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Dassault Systèmes Raises EPS Guidance for 2018

VÉLIZY-VILLACOUBLAY, France — (BUSINESS WIRE) — July 24, 2018 — Regulatory News:

Dassault Systèmes (Paris: DSY) (Euronext Paris: #13065, DSY.PA), announces IFRS unaudited financial results for the second quarter and first half ended June 30, 2018. These results were reviewed by the Company’s Board of Directors on July 24, 2018. The Company has adopted IFRS 15 as from January 1, 2018. This press release includes 2018 second quarter and first half financial results under IFRS 15 as well as under the prior IAS 18 standard and includes a summary explanation of the major differences for the Company. In addition, this press release also includes financial information on a non-IFRS basis (both IFRS 15 and IAS 18) with reconciliations included in the Appendix to this communication.

Second Quarter and First Half 2018 Highlights and Financial Summary
(Unaudited, with references to IAS 18 data, revenue in constant currency)

                 
In millions of Euros,

except per share data

IFRS under IFRS15 IFRS under IAS18 IFRS under IFRS15 IFRS under IAS18
  Q2 2018 Q2 2018   Change   Change in cc*   YTD 2018 YTD 2018   Change   Change in cc*
Total Revenue 827.8 837.3   4%   8% 1,646.4 1,606.6   3%   9%
Software Revenue 740.1 749.6   4%   9% 1,475.2 1,435.4   3%   10%
Operating Margin 20.4% 21.3%   +0.3pts     21.1% 19.1%   +0.7pts    
EPS 0.50 0.52   8%   14% 1.02 0.91   12%   22%
                         
In millions of Euros,

except per share data

Non-IFRS under IFRS15 Non-IFRS under IAS18 Non-IFRS under IFRS15 Non-IFRS under IAS18
  Q2 2018 Q2 2018   Change   Change in cc*   YTD 2018 YTD 2018   Change   Change in cc*
Total Revenue 830.7 840.3   4%   8% 1,651.3 1,611.4   2%   9%
Software Revenue 743.0 752.6   4%   9% 1,480.0 1,440.2   3%   9%
Operating Margin 29.4% 30.2%   +0.1pts     30.4% 28.7%   +0.5pts    
EPS 0.69 0.72   16%   22% 1.41 1.30   13%   23%

*In constant currencies.

Bernard Charlès, Dassault Systèmes’ Vice Chairman and Chief Executive Officer commented, “More companies are understanding that the 3DEXPERIENCE platform is the catalyst and enabler for them to become platform companies. As it is both an operating system to run their business and a business model to transform their business, the 3DEXPERIENCE platform is a game-changer in added value creation.

“During the first half of this year we have commenced new major 3DEXPERIENCE engagements with global leaders in core and diversification industries. A very good illustration is the twenty-year partnership we entered into with EDF: with the 3DEXPERIENCE twin of existing and future plants, we can create new nuclear engineering experiences for EDF and digitally transform the nuclear industry as a whole. Indeed, our world leading solutions are used to manage the complexity of two-thirds of the world’s nuclear reactors and four-fifths of those under construction.

“Leading engagements with strategic partners contributes to increase our footprint, like our current alliance with Accenture for industry-specific solutions and the partnership we have with Capgemini for EDF.

“We continue to invest in markets that are highly promising both in terms of digital maturity and our own growth potential. We have decided to team up with Centric Software, the market leader driving digital transformation in the fashion, apparel, luxury and retail sectors with its well-tailored, configurable PLM solution. Together, we aim to boost the innovation and speed to market of all businesses that launch their products by collection and seek solutions that respond to today’s on-trend and on-demand consumers, representing a multi-billion-dollar total addressable market. As we successfully did with SOLIDWORKS, Centric Software will take the lead in this market segment.”

2018 Second Quarter Financial Summary
(Unaudited)

                 
In millions of Euros,

except per share data

IFRS under IFRS15 IFRS under IAS18 Non-IFRS under IFRS15 Non-IFRS under IAS18
    Q2 2018   Change   Change in cc*   Q2 2018   Change   Change in cc*
Q2 2018 Total Revenue 827.8 837.3   4%   8% 830.7 840.3   4%   8%
Q2 2018 Software Revenue 740.1 749.6   4%   9% 743.0 752.6   4%   9%
Q2 2018 Services Revenue 87.7 87.7   0%   4% 87.7 87.7   0%   4%
Q2 2018 Operating Margin 20.4% 21.3%   +0.3pts     29.4% 30.2%   +0.1pts    
Q2 2018 EPS 0.50 0.52   8%   14% 0.69 0.72   16%   22%
                         
Total Software Revenue in millions of Euros IFRS under IFRS15 IFRS under IAS18 Non-IFRS under IFRS15 Non-IFRS under IAS18
    Q2 2018   Q2 2017   Change in cc*   Q2 2018   Q2 2017   Change in cc*
Americas 208.1 221.5   224.4   7% 210.0 223.3   225.7   7%
Europe 306.9 314.0   297.4   7% 307.1 314.2   300.0   6%
Asia 225.1 214.2   196.7   14% 225.9 215.1   196.9   14%

*In constant currencies

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

2018 First Half Financial Summary
(Unaudited)

                 
In millions of Euros,

except per share data

IFRS under IFRS15 IFRS under IAS18 Non-IFRS under IFRS15 Non-IFRS under IAS18
    YTD 2018   Change   Change in cc*     YTD 2018   Change   Change in cc*
YTD 2018 Total Revenue 1,646.4 1,606.6   3%   9% 1,651.3 1,611.4   2%   9%
YTD 2018 Software Revenue   1,475.2 1,435.4   3%   10% 1,480.0 1,440.2   3%   9%
YTD 2018 Services Revenue   171.2 171.2   -4%   2% 171.2 171.2   -4%   2%
YTD 2018 Operating Margin 21.1% 19.1%   +0.7pts     30.4% 28.7%   +0.5pts    
YTD 2018 EPS 1.02 0.91   12%   22% 1.41 1.30   13%   23%
                         
Total Software Revenue in millions of Euros IFRS under IFRS15 IFRS under IAS18 Non-IFRS under IFRS15 Non-IFRS under IAS18
    YTD 2018   YTD 2017   Change in cc*     YTD 2018   YTD 2017   Change in cc*
Americas 417.7 417.2   425.7   9% 420.5 420.0   428.9   9%
Europe 631.9 602.9   578.2   7% 632.4 603.4   584.5   6%
Asia 425.6 415.3   384.9   15% 427.1 416.7   385.5   15%

*In constant currencies

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

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, “Building on the strong start to 2018 in the first quarter, our second quarter financial results were aligned well with our objectives, bringing us to a solid first half performance, with software revenue up 9%, 160 basis points of underlying organic operating margin improvement absorbing both currency headwinds and acquisition dilution, and earnings per share up 13% as reported and 23% at constant currency. Cash flow from operations was also strong, increasing 9% in the first half to €645 million.

“Looking to the full year outlook, we are now targeting IAS 18 non-IFRS total revenue growth of about 9% to 10% in constant currencies, confirming acceleration in 3DEXPERIENCE activity as our first half results demonstrated, and healthy software growth for SOLIDWORKS for the year in total while anticipating a high base of comparison in the third quarter. We are then updating our financial objectives for new acquisitions. Our new revenue range is €3.41 to €3.44 billion, incorporating the second quarter currency upside.

