Dassault Systèmes Delivers Broad-based Growth in First Quarter with 3DEXPERIENCE Software Revenue Up Strongly
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Dassault Systèmes Delivers Broad-based Growth in First Quarter with 3DEXPERIENCE Software Revenue Up Strongly

VÉLIZY-VILLACOUBLAY, France — (BUSINESS WIRE) — April 24, 2018Dassault Systèmes (Euronext Paris: #13065, DSY.PA), announces IFRS unaudited financial results for the first quarter ended March 31, 2018. These results were reviewed by the Company’s Board of Directors on April 24, 2018. The Company has adopted IFRS 15 as of January 1, 2018. This press release includes 2018 first quarter results under IFRS 15 as well as under the prior IAS 18 standard and includes a summary explanation of the major differences for the Company. In addition, this press release also includes financial information on a non-IFRS basis (both IFRS 15 and IAS 18) with reconciliations included in the Appendix to this communication.

Summary First Quarter 2018 Highlights and Financial Summary

(Unaudited, with references to IAS 18 financial information)

In millions of Euros, except per share data   IFRS
    IFRS15 Basis Q118   Difference   IAS 18 Basis Q118   IAS 18 Basis Q117   IAS 18 Change   IAS 18Change in cc*
Total Revenue   818,7   (49,4)   769,3   759,8   1%   10%
Software Revenue   735,1   (49,4)   685,7   670,2   2%   11%
Services Revenue   83,5   0,0   83,5   89,6   -7%   0%
Operating Margin   21,8%   -5,0pts   16,8%   15,7%        
EPS   0,53   (0,14)   0,39   0,33   18%   33%
                         
In millions of Euros, except per share data Non-IFRS
    IFRS15 Basis Q118   Difference   IAS 18 Basis Q118   IAS 18 Basis Q117   IAS 18 Change   IAS 18Change in cc*
Total Revenue   820,6   (49,4)   771,2   765,7   1%   9%
Software Revenue   737,0   (49,4)   687,6   676,1   2%   10%
Services Revenue   83,5   0,0   83,5   89,6   -7%   0%
Operating Margin   31,4%   -4,4pts   27,0%   26,2%        
EPS   0,72   (0,13)   0,59   0,53   11%   26%

*In constant currencies.

Bernard Charlès, Dassault Systèmes’ Vice Chairman and Chief Executive Officer commented,We are experiencing a global Industry Renaissance, bringing new ways, real and virtual, of inventing, learning, producing and trading. The leading businesses of the future will be those that empower the workforce of the future and their value networks with knowledge and know-how to deliver new categories of sustainable solutions. Digital experience platforms are the infrastructures of the 21st century: they have transformed retail, transportation and hospitality services; the industrial world is next. The 3DEXPERIENCE Marketplace positions Dassault Systèmes as a catalyst of this transformation.

“The sharp increase in 3DEXPERIENCE licenses revenue proves that our 3DEXPERIENCE platform opens up whole new market opportunities. It brings unparalleled added value for customers in terms of leadership and innovation as the platform is both an operating system, as shown this quarter by Gilead Sciences and a business model. Our Cloud offer represents for large and smaller companies, like recent new engagements with Kärcher and EVelozcity, the possibility to reduce to zero the distance to their own clients. For the SOLIDWORKS users’ community it represents the opportunity to benefit from a wide range of marketplace services.”

2018 First Quarter Financial Summary

(Unaudited)

 
Software Revenue in millions of Euros IFRS
    IFRS15 Basis Q118   Difference   IAS 18 Basis Q118   IAS 18 Basis Q117   IAS 18 Change   IAS 18Change in cc*
Total Software Revenue   735.1   (49.4)   685.7   670.2   2%   11%
- Licenses and Other software   179.1   1.4   180.5   173.0   4%   14%
- Recurring software   556.0   (50.8)   505.3   497.2   2%   10%
Americas total software   209.6   (13.8)   195.8   201.3   -3%   12%
Europe total software   325.0   (36.1)   288.9   280.7   3%   7%
Asia total software   200.6   0.4   201.0   188.2   7%   16%
                         
Software Revenue in millions of Euros Non-IFRS
    IFRS15 Basis Q118   Difference   IAS 18 Basis Q118   IAS 18 Basis Q117   IAS 18 Change   IAS 18Change in cc*
Total Software Revenue   737.0   (49.4)   687.6   676.1   2%   10%
- Licenses and Other software   179.1   1.4   180.5   173.0   4%   14%
- Recurring software   557.9   (50.8)   507.2   503.2   1%   9%
Americas total software   210.5   (13.8)   196.7   203.2   -3%   11%
Europe total software   325.3   (36.0)   289.3   284.4   2%   6%
Asia total software   201.2   0.4   201.6   188.6   7%   16%

*In constant currencies

First Quarter 2018 versus 2017 Financial Comparisons on an IAS 18 Basis (“IAS 18 IFRS and IAS 18 non-IFRS”)

Business Outlook

(Discussion on an IAS 18, non-IFRS basis, with revenue growth rates in constant currencies)

Pascal Daloz, Dassault Systèmes’ Executive Vice President, CFO and Corporate Strategy Officer, commented, We expected a strong start to 2018 and are pleased to report that first quarter results came in well aligned with this objective. Software revenue increased 10%, with licenses and other software growth of 14% and recurring software revenue growth of 9% in constant currencies. Earnings per share increased 11% or 26% excluding strong currency headwinds. Those good results are also reflected in strong cash flow from operations, up 17%.

