Dassault Systèmes Delivers Broad-based Growth in First Quarter with 3DEXPERIENCE Software Revenue Up Strongly

(2) The non-IFRS percentage increase (decrease) compares non-IFRS measures for the two different periods. In the event there is non-IFRS adjustment to the relevant measure for only one of the periods under comparison, the non-IFRS increase (decrease) compares the non-IFRS measure to the relevant IFRS measure.

(3) Based on a weighted average 259.3 million diluted shares for Q1 2018 and 257.3 million diluted shares for Q1 2017.

Summary of Principal Differences of IFRS 15 Compared to IAS 18

The Company has adopted IFRS 15 as of January 1, 2018 using the modified retrospective transition method (also called the cumulative effect method). Under this method, the transition effect is accounted for within the consolidated equity at the date of initial application, i.e. January 1, 2018, without any adjustment to the prior year comparative information. See also the Company’s 2017 Document de Référence (Annual Report) for further information.

  • Recurring software: Recurring software is comprised of subscription and support revenue. IFRS 15 has an impact on the timing of the quarterly recognition of subscription revenue but on a full year basis there is essentially no difference between IFRS 15 and IAS 18 for subscription contracts of one year in length. For the 2018 first quarter, recurring software revenue was €557.9 million under IFRS 15 and was €50.8 million higher compared to the prior IAS 18 standard. Previously, under IAS 18, we showed a ratable quarterly amount based upon the annual contract level of our on-premise subscription software. Under IFRS 15, for new contracts entered into or for contracts renewing, we have assigned an upfront value as required which is recognized in the first quarter of the contract, and the remainder which is recognized ratably during the four quarters. We continue to report both of these amounts within recurring revenue, specifically as subscription revenue (previously called periodic revenue). Historically, a higher proportion of subscription contracts are renewed in the first quarter of the year than in the other three quarters of the year.
  • Operating expenses and sales commissions: The Company continues to expense sales commissions under the IFRS 15 standard as was done under IAS 18. Therefore, there are no capitalized sales commissions. As a result, the Company’s operating expenses are identical under IFRS 15 and IAS 18.
  • One-time permanent difference: The implementation of IFRS 15 on January 1, 2018 resulted in a one-time permanent difference between IFRS 15 and IAS 18, where the deferred portion of rental agreements concluded in prior years will not be recognized into revenue. As a result, the corresponding amount of €80 million, net of taxes (€110 million before) was recorded in stockholders’ equity as of January 1, 2018.
  • Initial impact on unearned revenue: At March 31, 2018 unearned revenue on the Balance Sheet under IFRS 15 is not directly comparable to the year-ago March 31, 2017 balance sheet under the prior standard IAS 18. This is due to the fact that the March 31, 2018 balance sheet line item unearned revenue has been reduced by €158 million, reflecting mainly (i) the one-time permanent difference of €110 million, and (ii) the higher amount of recurring revenue recognized in the first quarter under IFRS 15 compared to IAS 18 in the amount of €49.4 million.

DASSAULT SYSTEMES

RECONCILIATION P&L NON-IFRS IAS 18 vs IFRS 15

(unaudited; in millions of Euros)

   
In millions of Euros, except per share data and percentages 2018 Non-IFRS
QTD   Difference QTD
    IFRS15       IAS18
Total Revenue € 820.6 (€ 49.4) € 771.2
Total Revenue breakdown by activity
Software revenue 737.0 (49.4) 687.6
Licenses and Other software revenue 179.1 1.4 180.5
Subscription and Support revenue 557.9 (50.8) 507.2
Recurring portion of Software revenue 76% (0.0) 74%
Services revenue 83.5 83.5
 
Total Software Revenue breakdown by product line
CATIA software revenue 250.7 (13.8) 236.9
ENOVIA software revenue 74.7 (1.8) 72.9
SOLIDWORKS software revenue 169.9 3.2 173.1
Other software revenue 241.7 (37.0) 204.7
 