“In turn, we are upgrading our EPS objective, targeting IAS 18 non-IFRS earnings per share of €2.95 to €3.00, representing growth of about 10% to 12%, reflecting higher activity, currency and improved effective tax rate for the year. At constant currency, this would represent a growth rate of about 15% to 17%.”

The Company’s third quarter and full year 2018 financial objectives are given in IAS 18 on a non-IFRS basis:

These objectives are prepared and communicated only on a non-IFRS basis and are subject to the cautionary statement set forth below.

The 2018 non-IFRS objectives, which are stated on an IAS 18 basis, set forth above do not take into account the following accounting elements and are estimated based upon the 2018 principal currency exchange rates above: deferred revenue write-downs estimated at approximately €5 million on an IAS 18 basis, share-based compensation expense, including related social charges, estimated at approximately €121 million and amortization of acquired intangibles estimated at approximately €163 million. The above objectives also do not include any impact from other operating income and expense, net principally comprised of acquisition, integration and restructuring expenses, from one-time items included in financial revenue and from one-time tax restructuring gains and losses. Finally, these estimates do not include any new stock option or share grants, or any new acquisitions or restructurings completed after July 25, 2018.

Cash Flow and Other Financial Highlights Under IAS 18 For Year-over-Year Comparisons

The Company’s net cash flow from operations for the second quarter and first half ended June 30, 2018 are identical under IFRS 15 in comparison to IAS 18 although some of the line items differ. (See pages 16 and 22 in the Appendix to this press release for further details including a reconciliation of the cash flow statement and balance sheets under IFRS 15 compared to IAS 18 for the quarter, half year and period ended June 30, 2018.)

IAS 18 net operating cash flow for the 2018 First Half increased 9% to €645.5 million compared to €592.4 million in the 2017 First Half on growth in net income and non-cash operating adjustments.

Dassault Systèmes’ net financial position totaled €2.04 billion at June 30, 2018, compared to €1.46 billion at December 31, 2017, reflecting cash, cash equivalents and short-term investments of €3.04 billion and long-term debt of €1.00 billion.

Summary of Recent Business, Technology and Customer Announcements

Customers:

On June 27, 2018, EDF, Dassault Systèmes and Capgemini jointly announced the signing of a long-term partnership agreement for the digital transformation of EDF’s nuclear engineering and its ecosystem. The partnership aims to support EDF in the digitalization of its plant engineering projects with the view to strengthen plant performance and overall competitiveness of nuclear power. It represents a major step in accelerating the digital transformation of the nuclear industry as a whole. In keeping with the terms of the agreement, EDF and Dassault Systèmes are engaging in a 20-year partnership that will sustainably support industrial projects thanks to the 3DEXPERIENCE platform of Dassault Systèmes which is designed to standardize, harmonize and modernize processes and engineering methods. This interactive and evolutive platform will be used by nuclear businesses to access real-time project data. It will also be used to design the digital twins of nuclear plants whether they are at the design, construction or operational phase.

Corporate:

On June 14, 2018, Dassault Systèmes announced the signing of a definitive agreement to acquire a majority stake in Centric Software, a privately-owned industry market leader driving digital transformation with software innovation in the fashion, apparel, luxury and retail sectors. With this investment, Dassault Systèmes aims to accelerate the digital transformation of companies seeking solutions for the increasingly complex development of collections that respond to today’s on-trend and on-demand consumers, representing a multi-billion, dollar total addressable market. Headquartered in California’s Silicon Valley and with offices in 13 countries, Centric Software provides product lifecycle management software solutions to more than 600 globally-recognized brands, including ASICS, Bass Pro, Belle China, Bestseller, Etam, Kate Spade, Loblaws, Louis Vuitton, Michael Kors, Samsonite, Ted Baker, Tommy Hilfiger and others.

On June 20, 2018 the completion of the acquisition of No Magic, a global solutions company focused on model-based systems engineering, architecture modeling for software, system of systems and enterprise business processes modeling was announced. No Magic is headquartered in Allen, Texas and has offices in Lithuania and Thailand. While providing continuity for No Magic’s customers, Dassault Systèmes will empower No Magic’s solutions with its 3DEXPERIENCE platform, complementing and reinforcing CATIA applications. This will provide a “single source of truth” allowing any user within a company to implement continuous 3D digital processes and to address all lifecycle aspects of an experience, from requirements, system of systems architecture models, systems and sub-systems architecture to functional, conceptual, logical and physical 3D modeling simulations. Enterprise customers, small companies and professionals in the Aerospace & Defense (NASA/JPL, Boeing, Lockheed Martin), Transportation & Mobility (Ford, Renault, Honda, BMW, Nissan), and other industries (Sony, Panasonic, John Deere, GE Healthcare, Pfizer, J.P. Morgan, PayPal) rely on No Magic’s solutions.

Today’s Webcast and Conference Call Information

Today, Wednesday, July 25, 2018, Dassault Systèmes will first host from Paris a webcasted meeting at 10:00 AM Paris time/ 9:00 AM London time and will then host a conference call at 9:00 AM New York time/ 2:00 PM London time/ 3:00 PM Paris time. The webcasted meeting and conference call will be available via the Internet by accessing http://www.3ds.com/investors/. Please go to the website at least 15 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 one year.

Additional investor information can be accessed at http://www.3ds.com/investors/ or by calling Dassault Systèmes’ Investor Relations at 33.1.61.62.69.24.

Key Investor Relations Events

Third Quarter 2018 Earnings: October 24, 2018
Fourth Quarter 2018 Earnings: February 6, 2019

Forward-looking Information

Statements herein that are not historical facts but express expectations or objectives for the future, including but not limited to statements regarding the Company’s non-IFRS financial performance objectives, are forward-looking statements.

Such forward-looking statements are based on Dassault Systèmes management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results or performances may differ materially from those in such statements due to a range of factors. The Company’s current outlook for 2018 takes into consideration, among other things, an uncertain global economic environment. In light of the continuing uncertainties regarding economic, business, social and geopolitical conditions at the global level, the Company’s revenue, net earnings and cash flows may grow more slowly, whether on an annual or quarterly basis. While the Company makes every effort to take into consideration this uncertain macroeconomic outlook, the Company’s business results, however, may not develop as anticipated. Further, there may be a substantial time lag between an improvement in global economic and business conditions and an upswing in the Company’s business results. The Company’s actual results or performance may also be materially negatively affected by numerous risks and uncertainties, as described in the “Risk Factors” section of the 2017 Document de Référence (Annual Report) filed with the AMF (French Financial Markets Authority) on March 21, 2018 and also available on the Company’s website www.3ds.com.

In preparing such forward-looking statements, the Company has in particular assumed an average US dollar to euro exchange rate of US$1.20 per €1.00 for the 2018 third and fourth quarters as well as an average Japanese yen to euro exchange rate of JPY135 to €1.00 for the 2018 third and fourth quarters before hedging; however, currency values fluctuate, and the Company’s results of operations may be significantly affected by changes in exchange rates.

Non-IFRS Financial Information

Readers are cautioned that the supplemental non-IFRS 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 IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Company’s 2017 Document de Référence filed with the AMF on March 21, 2018.