“Importantly, the first quarter results demonstrated the improving breadth and balance of our financial performance. Our three sales channels, all major brands and 9 of 12 geos reported strong license revenue growth in constant currencies. Moreover, looking at total software performance, we saw a similar pattern of strength across Transportation & Mobility, Aerospace & Defense, Industrial Equipment, Consumer Goods & Retail, Architecture, Engineering & Construction and Natural Resources as well as improvement in Life Sciences.

“For the second quarter, we anticipate a strong performance with non-IFRS total revenue growth of 8% to 10% and non-IFRS EPS of about €0.65 to €0.68, representing growth of about 16% to 22% at constant currency (all on an IAS 18 basis).

“We are reconfirming our 2018 financial objectives with IAS 18 non-IFRS total revenue growth of about 8% to 9% in constant currencies, a IAS 18 non-IFRS operating margin of 31% to 31.5%, and IAS 18 non-IFRS earnings per share of €2.83 to €2.88, representing growth of about 11% to 13% at constant currency.

“In summary, the first quarter well underscores our strategy and growth drivers at work. We look forward to sharing our perspectives for the future at our Capital Markets Day on June 15th.”

The Company’s second quarter and full year 2018 financial objectives are given in IAS 18 on a non-IFRS basis:

These objectives are prepared and communicated only on a non-IFRS basis and are subject to the cautionary statement set forth below.

The 2018 non-IFRS objectives, which are stated on an IAS 18 basis, set forth above do not take into account the following accounting elements and are estimated based upon the 2018 principal currency exchange rates above: deferred revenue write-downs estimated at approximately €5 million on an IAS 18 basis, share-based compensation expense, including related social charges, estimated at approximately €78 million and amortization of acquired intangibles estimated at approximately €160 million. The above objectives also do not include any impact from other operating income and expense, net principally comprised of acquisition, integration and restructuring expenses, from one-time items included in financial revenue and from one-time tax restructuring gains and losses. Finally, these estimates do not include any new stock option or share grants, or any new acquisitions or restructurings completed after April 25, 2018.

Cash Flow and Other Financial Highlights Under IAS 18 For Year-over-Year Comparisons

The Company’s net cash flow from operations for the first quarter ended March 31, 2018 is identical under IFRS 15 in comparison to IAS 18 although some of the line items differ. (See page 19 in the Appendix to this press release for further details including a reconciliation of the cash flow statement and balance sheets under IFRS 15 compared to IAS 18 for the quarter and period ended March 31, 2018.)

IAS 18 net operating cash flow increased 17% to €406.9 million for the quarter ended March 31, 2018, compared to €347.8 million in the 2017 First Quarter on growth in net income and working capital evolution.

Dassault Systèmes’ net financial position totaled €1.85 billion at March 31, 2018, compared to €1.46 billion at December 31, 2017, reflecting cash, cash equivalents and short-term investments of €2.85 billion and long-term debt of €1.00 billion.

Cash Dividend Recommendation, Annual Shareholders’ Meeting Date and Filing of Regulatory Annual Report

The Board of Directors has scheduled the Annual Shareholders’ Meeting for May 22, 2018 and is recommending a dividend per share equivalent to €0.58 per share for the fiscal year ended December 31, 2017, representing an increase of approximately 9% compared to the prior year €0.53 per share. In addition, as in recent years, it will also be proposed that each shareholder be granted the option to choose to receive payment of the dividend in cash or new shares. Shareholders may choose payment of the dividend in cash or new shares between May 29, 2018 and June 8, 2018, inclusive. Shares will be traded ex-dividend as of May 29, 2018. Dividends will be made payable as from June 19, 2018. These recommendations are subject to approval by shareholders at the Annual Shareholders’ Meeting. For further information, see the Company’s 2017 Document de Référence filed with the French Autorité des Marchés Financiers (AMF) on March 21, 2018. The 2017 Document de Référence and an English language translation of this document are available on the Company’s website.

Summary of Recent Business, Technology and Customer Announcements

Corporate:

During the week of April 16th, the Company held its annual Design in the Age of Experience Conference in Milano, Italy. For Dassault Systèmes and its clients, Design is bigger than aesthetics or products. Design is the start of sustainable experiences that change lives and helps address key challenges facing society – such as climate action, dwelling, mobility and healthcare. Designers are at the focal point, linking form, function, and sometimes ‘magic’ to transform how we live, work and play.

Dassault Systèmes Accelerates the Global Industry Renaissance with Launch of Online Marketplace. On February 1, 2018 the Company officially launched the 3DEXPERIENCE Marketplace, its online ecosystem for industrial services and content providers. Fifty digital manufacturers with more than 500 machines and 30 million components from 600 suppliers will help businesses leverage new ways to innovate. With the 3DEXPERIENCE Marketplace, Dassault Systèmes brings to the industrial world an online trading platform as disruptive as the first retail marketplace.

Customers:

On February 22, 2018 Dassault Systèmes announced that Kärcher, the world's leading provider of cleaning technology, has adopted the 3DEXPERIENCE platform to digitally transform its existing processes worldwide and be first to market with efficient, resource-conserving cleaning systems, products and services. Kärcher will rely on the “Single Source for Speed” industry solution experience based on the 3DEXPERIENCE platform. The company can integrate its product development processes, improve collaboration and knowledge sharing for up to 1,200 employees, and reduce product development and production costs.

Today’s Webcast and Conference Call Information

Today, Wednesday, April 25, 2018, Dassault Systèmes will first host from London a webcasted meeting at 8:30 AM London time/ 9:30 AM Paris time and will then host a conference call at 9:00 AM New York time/ 2:00 PM London time/ 3:00 PM Paris time. The webcasted meeting and conference call will be available via the Internet by accessing http://www.3ds.com/investors/. Please go to the website at least 15 minutes prior to the webcast or conference call to register, download and install any necessary audio software. The webcast and conference call will be archived for one year.

