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

*In constant currencies

First Quarter 2018 versus 2017 Financial Comparisons on an IAS 18 Basis (“IAS 18 IFRS and IAS 18 non-IFRS”)

  • On an IAS 18 basis, total revenue increased 10% (IFRS) and 9% (non-IFRS). First quarter financial results include EXA Corporation, an acquisition completed on November 17, 2017. Excluding acquisitions, IAS 18 non-IFRS total revenue increased 7% and software revenue increased 8%. (All growth rates are in constant currencies.)
  • On an IAS 18 basis and in constant currencies: Software revenue increased 11% (IFRS) and 10% (non-IFRS). Licenses and other software revenue grew 14% (IFRS and non-IFRS), with double-digit growth for CATIA, SOLIDWORKS, ENOVIA, SIMULIA, DELMIA and GEOVIA. Non-IFRS Recurring revenue, comprised of Subscription and Support revenue, represented 74% of non-IFRS software revenue. Non-IFRS Recurring revenue increased 9% reflecting strong growth in Subscription revenue, including the acquisition of EXA, and continued strong Support renewal rates in all three regions. (In the Company’s financial statements the line item ‘Periodic and Maintenance Revenue’ has been updated to ‘Subscription and Support Revenue’ commencing with the 2018 First Quarter and combined represent the Company’s ‘Recurring Revenue’.)
  • IAS 18 non-IFRS software revenue increased double-digits in constant currencies across Transportation & Mobility, Aerospace & Defense, Industrial Equipment, Consumer Goods & Retail, Architecture, Engineering & Construction and Natural Resources. The Company noted an improving dynamic in Life Sciences.
  • On a regional and IAS 18 basis: Asia non-IFRS software revenue increased 16% on broad-based growth in China, India and South Korea and strong improvement in Japan. In Europe non-IFRS software revenue increased 6% with notable performances in Western and Southern Europe as well as Russia. In the Americas, non-IFRS software revenue increased 11% on North America growth dynamics. High Growth Countries non-IFRS software revenue increased 12% on strong growth in a number of countries. (All growth rates are in constant currencies.)
  • On an IAS 18 basis, 3DEXPERIENCE software revenue was up 26% during the 2018 first quarter, with Go Live implementations continuing and new 3DEXPERIENCE investments commencing with multiple large customers. More specifically, the Company noted new wins including in Electric Vehicles where it has the leading industry presence and in Industrial Equipment, Marine & Offshore and High Tech, as well as 3DEXPERIENCE programs ramping with large clients in Transportation & Mobility, in Aerospace & Defense as well as in Consumer Packaged Goods & Retail. 3DEXPERIENCE cloud activity was up significantly during the first quarter.
  • Services revenue of €84 million was unchanged in constant currencies (IAS 18 IFRS and non-IFRS) on a mixed performance. The Company noted strong growth in 3DEXPERIENCE services activity.
  • IAS 18 IFRS operating income increased 8%. IAS 18 non-IFRS operating income totaled €208.3 million, representing an increase of 4% as reported but 18% in constant currencies. The IAS 18 non-IFRS operating margin increased 80 basis points to 27.0% in the first quarter, compared to 26.2% in the year-ago period, reflecting underlying organic improvement of 240 basis points, offset by negative currency effects of 110 basis points and acquisition dilution estimated at 50 basis points.
  • Principally reflecting the U.S. Tax Reform Act of 2017, the Company’s IAS 18 IFRS and non-IFRS effective tax rates decreased to 25.0% and 28.9%, respectively, in the 2018 first quarter compared to 31.8% and 31.9%, respectively, in the year-ago period.
  • IAS 18 non-IFRS financial revenue totaled €5.2 million in the 2018 first quarter, compared to €0.6 million in the year-ago period principally due to lower currency exchange losses.
  • IAS 18 IFRS diluted net income per share increased 18% or 33% in constant currencies. IAS 18 non-IFRS diluted net income per share totaled €0.59, increasing 11% or 26% at constant currency.

Business Outlook

(Discussion on an IAS 18, non-IFRS basis, with revenue growth rates in constant currencies)

Pascal Daloz, Dassault Systèmes’ Executive Vice President, CFO and Corporate Strategy Officer, commented, We expected a strong start to 2018 and are pleased to report that first quarter results came in well aligned with this objective. Software revenue increased 10%, with licenses and other software growth of 14% and recurring software revenue growth of 9% in constant currencies. Earnings per share increased 11% or 26% excluding strong currency headwinds. Those good results are also reflected in strong cash flow from operations, up 17%.

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