Total Revenue breakdown by geography
Americas 239.0 (13.8) 225.2
Europe 362.6 (36.1) 326.5
Asia   219.0   0.4   219.4
Total Operating Expenses (€ 562.8) (€ 562.8)
Share-based compensation expense - -
Amortization of acquired intangibles - -
Other operating income and expense, net   -       -
Operating Income € 257.8 (€ 49.4) € 208.3
Operating Margin 31.4% -4.4pts 27.0%
Financial revenue & other, net 5.2 5.2
Income tax expense (75.6) 14.0 (61.6)
Non-controlling interest 0.3 0.3
Net Income attributable to shareholders € 187.6 (€ 35.4) € 152.2
Diluted Net Income Per Share   € 0.72   (€ 0.13)   € 0.59
             
2018 Non-IFRS
In millions of Euros 2018 Difference 2018
    IFRS15       IAS18
Cost of revenue (119.3) (119.3)
Research and development (140.4) (140.4)
Marketing and sales (246.6) (246.6)
General and administrative   (56.5)       (56.5)
 

DASSAULT SYSTEMES

RECONCILIATION BALANCE SHEET NON-IFRS IAS 18 vs IFRS 15

(unaudited; in millions of Euros)

   
In millions of Euros IFRS15 Basis IAS 18 Basis
March 31,   Difference March 31,
    2018       2018
 
ASSETS
Cash and cash equivalents 2,803.8 - 2,803.8
Short-term investments 41.3 - 41.3
Accounts receivable, net 749.7 - 749.7
Other current assets 215.1 - 215.1
Total current assets 3,809.9 - 3,809.9
Property and equipment, net 164.4 - 164.4
Goodwill and Intangible assets, net 2,899.2 - 2,899.2
Other non-current assets 273.3   14.3   287.6
Total Assets   € 7,146.8   € 14.3   € 7,161.1
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 128.9 - 128.9
Contract liabilities - Unearned revenues 842.8 158.2 1,001.0
Other current liabilities 486.2 (29.2) 457.0
Total current liabilities 1,457.9 129.0 1,586.9
Long-term debt 1,000.0 - 1,000.0
Other non-current obligations 499.4 - 499.4
Total long-term liabilities 1,499.4 - 1,499.4
Non-controlling interests 1.6 - 1.6
Parent shareholders' equity 4,187.9   (114.7)   4,073.2
Total Liabilities and Shareholders' equity   € 7,146.8   € 14.3   € 7,161.1
 

DASSAULT SYSTEMES

RECONCILIATION CASH FLOW NON-IFRS IAS 18 vs IFRS 15

(unaudited; in millions of Euros)

 
In millions of Euros Three months ended March 31, 2018
    IFRS 15   Difference   IAS 18
Net Income attributable to equity holders of the parent 136.3   (35.5)   100.8
Non-controlling interest (0.3)   0.0   (0.3)
Net Income 136.0 (35.5) 100.5
Depreciation of property & equipment 13.7 - 13.7
Amortization of intangible assets 43.9 - 43.9
Other non cash P&L items 16.7 - 16.7
Changes in working capital 196.6   35.5   232.1
Net Cash provided by operating activities € 406.9 € 0.0 € 406.9
 
Additions to property, equipment and intangibles (11.9) - (11.9)
Payments for acquisition of businesses, net of cash acquired - - -
Sale (purchase) of short term investments, net (40.1) - (40.1)
Investments, loans and others (0.1)   -   (0.1)
Net Cash provided by (used in) investing activities (€ 52.1) € 0.0 (€ 52.1)
 
(Purchase) Sale of treasury stock 8.4 - 8.4
Proceeds from exercise of stock-options 12.3   -   12.3
Net Cash provided by (used in) financing activities € 20.7 € 0.0 € 20.7
 
Effect of exchange rate changes on

cash and cash equivalents

(31.1) 0.0 (31.1)
         
Increase (decrease) in cash and cash equivalents   € 344.4   € 0.0   € 344.4
             
Cash and cash equivalents at beginning of period € 2,459.4 € 0.0 € 2,459.4
Cash and cash equivalents at end of period   € 2,803.8   € 0.0   € 2,803.8
 

IFRS 15

DASSAULT SYSTEMES

NON-IFRS IFRS 15 FINANCIAL INFORMATION

(unaudited; in millions of Euros, except per share data, headcount and exchange rates)

 
In millions of Euros, except per share data and percentages Three months ended
    March 31, 2018
Non-IFRS-IFRS15 Revenue € 820.6
 
