*In constant currencies IFRS total revenue increased 15%. Non-IFRS total revenue increased 14%, with software revenue growth of 13% and services and other revenue growth of 23%. Year over year comparisons reflect the inclusion of BIOVIA (Accelrys) since April 2014 and Quintiq since September 2014. (All growth comparisons are in constant currencies.) Excluding acquisitions and in constant currencies, non-IFRS software revenue increased 8%, with non-IFRS new licenses software revenue growth of 11% and periodic, maintenance and other software revenue growth of 7% for the 2015 nine-month period. During the first nine months of 2015, the Company’s growth was well-supported by both its core industries, most notably Transportation & Mobility and Aerospace & Defense and its diversification industries, in particular Energy, Process & Utilities, Life Sciences, Marine & Offshore and CPG. On a regional basis, for the nine-month period, growth was relatively balanced across the three regions from both a total software perspective and an organic software basis. (All growth rates are in constant currencies.) Non-IFRS software revenue increased 13%, with new licenses revenue growth of 17%. Non-IFRS periodic license, maintenance and other software-related revenue increased 12% with a strong performance across all three regions. Recurring software revenue represented 72% of total software revenue for the 2015 nine-month period and was comprised of maintenance and periodic licenses (rental or subscriptions). (All growth comparisons are in constant currencies.) By product line, non-IFRS software revenue increased 4% for CATIA, 12% for SOLIDWORKS, 2% for ENOVIA, and Other Software, which included the 2014 acquisitions of Quintiq and Accelrys, increased 35%. On an organic basis, Other Software increased 13%. (All growth comparisons are in constant currencies.) Non-IFRS operating income increased 26% to €597.8 million, and the non-IFRS operating margin was 28.8%, compared to 28.7% in the 2014 nine-month period. The Company noted that on an organic basis, the non-IFRS operating margin increased an estimated 80 basis points year-to-date, reflecting the focus on driving improvements in the Company’s operating efficiency and productivity. Non-IFRS financial revenue and other, net totaled €2.7 million compared to €11.2 million in the 2014 nine-month period, reflecting higher exchange losses and lower net interest income. IFRS diluted net income per share increased 44%. Non-IFRS diluted net income per share increased 24% to €1.54 per diluted share. IFRS and non-IFRS net income reflected strong revenue growth, the positive influence from currencies and organic operating margin expansion.
Cash Flow and Other Financial Highlights
Net operating cash flow was €113 million and €530 million for the three and nine months ended September 30, 2015, respectively, compared to €90.1 and €444.7 million for the 2014 comparable periods. Year-to-date 2015 changes in working capital include the payment of €60 million in connection with ongoing tax proceedings.
For the first nine months of 2015, the Company uses of cash were principally for cash dividends of €98.5 million, capital expenditures of €30.8 million, share repurchases of €28.0 million and payment for acquisitions of €18.1 million. The Company received cash for stock options exercised of €25.0 million.
At September 30, 2015, the Company’s net financial position totaled €1.23 billion, compared to €825.5 million at December 31, 2014, reflecting an increase in cash, cash equivalents and short-term investments to €1.58 billion, compared to €1.18 billion at December 31, 2014, with long-term debt unchanged at €350.0 million.
In October 2015, the Company entered into a new five year €650 million credit facility which was fully drawn down.
Summary of Recent Business, Technology and Customer Highlights
On October 1, 2015 Dassault Systèmes unveiled SOLIDWORKS 2016, the latest release, delivering new and enhanced capabilities that will help its 2.7 million users quickly and easily innovate, design, validate, collaborate and build, from initial concept to final product. For Design, users can work smarter and get the CAD system out of the way with fewer “picks and clicks”, increased modeling flexibility, a more intuitive interface, and easier access to commands; for Collaboration, users can communicate, collaborate, and work concurrently across teams, disciplines, customers, and vendors with mechatronic design, concurrent design, and streamlined electrical/mechanical design; for Validation, innovative design simulation makes analysis more efficient to solve complex problems, visualize and verify functionality, and find potential errors before they occur; and for Manufacturing, users are now able to create more detailed outputs for manufacturing and shorten product development to manufacture while saving time and reducing errors.
On September 14, 2015 the Company announced that India’s second largest manufacturer of Trucks and Buses, Ashok Leyland, has adopted two Dassault Systèmes Industry Solution Experiences: “Modular, Glocal and Secure” and “Target Zero Defect”. As part of its customer-centric activities, Ashok Leyland looked to enhance quality control and accelerate the delivery of its trucks and buses. In addition, the company wanted an efficient cost management solution that would address the complexity of its product portfolio as it tailors a diverse range of products to meet shifting market requirements.
On July 23, 2015 the Company announced that Elixir Aircraft, a French aviation startup, selected Dassault Systèmes’ 3DEXPERIENCE platform for the industry’s first airplane designed using cloud-based applications. Elixir Aircraft will rely on Dassault Systèmes’“Engineered to Fly” industry solution experience for the cloud-based design and engineering of its high-performing two-seater airplane, crafted to appeal to the passenger experience with a unique wing structure, comfort and gains in payload, safety and costs.