Additional investor information can be accessed at http://www.3ds.com/investors/ or by calling Dassault Systèmes’ Investor Relations at 33.1.61.62.69.24.

Key Investor Relations Events

Annual Meeting of Shareholders: May 22, 2018
Capital Markets Day, June 15, 2018
Second Quarter 2018 Earnings: July 25, 2018
Third Quarter 2018 Earnings: October 24, 2018
Fourth Quarter 2018 Earnings: February 6, 2019

Forward-looking Information

Statements herein that are not historical facts but express expectations or objectives for the future, including but not limited to statements regarding the Company’s non-IFRS financial performance objectives, 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 Company’s current outlook for 2018 takes into consideration, among other things, an uncertain global economic environment. In light of the continuing uncertainties regarding economic, business, social and geopolitical conditions at the global level, the Company’s revenue, net earnings and cash flows may grow more slowly, whether on an annual or quarterly basis. While the Company makes every effort to take into consideration this uncertain macroeconomic outlook, the Company’s business results, however, may not develop as anticipated. Further, there may be a substantial time lag between an improvement in global economic and business conditions and an upswing in the Company’s business results. The Company’s actual results or performance may also be materially negatively affected by numerous risks and uncertainties, as described in the “Risk Factors” section of the 2017 Document de Référence (Annual Report) filed with the AMF (French Financial Markets Authority) on March 21, 2018 and also available on the Company’s website www.3ds.com.

In preparing such forward-looking statements, the Company has in particular assumed an average US dollar to euro exchange rate of US$1.25 per €1.00 for the 2018 second quarter and US$1.20 per €1.00 for the 2018 second half as well as an average Japanese yen to euro exchange rate of JPY135.0 to €1.00 for the 2018 second quarter and JPY134.5 to €1.00 for the full year 2018 before hedging; however, currency values fluctuate, and the Company’s results of operations may be significantly affected by changes in exchange rates.

Non-IFRS Financial Information

Readers are cautioned that the supplemental non-IFRS information presented in this press release is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Company’s 2017 Document de Référence filed with the AMF on March 21, 2018.

In the tables accompanying this press release the Company sets forth its supplemental non-IFRS figures for revenue, operating income, operating margin, net income and diluted earnings per share, which exclude the effect of adjusting the carrying value of acquired companies’ deferred revenue, share-based compensation expense and related social charges, the amortization of acquired intangible assets, other operating income and expense, net, certain one-time items included in financial revenue and other, net, and the income tax effect of the non-IFRS adjustments and certain one-time tax effects. The tables also set forth the most comparable IFRS financial measure and reconciliations of this information with non-IFRS information.

This press release constitutes the quarterly financial information required by article L.451-1-2 IV of the French Monetary and Financial Code (Code Monétaire et Financier).

About Dassault Systèmes

Dassault Systèmes, the 3DEXPERIENCE Company, provides business and people with virtual universes to imagine sustainable innovations. Its world-leading solutions transform the way products are designed, produced, and supported. Dassault Systèmes’ collaborative solutions foster social innovation, expanding possibilities for the virtual world to improve the real world. The Group brings value to over 220,000 customers of all sizes, in all industries, in more than 140 countries. For more information, visit www.3ds.com.

3DEXPERIENCE, the Compass logo and the 3DS logo, CATIA, SOLIDWORKS, ENOVIA, DELMIA, SIMULIA, GEOVIA, EXALEAD, 3DVIA, BIOVIA, NETVIBES and 3DEXCITE are registered trademarks of Dassault Systèmes or its subsidiaries in the US and/or other countries.

(Tables to Follow)

APPENDIX TABLE OF CONTENTS

(Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.)

Glossary of Definitions

IAS 18

Non-IFRS Financial Information

Condensed consolidated statements of income

Condensed consolidated balance sheets

Condensed consolidated cash flow statements

IFRS – non-IFRS reconciliation

IFRS 15

Reconciliation tables IFRS 15 and IAS 18

Reconciliation P&L IFRS 15 and IAS 18

Reconciliation Balance sheet IFRS 15 and IAS 18

Reconciliation Cash flow IFRS 15 and IAS 18

Non-IFRS Financial Information

Condensed consolidated statements of income

Condensed consolidated balance sheets

Condensed consolidated cash flow statements

IFRS – non-IFRS reconciliation

DASSAULT SYSTEMES

Glossary of Definitions

Information in Constant Currencies

We have followed a long-standing policy of measuring our revenue performance and setting our revenue objectives exclusive of currency in order to measure in a transparent manner the underlying level of improvement in our total revenue and software revenue by type, industry, region and product lines. We believe it is helpful to evaluate our growth exclusive of currency impacts, particularly to help understand revenue trends in our business. Therefore, we provide percentage increases or decreases in our revenue and EPS (in both IFRS as well as non-IFRS) to eliminate the effect of changes in currency values, particularly the U.S. dollar and the Japanese yen, relative to the euro. When trend information is expressed by us "in constant currencies", the results of the "prior" period have first been recalculated using the average exchange rates of the comparable period in the current year, and then compared with the results of the comparable period in the current year.

While constant currency calculations are not considered to be an IFRS measure, we do believe these measures are critical to understanding our global revenue results and to compare with many of our competitors who report their financial results in U.S. dollars. Therefore, we are including this calculation for comparing IFRS revenue figures for comparable periods as well as for comparing non-IFRS revenue figures for comparable periods. All constant currency information is provided on an approximate basis. Unless otherwise indicated, the impact of exchange rate fluctuations is approximately the same for both the Company’s IFRS and supplemental non-IFRS financial data.