Non-IFRS-IFRS15 Revenue breakdown by activity
Software revenue 737.0
of which licenses and other software revenue 179.1
of which subscription and support revenue 557.9
Services revenue 83.5
 
Non-IFRS-IFRS15 software revenue breakdown by product line
CATIA software revenue 250.7
ENOVIA software revenue 74.7
SOLIDWORKS software revenue 169.9
Other software revenue 241.7
 
Non-IFRS-IFRS15 Revenue breakdown by geography
Americas 239.0
Europe 362.6
Asia   219.0
 
Non-IFRS-IFRS15 operating income € 257.8
Non-IFRS-IFRS15 operating margin 31.4%
Non-IFRS net income attributable to shareholders € 187.6
Non-IFRS-IFRS15 diluted net income per share   € 0.72
Closing headcount   16,067
 
Average Rate USD per Euro 1.23
Average Rate JPY per Euro   133.2
 

IFRS 15

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED STATEMENT OF INCOME (IFRS)

(unaudited; in millions of Euros, except per share data)

 
In millions of Euros, except per share data and percentages Three months ended
March 31,
    2018
Licenses and Other software revenue 179.1
Subscription and Support revenue 556.0
Software revenue 735.1
Services revenue 83.5
Total Revenue IFRS15 € 818.7
Cost of software revenue (excluding amortization of acquired intangibles) (40.9)
Cost of services and other revenue (79.4)
Research and development (152.7)
Marketing and sales (253.0)
General and administrative (69.7)
Amortization of acquired intangibles (41.8)
Other operating income and expense, net (2.5)
Total Operating Expenses (639.9)
Operating Income € 178.7
Financial revenue and other, net 4.7
Income before income taxes 183.5
Income tax expense (47.5)
Net Income € 136.0
Non-controlling interest 0.3
Net Income attributable to equity holders of the parent € 136.3
Basic net income per share 0.53
Diluted net income per share € 0.53
Basic weighted average shares outstanding (in millions) 256.9
Diluted weighted average shares outstanding (in millions)   259.3
 

IFRS 15

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED BALANCE SHEET (IFRS)

(unaudited; in millions of Euros)

 
In millions of Euros March 31,
    2018
 
ASSETS
Cash and cash equivalents 2,803.8
Short-term investments 41.3
Accounts receivable, net 749.7
Other current assets 215.1
Total current assets 3,809.9
Property and equipment, net 164.4
Goodwill and Intangible assets, net 2,899.2
Other non-current assets 273.3
Total Assets   € 7,146.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 128.9
Contract liabilities 842.8
Short-term debt 0.0
Other current liabilities 486.2
Total current liabilities 1,457.9
Long-term debt 1,000.0
Other non-current obligations 499.4
Total long-term liabilities 1,499.4
Non-controlling interests 1.6
Parent shareholders' equity 4,187.9
Total Liabilities and Shareholders' equity   € 7,146.8
 

IFRS 15

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED CASH FLOW STATEMENT (IFRS)

 
In millions of Euros Three months ended
    March 31, 2018
Net Income attributable to equity holders of the parent 136.3
Non-controlling interest (0.3)
Net Income 136.0
Depreciation of property & equipment 13.7
Amortization of intangible assets 43.9
Other non cash P&L items 16.7
Changes in working capital 196.6
Net Cash provided by operating activities € 406.9
 
Additions to property, equipment and intangibles (11.9)
Payments for acquisition of businesses, net of cash acquired -
Sale (purchase) of short term investments, net (40.1)
Investments, loans and others (0.1)
Net Cash provided by (used in) investing activities (€ 52.1)
 
Acquisition of non-controlling interests -
(Purchase) Sale of treasury stock 8.4
Proceeds from exercise of stock-options 12.3
Cash dividend paid -
Net Cash provided by (used in) financing activities € 20.7
 
Effect of exchange rate changes on

cash and cash equivalents

(31.1)
 
Increase (decrease) in cash and cash equivalents   € 344.4
     
Cash and cash equivalents at beginning of period € 2,459.4
Cash and cash equivalents at end of period   € 2,803.8
 

IFRS 15

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