DS Reports Second Quarter 2009 Financial Results
At High End of Company Objectives
Paris, France, July 30, 2009 ─ Dassault Systèmes (DS) (Euronext Paris: #13065, DSY.PA) reports IFRS unaudited financial results for the second quarter and first half ended June 30, 2009. These results have been reviewed by the Company’s Board of Directors.
Summary Financial Highlights
• Second Quarter 2009 non-IFRS financial results at high end of DS objectives
• Cost-savings initiative on track with €55 million realized year-to-date
• Net operating cash flow of €177 million for First Half; Net cash position of €733 million
• Shareholders approved annual cash dividend of €0.46 per share, stable with prior year
• DS reconfirms 2009 constant currency financial objectives and updates for currency exchange rates
Second Quarter 2009 Financial Summary
*In constant currencies.
Bernard Charlès, Dassault Systèmes President and Chief Executive Officer, commented, “The second quarter unfolded as anticipated. Revenue, margin and earnings results came in at the high end of our objectives, thanks to continued strong interest in DS solutions across a diversified number of industries, and to our cost savings program which is being implemented without impacting our R&D and sales capacities.
“On balance, business conditions during the second quarter were similar to the first quarter with customers remaining cautious with respect to new business investments. We started to see some increase in activity among larger companies, for which design excellence, simulation and compliance were significant drivers. For smaller companies, in general, it was not the case as we observed some slight further weakening from the first three months of the year.
“We are dedicated to the success of our customers with our investments in R&D. In June, we introduced Version 6 Release 2010 for the PLM market. We are just at the start of the adoption ramp of our V6 platform and software solutions and are therefore pleased by the number of wins we are seeing with more than 130 companies to date, representing the apparel, aerospace, automotive, energy, life sciences and high tech industries, among others.
“This quarter, we obtained a milestone decision, with Renault Group selecting our V6 PLM solution, which will be deployed as their global collaborative innovation platform for all functions involved in engineering and product development, thus replacing legacy PDM and reducing Renault Group’s cost of operations.
“In the Mainstream market, SolidWorks 2010 is set to be released in the fall of 2009 as scheduled. This latest release is uniquely positioned to offer users the ability to easily evaluate design and material alternatives for sustainable product development.”
Second Quarter 2009 Financial Review
*In constant currencies.
• On a reported basis, IFRS and non-IFRS total revenue and software revenue decreased by 5% and 2%, respectively, benefiting from favorable currency effects which helped mitigate the impact of lower activity.
• On a constant currency basis, non-IFRS software revenue performance benefited from recurring software revenue which increased 6% (representing 74% of total software revenue) but was negatively impacted by a decline in new licenses revenue of 36%.
• Excluding currency effects non-IFRS PLM software revenue declined by 9% with CATIA and ENOVIA software revenue lower by 13% and 15%, respectively. Overall PLM performance benefited from higher simulation revenue, with SIMULIA posting double-digit software revenue growth. Mainstream 3D software results also reflected lower new licenses revenue partially offset by growth in subscription revenue.
• In order to mitigate the impact of the global recession on its operating results, the Company has in place a cost savings program with the goal of reducing expenses while maintaining its research and development and sales capacities.
o Since the start of the year, the Company has realized over €55 million in savings across such areas as revenue-related costs, travel, marketing, procurement, outside services and other areas.
o In addition to the savings program, the Company had previously begun and is continuing an operational efficiency program organized around several key initiatives including shared services and co-location of offices. The Company anticipates that these efficiency programs will bring additional benefits in 2010.
Looking at financial results on a sequential basis,
• Non-IFRS total revenue was €311.2 million in the second quarter, compared to €310.7 million in the first quarter, and excluding quarter to quarter currency effects increased 2%.
• Non-IFRS total software revenue was €271.6 million, similar to first quarter non-IFRS total software revenue of €272.8 million. Excluding currency effects, non-IFRS total software revenue increased 2% sequentially, with new licenses revenue higher by 10% and services and other revenue growing 7%. As anticipated, non-IFRS recurring software revenue was lower by 1% on a sequential basis in constant currencies.
• The non-IFRS operating margin improved to 21.9% in the second quarter from 19.4% in the first quarter benefiting from the ongoing implementation of the Company’s cost savings program.
• Global headcount at June 30th was 7,903, down 1.5% from 8,020 at March 31, 2009.
First Half 2009 Financial Summary
*In constant currencies.
**In the 2008 First Half DS recorded a €17 million (€0.13 per share) gain on sale for its prior corporate headquarters facility in other operating income and expense, net.
*In constant currencies.
IFRS and non-IFRS total revenue was lower by approximately 2% as reported and 9% in constant currencies. Revenue growth rates on a reported basis benefited from the strengthening of both the US dollar and the Japanese yen during the first half of 2009 compared to the 2008 First Half which helped mitigate the impact of lower activity.
Revenue distribution by geographic region in the 2009 First Half remained similar to that of the same period in 2008. As a percentage of total revenue, Europe represented 46% (47% in 2008 First Half), the Americas accounted for 31% (30% in 2008 First Half) and Asia represented 23% (23% in 2008 First Half).
For the 2009 First Half, IFRS and non-IFRS software revenue was lower by approximately 1% as reported and 7% in constant currencies, reflecting periodic licenses, maintenance, and product development revenue growth of 11% which was largely offset by a decrease in new licenses revenue of 38% (all figures in constant currencies except as noted).
Non-IFRS recurring software revenue, comprised of periodic licenses and maintenance revenue, increased 10% in constant currencies and totaled €407.8 million for the 2009 First Half, compared to €345.6 million in the 2008 First Half. Recurring software revenue represented 75% of total software revenue in the 2009 First Half and 63% in the 2008 First Half.
Software revenue growth trends were similarly impacted in both the PLM and Mainstream segments of the Company’s business with a significant decrease in new license revenue activity offset in part by growth in periodic licenses and maintenance revenue.
IFRS net income per diluted share decreased 45.2% principally reflecting the year-over-year decrease in revenue as well as the year-ago benefit from the gain on sale of part of the Company’s prior corporate headquarters facility. Non-IFRS net income per diluted share decreased 14.9%, principally reflecting lower revenue activity.
Cash Flow and Other Financial Highlights
IFRS net operating cash flow was €81.0 million and €177.3 million for the second quarter and first half ended June 30, 2009, respectively.
Cash and short-term investments totaled €932.8 million at June 30, 2009, compared to €840.4 million at December 31, 2008. The Company’s net financial position amounted to €732.6 million at June 30, 2009, net of outstanding debt consisting of €200.2 million of financial long-term debt. During the second quarter 2009, the Company paid cash dividends totaling €54.8 million.
Annual Shareholders’ Meeting Approved Cash Dividend Payment
The Annual Shareholders’ Meeting was held on June 9, 2009. At the meeting shareholders approved for the fiscal year ended December 31, 2008 the payment of an annual cash dividend equivalent to €0.46 per share, equal to the prior year. The Company has consistently paid annual cash dividends since its initial public offering in 1996. The cash dividend was paid on June 25, 2009.
Key Business and Corporate Highlights
Renault Chooses DS Full V6 PLM to Improve the Company’s Productivity and Product Quality. Renault has selected Dassault Systèmes’ V6 PLM as its new global product development solution, in order to improve productivity, and product quality. Renault has already started to implement the ENOVIA V6 based collaborative platform and CATIA V6, and will rapidly move to the full DS V6 portfolio to enable the company and its suppliers to collaborate on the creation of new product designs in real time.