In the tables accompanying this press release the Company sets forth its supplemental non-IFRS figures for revenue, operating income, operating margin, net income and diluted earnings per share, which exclude the effect of adjusting the carrying value of acquired companies’ deferred revenue, share-based compensation expense and related social charges, the amortization of acquired intangible assets, other operating income and expense, net, certain one-time items included in financial revenue and other, net, and the income tax effect of the non-IFRS adjustments and certain one-time tax effects. The tables also set forth the most comparable IFRS financial measure and reconciliations of this information with non-IFRS information.

About Dassault Systèmes

Dassault Systèmes, the 3DEXPERIENCE Company, provides business and people with virtual universes to imagine sustainable innovations. Its world-leading solutions transform the way products are designed, produced, and supported. Dassault Systèmes’ collaborative solutions foster social innovation, expanding possibilities for the virtual world to improve the real world. The Group brings value to over 220,000 customers of all sizes, in all industries, in more than 140 countries. For more information, visit www.3ds.com.

3DEXPERIENCE, the Compass logo and the 3DS logo, CATIA, SOLIDWORKS, ENOVIA, DELMIA, SIMULIA, GEOVIA, EXALEAD, 3DVIA, BIOVIA, NETVIBES and 3DEXCITE are registered trademarks of Dassault Systèmes or its subsidiaries in the US and/or other countries.

(Tables to Follow)

APPENDIX TABLE OF CONTENTS

(Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.)

Glossary of Definitions

IAS 18

Non-IFRS Financial Information

Condensed consolidated statements of income

Condensed consolidated balance sheets

Condensed consolidated cash flow statements

IFRS – non-IFRS reconciliation

IFRS 15

Reconciliation tables IFRS 15 and IAS 18

Reconciliation P&L IFRS 15 and IAS 18

Reconciliation Balance sheet IFRS 15 and IAS 18

Reconciliation Cash flow IFRS 15 and IAS 18

Non-IFRS Financial Information

Condensed consolidated statements of income

Condensed consolidated balance sheets

Condensed consolidated cash flow statements

IFRS – non-IFRS reconciliation

DASSAULT SYSTEMES

Glossary of Definitions

Information in Constant Currencies

We have followed a long-standing policy of measuring our revenue performance and setting our revenue objectives exclusive of currency in order to measure in a transparent manner the underlying level of improvement in our total revenue and software revenue by type, industry, region and product lines. We believe it is helpful to evaluate our growth exclusive of currency impacts, particularly to help understand revenue trends in our business. Therefore, we provide percentage increases or decreases in our revenue and EPS (in both IFRS as well as non-IFRS) 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 by us "in constant currencies", the results of the "prior" period have first been recalculated using the average exchange rates of the comparable period in the current year, and then compared with the results of the comparable period in the current year.

While constant currency calculations are not considered to be an IFRS measure, we do believe these measures are critical to understanding our global revenue results and to compare with many of our competitors who report their financial results in U.S. dollars. Therefore, we are including this calculation for comparing IFRS revenue figures for comparable periods as well as for comparing non-IFRS revenue figures for comparable periods. All constant currency information is provided on an approximate basis. Unless otherwise indicated, the impact of exchange rate fluctuations is approximately the same for both the Company’s IFRS and supplemental non-IFRS financial data.

Information on Growth excluding acquisitions (“organic growth”)

In addition to discussing total growth, we also provide financial information where we discuss growth excluding acquisitions or growth on an organic basis as used alternatively. In both cases, growth excluding acquisitions have been calculated using the following restatements of the scope of consolidation: for entities entering the consolidation scope in the current year, subtracting the contribution of the acquisition from the aggregates of the current year, and for entities entering the consolidation scope in the previous year, subtracting the contribution of the acquisition from January 1st of the current year, until the last day of the month of the current year when the acquisition was made the previous year.

Information on Industrial Sectors

The Company’s global customer base includes companies in 12 industrial sectors: Transportation & Mobility; Industrial Equipment; Aerospace & Defense; Financial & Business Services; High-Tech; Life Sciences; Energy, Process & Utilities; Consumer Goods & Retail; Natural Resources; Architecture, Engineering & Construction; Consumer Packaged Goods & Retail and Marine & Offshore. Commencing in 2012 we implemented an industry go-to-market strategy with the dual objectives of broadening and deepening our presence in our largest industries as well as increasing the contribution from a diversified set of industrial sectors. “Diversification Industries” include: Architecture, Engineering & Construction; Consumer Goods & Retail; Consumer Packaged Goods & Retail; Energy, Process & Utilities; Finance Business Services; High-Tech; Life Sciences; Marine & Offshore; and Natural Resources. “Core Industries” include: Transportation & Mobility, Industrial Equipment, Aerospace & Defense and a portion of Business Services.

3DEXPERIENCE Licenses and Software Contribution

To measure the progressive penetration of 3DEXPERIENCE software, the Company utilizes the following ratios: a) for Licenses revenue, the Company calculates the percentage contribution by comparing total 3DEXPERIENCE Licenses revenue to Licenses revenue for all product lines except SOLIDWORKS and acquisitions (“related Licenses revenue”); and, b) for software revenue, the Company calculates the percentage contribution by comparing total 3DEXPERIENCE software revenue to software revenue for all product lines except SOLIDWORKS and acquisitions (“related software revenue”).

IAS 18

DASSAULT SYSTEMES
NON-IFRS IAS 18 FINANCIAL INFORMATION
(unaudited; in millions of Euros, except per share data, headcount and exchange rates)

Non-IFRS key figures exclude the effects of adjusting the carrying value of acquired companies’ deferred revenue, share-based compensation expense and related social charges, amortization of acquired intangible assets, other operating income and expense, net, certain one-time financial revenue items and the income tax effects of these non-IFRS adjustments.

Comparable IFRS financial information and a reconciliation of the IFRS and non-IFRS measures are set forth in the separate tables within this Attachment.

                 
In millions of Euros, except per share data and percentages   Three months ended   Six months ended
    June 30, 2018   June 30, 2017   Change   Change in cc*   June 30, 2018   June 30, 2017   Change   Change in cc*
Non-IFRS-IAS18 Revenue € 840.3   € 810.6   4%   8%   € 1,611.4   € 1,576.3   2%   9%
 
Non-IFRS-IAS18 Revenue breakdown by activity
Software revenue 752.6 722.7 4% 9% 1,440.2 1,398.8 3% 9%
of which licenses and other software revenue 218.9 211.8 3% 8% 399.3 384.8 4% 10%
of which subscription and support revenue 533.7 510.9 4% 9% 1,040.9 1,014.0 3% 9%
Services revenue 87.7 87.9 0% 4% 171.2 177.5 -4% 2%
 
Non-IFRS-IAS18 software revenue breakdown by product line
CATIA software revenue 254.9 249.7 2% 5% 491.9 486.2 1% 5%
ENOVIA software revenue 87.9 84.4 4% 9% 160.8 158.0 2% 7%
SOLIDWORKS software revenue 187.1 176.7 6% 11% 360.3 350.9 3% 12%
Other software revenue 222.7 211.9 5% 11% 427.3 403.8 6% 13%
 
Non-IFRS-IAS18 Revenue breakdown by geography
Americas 252.3 258.1 -2% 6% 477.5 493.9 -3% 8%
Europe 353.2 337.1 5% 6% 679.7 660.1 3% 5%
Asia   234.8   215.4   9%   14%   454.2   422.3   8%   15%
 
