Dassault Systèmes Reports Strong 3DEXPERIENCE-driven Growth with Fourth Quarter Total Revenue up 13% and Software Revenue up 11% at Constant Currency

(“IAS 18 IFRS and IAS 18 non-IFRS”)

  • The Company implemented IFRS 15 effective as of January 1, 2018. While the implementation resulted in some quarterly variation compared to under IAS 18, the prior standard, it did not have a material impact on overall 2018 financial results. Specifically, for the full year 2018 total revenue and software revenue were both €3.1 million (IFRS and non-IFRS) higher under IFRS 15 with no difference in earnings per share compared to IAS 18 on an IFRS basis and a 1 cent difference on a non-IFRS basis.
  • On an IAS 18 basis and in constant currencies, total revenue increased 10% (IFRS and non-IFRS) with acquisitions contributing three points to the total revenue growth.
  • On an IAS 18 basis and in constant currencies: Total software revenue increased 10% (IFRS and non-IFRS) with double-digit growth for SOLIDWORKS, ENOVIA, SIMULIA and DELMIA and 4% growth for CATIA. Licenses and other software revenue increased 11% (IFRS and non-IFRS). Non-IFRS recurring revenue increased 9% in total, with double-digit subscription revenue growth including acquisitions and continued high support renewal rates on a global basis. On an organic basis excluding acquisitions, total software increased 7% with licenses and other software revenue higher by 9% and recurring software revenue up 6%.
  • From an industry perspective and in constant currencies: IAS 18 non-IFRS software revenue increased double-digits in Transportation & Mobility, Aerospace & Defense, Industrial Equipment, Marine & Offshore, Consumer Goods-Retail, Architecture, Engineering & Construction, Natural Resources and Business Services.
  • On a regional and IAS 18 basis: Asia non-IFRS software revenue increased 16% with double-digit software growth across all geographies. In Europe non-IFRS software revenue increased 8%, led by significantly higher license growth in Western Europe and strong recurring software revenue results generally. In the Americas, non-IFRS software revenue increased 7% reflecting the contribution from new acquisitions, strong growth in subscription revenue and continued strengthening in Latin America. High Growth Countries non-IFRS software revenue increased 18% and represented about 18% of total software revenue. (All growth rates are in constant currencies.)
  • 3DEXPERIENCE non-IFRS IAS 18 software revenue increased 24% at constant currency in 2018 and represented approximately 25% of related software revenue, up 4 percentage points from 21% in 2017.
  • On an IAS 18 basis, IFRS services revenue increased 13% and non-IFRS 14% in constant currencies, principally reflecting strong growth in 3DEXPERIENCE related services activities and the contribution from acquisitions. The non-IFRS services gross margin was 12.9% for 2018 compared to 12.7% in the prior year.
  • IAS 18 IFRS operating income increased 5%. IAS 18 non-IFRS operating income increased 7% as reported and 10% at constant currency and totaled €1.11 billion. On an IAS 18 non-IFRS basis, the operating margin was 31.8%, compared to 32% in 2017. The Company improved its underlying organic operating margin by about 70 basis points, largely absorbing acquisition dilution of about 80 basis points. Currency had a negative impact of about 10 basis points.
  • On an IAS 18 basis, and principally reflecting the US tax law changes enacted in 2017, the 2018 IFRS effective tax rate decreased to 28.0% compared to 30.8% in 2017 and the non-IFRS effective tax rate decreased to 28.2% from 33.2%.
  • IAS 18 non-IFRS financial revenue, net totaled €16.3 million, compared to €1.7 million in 2017 with an increase in financial net income of €11.2 million and a €2.7 million lower impact from foreign currency exchange losses.
  • IAS 18 IFRS diluted net income per share increased 8%. IAS 18 non-IFRS diluted net income per share totaled €3.11, up 16% as reported and 20% at constant currency.

Business Outlook

(In the discussion below 2018 figures on an IAS 18, non-IFRS basis, with revenue growth rates in constant currencies while 2019 figures are on an IFRS 15 and IFRS 16, non-IFRS basis)

Pascal Daloz, Dassault Systèmes’ Executive Vice President, CFO and Corporate Strategy Officer, commented, “The fourth quarter came in at or above the high end of our objectives driven by 3DEXPERIENCE. On an organic basis, we had strong results across the board in the quarter with total revenue up 10%, software revenue up 8%, licenses and other software revenue growth of 11% and services revenue up 26%. On a regional basis, the quarter was led by Asia, with broad-based growth and notable strength in China and Japan, and by Europe.

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