We have followed a long-standing policy of setting our revenue growth objectives in constant currencies and calculating a reported revenue range based upon the key currency exchange rate assumptions outlined in our quarterly earnings reports and in our half-year and annual regulatory documents. We also set our non-IFRS revenue objectives in constant currencies in order to provide transparency on our activities as compared to the impact of currency exchange rates.

Information on Growth excluding acquisitions (“organic growth”)

In addition to discussing total growth, we also provide financial information where we discuss growth excluding acquisitions or growth on an organic basis as used alternatively. In both cases, growth excluding acquisitions have been calculated using the following restatements of the scope of consolidation: for entities entering the consolidation scope in the current year, subtracting the contribution of the acquisition from the aggregates of the current year, and for entities entering the consolidation scope in the previous year, subtracting the contribution of the acquisition from January 1st of the current year, until the last day of the month of the current year when the acquisition was made the previous year.

Information on Industrial Sectors

The Company’s global customer base includes companies in 12 industrial sectors: Transportation & Mobility; Industrial Equipment; Aerospace & Defense; Financial & Business Services; High-Tech; Life Sciences; Energy, Process & Utilities; Consumer Goods & Retail; Natural Resources; Architecture, Engineering & Construction; Consumer Packaged Goods & Retail and Marine & Offshore. Commencing in 2012 we implemented an industry go-to-market strategy with the dual objectives of broadening and deepening our presence in our largest industries as well as increasing the contribution from a diversified set of industrial sectors. “Diversification Industries” include: Architecture, Engineering & Construction; Consumer Goods & Retail; Consumer Packaged Goods & Retail; Energy, Process & Utilities; Finance Business Services; High-Tech; Life Sciences; Marine & Offshore; and Natural Resources. “Core Industries” include: Transportation & Mobility, Industrial Equipment, Aerospace & Defense and a portion of Business Services.

3DEXPERIENCE Licenses and Software Contribution

To measure the progressive penetration of 3DEXPERIENCE software, the Company utilizes the following ratios: a) for Licenses revenue, the Company calculates the percentage contribution by comparing total 3DEXPERIENCE Licenses revenue to Licenses revenue for all product lines except SOLIDWORKS and acquisitions (“related Licenses revenue”); and, b) for software revenue, the Company calculates the percentage contribution by comparing total 3DEXPERIENCE software revenue to software revenue for all product lines except SOLIDWORKS and acquisitions (“related software revenue”).

IAS 18

DASSAULT SYSTEMES

NON-IFRS IAS 18 FINANCIAL INFORMATION

(unaudited; in millions of Euros, except per share data, headcount and exchange rates)

Non-IFRS key figures exclude the effects of adjusting the carrying value of acquired companies’ deferred revenue, share-based compensation expense and related social charges, amortization of acquired intangible assets, other operating income and expense, net, certain one-time financial revenue items and the income tax effects of these non-IFRS adjustments.

Comparable IFRS financial information and a reconciliation of the IFRS and non-IFRS measures are set forth in the separate tables within this Attachment.

In millions of Euros, except per share data and percentages   Three months ended        
    March 31, 2018   March 31, 2017   Change   Change in cc*
Non-IFRS-IAS18 Revenue € 771.2   € 765.7   1%   9%
 
Non-IFRS-IAS18 Revenue breakdown by activity
Software revenue 687.6 676.1 2% 10%
of which licenses and other software revenue 180.5 173.0 4% 14%
of which subscription and support revenue 507.2 503.2 1% 9%
Services revenue 83.5 89.6 -7% 0%
 
Non-IFRS-IAS18 software revenue breakdown by product line
CATIA software revenue 236.9 236.4 0% 5%
ENOVIA software revenue 72.9 73.6 -1% 11%
SOLIDWORKS software revenue 173.1 174.2 -1% 13%
Other software revenue 204.7 191.9 7% 14%
 
Non-IFRS-IAS18 Revenue breakdown by geography
Americas 225.2 235.8 -4% 10%
Europe 326.5 323.1 1% 5%
Asia   219.4   206.9   6%   16%
 
Non-IFRS-IAS18 operating income € 208.3 € 200.7 4%
Non-IFRS-IAS18 operating margin 27.0% 26.2%
Non-IFRS net income attributable to shareholders € 152.2 € 135.7 12%
Non-IFRS-IAS18 diluted net income per share   € 0.59   € 0.53   11%   26%
Closing headcount   16,067   15,262   5%    
 
Average Rate USD per Euro 1.23 1.06 16%
Average Rate JPY per Euro   133.2   121.0   10%    
 

* In constant currencies

IAS 18

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IFRS)

(unaudited; in millions of Euros, except per share data)

 
In millions of Euros, except per share data and percentages Three months ended
March 31,   March 31,
    2018   2017
Licenses and other software revenue 180.5 173.0
Subscription and Support revenue 505.3   497.2
Software revenue 685.7 670.2
Services revenue 83.5   89.6
Total Revenue IFRS -IAS18 € 769.4 € 759.8
Cost of software revenue (excluding amortization of acquired intangibles) (40.9) (40.4)
Cost of services and other revenue (79.4) (82.8)
Research and development (152.7) (149.7)
Marketing and sales (253.0) (259.8)
General and administrative (69.7) (60.3)
Amortization of acquired intangibles (41.8) (41.2)
Other operating income and expense, net (2.5)   (6.1)
Total Operating Expenses (639.9)   (640.3)
Operating Income € 129.3 € 119.5
Financial revenue and other, net 4.7   7.2
Income before income taxes 134.0 126.7
Income tax expense (33.5) (40.3)
Net Income € 100.6 € 86.4
Non-controlling interest 0.3 (1.4)
Net Income attributable to equity holders of the parent € 100.8 € 85.0
Basic net income per share 0.39 0.33
Diluted net income per share € 0.39 € 0.33
Basic weighted average shares outstanding (in millions) 256.9 253.8
Diluted weighted average shares outstanding (in millions)   259.3   257.3
 