Non-IFRS-IAS18 operating income € 253.6 € 243.8 4% € 462.0 € 444.5 4%
Non-IFRS-IAS18 operating margin 30.2% 30.1% 28.7% 28.2%
Non-IFRS net income attributable to shareholders € 186.8 € 159.4 17% € 339.0 € 295.1 15%
Non-IFRS-IAS18 diluted net income per share   € 0.72   € 0.62   16%   22%   € 1.30   € 1.15   13%   23%
Closing headcount   16,221   15,457   5%       16,221   15,457   5%    
 
Average Rate USD per Euro 1.19 1.10 8% 1.21 1.08 12%
Average Rate JPY per Euro   130.0   122.6   6%       131.60   121.80   8%    

* In constant currencies

IAS 18

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED STATEMENTS 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   Six months ended
June 30,   June 30,   June 30,   June 30,
    2018   2017   2018   2017
Licenses and other software revenue 218.9 211.8 399.3 384.8
Subscription and Support revenue 530.8   506.7   1,036.0   1,003.9
Software revenue 749.6 718.5 1,435.4 1,388.7
Services revenue 87.7   87.9   171.2   177.5
Total Revenue IFRS -IAS18 € 837.3 € 806.4 € 1,606.6 € 1,566.2
Cost of software revenue (excluding amortization of acquired intangibles) (38.2) (37.9) (79.0) (78.4)
Cost of services and other revenue (81.8) (78.9) (161.2) (161.8)
Research and development (161.4) (156.2) (314.0) (305.9)
Marketing and sales (262.8) (258.5) (515.8) (518.3)
General and administrative (69.8) (61.6) (139.6) (121.8)
Amortization of acquired intangibles (40.7) (39.3) (82.5) (80.5)
Other operating income and expense, net (4.4)   (4.5)   (6.9)   (10.6)
Total Operating Expenses (659.0)   (637.0)   (1,299.0)   (1,277.3)
Operating Income € 178.3 € 169.4 € 307.6 € 288.9
Financial revenue and other, net 4.4   15.3   9.1   22.5
Income before income taxes 182.7 184.6 316.7 311.4
Income tax expense (46.7) (61.8) (80.2) (102.2)
Net Income € 136.0 € 122.8 € 236.5 € 209.2
Non-controlling interest 0.1   0.1   0.4   (1.3)
Net Income attributable to equity holders of the parent € 136.1   € 122.9   € 236.9   € 208.0
Basic net income per share 0.53   0.48   0.92   0.82
Diluted net income per share € 0.52   € 0.48   € 0.91   € 0.81
Basic weighted average shares outstanding (in millions) 258.9   254.5   257.9   254.2
Diluted weighted average shares outstanding (in millions)   260.4   257.9   260.0   257.1
 
                 
Three months ended June 30, 2018   Six months ended June 30, 2018
    Change*   Change in cc**   Change*   Change in cc**
IFRS Revenue IFRS -IAS18 4% 8% 3% 9%
IFRS Revenue by activity
Software revenue 4% 9% 3% 10%
Services revenue 0% 4% -4% 2%
IFRS Software Revenue by product line
CATIA software revenue 2% 5% 1% 5%
ENOVIA software revenue 4% 9% 2% 7%
SOLIDWORKS software revenue 6% 11% 3% 12%
Other software revenue 6% 12% 7% 15%
IFRS Revenue by geography
Americas -2% 6% -3% 8%
Europe 6% 7% 4% 6%
Asia   9%   14%   7%   15%

*Variation compared to the same period in the prior year. **In constant currencies

IAS 18

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED BALANCE SHEETS (IFRS)
(unaudited; in millions of Euros)

         
In millions of Euros   June 30,   December 31,
    2018   2017
 
ASSETS
Cash and cash equivalents 3,043.2 2,459.4
Short-term investments 0.5 1.3
Accounts receivable, net 695.5 895.9
Other current assets 273.1 242.9
Total current assets 4,012.3 3,599.5
Property and equipment, net 169.1 169.0
Goodwill and Intangible assets, net 3,023.6 2,990.1
Other non-current assets 292.6   271.2
Total Assets   € 7,497.5   € 7,029.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 132.7 149.3
Unearned revenues 1,016.0 876.4
Other current liabilities 482.4 501.7
Total current liabilities 1,631.1 1,527.4
Long-term debt 1,000.0 1,000.0
Other non-current obligations 494.6 506.3
Total long-term liabilities 1,494.6 1,506.3
Non-controlling interests 1.5 1.9
Parent shareholders' equity 4,370.4   3,994.2
Total Liabilities and Shareholders' equity   € 7,497.5   € 7,029.8

IAS 18

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (IFRS)

         
In millions of Euros   Three months ended   Six months ended
    June 30, 2018   June 30, 2017   Change   June 30, 2018   June 30, 2017   Change
Net Income attributable to equity holders of the parent 136.1   123.0   13.1   236.9   208.0   28.9
Non-controlling interest

(0.1)

(0.1)

0.0

(0.4)

1.3

(1.7)

Net Income 136.0 122.9 13.1 236.5 209.2 27.3
Depreciation of property & equipment 14.5 11.1 3.4 28.2 22.9 5.3
Amortization of intangible assets 43.1 41.3 1.8 87.0 84.6 2.4
Other non cash P&L items 16.5 2.6 13.9 33.1 10.4 22.7
Changes in working capital 28.5   66.7   (38.2)   260.7   265.2   (4.5)
Net Cash provided by operating activities € 238.6 € 244.6 (€ 6.0) € 645.5 € 592.4 € 53.1
 
Additions to property, equipment and intangibles (19.3) (27.4) 8.1 (31.3) (45.8) 14.5
Payments for acquisition of businesses, net of cash acquired (51.6) (7.6) (44.0) (51.6) (8.0) (43.6)
Sale (purchase) of short term investments, net 40.8 12.5 28.3 0.7 3.7 (3.0)
Investments, loans and others (1.5)   -   (1.5)   (1.5)   6.4   (7.9)
Net Cash provided by (used in) investing activities (€ 31.6) (€ 22.5) (€ 9.1) (€ 83.7) (€ 43.7) (€ 40.0)
 
Acquisition of non-controlling interests (26.2) (14.1) (12.1) (26.2) (14.1) (12.1)
(Purchase) Sale of treasury stock (10.6) (47.9) 37.3 (2.3) (44.8) 42.5
Proceeds from exercise of stock-options 31.4 16.5 14.9 43.7 21.8 21.9
Cash dividend paid (38.0)   (51.3)   13.3   (38.0)   (51.3)   13.3
Net Cash provided by (used in) financing activities (€ 43.4) (€ 96.8) € 53.4 (€ 22.8) (€ 88.4) € 65.6
 
Effect of exchange rate changes on

cash and cash equivalents

75.8 (121.5) 197.3 44.8 (127.8) 172.6
                     
Increase (decrease) in cash and cash equivalents   € 239.4   € 3.8       € 583.8   € 332.5    
                         
Cash and cash equivalents at beginning of period € 2,803.8 € 2,765.4 € 2,459.4 € 2,436.7
Cash and cash equivalents at end of period   € 3,043.2   € 2,769.2       € 3,043.2   € 2,769.2    

IAS 18

DASSAULT SYSTEMES
SUPPLEMENTAL NON-IFRS FINANCIAL INFORMATION
IFRS – NON-IFRS RECONCILIATION
(unaudited; in millions of Euros, except per share data)

Readers are cautioned that the supplemental non-IFRS 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 IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Company’s Document de référence for the year ended December 31, 2017 filed with the AMF on March 21, 2018. To compensate for these limitations, the supplemental non-IFRS financial information should be read not in isolation, but only in conjunction with the Company’s consolidated financial statements prepared in accordance with IFRS.

