The 2020 non-IFRS financial objectives/framework set forth above do not take into account the following accounting elements and are estimated based upon the 2020 principal currency exchange rates above: contract liabilities write-downs estimated at approximately €12 million, largely impacted by the Medidata acquisition; share-based compensation expense, including related social charges, estimated at approximately €139 million and amortization of acquired intangibles and of tangibles reevaluation, estimated at approximately €403 million and lease incentives of acquired companies at approximately €3 million. The above objectives also do not include any impact from other operating income and expenses, net principally comprised of acquisition, integration and restructuring expenses, and impairment of goodwill and acquired intangible assets; from one-time items included in financial revenue; from one-time tax effects; and from the income tax effects of these non-IFRS adjustments. Finally, these estimates do not include any new stock option or share grants, or any new acquisitions or restructurings completed after March 31, 2020.
Cash Flow and Balance Sheet Information
Net operating cash flow totaled €458.1 million for the 2020 first quarter compared to €488.5 million in the year-ago period. During the 2020 first quarter, cash obtained from operations was used principally for capital expenditures, net of €60.3 million; repurchase of shares of €108.1 million related to its stock options and share grants programs, and payment for lease obligations of €25.5 million. The Group also received cash from exercise of stock options of €23.7 million.
Dassault Systèmes’ net financial position totaled €(2.37) billion at March 31, 2020, compared to €(2.66) billion at December 31, 2019, reflecting cash, cash equivalents and short-term investments of €2.24 billion and debt related to borrowings of €4.62 billion.
Summary of Recent Business, Technology and Customer Announcements
On March 29, 2020, Dassault Systèmes unveiled initiatives supporting its customers, partners and communities to work from anywhere with the full power of 3DEXPERIENCE collaboration during the Covid-19 pandemic.
On March 26, 2020 Celsion Corporation, a leading oncology drug development company, jointly announced with Medidata, a Dassault Systèmes company, that the use of a regulatory grade synthetic control arm (SCA) in Phase Ib dose-escalating OVATION I Study with GEN-1 in Stage III/IV ovarian cancer patients revealed progression-free survival (PFS) in the treatment group. Synthetic Control Arms have the potential to revolutionize clinical trials in certain oncology indications and some other diseases where a randomized control is not ethical or practical. SCAs are formed by carefully selecting control patients from historical clinical trials to match the demographic and disease characteristics of the patients treated with the new investigational product. SCAs have been shown to mimic the results of traditional randomized controls so that the treatment effects of an investigational product can be visible by comparison to the SCA. SCAs can help advance the scientific validity of single arm trials, and in certain indications, reduce time and cost, and expose fewer patients to placebos or existing standard-of-care treatments that might not be effective for them. Medidata is in a unique position to create fit-for-purpose synthetic controls because of access to a pool of more than six million anonymized patients from nearly 20,000 previous clinical trials.
On February 10, 2020, Dassault Systèmes introduced the new 3DEXPERIENCE WORKS commercial offers that provide SOLIDWORKS users with a connected, integrated and automated way to streamline their creative process, and save time and money. The new offers – Standard, Professional and Premium – feature SOLIDWORKS standard, professional and premium applications that are installed from, licensed from, and updated in the 3DEXPERIENCE platform, with data stored in it. With this connection, SOLIDWORKS customers use the same desktop applications that they rely on to design and engineer new customer experiences, all while benefitting from the advantages of a digital platform: improved collaboration, embedded and easy-to-use data management, automatic software updates, and flexible access to the latest project data readily available in one place. The scalable offers also include 3D Creator and 3D Sculptor - next generation design applications that run in any browser, anywhere - and enable users to extend and improve what they can do with SOLIDWORKS by selecting from dozens of other powerful 3DEXPERIENCE WORKS applications and use only the ones they need for their tasks.
Today’s Webcast and Conference Call Information
Today, Thursday, April 23, 2020, Dassault Systèmes will host a webcasted presentation at 9:00 London Time/ 10:00 AM Paris time and will then host a conference call at 9:00 AM New York time / 3:00 PM Paris time / 2:00 PM London time. The webcasted presentation and conference call will be available via the Internet by accessing http://www.3ds.com/investors/ .