         
Three months ended March 31, 2018
    Change*   Change in cc**
IFRS Revenue IFRS -IAS18 1% 10%
IFRS Revenue by activity
Software revenue 2% 11%
Services revenue -7% 0%
IFRS Software Revenue by product line
CATIA software revenue 0% 5%
ENOVIA software revenue -1% 11%
SOLIDWORKS software revenue -1% 13%
Other software revenue 9% 17%
IFRS Revenue by geography
Americas -4% 11%
Europe 2% 6%
Asia   6%   15%

*Variation compared to the same period in the prior year. **In constant currencies

IAS 18

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED BALANCE SHEETS (IFRS)

(unaudited; in millions of Euros)

   
In millions of Euros March 31, December 31,
    2018   2017
 
ASSETS
Cash and cash equivalents 2,803.8 2,459.4
Short-term investments 41.3 1.3
Accounts receivable, net 749.7 895.9
Other current assets 215.1 242.9
Total current assets 3,809.9 3,599.5
Property and equipment, net 164.4 169.0
Goodwill and Intangible assets, net 2,899.2 2,990.1
Other non-current assets 287.6   271.2
Total Assets   € 7,161.1   € 7,029.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 128.9 149.3
Unearned revenues 1,001.0 876.4
Other current liabilities 457.0 501.7
Total current liabilities 1,586.9 1,527.4
Long-term debt 1,000.0 1,000.0
Other non-current obligations 499.4 506.3
Total long-term liabilities 1,499.4 1,506.3
Non-controlling interests 1.6 1.9
Parent shareholders' equity 4,073.2   3,994.2
Total Liabilities and Shareholders' equity   € 7,161.1   € 7,029.8
 

IAS 18

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (IFRS)

 
In millions of Euros Three months ended
    March 31, 2018   March 31, 2017   Change
Net Income attributable to equity holders of the parent 100.8   85.0   15.8
Non-controlling interest (0.3) 1.4 (1.7)
Net Income 100.5 86.4 14.1
Depreciation of property & equipment 13.7 11.7 2.0
Amortization of intangible assets 43.9 43.3 0.6
Other non cash P&L items 16.7 7.8 8.9
Changes in working capital 232.1   198.6   33.5
Net Cash provided by operating activities € 406.9 € 347.8 € 59.1
 
Additions to property, equipment and intangibles (11.9) (18.3) 6.4
Payments for acquisition of businesses, net of cash acquired - (0.4) 0.4
Sale (purchase) of short term investments, net (40.1) (8.8) (31.3)
Investments, loans and others (0.1)   6.3   (6.4)
Net Cash provided by (used in) investing activities (€ 52.1) (€ 21.2) (€ 30.9)
 
Acquisition of non-controlling interests - - -
(Purchase) Sale of treasury stock 8.4 3.1 5.3
Proceeds from exercise of stock-options 12.3 5.3 7.0
Cash dividend paid -   -   -
Net Cash provided by (used in) financing activities € 20.7 € 8.4 € 12.3
 
Effect of exchange rate changes on

cash and cash equivalents

(31.1) (6.3) (24.8)
         
Increase (decrease) in cash and cash equivalents   € 344.4   € 328.7    
             
Cash and cash equivalents at beginning of period € 2,459.4 € 2,436.7
Cash and cash equivalents at end of period   € 2,803.8   € 2,765.4    
 

IAS 18

DASSAULT SYSTEMES
SUPPLEMENTAL NON-IFRS FINANCIAL INFORMATION
IFRS – NON-IFRS RECONCILIATION
(unaudited; in millions of Euros, except per share data)

Readers are cautioned that the supplemental non-IFRS information presented in this press release is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Company’s Document de référence for the year ended December 31, 2017 filed with the AMF on March 21, 2018. To compensate for these limitations, the supplemental non-IFRS financial information should be read not in isolation, but only in conjunction with the Company’s consolidated financial statements prepared in accordance with IFRS.

In millions of Euros, except per share data and percentages   Three months ended March 31,   Change
2018   Adjustment (1)   2018   2017   Adjustment (1)   2017   IFRS   Non-IFRS (2)
    IFRS       Non-IFRS   IFRS       Non-IFRS        
Total Revenue IAS18 € 769.3 € 1.9 € 771.2 € 759.8 € 5.9 € 765.7 1% 1%
Total Revenue IAS18 breakdown by activity
Software revenue 685.7 1.9 687.6 670.2 5.9 676.1 2% 2%
Licenses and other software revenue 180.5 180.5 173.0 173.0 4% 4%
Subscription and Support revenue 505.3 1.9 507.2 497.2 5.9 503.2 2% 1%
Recurring portion of Software revenue 74% 74% 74% 74%
Services revenue 83.5 83.5 89.6 89.6 -7% -7%
 
Total Software Revenue IA18 breakdown by product line
CATIA software revenue 236.9 236.9 236.4 236.4 0% 0%
ENOVIA software revenue 72.9 72.9 73.6 73.6 -1% -1%
SOLIDWORKS software revenue 173.1 173.1 174.2 174.2 -1% -1%
Other software revenue 202.8 1.9 204.7 186.0 5.9 191.9 9% 7%
 