                         
In millions of Euros, except per share data and percentages   Three months ended June 30,   Change
2018   Adjustment (1)   2018   2017   Adjustment (1)   2017   IFRS   Non-IFRS (2)
    IFRS       Non-IFRS   IFRS       Non-IFRS        
Total Revenue IAS18 € 837.3 € 3.0 € 840.3 € 806.4 € 4.2 € 810.6 4% 4%
Total Revenue IAS18 breakdown by activity
Software revenue 749.6 3.0 752.6 718.5 4.2 722.7 4% 4%
Licenses and other software revenue 218.9 218.9 211.8 211.8 3% 3%
Subscription and Support revenue 530.8 3.0 533.7 506.7 4.2 510.9 5% 4%
Recurring portion of Software revenue 71% 71% 71% 71%
Services revenue 87.7 87.7 87.9 87.9 0% 0%
Total Software Revenue IA18 breakdown by product line
CATIA software revenue 254.5 0.5 254.9 249.7 249.7 2% 2%
ENOVIA software revenue 87.9 87.9 84.4 84.4 4% 4%
SOLIDWORKS software revenue 187.1 187.1 176.7 176.7 6% 6%
Other software revenue 220.2 2.5 222.7 207.7 4.2 211.9 6% 5%
Total Revenue IAS18 breakdown by geography
Americas 250.5 1.9 252.3 256.8 1.3 258.1 -2% -2%
Europe 353.0 0.2 353.2 334.5 2.6 337.1 6% 5%
Asia   233.9   0.9   234.8   215.2   0.3   215.4   9%   9%
Total Operating Expenses (€ 659.0) € 72.4 (€ 586.6) (€ 637.0) € 70.2 (€ 566.8) 3% 4%
Share-based compensation expense (27.3) 27.3 - (26.3) 26.3 -
Amortization of acquired intangibles (40.7) 40.7 - (39.3) 39.3 -
Other operating income and expense, net   (4.4)   4.4   -   (4.5)   4.5   -        
Operating Income € 178.3 € 75.4 € 253.6 € 169.4 € 74.4 € 243.8 5% 4%
Operating Margin 21.3% 30.2% 21.0% 30.1%
Financial revenue & other, net 4.4 0.6 5.0 15.3 (16.0) (0.7) -71% N/A
Income tax expense (46.7) (25.3) (72.0) (61.8) (22.0) (83.8) -24% -14%
Non-controlling interest 0.1 0.1 0.1 0.1
Net Income attributable to shareholders € 136.1 € 50.7 € 186.8 € 122.9 € 36.5 € 159.4 11% 17%
Diluted Net Income Per Share (3)   € 0.52   € 0.20   € 0.72   € 0.48   € 0.14   € 0.62   8%   16%

(1)In the reconciliation schedule above, (i) all adjustments to IFRS revenue data reflect the exclusion of the deferred revenue adjustment of acquired companies; (ii) adjustments to IFRS operating expense data reflect the exclusion of the amortization of acquired intangibles, share-based compensation expense and related social charges, and other operating income and expense, (iii) adjustments to IFRS financial revenue and other, net reflect the exclusion of certain one-time items included in financial revenue and other, net, and (iv) all adjustments to IFRS income data reflect the combined effect of these adjustments, plus for net income and diluted net income per share, certain one-time tax effects and the income tax effect of the non-IFRS adjustments.

                         
  Three months ended June 30,   Change
In millions of Euros 2018 IFRS   Adjustment   2018   2017 IFRS   Adjustment   2017   IFRS   Non-IFRS
            Non-IFRS           Non-IFRS        
Cost of revenue (120.0) 1.1 (118.9) (116.9) 1.1 (115.8) 3% 3%
Research and development (161.4) 10.8 (150.5) (156.2) 11.2 (145.0) 3% 4%
Marketing and sales (262.8) 7.5 (255.3) (258.5) 8.9 (249.6) 2% 2%
General and administrative (69.8) 7.9 (61.9) (61.6) 5.2 (56.3) 13% 10%
Total share-based compensation expense       € 27.3           € 26.4            

(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 260.4 million diluted shares for Q2 2018 and 257.9 million diluted shares for Q2 2017.

IAS 18

DASSAULT SYSTEMES
SUPPLEMENTAL NON-IFRS FINANCIAL INFORMATION
IFRS – NON-IFRS RECONCILIATION
(unaudited; in millions of Euros, except per share data)

Readers are cautioned that the supplemental non-IFRS 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 IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Company’s Document de référence for the year ended December 31, 2017 filed with the AMF on March 21, 2018. To compensate for these limitations, the supplemental non-IFRS financial information should be read not in isolation, but only in conjunction with the Company’s consolidated financial statements prepared in accordance with IFRS.

                 
In millions of Euros, except per share data and percentages   Six months ended June 30,   Change
2018   Adjustment (1)   2018   2017   Adjustment (1)   2017   IFRS   Non-IFRS (2)
    IFRS       Non-IFRS   IFRS       Non-IFRS        
Total Revenue IAS18 € 1,606.6 € 4.8 € 1,611.4 € 1,566.2 € 10.1 € 1,576.3 3% 2%
Total Revenue IAS18 breakdown by activity
Software revenue 1,435.4 4.8 1,440.2 1,388.7 10.1 1,398.8 3% 3%
Licenses and other software revenue 399.3 399.3 384.8 384.8 4% 4%
Subscription and Support revenue 1,036.0 4.8 1,040.9 1,003.9 10.1 1,014.0 3% 3%
Recurring portion of Software revenue 72% 72% 72% 72%
Services revenue 171.2 171.2 177.5 177.5 -4% -4%
Total Software Revenue IA18 breakdown by product line
CATIA software revenue 491.4 0.5 491.9 486.2 486.2 1% 1%
ENOVIA software revenue 160.8 160.8 158.0 158.0 2% 2%
SOLIDWORKS software revenue 360.3 360.3 350.9 350.9 3% 3%
Other software revenue 422.9 4.4 427.3 393.6 10.1 403.8 7% 6%
Total Revenue IAS18 breakdown by geography
Americas 474.7 2.8 477.5 490.7 3.2 493.9 -3% -3%
Europe 679.1 0.6 679.7 653.8 6.3 660.1 4% 3%
Asia   452.7   1.5   454.2   421.7   0.6   422.3   7%   8%
Total Operating Expenses (€ 1,299.0) 149.5 (€ 1,149.5) (€ 1,277.3) 145.4 (€ 1,131.8) 2% 2%
Share-based compensation expense (60.2) 60.2 - (54.4) 54.4 -
Amortization of acquired intangibles (82.5) 82.5 - (80.5) 80.5 -
Other operating income and expense, net   (6.9)   6.9   -   (10.6)   10.6   -        
Operating Income € 307.6 154.4 € 462.0 € 288.9 155.6 € 444.5 6% 4%
Operating Margin 19.1% 28.7% 18.4% 28.2%
Financial revenue & other, net 9.1 1.1 10.3 22.5 (22.6) (0.2) -59% N/A
Income tax expense (80.2) (53.5) (133.7) (102.2) (45.8) (147.9) -22% -10%
Non-controlling interest 0.4 0.4 (1.3) (1.3)
Net Income attributable to shareholders € 236.9 102.0 € 339.0 € 208.0 87.2 € 295.1 14% 15%
Diluted Net Income Per Share (3)   € 0.91   0.39   € 1.30   € 0.81   0.34   € 1.15   12%   13%

(1)In the reconciliation schedule above, (i) all adjustments to IFRS revenue data reflect the exclusion of the deferred revenue adjustment of acquired companies; (ii) adjustments to IFRS operating expense data reflect the exclusion of the amortization of acquired intangibles, share-based compensation expense and related social charges, and other operating income and expense, (iii) adjustments to IFRS financial revenue and other, net reflect the exclusion of certain one-time items included in financial revenue and other, net, and (iv) all adjustments to IFRS income data reflect the combined effect of these adjustments, plus for net income and diluted net income per share, certain one-time tax effects and the income tax effect of the non-IFRS adjustments.

