Oct 30 - Dassault Q3 Revenue Up 8% to 299M Euro with 31M Profit

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Dassault Q3 Revenue Up 8% to 299M Euro with 31M Profit

SolidWorks new seats up 19%, Q3 revenue up 17% in constant currencies

See Also

·	Webcast presentation
·	Q3 Earnings Presentation - zip file, 4.1 MB
·	Conference Call Text - pdf
·	Dassault Systemes Website
·	CATIA directory - by TenLinks.com
·	CATIA Reading Room - features, tutorials, reviews and news, by CADdigest.com

·	related news

PARIS, France Oct. 30, 2007- Dassault Systemes (DS) (Nasdaq: DASTY; Euronext Paris: #13065, DSY.PA) reported financial results for the third quarter and nine months ended September 30, 2007.

Summary Third Quarter 2007 Financial Highlights

GAAP software revenue up 19% in constant currencies; non-GAAP software revenue up 17% in constant currencies
SolidWorks new seats up 19%
DS reconfirms 2007 constant currency non-GAAP revenue growth objective of 14% to 15% and adjusts 2007 non-GAAP EPS objective to €1.96 to €2.00 for weaker US dollar
DS initiates 2008 non-GAAP growth objectives for software and total revenue

Bernard Charles, Dassault Systemes President and Chief Executive Officer, commented, “DS had a satisfactory third quarter, despite currency headwinds, with strong software performance. We continue to make good progress in our PLM Value channel transformation and SolidWorks had a rewarding quarter with 20% non-GAAP revenue growth in constant currencies.

“DS is expanding the scope of its PLM portfolio to revolutionize the way companies can share and reuse 3D product data. Our goal is to help companies leverage their product-related data wherever it may reside for product documentation, technical training, maintenance, customer service as well as for marketing and sales. With the acquisition of Seemage, we are adding an innovative team and technology in support of this vision.

“We continue to focus our R&D efforts on developing technologies for next-generation, online collaboration. As part of our 3D For ALL strategy, we recently launched with Microsoft, Virtual Earth – 3DVIA Shape. This online application enables users to easily create realistic 3D models of homes and buildings, and then share them with others in online communities.”

Third Quarter 2007 Financial Summary

¹EPS growth trends in the third quarter were impacted both in GAAP and non-GAAP by one-time, positive tax restructuring effects in the year-ago period. Specifically, GAAP pretax income increased 6% to €48.6 million in the 2007 third quarter, while GAAP earnings per diluted share of €0.26 decreased 24% on a higher effective tax rate of 35.8% compared to 11.8% in the year-ago period. Non-GAAP pre-tax income increased 6% to €69.5 million compared to €65.4 million in the year-ago quarter, while non-GAAP earnings per diluted share of €0.39, in line with the Company’s objective, decreased 3% on a higher effective tax rate of 32.7% compared to 28.0% in the year-ago quarter.

Third quarter software performance was driven by good software revenue growth in both PLM and Mainstream 3D segments.

Non-GAAP PLM revenue rose 10% in constant currencies in the third quarter. CATIA is seeing continued momentum in large accounts and increasing interest in CATIA PLM Express in the PLM Value channel. New CATIA seats in the quarter increased 4% to 7,704. ENOVIA, following a robust first half, had non-GAAP revenue growth of 12% in constant currencies in the third quarter and is on track to deliver a solid full year performance.
DS PLM Value channel continues to advance its transformation on the original timetable, is seeing growth in new customers and is starting to expand VAR capacity.
SIMULIA saw strong interest for its simulation applications in the third quarter continuing the trends of the first half of this year with expanding relationships with its largest customers, broadening of its customer base, and growth in automotive and aerospace which should help drive market share gains for SIMULIA.
SolidWorks delivered a record quarter for revenue. Non-GAAP SolidWorks revenue increased 20% in constant currencies with seat growth of 19% (11,350 seats) demonstrating good demand from companies looking to convert to 3D from 2D legacy design tools. Total Mainstream 3D non-GAAP revenue, which now includes both SolidWorks and COSMOSWorks, increased 19% in constant currencies in the third quarter.
All regions contributed to the growth in non-GAAP revenue in the third quarter, led by Asia, up 27% in constant currencies; the Americas up 10% in constant currencies and Europe higher by 5%. In addition, all three geographic regions reported double-digit software growth in constant currencies.
Service revenue, which totaled €43.2 million in the 2007 third quarter, decreased 11% in constant currencies on an unusually strong base of comparison as 2006 third quarter service revenue was up 72% in constant currencies.
On October 18, 2007, Microsoft and DS introduced Microsoft Virtual Earth – 3DVIA. This free online application, developed by Dassault Systemes, allows consumers to create realistic 3D models - such as buildings and structures - and then share them through Microsoft Virtual Earth and online communities.
New wins in the quarter included: LG and Yantai Raffles in collaboration, HydroQuebec and KTM in simulation, Valeo in digital manufacturing and Foxconn, a combined PLM design and collaboration win, among others.