Total Revenue IAS18 breakdown by geography
Americas 224.3 0.9 225.2 233.9 1.9 235.8 -4% -4%
Europe 326.1 0.4 326.5 319.4 3.7 323.1 2% 1%
Asia   218.8   0.6   219.4   206.5   0.4   206.9   6%   6%
Total Operating Expenses (€ 639.9) € 77.1 (€ 562.8) (€ 640.3) € 75.2 (€ 565.0) 0% 0%
Share-based compensation expense (32.8) 32.8 - (27.9) 27.9 -
Amortization of acquired intangibles (41.8) 41.8 - (41.2) 41.2 -
Other operating income and expense, net   (2.5)   2.5   -   (6.1)   6.1   -        
Operating Income € 129.3 € 79.0 € 208.3 € 119.5 € 81.2 € 200.7 8% 4%
Operating Margin 16.8% 27.0% 15.7% 26.2%
Financial revenue & other, net 4.7 0.5 5.2 7.2 (6.7) 0.6 -35% 851%
Income tax expense (33.5) (28.2) (61.6) (40.3) (23.8) (64.1) -17% -4%
Non-controlling interest 0.3 0.3 (1.4) (1.4) -121% -121%
Net Income attributable to shareholders € 100.8 € 51.4 € 152.2 € 85.0 € 50.7 € 135.7 19% 12%
Diluted Net Income Per Share (3)   € 0.39   € 0.20   € 0.59   € 0.33   € 0.20   € 0.53   18%   11%
 

(1)In the reconciliation schedule above, (i) all adjustments to IFRS revenue data reflect the exclusion of the deferred revenue adjustment of acquired companies; (ii) adjustments to IFRS operating expense data reflect the exclusion of the amortization of acquired intangibles, share-based compensation expense and related social charges, and other operating income and expense, (iii) adjustments to IFRS financial revenue and other, net reflect the exclusion of certain one-time items included in financial revenue and other, net, and (iv) all adjustments to IFRS income data reflect the combined effect of these adjustments, plus for net income and diluted net income per share, certain one-time tax effects and the income tax effect of the non-IFRS adjustments.

  Three months ended March 31,
In millions of Euros 2018 IFRS   Adjustment   2018   2017 IFRS   Adjustment   2017
            Non-IFRS           Non-IFRS
Cost of revenue (120.3) 1.0 (119.3) (123.3) 1.1 (122.2)
Research and development (152.7) 12.2 (140.4) (149.7) 11.8 (137.9)
Marketing and sales (253.0) 6.4 (246.6) (259.8) 9.2 (250.5)
General and administrative (69.7) 13.2 (56.5) (60.3) 5.9 (54.4)
Total share-based compensation expense       € 32.8           € 27.9    
 

(2) The non-IFRS percentage increase (decrease) compares non-IFRS measures for the two different periods. In the event there is non-IFRS adjustment to the relevant measure for only one of the periods under comparison, the non-IFRS increase (decrease) compares the non-IFRS measure to the relevant IFRS measure.

(3) Based on a weighted average 259.3 million diluted shares for Q1 2018 and 257.3 million diluted shares for Q1 2017.

Summary of Principal Differences of IFRS 15 Compared to IAS 18

The Company has adopted IFRS 15 as of January 1, 2018 using the modified retrospective transition method (also called the cumulative effect method). Under this method, the transition effect is accounted for within the consolidated equity at the date of initial application, i.e. January 1, 2018, without any adjustment to the prior year comparative information. See also the Company’s 2017 Document de Référence (Annual Report) for further information.

DASSAULT SYSTEMES

RECONCILIATION P&L NON-IFRS IAS 18 vs IFRS 15

(unaudited; in millions of Euros)

   
In millions of Euros, except per share data and percentages 2018 Non-IFRS
QTD   Difference QTD
    IFRS15       IAS18
Total Revenue € 820.6 (€ 49.4) € 771.2
Total Revenue breakdown by activity
Software revenue 737.0 (49.4) 687.6
Licenses and Other software revenue 179.1 1.4 180.5
Subscription and Support revenue 557.9 (50.8) 507.2
Recurring portion of Software revenue 76% (0.0) 74%
Services revenue 83.5 83.5
 
Total Software Revenue breakdown by product line
CATIA software revenue 250.7 (13.8) 236.9
ENOVIA software revenue 74.7 (1.8) 72.9
SOLIDWORKS software revenue 169.9 3.2 173.1
Other software revenue 241.7 (37.0) 204.7
 
Total Revenue breakdown by geography
Americas 239.0 (13.8) 225.2
Europe 362.6 (36.1) 326.5
Asia   219.0   0.4   219.4
Total Operating Expenses (€ 562.8) (€ 562.8)
Share-based compensation expense - -
Amortization of acquired intangibles - -
Other operating income and expense, net   -       -
Operating Income € 257.8 (€ 49.4) € 208.3
Operating Margin 31.4% -4.4pts 27.0%
Financial revenue & other, net 5.2 5.2
Income tax expense (75.6) 14.0 (61.6)
Non-controlling interest 0.3 0.3
Net Income attributable to shareholders € 187.6 (€ 35.4) € 152.2
Diluted Net Income Per Share   € 0.72   (€ 0.13)   € 0.59
             
2018 Non-IFRS
In millions of Euros 2018 Difference 2018
    IFRS15       IAS18
Cost of revenue (119.3) (119.3)
Research and development (140.4) (140.4)
Marketing and sales (246.6) (246.6)
General and administrative   (56.5)       (56.5)
 

DASSAULT SYSTEMES

RECONCILIATION BALANCE SHEET NON-IFRS IAS 18 vs IFRS 15

(unaudited; in millions of Euros)

   
In millions of Euros IFRS15 Basis IAS 18 Basis
March 31,   Difference March 31,
    2018       2018
 