                     
  Six months ended June 30,   Change
In millions of Euros 2018 IFRS   Adjustment   2018   2017 IFRS   Adjustment   2017   IFRS   Non-IFRS
            Non-IFRS           Non-IFRS      
Cost of revenue (240.2) 2.1 (238.1) (240.1) 2.2 (238.0) 0% 0%
Research and development (314.0) 23.1 (291.0) (305.9) 23.0 (282.9) 3% 3%
Marketing and sales (515.8) 13.9 (501.9) (518.3) 18.1 (500.2) 0% 0%
General and administrative (139.6) 21.1 (118.4) (121.8) 11.1 (110.7) 15% 7%
Total share-based compensation expense       € 60.2           € 54.4            

(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 260.0 million diluted shares for H1 2018 and 257.1 million diluted shares for H1 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.

DASSAULT SYSTEMES
RECONCILIATION P&L NON-IFRS IFRS 15 vs Non-IFRS IAS 18
(unaudited; in millions of Euros except per share data)

                 
In millions of Euros, except per share data and percentages   2018 Non-IFRS   2018 Non-IFRS
QTD   Adjustment (1)   QTD   YTD   Adjustment (1)   YTD
    IFRS15       IAS18   IFRS15       IAS18
Total Revenue € 830.7 9.6 € 840.3 € 1,651.3 (39.8) € 1,611.4
Total Revenue breakdown by activity
Software revenue 743.0 9.6 752.6 1,480.0 (39.8) 1,440.2
Licenses and Other software revenue 217.5 1.3 218.9 396.6 2.7 399.3
Subscription and Support revenue 525.5 8.2 533.7 1,083.4 (42.5) 1,040.9
Recurring portion of Software revenue 71% 71% 73% 72%
Services revenue 87.7 87.7 171.2 171.2
Total Software Revenue breakdown by product line
CATIA software revenue 250.4 4.6 254.9 501.0 (9.2) 491.9
ENOVIA software revenue 87.3 0.6 87.9 162.0 (1.2) 160.8
SOLIDWORKS software revenue 185.9 1.3 187.1 355.7 4.5 360.3
Other software revenue 219.4 3.2 222.7 461.3 (34.0) 427.3
Total Revenue breakdown by geography
Americas 239.0 13.3 252.3 478.0 (0.5) 477.5
Europe 346.1 7.1 353.2 708.7 (29.0) 679.7
Asia   245.6   (10.8)   234.8   464.5   (10.3)   454.2
Total Operating Expenses (€ 586.6) (€ 586.6) (€ 1,149.5) (€ 1,149.5)
Share-based compensation expense - - - -
Amortization of acquired intangibles - - - -
Other operating income and expense, net   -       -   -       -
Operating Income € 244.1 9.6 € 253.6 € 501.8 (39.8) € 462.0
Operating Margin 29.4% +0.8pts 30.2% 30.4% -1.7pts 28.7%
Financial revenue & other, net 5.0 5.0 10.3 10.3
Income tax expense (69.3) (2.7) (72.0) (144.9) 11.2 (133.7)
Non-controlling interest 0.1 0.1 0.4 0.4
Net Income attributable to shareholders € 179.9 6.8 € 186.8 € 367.5 (28.6) € 339.0
Diluted Net Income Per Share (3)   € 0.69   0.03   € 0.72   € 1.41   (0.11)   € 1.30
                         
2018 Non-IFRS 2018 Non-IFRS
In millions of Euros 2018 Adjustment 2018 2017 Adjustment 2017
    IFRS15       IAS18   IFRS15       IAS18
Cost of revenue (118.9) (118.9) (238.1) (238.1)
Research and development (150.5) (150.5) (291.0) (291.0)
Marketing and sales (255.3) (255.3) (501.9) (501.9)
General and administrative (61.9) (61.9) (118.4) (118.4)
Total share-based compensation expense                        

DASSAULT SYSTEMES

RECONCILIATION BALANCE SHEET IFRS 15 vs NON-IFRS IAS 18
(unaudited; in millions of Euros)

           
In millions of Euros   IFRS15 Basis   IAS 18 Basis
June 30,   Difference June 30,
    2018       2018
 
ASSETS
Cash and cash equivalents 3,043.2 - 3,043.2
Short-term investments 0.5 - 0.5
Accounts receivable, net 677.2 18.3 695.5
Contract assets 36.3 (36.3) -
Other current assets 273.1 - 273.1
Total current assets 4,030.3 (18.0) 4,012.3
Property and equipment, net 169.1 - 169.1
Goodwill and Intangible assets, net 3,023.6 - 3,023.6
Other non-current assets 284.2   8.4   292.6
Total Assets   € 7,507.2   (€ 9.7)   € 7,497.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 132.7 - 132.7
Contract liabilities - Unearned revenues 882.3 133.7 1,016.0
Other current liabilities 509.3 (26.9) 482.4
Total current liabilities 1,524.3 106.8 1,631.1
Long-term debt 1,000.0 - 1,000.0
Other non-current obligations 500.3 (5.70) 494.6
Total long-term liabilities 1,500.3 (5.70) 1,494.6
Non-controlling interests 1.5 - 1.5
Parent shareholders' equity 4,481.1   (110.7)   4,370.4
Total Liabilities and Shareholders' equity   € 7,507.2   (€ 9.7)   € 7,497.5

DASSAULT SYSTEMES

RECONCILIATION CASH FLOW IFRS 15 vs NON-IFRS IAS 18
(unaudited; in millions of Euros)

         
In millions of Euros   Three months ended June 30, 2018   Six months ended June 30, 2018
    IFRS 15   Difference   IAS 18   IFRS 15   Difference   IAS 18
Net Income attributable to equity holders of the parent 129.2   6.9   136.1   265.5   (28.6)   236.9
Non-controlling interest

(0.1)

0.0

(0.1)

(0.4)

0.0

(0.4)

Net Income 129.1 6.9 136.0 265.1 (28.6) 236.5
Depreciation of property & equipment 14.5 - 14.5 28.2 - 28.2
Amortization of intangible assets 43.1 - 43.1 87.0 - 87.0
Other non cash P&L items 16.5 - 16.5 33.1 - 33.1
Changes in working capital 35.4   (6.9)   28.5   232.1   28.6   260.7
Net Cash provided by operating activities € 238.6 € 0.0 € 238.6 € 645.5 € 0.0 € 645.5
 
