Dassault Systèmes Reports Q3 and YTD EPS Up Double-Digits and Reaffirms 2018 Growth Objectives
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Dassault Systèmes Reports Q3 and YTD EPS Up Double-Digits and Reaffirms 2018 Growth Objectives

VÉLIZY-VILLACOUBLAY, France — (BUSINESS WIRE) — October 23, 2018Dassault Systèmes (Paris: DSY) (Euronext Paris: #13065, DSY.PA), announces IFRS unaudited financial results for the third quarter and nine months ended September 30, 2018. These results were reviewed by the Company’s Board of Directors on October 23, 2018. The Company has adopted IFRS 15 as of January 1, 2018. This press release includes 2018 third quarter and nine-month financial 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.

Third Quarter and Nine Months 2018 Highlights and Financial Summary
(Unaudited, with references to IAS 18 data, revenue growth at constant currency)

                 

In millions of Euros,
except per share data

 

IFRS under
IFRS15

  IFRS under IAS18  

IFRS under
IFRS15

  IFRS under IAS18
  Q3 2018   Q3 2018   Change   Change in cc*   YTD 2018   YTD 2018   Change   Change in cc*
Total Revenue   804.5   826.9   10%   9%   2,450.9   2,433.5   5%   9%
Software Revenue   711.2   733.7   10%   9%   2,186.4   2,169.1   5%   10%
Operating Margin   18.9%   21.1%   -0.2pts       20.4%   19.8%   +0.4pts    
EPS   0.43   0.49   20%       1.45   1.41   16%    
                                 

In millions of Euros,
except per share data

 

Non-IFRS under
IFRS15

  Non-IFRS under IAS18  

Non-IFRS under
IFRS15

  Non-IFRS under IAS18
  Q3 2018   Q3 2018   Change   Change in cc*   YTD 2018   YTD 2018   Change   Change in cc*
Total Revenue   809.2   831.7   10%   10%   2,460.5   2,443.1   5%   9%
Software Revenue   715.5   738.0   10%   9%   2,195.6   2,178.2   5%   9%
Operating Margin   28.9%   30.9%   -1.1pts       29.9%   29.4%   -0.0pts    
EPS   0.65   0.71   11%   11%   2.06   2.01   12%   19%

*In constant currencies.

 

Bernard Charlès, Dassault Systèmes’ Vice Chairman and Chief Executive Officer commented, “We see a global Industry Renaissance: companies across all industries are reinventing themselves to provide new categories of experiences revealing new categories of customers. In all sectors that we serve – starting with Transportation and Mobility, Aerospace and Defense and Energy, Processes and Utilities – we observe a radical transformation of the offer. All businesses are putting their next generation portfolio at the top of their agenda.

This long term trend is going to accelerate with the ‘platform factor’. Indeed, producing new experiences requires excellence in operations and high added value ecosystems. With the 3DEXPERIENCE platform we provide an operating system – for customers to power industry solutions - and a business model – for customers to power their value networks. Moreover, the 3DEXPERIENCE platform on the Cloud enables companies to very quickly launch and create full digital continuity from day 1, as we see both in our commercial business and in our 3DEXPERIENCE Lab, our accelerator for start-ups.

“This will drive sustainable growth opportunities for 2018 and the medium term.”

Third Quarter Financial Summary
(Unaudited)

                 

In millions of Euros,
except per share data

 

IFRS under
IFRS15

  IFRS under IAS18  

Non-IFRS under
IFRS15

  Non-IFRS under IAS18
    Q3 2018   Change   Change in cc*     Q3 2018   Change   Change in cc*
Q3 2018 Total Revenue   804.5   826.9   10%   9%   809.2   831.7   10%   10%
Q3 2018 Software Revenue   711.2   733.7   10%   9%   715.5   738.0   10%   9%
Q3 2018 Services Revenue   93.2   93.2   13%   13%   93.7   93.7   14%   13%
Q3 2018 Operating Margin   18.9%   21.1%   -0.2pts       28.9%   30.9%   -1.1pts    
Q3 2018 EPS   0.43   0.49   20%       0.65   0.71   11%   11%
                                 

Total Software Revenue in
millions of Euros

 

IFRS under
IFRS15

  IFRS under IAS18  

Non-IFRS under
IFRS15

  Non-IFRS under IAS18
    Q3 2018   Q3 2017   Change in cc*     Q3 2018   Q3 2017   Change in cc*
Americas   203.0   216.1   200.5   7%   205.7   218.8   200.9   8%
Europe   294.8   303.9   277.7   8%   296.1   305.2   278.7   8%
Asia   213.4   213.7   190.9   13%   213.7   214.0   191.0   13%

*In constant currencies

 

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

Nine Months Financial Summary
(Unaudited)

                 

In millions of Euros,
except per share data

 

IFRS under
IFRS15

  IFRS under IAS18  

Non-IFRS under
IFRS15

  Non-IFRS under IAS18
    YTD 2018   Change   Change in cc*     YTD 2018   Change   Change in cc*
YTD 2018 Total Revenue   2,450.9   2,433.5   5%   9%   2,460.5   2,443.1   5%   9%
YTD 2018 Software Revenue   2,186.4   2,169.1   5%   10%   2,195.6   2,178.2   5%   9%
YTD 2018 Services Revenue   264.4   264.4   2%   6%   264.9   264.9   2%   6%
YTD 2018 Operating Margin   20.4%   19.8%   +0.4pts       29.9%   29.4%   -0.0pts    
YTD 2018 EPS   1.45   1.41   16%       2.06   2.01   12%   19%
                                 

Total Software Revenue in
millions of Euros

 

IFRS under
IFRS15

  IFRS under IAS18  

Non-IFRS under
IFRS15

  Non-IFRS under IAS18
    YTD 2018   YTD 2017   Change in cc*     YTD 2018   YTD 2017   Change in cc*
Americas   620.7   633.3   626.1   9%   626.2   638.8   629.7   9%
Europe   926.7   906.8   855.9   7%   928.5   908.6   863.2   7%
Asia   639.0   628.9   575.8   14%   640.8   630.7   576.5   14%

*In constant currencies

 

Nine Months 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, “Based on our solid first half and third quarter aligned with our objectives, year-to-date total revenue and software revenue are higher by 9% at constant currency, our operating margin is stable year on year thanks to underlying operational improvements of 100 basis points enabling us to absorb 70 basis points of dilution from acquisitions as well as negative currency effects. Finally, our earnings per share is up double-digits. Our cash flow from operations increased 11% year over year, reaching €747 million for the first nine months of 2018.

