DS Reports 2007 Full Year Software Revenue Growth Above 15% in Constant Currencies


-- GAAP PLM software revenue increased 17% in constant currencies. Non-GAAP PLM software revenue increased 16% in constant currencies.
      -- CATIA non-GAAP software revenue growth of 14% in constant
       currencies benefited from increased leasing activity, growth in
       maintenance, increasing interest in CATIA PLM Express in the
       mid-market and the inclusion of ICEM.
      -- ENOVIA non-GAAP software revenue growth of 32% reflected key
       new wins in target industries including high tech and apparel,
       growth with existing customers and the inclusion of ENOVIA
       MatrixOne for a full year.
      -- SIMULIA posted a record year on expanding relationships with
       customers.
      -- The GAAP PLM indirect channel software revenue grew by
       double-digits in constant currencies during 2007. In total the
       PLM indirect channel accounted for approximately one-quarter of
       DS' total revenue in 2007. At the end of 2007 DS was directly
       responsible for 25 regions. In addition to revenue growth, PLM
       indirect channel capacity grew by over 15% during 2007.


-- GAAP Mainstream 3D software revenue increased 15% in constant currencies. Non-GAAP Mainstream 3D software revenue increased 14% in constant currencies on SolidWorks new seat growth of 13% and strong growth in maintenance revenue, including renewals.

-- GAAP recurring software revenue represented 60% of software revenue. Non-GAAP recurring software revenue, representing 60% of non-GAAP software revenue, increased 28% in constant currencies for the year reflecting growth in maintenance and periodic licenses.

-- Services and other revenue increased approximately 6% in constant currencies on growth of PLM consulting services, offset in part by lower revenue related to DS operations formerly known as IBM business partner activities.

-- GAAP operating margin was 20.1% for the year. The non-GAAP operating margin was 26.2% compared to 26.9% for 2006, with currency exchange rate variations accounting for approximately 60 basis points of the 70 basis points decrease.

-- GAAP earnings per diluted share decreased 1% for the full year primarily reflecting higher investments in marketing and sales and G&A, a higher effective tax rate and the impact of amortization of acquired intangibles in connection with acquisitions. Non-GAAP earnings per diluted share increased 8% for the full year 2007 due to an increase in non-GAAP operating income of 6%, higher financial revenue and a lower effective tax rate.

-- DS also announced initial plans to allocate up to EUR 35 million towards the repurchase of its common stock during 2008.

Cash flow and other financial highlights

Net operating cash flow was EUR 70.9 million and EUR 311.0 million, respectively, for the fourth quarter and year ended December 31, 2007. Cash and short-term investments totaled EUR 626.6 million and long-term debt totaled EUR 202.9 million at December 31, 2007.

Other Corporate Announcements

On January 24th, DS announced the launch of PLM 2.0 and its new, next-generation platform, Version 6 (V6). PLM 2.0, PLM online for all, is a 3D online environment for everyone to experience products virtually where all user interactions generate product experience. PLM 2.0 is to PLM what Web 2.0 is to the Web, harnessing collective intelligence from online communities. Any user can imagine, share and experience products in the universal language of 3D. PLM 2.0 brings knowledge, from idea to product experience, to life.

V6 is an open platform, embracing SOA standards. V6 delivers a single PLM platform for all PLM business processes, available to anybody anywhere, spanning engineering groups, businesses and end users. V6 also gives intelligent access to all product experience information no matter the data source location, with MatrixOne technology built into the foundation. Business Outlook

Thibault de Tersant, Senior Executive Vice President and CFO, commented: "Turning to 2008 we are reconfirming our 12% non-GAAP software revenue growth objective in constant currencies. We see good opportunities for growth coming from both our core and target industries. We are initiating our non-GAAP earnings per share growth objective of about 10% to 12% for 2008. In addition, we expect to see about an 80 to 130 basis points expansion in our non-GAAP operating margin in 2008 compared to 2007.

"In summary, thanks to the investments in our sales channels and product portfolio, we enter 2008 a substantially stronger company, well positioned to deliver growth in software, operating margin and earnings per share in spite of the macro-economic environment."

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

-- First quarter 2008 non-GAAP total revenue objective of about EUR 305 to EUR 310 million and non-GAAP EPS of about EUR 0.40 to EUR 0.42;

-- 2008 non-GAAP total revenue objective of about 10% growth in constant currencies; 2008 non-GAAP software revenue objective of about 12% growth in constant currencies;

-- 2008 non-GAAP EPS objective of about EUR 2.17 to EUR 2.22, representing about 10% to 12% growth;

-- 2008 non-GAAP operating margin objective of about 27% to 27.5%;

-- Objectives based upon exchange rate assumptions for the 2008 first quarter and full year of US$1.45 per EUR 1.00 and JPY 160 per EUR 1.00;

-- The constant currency revenue objective leads to a reported 2008 non-GAAP revenue range of about EUR 1.365 to EUR 1.380 billion;

The non-GAAP objectives set forth above do not take into account the following accounting elements: deferred revenue write-downs estimated at approximately EUR 1 million for 2008; stock-based compensation expense estimated at approximately EUR 18 million for 2008; amortization of acquired intangibles estimated at approximately EUR 48 million for 2008. The above objectives do not include any impact from one-time costs and one-time gains related to the anticipated DS global headquarters' relocation in 2008. These estimates also do not include any new stock option or share grants, or any new acquisitions completed after February 13, 2008.

Recent Business News Highlights

-- On January 24th, DS launched ENOVIA MatrixOne 10.8 - a single, collaborative PLM platform foundation.

-- On January 23rd, DS announced that more than 4,600 attendees participated in the SolidWorks World 2008 User Conference & Exposition, the largest annual worldwide 3D CAD event.

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