Dassault Q3 Revenue Up 6% to 318M Euros with 43M Profit
PARIS,
France, Oct 29, 2008 - Dassault Systems (DS) (Euronext Paris: #13065,
DSY.PA) 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.
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
(unaudited)
In M Euros,
U.S. GAAP
Non-GAAP
except per
Growth Growth Growth
Growth
share data
in cc*
in cc*
Q3 Total Revenue 318.3 6% 10%
319.7 6% 10%
Q3 Software
Revenue 276.5 8%
12% 277.9 8% 12%
Q3 EPS 0.36
38% - 0.49
26% -
Q3 Operating
Margin 16.7%
- -
23.7% - -
* In constant currencies.
Bernard Charlès, Dassault Systems President and Chief Executive
Officer, commented, “Dassault Systems 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 Systems 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; 3
- 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
(unaudited)
In M Euros,
U.S. GAAP
Non-GAAP
except per Growth
Growth Growth Growth
share data
in cc*
in cc*
YTD Total
Revenue 951.9 6%
12% 953.8 5%
11%
YTD Software
Revenue 823.6 9%
15% 825.5 8%
14%
YTD EPS 1.06 25%
- 1.36 13%
-
YTD Operating
Margin 17.9% -
- 23.9% -
-
* In constant currencies.
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 Systems 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 available via the Internet by accessing
http://www.3ds.com/corporate/investors/. Please go to the website at
least fifteen minutes prior to the webcast or conference call to register,
download and install any necessary audio software.
The webcast and conference call will be archived for 30 days. Additional
investor information can be accessed at
http://www.3ds.com/corporate/investors/ or by calling Dassault Systems ’
Investor Relations at 33.1.40.99.69.24.
About Dassault Systems :
As a world leader in 3D and Product Lifecycle Management (PLM) solutions,
Dassault Systems brings value to more than 100,000 customers in 80
countries. A pioneer in the 3D software market since 1981, Dassault Systems
develops and markets PLM application software and services that support
industrial processes and provide a 3D vision of the entire lifecycle of
products from conception to maintenance to recycling. The Dassault Systems
portfolio consists of CATIA for designing the virtual product - SolidWorks
for 3D mechanical design - DELMIA for virtual production - SIMULIA for
virtual testing - ENOVIA for global collaborative lifecycle management, and
3DVIA for online 3D lifelike experiences. Dassault Systems ’ shares are
listed on Euronext Paris (#13065, DSY.PA) and Dassault Systems ’ ADRs may be
traded on the U.S. Over-The-Counter (OTC) market (DASTY).
For more information, visit
http://www.3ds.com.
DASSAULT SYSTEMES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(U.S. GAAP)
(in millions of Euro, except per share data, unaudited)
Three months ended Nine months ended
Sep 30, Sep 30, Sep 30, Sep
30,
2008 2007
2008 2007
New licenses
revenue
90.5 92.8
292.4 284.8
Periodic licenses,
maintenance and
product development
revenue
186.0 163.1
531.2 470.2
Software revenue 276.5 255.9
823.6 755.0
Services and other
revenue
41.8 43.2
128.3 140.7
Total Revenue €318.3
€299.1 €951.9 €895.7
Cost of software
revenue (excluding
amortization of
acquired intangibles)14.3 16.0
41.7 41.8
Cost of services
and other revenue 37.6 38.4
112.1 117.1
Research and
development 78.1
76.3 228.4 228.3
Marketing and sales 91.3 83.5
279.0 254.9
General and
administrative 26.5
24.4 78.5
70.4
Amortization of
acquired intangibles 11.4 13.6
32.9 35.4
Other operating
income and
expense, net 6.0
0.0 8.5
0.0
Total Operating
Expenses €265.2
€252.2 €781.1 €747.9
Operating Income €53.1 €46.9
€170.8 €147.8
Financial revenue
and other, net 9.9
1.7 10.1
8.0
Income before
income taxes 63.0
48.6 180.9
155.8
Income tax expense (19.6) (17.4)
(54.3) (53.7)
Minority interest (0.1) (0.1)
(0.2) (0.2)
Net Income €43.3
€31.1 €126.4
€101.9
Basic net income
per share 0.37
0.27 1.08
0.88
Diluted net
income per share €0.36 €0.26
€1.06 €0.85
Basic weighted
average shares
outstanding (in M) 117.9 116.8
117.5 116.3
Diluted weighted
average shares
outstanding (in M) 119.9 120.4
119.5 119.5
U.S. GAAP revenue variation as
reported and in constant currencies
Three months ended Nine months ended
Sep 30, 2008 Sep
30, 2008
Variation* Variation Variation* Variation
in cc**
in cc**
GAAP Revenue 6%
10% 6%
12%
GAAP Revenue
by activity
Software Revenue 8%
12% 9%
15%
Services and other
Revenue
(3%) 0%
(9%) (4%)
GAAP Software
Revenue by segment
PLM software revenue 8% 11%
9% 14%
of which CATIA
software revenue 6%
9% 11%
17%
of which ENOVIA
software revenue 16% 22%
7% 13%
Mainstream 3D
software revenue 9%
14% 9%
13%
GAAP Revenue by geography
Americas
6% 15%
2% 15%
Europe
12% 12%
12% 12%
Asia
(2%) 1%
2% 7%
* Variation compared to the same
period in the prior year. ** In constant currencies.