“Turning to the fourth quarter, we are expecting to report another quarter of solid year over year progression, with a total revenue objective of about €1 billion and earnings per share reaching about €1.00. Given the record high quarter we reported for new licenses and other software revenue in the 2017 fourth quarter, we believe these objectives demonstrate very clearly the market opportunity before us. (all figures on an IAS non-IFRS basis)

“Finally, looking to the full year, we are confirming our non-IFRS total revenue growth objective of about 9% to 10% in constant currencies. Based upon our performance to date and fourth quarter outlook, this translates to a target revenue range of €3.425 to €3.450 billion, an operating margin of about 31.5% and EPS of about €2.98 to €3.02, representing growth of 11% to 13% or 16% to 17% at constant currency.” (all figures and related growth rates on an IAS 18 non-IFRS basis)

The Company’s fourth quarter and full year 2018 financial objectives presented below 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 €14 million on an IAS 18 basis, share-based compensation expense, including related social charges, estimated at approximately €129 million and amortization of acquired intangibles estimated at approximately €171 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 October 24, 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 three and nine months ended September 30, 2018 are identical under IFRS 15 in comparison to IAS 18 although some of the line items differ. (See pages 16 and 22 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, year-to-date and period ended September 30, 2018.)

IAS 18 net operating cash flow increased 11% to €746.6 million for the first nine months of 2018 compared to €671.8 million in the 2017 period principally reflecting growth in net income and non-cash operating adjustments.

Dassault Systèmes’ uses of cash for the 2018 nine-month period were principally for payment for acquisitions, net of cash acquired and non-controlling interests totaling €348.8 million; cash dividends of €38.0 million (based on the shareholders electing payment of the dividend in cash); share repurchases of €113.9 million and capital expenditures, net of €48.2 million. The Company received cash for stock options exercised of €59.2 million.

The Company’s net financial position totaled €1.75 billion at September 30, 2018, compared to €1.46 billion at December 31, 2017, reflecting cash, cash equivalents and short-term investments of €2.75 billion and debt related to credit lines of €1.0 billion.

Summary of Recent Business, Technology and Customer Announcements

Customers

On October 17, 2018, Dassault Systèmes announced that it is helping enable GE Aviation Hamble to drive innovation and efficiency across the product development lifecycle of aerostructures through the implementation of its 3DEXPERIENCE platform. The 3DEXPERIENCE platform is helping GE Aviation Hamble to develop a digital thread to enable continuity and collaboration across the business. This includes requirements definition, design, analysis, simulation, manufacturing, qualification and supporting the development of new manufacturing technologies and techniques.

On July 25, 2018, Dassault Systèmes announced that ExxonMobil has selected the 3DEXPERIENCE platform as part of its digital transformation. This implementation will support the aggregation of engineering data and derive greater value from ExxonMobil’s data across a multitude of tools. A long-time customer of Dassault Systèmes’ simulation, materials science and supply chain planning applications, ExxonMobil is the largest publicly traded energy company in the world and uses technology and innovation to help meet growing energy needs. ExxonMobil will now use the “Capital Facilities Information Excellence” industry solution experience based on the 3DEXPERIENCE platform. In a unified digital environment, ExxonMobil employees can collaborate in real time. Engineers, operations and maintenance personnel will be able to access a single source of information describing the complex assets for which they have responsibility, in order to improve business process control and performance.

Corporate:

On September 14, 2018, Dassault Systèmes announced the launch of SOLIDWORKS 2019, the latest release of its portfolio of 3D design and engineering applications. SOLIDWORKS 2019 delivers enhancements and new features that help millions of innovators improve the product development process to get products into production faster, and create new categories of experiences for new categories of customers in today’s Industry Renaissance. Among the new features are enhanced Large Design Review for greater design flexibility and SOLIDWORKS Extended Reality to experience designs in Virtual Reality and Augmented Reality.

Today’s Webcast and Conference Call Information

Today, Wednesday, October 24, 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

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$1.20 per €1.00 for the 2018 fourth quarter as well as an average Japanese yen to euro exchange rate of JPY135 to €1.00 for the 2018 fourth quarter 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.

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, certain one-time tax effects 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           Nine months ended  
 

September 30,
2018

 

September 30,
2017

  Change  

Change in
cc*

 

September 30,
2018

 

September 30,
2017

  Change  

Change in
cc*

 
Non-IFRS-IAS18 Revenue   € 831.7   € 752.9   10%   10%   € 2,443.1   € 2,329.2   5%   9%  
                                   
Non-IFRS-IAS18 Revenue breakdown by activity                                  
Software revenue   738.0   670.6   10%   9%   2,178.2   2,069.4   5%   9%  
of which licenses and other software revenue   188.4   175.2   8%   7%   587.7   560.0   5%   9%  
of which subscription and support revenue   549.5   495.4   11%   10%   1,590.4   1,509.4   5%   9%  
Services revenue   93.7   82.3   14%   13%   264.9   259.8   2%   6%  
                                   
Non-IFRS-IAS18 software revenue breakdown by product line                                  
CATIA software revenue   246.5   230.3   7%   7%   738.4   716.4   3%   6%  
ENOVIA software revenue   81.8   77.6   5%   5%   242.5   235.7   3%   7%  
SOLIDWORKS software revenue   177.5   166.2   7%   4%   537.8   517.1   4%   9%  
Other software revenue   232.2   196.5   18%   18%   659.5   600.2   10%   15%  
                                   
