statements may reflect other operating income and expense, net comprised of income and expenses related to the relocation of the Company’s corporate headquarters and restructuring expenses. In our supplemental non-GAAP financial information, we exclude other operating income and expense effects because of their infrequent or non-recurring nature. As a result, we believe that our supplemental non-GAAP financial information helps investors better understand the current trends in our operating performance. However, other operating income and expense, net are components of our income and expenses for 2008 and by excluding them the supplemental non-GAAP financial information understates the net impact to our net income in 2008. Other operating income and expense, net are generally not recurring, and we do not expect to incur other operating income and expense, net as part of our normal business on a regular basis.

To compensate for these limitations, the supplemental non-GAAP financial information should be read not in isolation, but only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP.

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 U.S. GAAP and on a non-GAAP basis) 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.

Become a member of the CIMdata PLM Community to receive your daily PLM news and much more.

Tell us what you think of the CIMdata Newsletter. Send your feedback.

CIMdata is committed to your privacy. Your personal information will never be sold or shared outside of CIMdata without your express permission.