DASSAULT SYSTEMES
CONDENSED CONSOLIDATED BALANCE SHEETS (U.S. GAAP)
(in millions of Euro, unaudited)
Sep 30, 2008 Dec 31, 2007
ASSETS
Cash and short-term investments 829.6
626.6
Accounts receivable, net
265.1 320.0
Other assets
1,069.5 1,004.5
Total Assets
€2,164.2 €1,951.1
LIABILITIES AND SHAREHOLDERS'EQUITY
Long-term debt
200.8 202.9
Other liabilities
651.9 552.4
Shareholders' equity
1,311.5 1,195.8
Total Liabilities and
Shareholders' equity
€2,164.2 €1,951.1
DASSAULT SYSTEMS
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (U.S. GAAP)
(in millions of Euro, unaudited)
Three months ended Nine months ended
Sep 30, Sep 30, Varn Sep 30, Sep 30 Varn
2008 2007
2008 2007
Net Income 43.3
31.1 12.2 126.4 101.9 24.5
Depreciation and
Amortization of
Property, Plant &
Equipment 5.5
7.3 (1.8) 17.0 19.8 (2.8)
Amortization of
intangible assets 12.6 12.2 0.4
36.2 37.1 (0.9)
Other Non Cash
P&L Items 0.1
1.4 (1.3) 0.2 (4.2) 4.4
Changes in
working capital 6.0 10.9
(4.9) 81.8 85.5 (3.7)
Net Cash provided
by operating
activities 67.5
62.9 4.6 261.6 240.1 21.5
Acquisition of
assets and equity,
net of cash
acquired (42.1)
(30.4) (11.7) (66.7) (90.3) 23.6
Sale of assets and
equity
0.4 0.1 0.3 36.6
0.1 36.5
Loans and others (0.3) 0.2 (0.5)
(0.3) (0.5) 0.2
Net Cash provided by
(used in)investing
activities (42.0) (30.1) (11.9)
(30.4) (90.7) 60.3
Borrowings
0.0 0.0 0.0 0.0
0.0 0.0
Share repurchase 0.0 0.0
0.0 (35.0) 0.0 (35.0)
DS Stock Option
and preferred Stock
Exercise 19.5
10.1 9.4 42.8
37.9 4.9
Cash dividend paid 0.0 0.0 0.0
(53.7) (50.8)(2.9)
Payments on capital
lease obligations 0.0 0.0
0.0 0.0 (0.4) 0.4
Net Cash provided by
(used in) financing
activities (1) 19.5 10.1
9.4 (45.9) (13.3)(32.6)
Effect of exchange
rate changes on
treasury (2) 44.9 (16.4)
61.3 17.7 (24.2) 41.9
Increase in
treasury (2) 89.9 26.5
63.4 203.0 111.9 91.1
Treasury (2) at
beginning of period 739.7 544.6
626.6 459.2
Treasury (2) at
end of period 829.6 571.1
829.6 571.1
(1) Excluding changes in short-term investments.
(2) Treasury includes cash, cash equivalents and short-term investments.
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