Non-IFRS-IAS18 Revenue breakdown by geography                                  
Americas   257.0   227.9   13%   12%   734.5   721.7   2%   9%  
Europe   344.0   317.3   8%   7%   1,023.7   977.5   5%   6%  
Asia   230.7   207.7   11%   12%   684.9   630.0   9%   14%  
                                   
Non-IFRS-IAS18 operating income   € 256.6   € 240.7   7%       € 718.6   € 685.2   5%      
Non-IFRS-IAS18 operating margin   30.9%   32.0%           29.4%   29.4%          
Non-IFRS net income attributable to shareholders   € 184.8   € 165.6   12%       € 523.8   € 460.7   14%      
Non-IFRS-IAS18 diluted net income per share   € 0.71   € 0.64   11%   11%   € 2.01   € 1.79   12%   19%  
Closing headcount   16,721   15,562   7%       16,721   15,562   7%      
                                   
Average Rate USD per Euro   1.16   1.17   -1%       1.19   1.11   7%      
Average Rate JPY per Euro   129.60   130.30   -1%       130.90   124.70   5%      

* In constant currencies

 
                                   

IAS 18

DASSAULT SYSTEMES
ACQUISITIONS AND FOREIGN EXCHANGE IMPACT

                   
in millions of Euros   Non-IFRS reported  

o/w Growth
EXFX (1)

 

o/w
Scope (2)

 

o/w
FX(3)

 
  2018   2017   Change MEUR        
Revenue QTD   831.7   752.9   78.8   41   33   5  
REVENUE YTD   2443.1   2329.2   113.9   132   71   -88  

(1) Growth at constant rate and constant scope

 

(2) Change of scope impact at current year rate

 

(3) FX impact on previous year figures

 
                           

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   Nine months ended  
 

September 30,
2018

 

September 30,
2017

 

September 30,
2018

 

September 30,
2017

 
Licenses and other software revenue   188.4   175.2   587.7   560.0  
Subscription and Support revenue   545.3   493.9   1,581.3   1,497.8  
Software revenue   733.7   669.1   2,169.1   2,057.8  
Services revenue   93.2   82.3   264.4   259.8  
Total Revenue IFRS -IAS18   € 826.9   € 751.4   € 2,433.5   € 2,317.6  

Cost of software revenue (excluding amortization
of acquired intangibles)

  (39.0)   (38.0)   (118.0)   (116.4)  
Cost of services and other revenue   (87.2)   (72.7)   (248.4)   (234.5)  
Research and development   (153.8)   (140.6)   (467.8)   (446.5)  
Marketing and sales   (256.5)   (232.1)   (772.3)   (750.4)  
General and administrative   (70.1)   (60.5)   (209.6)   (182.3)  
Amortization of acquired intangibles   (43.8)   (39.1)   (126.3)   (119.6)  
Other operating income and expense, net   (2.2)   (8.5)   (9.1)   (19.1)  
Total Operating Expenses   (652.6)   (591.5)   (1,951.6)   (1,868.8)  
Operating Income   € 174.3   € 159.9   € 481.9   € 448.8  
Financial revenue and other, net   3.5   (1.6)   12.6   20.9  
Income before income taxes   177.8   158.3   494.5   469.7  
Income tax expense   (51.5)   (52.1)   (131.7)   (154.2)  
Net Income   € 126.3   € 106.2   € 362.8   € 315.5  
Non-controlling interest   2.7   0.3   3.1   (1.0)  

Net Income attributable to equity holders of
the parent

  € 129.0   € 106.5   € 365.9   € 314.5  
Basic net income per share   0.50   0.42   1.42   1.23  
Diluted net income per share   € 0.49   € 0.41   € 1.41   € 1.22  

Basic weighted average shares outstanding (in
millions)

  259.7   255.5   258.3   254.7  

Diluted weighted average shares outstanding (in
millions)

  260.8   258.5   260.1   258.0  
                   
                   
    Three months ended September 30, 2018   Nine months ended September 30, 2018  
    Change*   Change in cc**   Change*   Change in cc**  
IFRS Revenue IFRS -IAS18   10%   9%   5%   9%  
IFRS Revenue by activity                  
Software revenue   10%   9%   5%   10%  
Services revenue   13%   13%   2%   6%  
IFRS Software Revenue by product line                  
CATIA software revenue   7%   6%   3%   5%  
ENOVIA software revenue   5%   5%   3%   7%  
SOLIDWORKS software revenue   7%   4%   4%   9%  
Other software revenue   17%   18%   11%   16%  
IFRS Revenue by geography                  
Americas   12%   10%   1%   9%  
Europe   8%   7%   5%   7%  
Asia   11%   12%   9%   14%  

*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

 

September 30,
2018

 

December 31,
2017

 
           
ASSETS          
Cash and cash equivalents   2,745.8   2,459.4  
Short-term investments   0.5   1.3  
Accounts receivable, net   634.9   895.9  
Other current assets   286.5   242.9  
Total current assets   3,667.7   3,599.5  
Property and equipment, net   169.6   169.0  
Goodwill and Intangible assets, net   3,314.6   2,990.1  
Other non-current assets   316.9   271.2  
Total Assets   € 7,468.8   € 7,029.8  
LIABILITIES AND SHAREHOLDERS' EQUITY          
Accounts payable   139.3   149.3  
Unearned revenues   894.9   876.4  
Short-term debt   350.0   0.0  
Other current liabilities   443.4   501.7  
Total current liabilities   1,827.6   1,527.4  
Long-term debt   650.0   1,000.0  
Other non-current obligations   615.6   506.3  
Total long-term liabilities   1,265.6   1,506.3  
Non-controlling interests   58.4   1.9  
Parent shareholders' equity   4,317.2   3,994.2  
Total Liabilities and Shareholders' equity   € 7,468.8   € 7,029.8  
           

IAS 18

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (IFRS)

           
In millions of Euros   Three months ended   Nine months ended  
 

September 30,
2018

 