Additional investor information can be accessed at http://www.3ds.com/investors/ or by calling Dassault Systèmes’ Investor Relations at +188.8.131.52.69.24.
Key Investor Relations Events
Annual Meeting of Shareholders: May 26, 2020 (see notice below herein)
Capital Market Day initially planned for June 12, 2020 is postponed to November 17, 2020 to be webcasted from Paris live. During this Capital Market Day, the Company will notably discuss the update of our 2023 objectives.
Second Quarter 2020 Earnings Release: July 23, 2020
Third Quarter 2020 Earnings Release: October 22, 2020
Fourth Quarter 2020 Earnings Release: February 4, 2021
General Meeting of May 26, 2020
As indicated in the meeting notice published in BALO on Friday April 17, 2020, the General Meeting of Dassault Systèmes called to be held on Tuesday May 26, 2020 at 3:00 p.m. will be held behind closed doors without the shareholders and other persons entitled to attend the meeting being present. The practicalities of participation in the General Meeting and consultation of documents relating to this General Meeting are detailed in the meeting notice available on the Company's website: https://investor.3ds.com/fr/shareholders-meeting/home .
Shareholders will be invited to follow the General Meeting live and remotely via an audio webcast with a written presentation on the Company's website www.3DS.com, provided of course that the conditions for this retransmission are met.
Due to the impossibility of asking oral questions during the General Meeting and in replacement, the Company proposes that its shareholders may send questions by email to the following email address Email Contact at the latest at 3 p.m. the day before the date of the General Meeting (i.e. no later than May 25, 2020 at 3 p.m. CET). Emails shall attach the shareholder’s registration certificate. The Company will make its best reasonable efforts to respond to such questions during the General Meeting.
Dassault Systèmes also announces that it has posted on its website a supplementary report to the 2019 corporate governance report of the Board of Directors. This document is available on the Company's website at the address mentioned below and supplements the information in section 5.1 of the 2019 Document d’enregistrement universel (Annual Report) also available on the Company's website.
The Company will keep its shareholders informed of any possible development relating to the methods of participation and voting at the General Meeting and, to this end, shareholders are invited to regularly consult the section dedicated to the General Meeting on the website of the Company: https://investor.3ds.com/fr/shareholders-meeting/home.
Statements herein that are not historical facts but express expectations or objectives for the future, including but not limited to statements regarding the Group’s non-IFRS financial performance objectives or framework, are forward-looking statements. Such forward-looking statements are based on Dassault Systèmes management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results or performances may differ materially from those in such statements due to a range of factors.
The Group’s current framework for 2020 takes into consideration, among other things, an uncertain global economic environment. In light of the uncertainties regarding economic, business, social, health and geopolitical conditions at the global level, Dassault Systèmes’ revenue, net earnings and cash flows may
grow more slowly, whether on an annual or quarterly basis, mainly due to the following factors:
- the deployment of Dassault Systèmes’ solutions may represent a large portion of a customer’s investments in software technology. Decisions to make such an investment are impacted by the economic environment in which the customers operate. Uncertain global geopolitical, economic and health conditions and the lack of visibility or the lack of financial resources may cause some customers, e.g. within automotive, aerospace or natural resources industries, to reduce, postpone or terminate their investments, or to reduce or not renew ongoing paid maintenance for their installed base, which impact larger customers’ revenue with their respective sub-contractors; the sales cycle of the Dassault Systèmes’ products – already relatively long due to the strategic nature of such investments for customers – could further lengthen; and
- the political, economic and monetary situation in certain geographic regions where Dassault Systèmes operates could become more volatile and, for example, result in stricter export compliance rules or the modification of current tariff regimes;
- health conditions in some geographic areas where Dassault Systèmes operates will impact the economic situation of those regions. Specifically, it is not possible to predict the impact, length and scope of damages originating from the coronavirus pandemic as of issuance date of this document. Health conditions, including the Covid-19 pandemic, may present risks for health and ability to travel for Dassault Systèmes employees; and
- continued pressure or volatility on raw materials and energy prices could also slow down Dassault Systèmes’ diversification efforts in new industries