Dassault Systèmes, the developers of SOLIDWORKS, SIMULIA & CATIA software, has reported strong third quarter numbers. However revenue increases from software licenses were held back by exchange rate movements.
Total revenue at the France based company increased by 2% to €751.4M for the third quarter of 2017.
| Revenue by activity | Q3 2017 | Q3 2016 | Variance | |
| €m | €m | €m | % | |
| Sofware Revenue | ||||
| – New licenses and Other software revenue | 175.2 | 164.6 | 10.6 | 6% |
| – Periodic and Maintenance revenue | 493.9 | 482.2 | 11.7 | 2% |
| Software revenue total | 669.1 | 646.8 | 22.3 | 3% |
| Services Revenue | 82.3 | 88.4 | -6.1 | -7% |
| Total Revenue | 751.4 | 735.2 | 16.2 | 2% |
IFRS Q3 2017 figures show that new licenses and other software revenue are up by 6% to €175.2 million. When non-IFRS figures are used – and FX movements taken out – SOLIDWORKS software revenue is up 16% in Q3 and by 14% YTD.
In a presentation to investors DS said they have added 15k+ new SOLIDWORKS customers since the beginning of 2017 and now have 800k+ commercial users.
The majority of the €751.4M income at DS comes from software revenue, with €82.3M related to service revenue for quarter.
| Software Revenue by product | Q3 2017 | Q3 2016 | Variance | |
| €m | €m | €m | % | |
| CATIA | 230.3 | 237.5 | -7.2 | -3% |
| ENOVIA | 77.6 | 77 | 0.6 | 1% |
| SOLIDWORKS | 166.2 | 152.2 | 14 | 9% |
| Other software revenue | 195 | 180.1 | 14.9 | 8% |
| 669.1 | 646.8 | 22.3 | 3% | |
Geographic analysis of DS revenues is important as it demonstrates that almost 60% of revenue is generated outside Europe. During the most recent quarter, and throughout much of 2017, exchange rates have moved against DS. This explains both the lower than anticipated performance during the quarter and is also the reason for the updated full year guidance.
| Software Revenue – Geographic Split | Q3 2017 | |
| €m | % | |
| Americas | 200.5 | 30% |
| Europe | 277.7 | 42% |
| Asia | 190.9 | 29% |
| Total | 669.1 | 100% |
Specifically, while DS has re-confirmed FY 2017 license revenue growth at a range between 8-10%, with recurring software growth of 6%, EPS forecasts were cut. The revised earnings guidance takes into account a 5 cent impact of currency movements and brings EPS to €2.57-2.61.
Major contract announced during quarter
As previously reported in July 2017, Dassault Systèmes signed a contract for 3DEXPERIENCE with Boeing that is estimated to be worth $1 billion over 30 years.
Updating analysts on the Boeing contract CFO Thibault de Tersant stated that the “most important increment in the Boeing revenue flow will be 2019, 2020, and 2021. These are the three years where most of the increase will happen.”
The future of SOLIDWORKS
Discussion around sales of SOLIDWORKS licenses and momentum in this area, DS CEO Bernard Charlès commented, “the mood with our channel, not only the user community, but the sales channel is also very positive”
Some of the reported increase in marketing spend has undoubtedly gone on events such as SOLIDWORKS World and the Design in the Age of … series of conferences, and has contributed to this positive view of SOLIDWORKS
Charlès had this to say about the evolution of SOLIDWORKS “the future of SOLIDWORKS through a browser is really something really important for our clients, even though they want — they love SOLIDWORKS on desktop, they see on.”
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