ASSETS
Cash and cash equivalents 2,803.8 - 2,803.8
Short-term investments 41.3 - 41.3
Accounts receivable, net 749.7 - 749.7
Other current assets 215.1 - 215.1
Total current assets 3,809.9 - 3,809.9
Property and equipment, net 164.4 - 164.4
Goodwill and Intangible assets, net 2,899.2 - 2,899.2
Other non-current assets 273.3   14.3   287.6
Total Assets   € 7,146.8   € 14.3   € 7,161.1
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 128.9 - 128.9
Contract liabilities - Unearned revenues 842.8 158.2 1,001.0
Other current liabilities 486.2 (29.2) 457.0
Total current liabilities 1,457.9 129.0 1,586.9
Long-term debt 1,000.0 - 1,000.0
Other non-current obligations 499.4 - 499.4
Total long-term liabilities 1,499.4 - 1,499.4
Non-controlling interests 1.6 - 1.6
Parent shareholders' equity 4,187.9   (114.7)   4,073.2
Total Liabilities and Shareholders' equity   € 7,146.8   € 14.3   € 7,161.1
 

DASSAULT SYSTEMES

RECONCILIATION CASH FLOW NON-IFRS IAS 18 vs IFRS 15

(unaudited; in millions of Euros)

 
In millions of Euros Three months ended March 31, 2018
    IFRS 15   Difference   IAS 18
Net Income attributable to equity holders of the parent 136.3   (35.5)   100.8
Non-controlling interest (0.3)   0.0   (0.3)
Net Income 136.0 (35.5) 100.5
Depreciation of property & equipment 13.7 - 13.7
Amortization of intangible assets 43.9 - 43.9
Other non cash P&L items 16.7 - 16.7
Changes in working capital 196.6   35.5   232.1
Net Cash provided by operating activities € 406.9 € 0.0 € 406.9
 
Additions to property, equipment and intangibles (11.9) - (11.9)
Payments for acquisition of businesses, net of cash acquired - - -
Sale (purchase) of short term investments, net (40.1) - (40.1)
Investments, loans and others (0.1)   -   (0.1)
Net Cash provided by (used in) investing activities (€ 52.1) € 0.0 (€ 52.1)
 
(Purchase) Sale of treasury stock 8.4 - 8.4
Proceeds from exercise of stock-options 12.3   -   12.3
Net Cash provided by (used in) financing activities € 20.7 € 0.0 € 20.7
 
Effect of exchange rate changes on

cash and cash equivalents

(31.1) 0.0 (31.1)
         
Increase (decrease) in cash and cash equivalents   € 344.4   € 0.0   € 344.4
             
Cash and cash equivalents at beginning of period € 2,459.4 € 0.0 € 2,459.4
Cash and cash equivalents at end of period   € 2,803.8   € 0.0   € 2,803.8
 

IFRS 15

DASSAULT SYSTEMES

NON-IFRS IFRS 15 FINANCIAL INFORMATION

(unaudited; in millions of Euros, except per share data, headcount and exchange rates)

 
In millions of Euros, except per share data and percentages Three months ended
    March 31, 2018
Non-IFRS-IFRS15 Revenue € 820.6
 
Non-IFRS-IFRS15 Revenue breakdown by activity
Software revenue 737.0
of which licenses and other software revenue 179.1
of which subscription and support revenue 557.9
Services revenue 83.5
 
Non-IFRS-IFRS15 software revenue breakdown by product line
CATIA software revenue 250.7
ENOVIA software revenue 74.7
SOLIDWORKS software revenue 169.9
Other software revenue 241.7
 
Non-IFRS-IFRS15 Revenue breakdown by geography
Americas 239.0
Europe 362.6
Asia   219.0
 
Non-IFRS-IFRS15 operating income € 257.8
Non-IFRS-IFRS15 operating margin 31.4%
Non-IFRS net income attributable to shareholders € 187.6
Non-IFRS-IFRS15 diluted net income per share   € 0.72
Closing headcount   16,067
 
Average Rate USD per Euro 1.23
Average Rate JPY per Euro   133.2
 

IFRS 15

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED STATEMENT OF INCOME (IFRS)

(unaudited; in millions of Euros, except per share data)

 
In millions of Euros, except per share data and percentages Three months ended
March 31,
    2018
Licenses and Other software revenue 179.1
Subscription and Support revenue 556.0
Software revenue 735.1
Services revenue 83.5
Total Revenue IFRS15 € 818.7
Cost of software revenue (excluding amortization of acquired intangibles) (40.9)
Cost of services and other revenue (79.4)
Research and development (152.7)
Marketing and sales (253.0)
General and administrative (69.7)
Amortization of acquired intangibles (41.8)
Other operating income and expense, net (2.5)
Total Operating Expenses (639.9)
Operating Income € 178.7
Financial revenue and other, net 4.7
Income before income taxes 183.5
Income tax expense (47.5)
Net Income € 136.0
Non-controlling interest 0.3
Net Income attributable to equity holders of the parent € 136.3
Basic net income per share 0.53
Diluted net income per share € 0.53
Basic weighted average shares outstanding (in millions) 256.9
Diluted weighted average shares outstanding (in millions)   259.3
 

IFRS 15

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED BALANCE SHEET (IFRS)

(unaudited; in millions of Euros)