September 30,
2017

  Change  

September 30,
2018

 

September 30,
2017

  Change  
Net Income attributable to equity holders of the parent   129.0   106.5   22.5   365.9   314.5   51.4  
Non-controlling interest  

(2.7)

 

(0.3)

 

(2.4)

 

(3.1)

 

1.0

 

(4.1)

 
Net Income   126.3   106.2   20.1   362.8   315.5   47.3  
Depreciation of property & equipment   14.3   13.9   0.4   42.5   36.8   5.7  
Amortization of intangible assets   45.9   40.9   5.0   132.9   125.5   7.4  
Other non cash P&L items   12.7   27.1   (14.4)   45.8   37.5   8.3  
Changes in working capital   (98.1)   (108.7)   10.6   162.6   156.5   6.1  
Net Cash provided by operating activities   € 101.1   € 79.4   € 21.7   € 746.6   € 671.8   € 74.8  
                           
Additions to property, equipment and intangibles   (16.9)   (17.7)   0.8   (48.2)   (63.5)   15.3  
Payments for acquisition of businesses, net of cash acquired   (195.7)   (2.8)   (192.9)   (247.3)   (10.8)   (236.5)  
Sale (purchase) of short term investments, net   -   (0.1)   0.1   0.7   3.6   (2.9)  
Investments, loans and others   0.2   0.8   (0.6)   (1.3)   7.2   (8.5)  
Net Cash provided by (used in) investing activities   (€ 212.4)   (€ 19.8)   (€ 192.6)   (€ 296.1)   (€ 63.5)   (€ 232.6)  
                           
Acquisition of non-controlling interests   (75.3)   (23.4)   (51.9)   (101.5)   (37.5)   (64.0)  
Repayment of short term and long term debt   (14.9)   -   (14.9)   (14.9)   -   (14.9)  
(Purchase) Sale of treasury stock   (111.6)   (19.2)   (92.4)   (113.9)   (64.0)   (49.9)  
Proceeds from exercise of stock-options   15.5   12.0   3.5   59.2   33.8   25.4  
Cash dividend paid   -   -   -   (38.0)   (51.3)   13.3  
Net Cash provided by (used in) financing activities   (€ 186.3)   (€ 30.6)   (€ 155.7)   (€ 209.1)   (€ 119.0)   (€ 90.1)  
                           
Effect of exchange rate changes on

cash and cash equivalents

  0.2   (56.3)   56.5   45.0   (184.1)   229.1  
                           
Increase (decrease) in cash and cash equivalents   (€ 297.4)   (€ 27.3)   (€ 270.1)   € 286.4   € 305.2   (€ 18.8)  
                           
Cash and cash equivalents at beginning of period   € 3,043.2   € 2,769.2       € 2,459.4   € 2,436.7      
Cash and cash equivalents at end of period   € 2,745.8   € 2,741.9       € 2,745.8   € 2,741.9      
                           

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 September 30,   Change  
 

2018
IFRS

 

Adjustment
(1)

 

2018
Non-IFRS

 

2017
IFRS

 

Adjustment
(1)

 

2017
Non-IFRS

  IFRS  

Non-IFRS
(2)

 
Total Revenue IAS18   € 826.9   € 4.8   € 831.7   € 751.4   € 1.5   € 752.9   10%   10%  
Total Revenue IAS18 breakdown by activity                                  
Software revenue   733.7   4.3   738.0   669.1   1.5   670.6   10%   10%  
Licenses and other software revenue   188.4       188.4   175.2       175.2   8%   8%  
Subscription and Support revenue   545.3   4.3   549.5   493.9   1.5   495.4   10%   11%  
Recurring portion of Software revenue   74%       74%   74%       74%          
Services revenue   93.2   0.5   93.7   82.3       82.3   13%   14%  

Total Software Revenue IA18 breakdown by product
line

                                 
CATIA software revenue   245.3   1.2   246.5   230.3       230.3   7%   7%  
ENOVIA software revenue   81.8       81.8   77.6       77.6   5%   5%  
SOLIDWORKS software revenue   177.5       177.5   166.2       166.2   7%   7%  
Other software revenue   229.1   3.1   232.2   195.0   1.5   196.5   17%   18%  
Total Revenue IAS18 breakdown by geography                                  
Americas   254.0   2.9   257.0   227.5   0.4   227.9   12%   13%  
Europe   342.4   1.6   344.0   316.3   1.0   317.3   8%   8%  
Asia   230.4   0.3   230.7   207.6   0.1   207.7   11%   11%  
Total Operating Expenses   (€ 652.6)   € 77.5   (€ 575.1)   (€ 591.5)   € 79.3   (€ 512.2)   10%   12%  
Share-based compensation expense   (31.5)   31.5   -   (31.7)   31.7   -          
Amortization of acquired intangibles   (43.8)   43.8   -   (39.1)   39.1   -          
Other operating income and expense, net   (2.2)   2.2   -   (8.5)   8.5   -          
Operating Income   € 174.3   € 82.3   € 256.6   € 159.9   € 80.8   € 240.7   9%   7%  
Operating Margin   21.1%       30.9%   21.3%       32.0%          
Financial revenue & other, net   3.5   (1.3)   2.2   (1.6)   1.9   0.4   N/A   N/A  
Income tax expense   (51.5)   (23.7)   (75.3)   (52.1)   (23.8)   (75.8)   -1%   -1%  
Non-controlling interest   2.7   (1.4)   1.3   0.3       0.3          
Net Income attributable to shareholders   € 129.0   € 55.8   € 184.8   € 106.5   € 59.1   € 165.6   21%   12%  
Diluted Net Income Per Share (3)   € 0.49   € 0.22   € 0.71   € 0.41   € 0.23   € 0.64   20%   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.