On July 23, 2015 the Company announced that LF Corp, a leading fashion and lifestyle company in Asia, has selected the “My Collection” industry solution experience to streamline the planning, designing and sourcing of its collections. LF Corp is now supporting its international growth initiatives using powerful collaborative and analytical capabilities in a single digital environment. Based on the 3DEXPERIENCE platform, Dassault Systèmes’“My Collection” industry solution experience provides LF Corp with unified development, sourcing and design capabilities, to simplify workflows and decision-making and minimize risks throughout its collections’ lifecycles.
Other Corporate Events
On July 27, 2015, the Company filed its 2015 Half-Year Financial Report with the French Autorité des marchés financiers .
On September 4, 2015, an Extraordinary Shareholders’ meeting was held. At the meeting shareholders’ ratified all the resolutions presented. Business Outlook
Thibault de Tersant, Senior Executive Vice President, CFO, commented, “Our third quarter financial results were well aligned with our guidance. Thanks to broad-based growth in Europe and the Americas, we were able to absorb the short-term market volatility in Asia as well as high year-ago comparisons in that region.
“Based upon our progress year-to-date, we confirm our two key 2015 financial goals - double-digits organic new licenses revenue growth in constant currencies and an organic improvement in our non-IFRS operating margin of 100 basis points. Year-to-date organic new licenses revenue increased 11% exclusive of any currency benefits and on an organic basis we have improved our operating margin by 80 basis points.
“Turning to our outlook, thanks to our pipeline of opportunities with clients we see a strong finish to the year with a fourth quarter embedding organic double-digit new licenses revenue growth in constant currencies. We therefore reaffirm our 2015 financial objectives and upgrade them for currency upside from Q3 and the reversal of tax reserves. As a result, we now target a non-IFRS EPS objective of about €2.20, increasing 21% in comparison to last year.”
The Company’s fourth quarter and full year 2015 financial objectives are as follows: Fourth quarter 2015 non-IFRS total revenue objective of about €745-755 million based upon the exchange rates assumptions below; non-IFRS operating margin of about 34%, and non-IFRS EPS of about €0.66; 2015 non-IFRS revenue growth objective of about 12% in constant currencies at €2.82 to €2.83 billion (based upon the 2015 currency exchange rate assumptions below); 2015 non-IFRS operating margin of about 30%, compared to 2014 where the non-IFRS operating margin was 29.8%; 2015 non-IFRS EPS of about €2.20, representing a growth objective of about 21%; Objectives are based upon exchange rate assumptions of US$1.15 per €1.00 and JPY135 per €1.00 for the 2015 fourth quarter and US$1.12 per €1.00 and JPY134.8 per €1.00 for the full year.
The Company’s objectives are prepared and communicated only on a non-IFRS basis and are subject to the cautionary statement set forth below.
The 2015 non-IFRS objectives set forth above do not take into account the following accounting elements and are estimated based upon the 2015 currency exchange rates above: deferred revenue write-downs estimated at approximately €37 million, share-based compensation expense, estimated at approximately €35 million and amortization of acquired intangibles estimated at approximately €160 million. The above objectives do not include any impact from other operating income and expense, net principally comprised of acquisition, integration and restructuring expenses. Finally, these estimates do not include any new stock option or share grants, or any new acquisitions or restructurings completed after October 22, 2015. Today’s Webcast and Conference Call Information
Today, Thursday, October 22, 2015, Dassault Systèmes will first host a meeting in London, which will be simultaneously webcasted at 8:30 AM London time/9:30 AM Paris time and will then also 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 1 year.
Additional investor information can be accessed at http://www.3ds.com/investors/ or by calling Dassault Systèmes’ Investor Relations at 188.8.131.52.69.24.
Key Investor Relations Events
Fourth Quarter 2015 Earnings, February 4, 2016
Capital Markets Day, June 10, 2016
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 2015 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. Furthermore, due to factors affecting sales of the Company’s products and services as described above, 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.
In preparing such forward-looking statements, the Company has in particular assumed an average US dollar to euro exchange rate of US$1.15 per €1.00 for the 2015 fourth quarter and US$1.12 per €1.00 for the full year as well as an average Japanese yen to euro exchange rate of JPY135.0 to €1.00 for the fourth quarter and JPY134.8 to €1.00 for the full year; however, currency values fluctuate, and the Company’s results of operations may be significantly affected by changes in exchange rates.
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 2014 Document de Référence , filed with the AMF on March 24, 2015, and also available on the Company’s website www.3ds.com .
Non-IFRS Financial Information
Readers are cautioned that the supplemental non-IFRS financial 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 annual report for the year ended December 31, 2014 included in the Company’s 2014 Document de Référence filed with the AMF on March 24, 2015.
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.
Information in Constant Currencies
When the Company believes it would be helpful for understanding trends in its business, the Company provides percentage increases or decreases in its revenue (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 herein "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.
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 190,000 customers of all sizes, in all industries, in more than 140 countries. For more information, visit www.3ds.com .
CATIA, SOLIDWORKS, ENOVIA, DELMIA, SIMULIA, GEOVIA, EXALEAD, 3D VIA, 3DSWYM, BIOVIA, NETVIBES, 3DEXCITE are registered trademarks of Dassault Systèmes or its subsidiaries in the US and/or other countries. (Tables to Follow)