Nine-Month 2007 Financial Summary

Year-to-date GAAP software revenue up 17% in constant currencies and non-GAAP software revenue up 16% in constant currencies

Cash flow and other financial highlights

Net operating cash flow totalled €62.9 million and €240.1 million, respectively, for the third quarter and nine months ended September 30, 2007. Cash and short-term investments aggregated €571.1 million and long-term debt totaled €210.5 million at September 30, 2007.

Segment Information

Commencing with the 2007 third quarter, DS has reclassified CosmosWorks to its Mainstream 3D business segment from the PLM segment reflecting the fact that CosmosWorks’ products are primarily sold through the SolidWorks channel in conjunction with the sale of SolidWorks products. All other DS simulation applications are classified within the PLM segment. In this press release, all references to SolidWorks’ revenues exclude CosmosWorks. All references to Mainstream 3D in this press release include both SolidWorks and CosmosWorks revenues. Detailed reconciliations for prior periods can be found on the Company’s website: www.3ds.com within the 2007 third quarter presentation.

Other Corporate Announcements

On October 2, 2007 DS announced that it expanded its market coverage into the product documentation market with the acquisition of Seemage, an innovative start-up. In combination, DS plans to offer a new class of desktop-based content authoring tools specifically addressing new communities including product documentation, customer service, technical training and marketing and sales.

Business Outlook

Thibault de Tersant, Senior Executive Vice President and CFO, commented, “Based upon our financial performance through the first nine months and with our third quarter in line with our expectations, we are reconfirming our 2007 constant currency non-GAAP revenue objective for growth of about 14-15% but are adjusting our 2007 non-GAAP reported revenue range to about €1.275 to €1.285 billion and our non-GAAP earnings per share objective to about €1.96 to €2.00 to reflect an update of our US dollar exchange rate assumption to US$1.45 per €1.00 versus US$1.35 previously.

“Looking to 2008, we see a continuation of the favorable demand dynamics for our software. We are introducing our 2008 initial constant currency non-GAAP software revenue growth objective of about 12% and non-GAAP total revenue growth of about 10% in constant currencies.” The Company’s objectives are prepared and communicated only on a non-GAAP basis and are subject to the cautionary statement set forth below:

Fourth quarter non-GAAP total revenue objective of about €370 to €380 million; non-GAAP EPS of about €0.76 to €0.80 and non-GAAP operating margin of about 36%;
2007 non-GAAP total revenue objective of about 14% to 15% growth in constant currencies (unchanged);
2007 non-GAAP EPS objective of about €1.96 to €2.00, representing about 7% to 9% growth (previously €2.00 to €2.05)
2007 non-GAAP operating margin objective of about 27% (unchanged);
Objectives based upon exchange rate assumptions for the 2007 fourth quarter of US$1.45 (previously US$1.35) per €1.00 and JPY 165 (unchanged) per €1.00;
2007 non-GAAP revenue range of about €1.275 to €1.285 billion, updated from the prior range of €1.285 to €1.30 billion;

The non-GAAP objectives set forth above do not take into account the following accounting elements: deferred revenue write-downs estimated at approximately €12 million (before Seemage) for 2007; stock-based compensation expense estimated at approximately €18 million for 2007 and amortization of intangibles estimated at approximately €48 million (before Seemage) for 2007. These estimates do not include any new stock option or share grants, or any new acquisitions completed after October 30, 2007. 4

Recent Business News Highlights

On October 16th, DS announced that ITER was using DELMIA solutions to virtually define a future power generation plant.
On October 8th, DS announced that Valeo had selected DELMIA digital manufacturing solutions for manufacturing processes improvement.
On October 4th, DS launched DELMIA PLM Express.
On September 25th, DS announced Version 5 Release 18 of its PLM portfolio.
On September 24th, SolidWorks unveiled PDMWorks Enterprise 2008.
On September 19th, DS launched Apparel PLM Solution for the Mid-Market.
On September 13th, DS announced the availability of Abaqus for CATIA Version 2.5.

Conference call information

Dassault Systemes will host a teleconference call today, Tuesday, October 30, 2007 at 3:00 PM CET/2:00 PM London/10:00 AM New York. The 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 call to register, download and install any necessary audio software. The webcast teleconference will be archived for 30 days. Financial information to be discussed in the call will be available on the Company’s website prior to commencement of the teleconference at http://www.3ds.com/corporate/investors/. Additional investor information can be accessed at http://www.3ds.com/corporate/investors/ or by calling Dassault Systemes’ Investor Relations at 33.1.40.99.69.24.

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 5 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, 2006 on Form 20-F filed with the SEC on May 29, 2007. 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 we believe it would be helpful for understanding trends in our business, we provide percentage increases or decreases in our revenue (in both US 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.

About Dassault Systèmes

As a world leader in 3D and Product Lifecycle Management (PLM) solutions, Dassault Systèmes brings value to more than 100,000 customers in 80 countries. A pioneer in the 3D software market since 1981, Dassault Systèmes 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 Systèmes 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 Systèmes is listed on the Nasdaq (DASTY) and Euronext Paris (#13065, DSY.PA) stock exchanges. For more information, visit http://www.3ds.com

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