                       
In millions of Euros   Three months ended September 30,   Change  
  2018 IFRS   Adjustment  

2018
Non-IFRS

  2017 IFRS   Adjustment  

2017
Non-IFRS

  IFRS   Non-IFRS  
Cost of revenue   (126.2)   1.3   (124.9)   (110.8)   1.2   (109.6)   14%   14%  
Research and development   (153.8)   12.0   (141.8)   (140.6)   12.4   (128.1)   9%   11%  
Marketing and sales   (256.5)   8.4   (248.1)   (232.1)   10.9   (221.2)   11%   12%  
General and administrative   (70.1)   9.7   (60.3)   (60.5)   7.2   (53.3)   16%   13%  
Total share-based compensation expense       € 31.5           € 31.7              
                                   

(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 260.8 million diluted shares for Q3 2018 and 258.5 million diluted shares for Q3 2017.

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   Nine months ended September 30,   Change  
 

2018
IFRS

 

Adjustment (1)

 

2018
Non-IFRS

 

2017
IFRS

 

Adjustment (1)

 

2017
Non-IFRS

  IFRS   Non-IFRS (2)  
Total Revenue IAS18   € 2,433.5   € 9.6   € 2,443.1   € 2,317.6   € 11.6   € 2,329.2   5%   5%  
Total Revenue IAS18 breakdown by activity                                  
Software revenue   2,169.1   9.1   2,178.2   2,057.8   11.6   2,069.4   5%   5%  
Licenses and other software revenue   587.7       587.7   560.0       560.0   5%   5%  
Subscription and Support revenue   1,581.3   9.1   1,590.4   1,497.8   11.6   1,509.4   6%   5%  
Recurring portion of Software revenue   73%       73%   73%       73%          
Services revenue   264.4   0.5   264.9   259.8       259.8   2%   2%  
Total Software Revenue IA18 breakdown by product line                                  
CATIA software revenue   736.7   1.7   738.4   716.4       716.4   3%   3%  
ENOVIA software revenue   242.5       242.5   235.7       235.7   3%   3%  
SOLIDWORKS software revenue   537.8       537.8   517.1       517.1   4%   4%  
Other software revenue   652.1   7.5   659.5   588.6   11.6   600.2   11%   10%  
Total Revenue IAS18 breakdown by geography                                  
Americas   728.8   5.7   734.5   718.2   3.5   721.7   1%   2%  
Europe   1,021.6   2.1   1,023.7   970.2   7.3   977.5   5%   5%  
Asia   683.1   1.8   684.9   629.2   0.8   630.0   9%   9%  
Total Operating Expenses   (€ 1,951.6)   227.0   (€ 1,724.5)   (€ 1,868.8)   224.8   (€ 1,644.0)   4%   5%  
Share-based compensation expense   (91.6)   91.6   -   (86.1)   86.1   -          
Amortization of acquired intangibles   (126.3)   126.3   -   (119.6)   119.6   -          
Other operating income and expense, net   (9.1)   9.1   -   (19.1)   19.1   -          
Operating Income   € 481.9   236.7   € 718.6   € 448.8   236.4   € 685.2   7%   5%  
Operating Margin   19.8%       29.4%   19.4%       29.4%          
Financial revenue & other, net   12.6   (0.2)   12.4   20.9   (20.7)   0.2   -40%   N/A  
Income tax expense   (131.7)   (77.2)   (208.9)   (154.2)   (69.5)   (223.7)   -15%   -7%  
Non-controlling interest   3.1   (1.4)   1.7   (1.0)       (1.0)          
Net Income attributable to shareholders   € 365.9   157.9   € 523.8   € 314.5   146.2   € 460.7   16%   14%  
Diluted Net Income Per Share (3)   € 1.41   0.60   € 2.01   € 1.22   0.57   € 1.79   16%   12%  
                                   

(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.

                       
In millions of Euros   Nine months ended September 30,   Change  
  2018 IFRS   Adjustment  

2018
Non-IFRS

  2017 IFRS   Adjustment  

2017
Non-IFRS

  IFRS   Non-IFRS  
Cost of revenue   (366.4)   3.4   (363.0)   (350.9)   3.4   (347.6)   4%   4%  
Research and development   (467.8)   35.1   (432.7)   (446.5)   35.5   (411.0)   5%   5%  
Marketing and sales   (772.3)   22.3   (750.0)   (750.4)   29.0   (721.4)   3%   4%  
General and administrative   (209.6)   30.9   (178.8)   (182.3)   18.2   (164.1)   15%   9%  
Total share-based compensation expense       € 91.6           € 86.1              
                                   

(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 260.1 million diluted shares for YTD 2018 and 258.0 million diluted shares for YTD 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 IFRS 15 vs NON-IFRS IAS 18
(unaudited; in millions of Euros except per share data)

           
In millions of Euros, except per share data and percentages   2018 Non-IFRS   2018 Non-IFRS  
 

QTD
IFRS15

 

Adjustment
(1)

 

QTD
IAS18

 

YTD
IFRS15

 

Adjustment
(1)

 

YTD
IAS18

 
Total Revenue   € 809.2   22.4   € 831.7   € 2,460.5   (17.4)   € 2,443.1  
Total Revenue breakdown by activity                          
Software revenue   715.5   22.4   738.0   2,195.6   (17.4)   2,178.2  
Licenses and Other software revenue   188.1   0.4   188.4   584.7   3.1   587.7  
Subscription and Support revenue   527.5   22.1   549.5   1,610.9   (20.4)   1,590.4  
Recurring portion of Software revenue   74%       74%   73%       73%  
Services revenue   93.7       93.7   264.9       264.9  
Total Software Revenue breakdown by product line                          
CATIA software revenue   241.4   5.1   246.5   742.4   (4.1)   738.4  
ENOVIA software revenue   80.6   1.2   81.8   242.6   (0.1)   242.5  
SOLIDWORKS software revenue   177.5   (0.0)   177.5   533.2   4.5   537.8  
Other software revenue   215.9   16.3   232.2   677.3   (17.8)   659.5  
Total Revenue breakdown by geography                          
Americas   243.9   13.1   257.0   721.9   12.6   734.5  
Europe   334.9   9.1   344.0   1,043.6   (19.9)   1,023.7  
Asia   230.5   0.2   230.7   695.0   (10.1)   684.9  
Total Operating Expenses   (€ 575.1)      

