Dassault Systèmes Reports First Quarter Financial Results With Recurring Software, Operating Margin and EPS At the High End of Its Non-IFRS Guidance

First Quarter 2020 versus 2019 Financial Comparisons

Q1 Revenue Review

  • In constant currencies: total revenue increased 17% (IFRS and non-IFRS), reflecting the inclusion of Medidata Solutions, Inc. following the completion of its acquisition on October 28, 2019. On an organic basis, non-IFRS total revenue decreased 1% largely due to the global Covid-19 pandemic impact on new licenses and services activities, offset in part by non-IFRS recurring software revenue, which increased 5% on an organic basis.
  • Software revenue increased 17% (IFRS and non-IFRS). Non-IFRS recurring software revenue grew 30% reflecting a six-fold increase in Life Sciences, non-IFRS recurring software revenue growth of 6% for Industrial Innovation non-IFRS software revenue, and growth of 9% for Mainstream Innovation. Non-IFRS recurring software revenue represented 83% of non-IFRS software revenue in the first quarter.  Licenses and other software revenue decreased 20% (IFRS and non-IFRS), largely reflecting the impact of Covid-19-related restrictions affecting businesses, initially in China and at the very end of the quarter throughout the world. The Company’s licenses guidance had been -5% to 0%, principally based on a high Q1 2019 base of comparison and reflecting macro and end-markets in early February with the health emergency difficult to factor in.  (All growth rates at constant currencies).
  • Services revenue increased 15% (IFRS) and 14% (non-IFRS) reflecting the addition of Medidata, and organic growth of 1%. Softer services activity on an organic basis was related to lower new licenses activity as well as to Covid-19 related restrictions. (All growth rates at constant currencies).
  • In the Americas, non-IFRS software revenue increased 46% in total, reflecting the inclusion of Medidata with a large North American customer base, and growth of 3% on an organic basis.  Europe non-IFRS software revenue increased 2% with strong growth in Northern Europe as well as Russia, largely offset by Southern Europe.  In Asia, non-IFRS software revenue increased 7% on acquisition impact as well as strong growth in AP South. Both Europe and Asia posted a decrease in software revenue on an organic basis on sharply lower new licenses revenue. (All growth rates at constant currencies).
  • 3DEXPERIENCE non-IFRS software revenue represented 22% of related software revenue in the first quarter, similar to the year-ago period, and included business from customers from Aerospace & Defense, Transportation & Mobility, Industrial Equipment and Marine & Offshore, among others. Reflecting a sharp postponement of enterprise decisions due to the global health crisis, as well as a high base of comparison, 3DEXPERIENCE software revenue decreased 1% in the quarter in constant currencies.             

Q1 Operating Review

  • Operating income decreased 30% on an IFRS basis, reflecting the impact of acquired amortization intangibles arising from the Medidata acquisition, while increasing 6% to €334.1 million on a non-IFRS basis. The non-IFRS operating margin of 29.2% came in near the high end of the Group’s guidance range of 28.5% to 29.5%.
  • The IFRS effective tax rate was 24.4% (non-IFRS 24.3%), compared to 28.5% (non-IFRS 29.7%) in the year-ago quarter, reflects the positive impact of the new French and US tax regimes on revenues from patents and technology and the finalization of the US BEAT consequences. These changes were fully recognized both in Q4 2019 for the full year and in Q1 2020 while Q1 2020 also reflects a favorable evolution in the geographic mix of taxable income.
  • IFRS diluted net income per share decreased 31%. Non-IFRS diluted net income per share grew 9% to €0.95 per share, and increased an estimated 7% at constant currency.

COO & CFO Commentary

Pascal Daloz, Dassault Systèmes’ EVP, Chief Operating Officer & Chief Financial Officer, commented:  “The global health emergency which unfolded during the first quarter underscored the power of the 3DEXPERIENCE platform to run our business from anywhere and to engage digitally with our customers and partners with 3DEXPERIENCE Cloud. With a complete cloud portfolio, we are working closely with our indirect partners to prioritize cloud, in particular for SOLIDWORKS customers with 3DEXPERIENCE WORKS. While our business is not immune, our financial model and financial strength enables us to continue to invest in our strategic priorities advancing our significant investments in Life Sciences & Healthcare and in Infrastructure & Cities while well supporting our Manufacturing sector.

“First quarter financial results demonstrated the improved balance of our end-markets with Life Sciences now our second largest industry, representing 19% of our total non-IFRS software. During the first quarter, Medidata passed the 1,500-customer milestone and achieved several important competitive displacements. IFRS and non-IFRS recurring revenue, representing 83% of total software revenue in the first quarter, demonstrated its resilience, with a solid organic performance across geographies as well as industries along with the contribution from Medidata. While licenses and services were negatively affected, recurring revenue, operating margin and EPS came in at the high end of our guidance. In total, our non-IFRS revenue increased 17% at constant currency and non-IFRS earnings per share increased 9%. 

“Looking forward, our goal is to maintain a stable non-IFRS earnings per share for 2020 in comparison to 2019.

  • We are assuming that there will be a significant reduction in global GDP with restrictions in a number of the industries we serve, with the most dramatic impact in Q2, consistent with what most economists are estimating. There may be some timing differentials among geographies, but globally we would expect that to be the case.
  • Our planning framework assumes a progressive recovery in Q3 and Q4, based upon the current governmental plans, and important advances in therapeutics and vaccine development.

“We have enacted a savings plan to achieve our EPS target while maintaining our global workforce and continuing to invest selectively for the future. Indeed, all industries are affected by this health pandemic, but for some the effects began sooner and will last longer. We believe in customers as partners and we will continue to work closely with them to help navigate over these two timeframes ahead – a pre-vaccine one and the new world thereafter.”

Second Quarter and 2020 Full Year Financial Objectives Framework

The Company has set the following framework as the basis for its second quarter and full year financial objectives. These objectives are being used by the Company to conduct its internal planning.  Key framework assumptions are as follows:

  • A significant deceleration in global GDP and restrictions in a number of industries based upon current governmental plans in the Americas, Europe and Asia, leading to non-IFRS licenses software revenue to decrease year over year by approximately -20% to -17% in constant currencies for FY 2020;
  • Non-IFRS recurring software revenue to maintain a strong resilience, while reflecting lower new licenses activity and some increased attrition, leading to growth of recurring revenue in the range of 26% to 27% in constant currencies for FY 2020;
  • Cost savings targeting to achieve a non-IFRS operating margin of about 29.5% for FY 2020;
  • Non-IFRS effective tax rate of about 25.2% for FY 2020.

Dassault Systèmes’ full year 2020 financial objectives presented below are given on a non-IFRS basis and reflect the principal 2020 currency exchange rate assumptions below for the US dollar and Japanese yen as well as the potential impact from additional non-Euro currencies:



Q2 2020 Framework


 FY 2020 Framework

Total non-IFRS Revenue


€1.04 to €1.07 billion


€4.50 to €4.55 billion

Growth in Constant Currencies


+9% to +12%


+12% to +13%

Non-IFRS operating Margin


25.0% to 26.5%





€0.72 to €0.77


€3.65 to €3.72

Non-IFRS EPS Growth


-12% to-6 %


+0% to +2%

US dollar


$1.15 per Euro


$1.14 per Euro

Japanese yen (before hedging)


JPY 125.0 per Euro


JPY 123.8 per Euro

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