Dassault Systemes Announces Solid Q2

PARIS—(BUSINESS WIRE)—July 25, 2007— Regulatory News:

Dassault Systemes (DS) (NASDAQ: DASTY) (Paris:DSY) reported financial results for the second quarter and six months ended June 30, 2007.

Summary Second Quarter 2007 Financial Results

-- GAAP revenue up 14% in constant currencies and GAAP EPS up 24%

-- Non-GAAP revenue up 13% in constant currencies and non-GAAP EPS up 14%

-- DS raises 2007 revenue objective and reconfirms EPS objective

Bernard Charles, Dassault Systemes President and Chief Executive Officer, commented, "Dassault Systemes delivered a very solid second quarter with revenue and earnings coming in above objectives. Moreover, given the large customer transaction in the year-ago second quarter, achieving non-GAAP revenue growth of 13% in constant currencies and delivering non-GAAP EPS growth of 14% is rewarding.

"One of our most visible initiatives is the successful transformation of our PLM channel. Our results to date demonstrate that we are well in line with our plans, driving growth for CATIA and ENOVIA. At the same time, we continue to advance our technology and strategic roadmap. During the second quarter we launched our newest brand, 3DVIA, whose goal is to enable 3D to become a universal media for online product experiences. This new brand enlarges our addressable market to a wider community of users, to now include professional and consumer communities."

Second Quarter 2007 Financial Summary

Second Quarter 2007 Financial Highlights:
                                      GAAP              Non-GAAP
Second Quarter 2007            ---------------------------------------
In millions of Euro, except     Q2          Growth  Q2          Growth
 per share data                 2007 Growth   in    2007 Growth   in
                                              cc*                 cc*
----------------------------------------------------------------------
Total Revenue                  305.7   9%    14%   308.8   8%    13%
----------------------------------------------------------------------
EPS                            0.31   24%          0.42   14%
----------------------------------------------------------------------
Operating margin               17.9%               23.4%
----------------------------------------------------------------------


* in constant currencies

GAAP total revenue increased 9% to EUR 305.7 million (14% in constant currencies) and GAAP earnings per diluted share increased 24% to EUR 0.31 in the 2007 second quarter.

Non-GAAP total revenue increased 13% in constant currencies to EUR 308.8 million on constant currencies non-GAAP software revenue growth of 10% and services growth of 31%. Non-GAAP earnings per diluted share increased 14% to EUR 0.42 in the 2007 second quarter.

"Looking more closely at our second quarter activity, we saw strength in all geographic regions, including Europe and across all sales channels. Overall, software revenue increased 10% in constant currencies thanks to the strong growth of recurring revenue coming from new licensing activity and a growing installed base. New licenses revenue decreased year over year, but would have been up excluding the large customer transaction of the year-ago period. ENOVIA's results clearly illustrate the success of its product lines, with constant currency revenue growth of 32% in total and 23% before including MatrixOne.

"Importantly, our revenue results translated into strong growth in EPS in spite of the persistently strong currency headwinds," Thibault de Tersant, Senior Executive Vice President and CFO commented.

Non-GAAP PLM revenue increased 14% in constant currencies, with non-GAAP ENOVIA revenue up 32% in constant currencies. Non-GAAP Mainstream 3D revenue increased 11% in constant currencies in the 2007 second quarter. In line with the Company's expectations, new CATIA and SolidWorks seats totaled 20,457, level with the year-ago period, largely reflecting the very strong year-over-year comparison for CATIA. On a sequential basis, new CATIA and SolidWorks seats increased 4%.

First Half 2007 Financial Summary

First Half 2007 Financial Highlights:
                                      GAAP              Non-GAAP
First Half 2007                ---------------------------------------
In millions of Euro, except    First        Growth First        Growth
 per share data                 Half Growth   in    Half Growth   in
                                '07           cc*   '07           cc*
----------------------------------------------------------------------
Total Revenue                  596.6  12%    18%   603.5  11%    17%
----------------------------------------------------------------------
EPS                            0.59   16%          0.81   14%
----------------------------------------------------------------------
Operating margin               16.9%               22.8%
----------------------------------------------------------------------


* in constant currencies

Cash flow and other financial highlights

Net operating cash flow was EUR 68.8 million and EUR 177.2 million, respectively, for the second quarter and six months ended June 30, 2007. Cash and short-term investments totaled EUR 544.6 million and long-term debt was EUR 208.9 million at June 30, 2007. During the second quarter, DS paid cash dividends aggregating EUR 50.8 million.

Other Corporate Announcements

On June 12, 2007, DS completed the acquisition of ICEM, a leading provider of high quality, surface modeling and rendering solutions. For 2006, ICEM's revenues were approximately EUR 20 million.

Business Outlook

Thibault de Tersant, Senior Executive Vice President and CFO, commented, "Looking to our full year 2007 objectives, our non-GAAP constant currency revenue objective is for growth of about 14-15%, increasing from 13% previously. Thanks to our strong second quarter performance and the inclusion of ICEM following completion of its acquisition, we are increasing our revenue objective. In addition, we are adjusting our yen currency exchange rate assumption, leading to a 2007 reported revenue range of about EUR 1.285 to EUR 1.30 billion. We are reconfirming our earnings per share and operating margin objectives."

The Company's objectives are prepared and communicated only on a non-GAAP basis and are subject to the cautionary statement set forth below:

-- Third quarter non-GAAP total revenue objective of about EUR 300 to EUR 305 million, non-GAAP EPS of about EUR 0.39 to EUR 0.41 and non-GAAP operating margin of about 22% to 22.5%;

-- 2007 non-GAAP total revenue objective of about 14% to 15% growth in constant currencies (previously 13%);

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