(€ 575.1)

 

(€1,724.5)

     

(€1,724.5)

 
Share-based compensation expense   -       -   -       -  
Amortization of acquired intangibles   -       -   -       -  
Other operating income and expense, net   -       -   -       -  
Operating Income   € 234.2   22.4   € 256.6   € 736.0   (17.4)   € 718.6  
Operating Margin   28.9%   +1.9pts   30.9%   29.9%   -0.5pts   29.4%  
Financial revenue & other, net   2.2       2.2   12.4       12.4  
Income tax expense   (68.9)   (6.4)   (75.3)   (213.8)   4.9   (208.9)  
Non-controlling interest   1.3       1.3   1.7       1.7  
Net Income attributable to shareholders   € 168.7   16.1   € 184.8   € 536.3   (12.5)   € 523.8  
Diluted Net Income Per Share (3)   € 0.65   0.06   € 0.71   € 2.06   (0,05)   € 2.01  
                           
    2018 Non-IFRS   2018 Non-IFRS  
In millions of Euros  

2018
IFRS15

  Adjustment  

2018
IAS18

 

2018
IFRS15

  Adjustment  

2018
IAS18

 
Cost of revenue   (124.9)       (124.9)   (363.0)       (363.0)  
Research and development   (141.8)       (141.8)   (432.7)       (432.7)  
Marketing and sales   (248.1)       (248.1)   (750.0)       (750.0)  
General and administrative   (60.3)       (60.3)   (178.8)       (178.8)  
Total share-based compensation expense                          
                           

DASSAULT SYSTEMES

RECONCILIATION BALANCE SHEET IFRS 15 vs IAS 18
(unaudited; in millions of Euros)

               
In millions of Euros  

IFRS15 Basis
September 30,
2018

  Difference  

IAS 18 Basis
September 30,
2018

 
       
               
ASSETS              
Cash and cash equivalents   2,745.8   -   2,745.8  
Short-term investments   0.5   -   0.5  
Accounts receivable, net   616.3   18.6   634.9  
Contract assets   38.3   (38.3)      
Other current assets   266.0   20.5   286.5  
Total current assets   3,666.9   0.8   3,667.7  
Property and equipment, net   169.6   -   169.6  
Goodwill and Intangible assets, net   3,314.6   -   3,314.6  
Other non-current assets   308.6   8.3   316.9  
Total Assets   € 7,459.8   € 9.0   € 7,468.8  
LIABILITIES AND SHAREHOLDERS' EQUITY              
Accounts payable   139.3   0   139.3  
Contract liabilities - Unearned revenues   785.3   109.6   894.9  
Short-term debt   350.0   0.0   350.0  
Other current liabilities   443.4   0.0   443.4  
Total current liabilities   1,718.0   109.6   1,827.6  
Long-term debt   650.0   -   650.0  
Other non-current obligations   621.4   (5.80)   615.6  
Total long-term liabilities   1,271.4   (5.80)   1,265.6  
Non-controlling interests   58.4   -   58.4  
Parent shareholders' equity   4,412.0   (94.8)   4,317.2  
Total Liabilities and Shareholders' equity   € 7,459.8   € 9.0   € 7,468.8  
               

DASSAULT SYSTEMES

RECONCILIATION CASH FLOW IFRS 15 vs IAS 18
(unaudited; in millions of Euros)

           
In millions of Euros   Three months ended September 30, 2018   Nine months ended September 30, 2018  
  IFRS 15   Difference   IAS 18   IFRS 15   Difference   IAS 18  
Net Income attributable to equity holders of the parent   112.9   16.1   129.0   378.4   (12.5)   365.9  
Non-controlling interest  

(2.7)

 

-

 

(2.7)

 

(3.1)

 

-

 

(3.1)

 
Net Income   110.2   16.1   126.3   375.3   (12.5)   362.8  
Depreciation of property & equipment   14.3   -   14.3   42.5   -   42.5  
Amortization of intangible assets   45.9   -   45.9   132.9   -   132.9  
Other non cash P&L items   12.7   -   12.7   45.8   -   45.8  
Changes in working capital   (82.0)   (16.1)   (98.1)   150.1   12.5   162.6  
Net Cash provided by operating activities   € 101.1   € 0.0   € 101.1   € 746.6   € 0.0   € 746.6  
                           
Additions to property, equipment and intangibles   (16.9)   -   (16.9)   (48.2)   -   (48.2)  
Payments for acquisition of businesses, net of cash acquired   (195.7)   -   (195.7)   (247.3)   -   (247.3)  
Sale (purchase) of short term investments, net   -   -   -   0.7   -   0.7  
Investments, loans and others   0.2   -   0.2   (1.3)   -   (1.3)  
Net Cash provided by (used in) investing activities   (€ 212.4)   -   (€ 212.4)   (€ 296.1)   -   (€ 296.1)  
                           
Acquisition of non-controlling interests   (75.3)   -   (75.3)   (101.5)   -   (101.5)  
Repayment of short term and long term debt   (14.9)   -   (14.9)   (14.9)   -   (14.9)  
(Purchase) Sale of treasury stock   (111.6)   -   (111.6)   (113.9)   -   (113.9)  
Proceeds from exercise of stock-options   15.5   -   15.5   59.2   -   59.2  
Cash dividend paid   -   -   -   (38.0)   -   (38.0)  
Net Cash provided by (used in) financing activities   (€ 186.3)   -   (€ 186.3)   (€ 209.1)   -   (€ 209.1)  
                           
Effect of exchange rate changes on
cash and cash equivalents
  0.2   -   0.2   45.0   -   45.0  
                           
Increase (decrease) in cash and cash equivalents   (€ 297.4)   -   (€ 297.4)   € 286.4   -   € 286.4  
                           