Additions to property, equipment and intangibles (19.3) - (19.3) (31.3) - (31.3)
Payments for acquisition of businesses, net of cash acquired (51.6) - (51.6) (51.6) - (51.6)
Sale (purchase) of short term investments, net 40.8 - 40.8 0.7 - 0.7
Investments, loans and others (1.5)   -   (1.5)   (1.5)   -   (1.5)
Net Cash provided by (used in) investing activities (€ 31.6) € 0.0 (€ 31.6) (€ 83.7) € 0.0 (€ 83.7)
 
Acquisition of non-controlling interests (26.2) - (26.2) (26.2) - (26.2)
(Purchase) Sale of treasury stock (10.6) - (10.6) (2.3) - (2.3)
Proceeds from exercise of stock-options 31.4 - 31.4 43.7 - 43.7
Cash dividend paid (38.0)   -   (38.0)   (38.0)   -   (38.0)
Net Cash provided by (used in) financing activities (€ 43.4) € 0.0 (€ 43.4) (€ 22.8) € 0.0 (€ 22.8)
 
Effect of exchange rate changes on

cash and cash equivalents

75.8 0.0 75.8 44.8 0.0 44.8
                     
Increase (decrease) in cash and cash equivalents   € 239.4   € 0.0   € 239.4   € 583.8   € 0.0   € 583.8
                         
Cash and cash equivalents at beginning of period € 2,803.8 € 0.0 € 2,803.8 € 2,459.4 € 0.0 € 2,459.4
Cash and cash equivalents at end of period   € 3,043.2   € 0.0   € 3,043.2   € 3,043.2   € 0.0   € 3,043.2

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   Six months ended
    June 30, 2018   June 30, 2018
Non-IFRS-IFRS15 Revenue € 830.7   € 1,651.3
 
Non-IFRS-IFRS15 Revenue breakdown by activity
Software revenue 743.0 1,480.0
of which licenses and other software revenue 217.5 396.6
of which subscription and support revenue 525.5 1,083.4
Services revenue 87.7 171.2
 
Non-IFRS-IFRS15 software revenue breakdown by product line
CATIA software revenue 250.4 501.0
ENOVIA software revenue 87.3 162.0
SOLIDWORKS software revenue 185.9 355.7
Other software revenue 219.4 461.3
 
Non-IFRS-IFRS15 Revenue breakdown by geography
Americas 239.0 478.0
Europe 346.1 708.7
Asia 245.6 464.5
 
Non-IFRS-IFRS15 operating income € 244.1 € 501.8
Non-IFRS-IFRS15 operating margin 29.4% 30.4%
Non-IFRS net income attributable to shareholders € 179.9 € 367.5
Non-IFRS-IFRS15 diluted net income per share   € 0.69   € 1.41
Closing headcount   16,221   16,221
 
Average Rate USD per Euro 1.19 1.21
Average Rate JPY per Euro   130.0   131.60

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   Six months ended
June 30, June 30,
    2018   2018
Licenses and other software revenue 217.5 396.6
Subscription and Support revenue 522.5   1,078.6
Software revenue 740.1 1,475.2
Services revenue 87.7   171.2
Total Revenue IFRS -IFRS15 € 827.8 € 1,646.4
Cost of software revenue (excluding amortization of acquired intangibles) (38.2) (79.0)
Cost of services and other revenue (81.8) (161.2)
Research and development (161.4) (314.0)
Marketing and sales (262.8) (515.8)
General and administrative (69.8) (139.6)
Amortization of acquired intangibles (40.7) (82.5)
Other operating income and expense, net (4.4)   (6.9)
Total Operating Expenses (659.0)   (1,299.0)
Operating Income € 168.7 € 347.4
Financial revenue and other, net 4.4   9.1
Income before income taxes 173.1 356.6
Income tax expense (44.0) (91.5)
Net Income € 129.1 € 265.1
Non-controlling interest 0.1   0.4
Net Income attributable to equity holders of the parent € 129.3   € 265.5
Basic net income per share 0.50   1.03
Diluted net income per share € 0.50   € 1.02
Basic weighted average shares outstanding (in millions) 258.9   257.9
Diluted weighted average shares outstanding (in millions)   260.4   260.0

IFRS 15

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED BALANCE SHEET (IFRS)
(unaudited; in millions of Euros)

         
In millions of Euros   June 30,   December 31,
    2018   2017
 
ASSETS
Cash and cash equivalents 3,043.2 2,459.4
Short-term investments 0.5 1.3
Accounts receivable, net 677.2 895.9
Contract assets 36.3 0.0
Other current assets 273.1 242.9
Total current assets 4,030.3 3,599.5
Property and equipment, net 169.1 169.0
Goodwill and Intangible assets, net 3,023.6 2,990.1
Other non-current assets 284.2   271.2
Total Assets   € 7,507.2   € 7,029.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 132.7 149.3
Unearned revenues 882.3 876.4
Other current liabilities 509.3 501.7
Total current liabilities 1,524.3 1,527.4
Long-term debt 1,000.0 1,000.0
Other non-current obligations 500.3 506.3
Total long-term liabilities 1,500.3 1,506.3
Non-controlling interests 1.5 1.9
Parent shareholders' equity 4,481.1   3,994.2
Total Liabilities and Shareholders' equity   € 7,507.2   € 7,029.8

IFRS 15

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (IFRS)
(unaudited; in millions of Euros)

         
In millions of Euros   Three months ended   Six months ended
    June 30, 2018   June 30, 2017   Change   June 30, 2018   June 30, 2017   Change
Net Income attributable to equity holders of the parent 129.2   123.0   6.2   265.5   208.0   57.5
Non-controlling interest

(0.1)

(0.1)

0.0

(0.4)

1.3

(1.7)

Net Income 129.1 122.9 6.2 265.1 209.2 55.9
Depreciation of property & equipment 14.5 11.1 3.4 28.2 22.9 5.3
Amortization of intangible assets 43.1 41.3 1.8 87.0 84.6 2.4
Other non cash P&L items 16.5 2.6 13.9 33.1 10.4 22.7
Changes in working capital 35.4   66.7   (31.3)   232.1   265.2   (33.1)
Net Cash provided by operating activities € 238.6 € 244.6 (€ 6.0) € 645.5 € 592.4 € 53.1
 
Additions to property, equipment and intangibles (19.3) (27.4) 8.1 (31.3) (45.8) 14.5
Payments for acquisition of businesses, net of cash acquired (51.6) (7.6) (44.0) (51.6) (8.0) (43.6)
Sale (purchase) of short term investments, net 40.8 12.5 28.3 0.7 3.7 (3.0)
Investments, loans and others (1.5)   -   (1.5)   (1.5)   6.4   (7.9)
Net Cash provided by (used in) investing activities (€ 31.6) (€ 22.5) (€ 9.1) (€ 83.7) (€ 43.7) (€ 40.0)
 
Acquisition of non-controlling interests (26.2) (14.1) (12.1) (26.2) (14.1) (12.1)
(Purchase) Sale of treasury stock (10.6) (47.9) 37.3 (2.3) (44.8) 42.5
Proceeds from exercise of stock-options 31.4 16.5 14.9 43.7 21.8 21.9
Cash dividend paid (38.0)   (51.3)   13.3   (38.0)   (51.3)   13.3
Net Cash provided by (used in) financing activities (€ 43.4) (€ 96.8) € 53.4 (€ 22.8) (€ 88.4) € 65.6
 