 
In millions of Euros March 31,
    2018
 
ASSETS
Cash and cash equivalents 2,803.8
Short-term investments 41.3
Accounts receivable, net 749.7
Other current assets 215.1
Total current assets 3,809.9
Property and equipment, net 164.4
Goodwill and Intangible assets, net 2,899.2
Other non-current assets 273.3
Total Assets   € 7,146.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 128.9
Contract liabilities 842.8
Short-term debt 0.0
Other current liabilities 486.2
Total current liabilities 1,457.9
Long-term debt 1,000.0
Other non-current obligations 499.4
Total long-term liabilities 1,499.4
Non-controlling interests 1.6
Parent shareholders' equity 4,187.9
Total Liabilities and Shareholders' equity   € 7,146.8
 

IFRS 15

DASSAULT SYSTEMES

CONDENSED CONSOLIDATED CASH FLOW STATEMENT (IFRS)

 
In millions of Euros Three months ended
    March 31, 2018
Net Income attributable to equity holders of the parent 136.3
Non-controlling interest (0.3)
Net Income 136.0
Depreciation of property & equipment 13.7
Amortization of intangible assets 43.9
Other non cash P&L items 16.7
Changes in working capital 196.6
Net Cash provided by operating activities € 406.9
 
Additions to property, equipment and intangibles (11.9)
Payments for acquisition of businesses, net of cash acquired -
Sale (purchase) of short term investments, net (40.1)
Investments, loans and others (0.1)
Net Cash provided by (used in) investing activities (€ 52.1)
 
Acquisition of non-controlling interests -
(Purchase) Sale of treasury stock 8.4
Proceeds from exercise of stock-options 12.3
Cash dividend paid -
Net Cash provided by (used in) financing activities € 20.7
 
Effect of exchange rate changes on

cash and cash equivalents

(31.1)
 
Increase (decrease) in cash and cash equivalents   € 344.4
     
Cash and cash equivalents at beginning of period € 2,459.4
Cash and cash equivalents at end of period   € 2,803.8
 

IFRS 15

DASSAULT SYSTEMES

SUPPLEMENTAL NON-IFRS FINANCIAL INFORMATION

IFRS – NON-IFRS RECONCILIATION

(unaudited; in millions of Euros, except per share data)

Readers are cautioned that the supplemental non-IFRS information presented in this press release is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. Further specific limitations for individual non-IFRS measures, and the reasons for presenting non-IFRS financial information, are set forth in the Company’s Document de référence for the year ended December 31, 2017 filed with the AMF on March 21, 2018. To compensate for these limitations, the supplemental non-IFRS financial information should be read not in isolation, but only in conjunction with the Company’s consolidated financial statements prepared in accordance with IFRS.

In millions of Euros, except per share data and percentages   Three months ended March 31,
2018   Adjustment (1)   2018
    IFRS       Non-IFRS
Total Revenue IFRS15 € 818.7 € 1.9 € 820.6
Total Revenue IFRS15 breakdown by activity
Software revenue 735.1 1.9 737.0
Licenses and Other software revenue 179.1 179.1
Subscription and Support revenue 556.0 1.9 557.9
Recurring portion of Software revenue 76% 76%
Services revenue 83.5 83.5
 
Total Software Revenue IFRS15 breakdown by product line
CATIA software revenue 250.7 250.7
ENOVIA software revenue 74.7 74.7
SOLIDWORKS software revenue 169.9 169.9
Other software revenue 239.8 1.9 241.7
Total Revenue IFRS15 breakdown by geography
 
Americas 238.1 0.9 239.0
Europe 362.2 0.4 362.6
Asia   218.4   0.6   219.0
Total Operating Expenses (€ 639.9) € 77.1 (€ 562.8)
Share-based compensation expense (32.8) 32.8 -
Amortization of acquired intangibles (41.8) 41.8 -
Other operating income and expense, net   (2.5)   2.5   -
Operating Income € 178.7 € 79.0 € 257.8
Operating Margin 21.8% 31.4%
Financial revenue & other, net 4.7 0.5 5.2
Income tax expense (47.5) (28.2) (75.6)
Non-controlling interest 0.3 0.3
Net Income attributable to shareholders € 136.3 € 51.4 € 187.6
Diluted Net Income Per Share (3)   € 0.53   € 0.20   € 0.72
 

(1)In the reconciliation schedule above, (i) all adjustments to IFRS revenue data reflect the exclusion of the deferred revenue adjustment of acquired companies; (ii) adjustments to IFRS operating expense data reflect the exclusion of the amortization of acquired intangibles, share-based compensation expense and related social charges, and other operating income and expense, (iii) adjustments to IFRS financial revenue and other, net reflect the exclusion of certain one-time items included in financial revenue and other, net, and (iv) all adjustments to IFRS income data reflect the combined effect of these adjustments, plus for net income and diluted net income per share, the income tax effect of the non-IFRS adjustments.

  Three months ended March 31,
In millions of Euros 2018 IFRS   Adjustment   2018
            Non-IFRS
Cost of revenue (120.3) 1.0 (119.3)
Research and development (152.7) 12.2 (140.4)
Marketing and sales (253.0) 6.4 (246.6)
General and administrative (69.7) 13.2 (56.5)
Total share-based compensation expense       € 32.8    
 

(2) The non-IFRS percentage increase (decrease) compares non-IFRS measures for the two different periods. In the event there is non-IFRS adjustment to the relevant measure for only one of the periods under comparison, the non-IFRS increase (decrease) compares the non-IFRS measure to the relevant IFRS measure.

(3) Based on a weighted average 259.3 million diluted shares for Q1 2018 and 257.3 million diluted shares for Q1 2017.



Contact:

Dassault Systèmes
François-José Bordonado/Béatrix Martinez
+33.1.61.62.69.24
United States and Canada:
Email Contact
or
FTI Consulting
Rob Mindell, +44.20.3727.1000
Arnaud de Cheffontaines, +33.1.47.03.69.48