Cash and cash equivalents at beginning of period   € 3,043.2   -   € 3,043.2   € 2,459.4   -   € 2,459.4  
Cash and cash equivalents at end of period   € 2,745.8   -   € 2,745.8   € 2,745.8   -   € 2,745.8  
                           

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   Nine months ended  
 

September 30,
2018

 

September 30,
2018

 
Non-IFRS-IFRS15 Revenue   € 809.2   € 2,460.5  
           
Non-IFRS-IFRS15 Revenue breakdown by activity          
Software revenue   715.5   2,195.6  
of which licenses and other software revenue   188.1   584.7  
of which subscription and support revenue   527.5   1,610.9  
Services revenue   93.7   264.9  
           
Non-IFRS-IFRS15 software revenue breakdown by product line          
CATIA software revenue   241.4   742.4  
ENOVIA software revenue   80.6   242.6  
SOLIDWORKS software revenue   177.5   533.2  
Other software revenue   215.9   677.3  
           
Non-IFRS-IFRS15 Revenue breakdown by geography          
Americas   243.9   721.9  
Europe   334.9   1,043.6  
Asia   230.5   695.0  
           
Non-IFRS-IFRS15 operating income   € 234.2   € 736.0  
Non-IFRS-IFRS15 operating margin   28.9%   29.9%  
Non-IFRS net income attributable to shareholders   € 168.7   € 536.3  
Non-IFRS-IFRS15 diluted net income per share   € 0.65   € 2.06  
Closing headcount   16,721   16,721  
           
Average Rate USD per Euro   1.16   1.19  
Average Rate JPY per Euro   129.60   130.90  
           

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

 

Nine months
ended

 
 

September 30,
2018

 

September 30,
2018

 
Licenses and other software revenue   188.1   584.7  
Subscription and Support revenue   523.2   1,601.8  
Software revenue   711.2   2,186.4  
Services revenue   93.2   264.4  
Total Revenue IFRS -IFRS15   € 804.5   € 2,450.9  

Cost of software revenue (excluding amortization
of acquired intangibles)

  (39.0)   (118.0)  
Cost of services and other revenue   (87.2)   (248.4)  
Research and development   (153.8)   (467.8)  
Marketing and sales   (256.5)   (772.3)  
General and administrative   (70.1)   (209.6)  
Amortization of acquired intangibles   (43.8)   (126.3)  
Other operating income and expense, net   (2.2)   (9.1)  
Total Operating Expenses   (652.6)   (1,951.6)  
Operating Income   € 151.9   € 499.3  
Financial revenue and other, net   3.5   12.6  
Income before income taxes   155.3   511.9  
Income tax expense   (45.1)   (136.6)  
Net Income   € 110.2   € 375.3  
Non-controlling interest   2.7   3.1  

Net Income attributable to equity holders of
the parent

  € 112.9   € 378.4  
Basic net income per share   0.43   1.47  
Diluted net income per share   € 0.43   € 1.45  

Basic weighted average shares outstanding (in
millions)

  259.7   258.3  

Diluted weighted average shares outstanding (in
millions)

  260.8   260.1  
           

IFRS 15

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED BALANCE SHEET (IFRS)
(unaudited; in millions of Euros)

In millions of Euros  

September 30,
2018

 

December 31,
2017

 
           
ASSETS          
Cash and cash equivalents   2,745.8   2,459.4  
Short-term investments   0.5   1.3  
Accounts receivable, net   616.3   895.9  
Contract assets   38.3   0.0  
Other current assets   266.0   242.9  
Total current assets   3,666.9   3,599.5  
Property and equipment, net   169.6   169.0  
Goodwill and Intangible assets, net   3,314.6   2,990.1  
Other non-current assets   308.6   271.2  
Total Assets   € 7,459.8   € 7,029.8  
LIABILITIES AND SHAREHOLDERS' EQUITY          
Accounts payable   139.3   149.3  
Contract liabilities   785.3   876.4  
Short-term debt   350.0   0.0  
Other current liabilities   443.4   501.7  
Total current liabilities   1,718.0   1,527.4  
Long-term debt   650.0   1,000.0  
Other non-current obligations   621.4   506.3  
Total long-term liabilities   1,271.4   1,506.3  
Non-controlling interests   58.4   1.9  
Parent shareholders' equity   4,412.0   3,994.2  
Total Liabilities and Shareholders' equity   € 7,459.8   € 7,029.8  
           

The Group has initially applied IFRS 15 at 1 January 2018.
Under the transition method chosen, comparative information is not restated.

IFRS 15

DASSAULT SYSTEMES
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (IFRS)
(unaudited; in millions of Euros)

           
In millions of Euros   Three months ended   Nine months ended  
 

September 30,
2018

 

September 30,
2017

  Change  

September 30,
2018

 

September 30,
2017

  Change  
Net Income attributable to equity holders of the parent   112.9   106.5   6.4   378.4   314.5   63.9  
Non-controlling interest  

(2.7)

 

(0.3)

 

(2.4)

 

(3.1)

 

1.0

 

(4.1)

 
Net Income   110.2   106.2   4.0   375.3   315.5   59.8  
Depreciation of property & equipment   14.3   13.9   0.4   42.5   36.8   5.7  
Amortization of intangible assets   45.9   40.9   5.0   132.9   125.5   7.4  
Other non cash P&L items   12.7   27.1   (14.4)   45.8   37.5   8.3  
Changes in working capital   (82.0)   (108.7)   26.7   150.1   156.5   (6.4)  
Net Cash provided by operating activities   € 101.1   € 79.4   € 21.7   € 746.6   € 671.8   € 74.8  
                           
Additions to property, equipment and intangibles   (16.9)   (17.7)   0.8   (48.2)   (63.5)   15.3  
Payments for acquisition of businesses, net of cash acquired   (195.7)   (2.8)   (192.9)   (247.3)   (10.8)   (236.5)  
Sale (purchase) of short term investments, net   -   (0.1)   0.1   0.7   3.6   (2.9)  
Investments, loans and others   0.2   0.8   (0.6)   (1.3)   7.2   (8.5)  
Net Cash provided by (used in) investing activities   (€ 212.4)   (€ 19.8)   (€ 192.6)   (€ 296.1)   (€ 63.5)   (€ 232.6)  
                           