Effect of exchange rate changes on

cash and cash equivalents

75.8 (121.5) 197.3 44.8 (127.8) 172.6
                     
Increase (decrease) in cash and cash equivalents   € 239.4   € 3.8       € 583.8   € 332.5    
                         
Cash and cash equivalents at beginning of period € 2,803.8 € 2,765.4 € 2,459.4 € 2,436.7
Cash and cash equivalents at end of period   € 3,043.2   € 2,769.2       € 3,043.2   € 2,769.2    

IFRS 15

DASSAULT SYSTEMES
SUPPLEMENTAL NON-IFRS FINANCIAL INFORMATION
IFRS – NON-IFRS RECONCILIATION
(unaudited; in millions of Euros, except per share data)

Readers are cautioned that the supplemental non-IFRS 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 IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Company’s Document de référence for the year ended December 31, 2017 filed with the AMF on March 21, 2018. To compensate for these limitations, the supplemental non-IFRS financial information should be read not in isolation, but only in conjunction with the Company’s consolidated financial statements prepared in accordance with IFRS.

     
In millions of Euros, except per share data and percentages   Three months ended June 30,
2018   Adjustment (1)   2018
    IFRS       Non-IFRS
Total Revenue IFRS15 € 827.8 € 3.0 € 830.7
Total Revenue IFRS15 breakdown by activity
Software revenue 740.1 3.0 743.0
Licenses and other software revenue 217.5 217.5
Subscription and Support revenue 522.5 3.0 525.5
Recurring portion of Software revenue 71% 71%
Services revenue 87.7 87.7
Total Software Revenue IFRS15 breakdown by product line
CATIA software revenue 249.9 0.5 250.4
ENOVIA software revenue 87.3 87.3
SOLIDWORKS software revenue 185.9 185.9
Other software revenue 217.0 2.4 219.4
Total Revenue IFRS15 breakdown by geography
Americas 237.1 1.9 239.0
Europe 345.9 0.2 346.1
Asia   244.7   0.9   245.6
Total Operating Expenses (€ 659.0) € 72.4 (€ 586.6)
Share-based compensation expense (27.3) 27.3 -
Amortization of acquired intangibles (40.7) 40.7 -
Other operating income and expense, net   (4.4)   4.4   -
Operating Income € 168.7 € 75.4 € 244.1
Operating Margin 20.4% 29.4%
Financial revenue & other, net 4.4 0.6 5.0
Income tax expense (44.0) (25.3) (69.3)
Non-controlling interest 0.1 0.1
Net Income attributable to shareholders € 129.3 € 50.7 € 179.9
Diluted Net Income Per Share (3)   € 0.50   € 0.19   € 0.69

(1)In the reconciliation schedule above, (i) all adjustments to IFRS revenue data reflect the exclusion of the deferred revenue adjustment of acquired companies; (ii) adjustments to IFRS operating expense data reflect the exclusion of the amortization of acquired intangibles, share-based compensation expense and related social charges, and other operating income and expense, (iii) adjustments to IFRS financial revenue and other, net reflect the exclusion of certain one-time items included in financial revenue and other, net, and (iv) all adjustments to IFRS income data reflect the combined effect of these adjustments, plus for net income and diluted net income per share, the income tax effect of the non-IFRS adjustments.

     
  Three months ended June 30,
In millions of Euros 2018 IFRS   Adjustment   2018
            Non-IFRS
Cost of revenue (120.0) 1.1 (118.9)
Research and development (161.4) 10.8 (150.5)
Marketing and sales (262.8) 7.5 (255.3)
General and administrative (69.8) 7.9 (61.9)
Total share-based compensation expense       € 27.3    

(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 260.4 million diluted shares for Q2 2018 and 257.9 million diluted shares for Q2 2017.

IFRS 15

DASSAULT SYSTEMES
SUPPLEMENTAL NON-IFRS FINANCIAL INFORMATION
IFRS – NON-IFRS RECONCILIATION
(unaudited; in millions of Euros, except per share data)

Readers are cautioned that the supplemental non-IFRS 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 IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Company’s Document de référence for the year ended December 31, 2017 filed with the AMF on March 21, 2018. To compensate for these limitations, the supplemental non-IFRS financial information should be read not in isolation, but only in conjunction with the Company’s consolidated financial statements prepared in accordance with IFRS.

     
In millions of Euros, except per share data and percentages   Six months ended June 30,
2018   Adjustment (1)   2018
    IFRS       Non-IFRS
Total Revenue IFRS15 € 1,646.4 € 4.8 € 1,651.3
Total Revenue IFRS15 breakdown by activity
Software revenue 1,475.2 4.8 1,480.0
Licenses and other software revenue 396.6 396.6
Subscription and Support revenue 1,078.6 4.8 1,083.4
Recurring portion of Software revenue 73% 73%
Services revenue 171.2 171.2
Total Software Revenue IFRS15 breakdown by product line
CATIA software revenue 500.6 0.5 501.0
ENOVIA software revenue 162.0 162.0
SOLIDWORKS software revenue 355.7 355.7
Other software revenue 456.9 4.4 461.3
Total Revenue IFRS15 breakdown by geography
Americas 475.2 2.8 478.0
Europe 708.1 0.6 708.7
Asia   463.1   1.5   464.5
Total Operating Expenses (€ 1,299.0) 149.5 (€ 1,149.5)
Share-based compensation expense (60.2) 60.2
Amortization of acquired intangibles (82.5) 82.5
Other operating income and expense, net   (6.9)   6.9    
Operating Income € 347.4 154.4 € 501.8
Operating Margin 21.1% 30.4%
Financial revenue & other, net 9.1 1.1 10.3
Income tax expense (91.5) (53.5) (144.9)
Non-controlling interest 0.4 0.4
Net Income attributable to shareholders € 265.5 102.0 € 367.5
Diluted Net Income Per Share (3)   € 1.02   0.4   € 1.41

(1)In the reconciliation schedule above, (i) all adjustments to IFRS revenue data reflect the exclusion of the deferred revenue adjustment of acquired companies; (ii) adjustments to IFRS operating expense data reflect the exclusion of the amortization of acquired intangibles, share-based compensation expense and related social charges, and other operating income and expense, (iii) adjustments to IFRS financial revenue and other, net reflect the exclusion of certain one-time items included in financial revenue and other, net, and (iv) all adjustments to IFRS income data reflect the combined effect of these adjustments, plus for net income and diluted net income per share, the income tax effect of the non-IFRS adjustments.

     
  Six months ended June 30,
In millions of Euros 2018 IFRS   Adjustment   2018 Non-IFRS
             
Cost of revenue (240.2) 2.1 (238.1)
Research and development (314.0) 23.1 (291.0)
Marketing and sales (515.8) 13.9 (501.9)
General and administrative (139.6) 21.1 (118.4)
Total share-based compensation expense       € 60.2    

(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 260.0 million diluted shares for H1 2018 and 257.1 million diluted shares for H1 2017.



Contact:

Dassault Systèmes
François-José Bordonado/Béatrix Martinez, +33.1.61.62.69.24
United States and Canada:
Email Contact
or
FTI Consulting
Rob Mindell, +44.20.3727.1000
Arnaud de Cheffontaines, +33.1.47.03.69.48