Acquisition of non-controlling interests   (75.3)   (23.4)   (51.9)   (101.5)   (37.5)   (64.0)  
Repayment of short term and long term debt   (14.9)   -   (14.9)   (14.9)   -   (14.9)  
(Purchase) Sale of treasury stock   (111.6)   (19.2)   (92.4)   (113.9)   (64.0)   (49.9)  
Proceeds from exercise of stock-options   15.5   12.0   3.5   59.2   33.8   25.4  
Cash dividend paid   -   -   -   (38.0)   (51.3)   13.3  
Net Cash provided by (used in) financing activities   (€ 186.3)   (€ 30.6)   (€ 155.7)   (€ 209.1)   (€ 119.0)   (€ 90.1)  
                           
Effect of exchange rate changes on

cash and cash equivalents

  0.2   (56.3)   56.5   45.0   (184.1)   229.1  
                           
Increase (decrease) in cash and cash equivalents   (€ 297.4)   (€ 27.3)   (€ 270.1)   € 286.4   € 305.2   (€ 18.8)  
                           
Cash and cash equivalents at beginning of period   € 3,043.2   € 2,769.2       € 2,459.4   € 2,436.7      
Cash and cash equivalents at end of period   € 2,745.8   € 2,741.9       € 2,745.8   € 2,741.9      
                           

The Group has initially applied IFRS 15 at 1 January 2018.
Under the transition method chosen, comparative information is not restated.

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 September 30,  
 

2018
IFRS

 

Adjustment
(1)

 

2018
Non-IFRS

 
Total Revenue IFRS15   € 804.5   € 4.8   € 809.2  
Total Revenue IFRS15 breakdown by activity              
Software revenue   711.2   4.3   715.5  
Licenses and other software revenue   188.1       188.1  
Subscription and Support revenue   523.2   4.3   527.5  
Recurring portion of Software revenue   74%       74%  
Services revenue   93.2   0.5   93.7  
Total Software Revenue IFRS15 breakdown by product line              
CATIA software revenue   240.2   1.2   241.4  
ENOVIA software revenue   80.6       80.6  
SOLIDWORKS software revenue   177.5       177.5  
Other software revenue   212.9   3.0   215.9  
Total Revenue IFRS15 breakdown by geography              
Americas   241.0   2.9   243.9  
Europe   333.3   1.6   334.9  
Asia   230.2   0.3   230.5  
Total Operating Expenses   (€ 652.6)   € 77.5   (€ 575.1)  
Share-based compensation expense   (31.5)   31.5   -  
Amortization of acquired intangibles   (43.8)   43.8   -  
Other operating income and expense, net   (2.2)   2.2   -  
Operating Income   € 151.9   € 82.3   € 234.2  
Operating Margin   18.9%       28.9%  
Financial revenue & other, net   3.5   (1.3)   2.2  
Income tax expense   (45.1)   (23.7)   (68.9)  
Non-controlling interest   2.7   (1.4)   1.3  
Net Income attributable to shareholders   € 112.9   € 55.8   € 168.7  
Diluted Net Income Per Share (3)   € 0.43   € 0.22   € 0.65  
               

(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 effects and the income tax effect of the non-IFRS adjustments.

       
    Three months ended September 30,  
In millions of Euros   2018 IFRS   Adjustment  

2018
Non-IFRS

 
Cost of revenue   (126.2)   1.3   (124.9)  
Research and development   (153.8)   12.0   (141.8)  
Marketing and sales   (256.5)   8.4   (248.1)  
General and administrative   (70.1)   9.7   (60.3)  
Total share-based compensation expense       € 31.5      
               

(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 260.8 million diluted shares for Q3 2018.

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   Nine months ended September 30,  
 

2018
IFRS

 

Adjustment
(1)

 

2018
Non-IFRS

 
Total Revenue IFRS15   € 2,450.9   € 9.6   € 2,460.5  
Total Revenue IFRS15 breakdown by activity              
Software revenue   2,186.4   9.1   2,195.6  
Licenses and other software revenue   584.7       584.7  
Subscription and Support revenue   1,601.8   9.1   1,610.9  
Recurring portion of Software revenue   73%       73%  
Services revenue   264.4   0.5   264.9  
Total Software Revenue IFRS15 breakdown by product line              
CATIA software revenue   740.8   1.7   742.4  
ENOVIA software revenue   242.6       242.6  
SOLIDWORKS software revenue   533.2       533.2  
Other software revenue   669.8   7.5   677.3  
Total Revenue IFRS15 breakdown by geography              
Americas   716.2   5.7   721.9  
Europe   1,041.5   2.1   1,043.6  
Asia   693.2   1.8   695.0  
Total Operating Expenses   (€ 1,951.6)   227.0   (€ 1,724.5)  
Share-based compensation expense   (91.6)   91.6      
Amortization of acquired intangibles   (126.3)   126.3      
Other operating income and expense, net   (9.1)   9.1      
Operating Income   € 499.3   236.7   € 736.0  
Operating Margin   20.4%       29.9%  
Financial revenue & other, net   12.6   (0.2)   12.4  
Income tax expense   (136.6)   (77.2)   (213.8)  
Non-controlling interest   3.1   (1.4)   1.7  
Net Income attributable to shareholders   € 378.4   157.9   € 536.3  
Diluted Net Income Per Share (3)   € 1.45   0.61   € 2.06  
               

(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 effects and the income tax effect of the non-IFRS adjustments.

       
In millions of Euros   Nine months ended September 30,  
  2018 IFRS   Adjustment   2018 Non-IFRS  
Cost of revenue   (366.4)   3.4   (363.0)  
Research and development   (467.8)   35.1   (432.7)  
Marketing and sales   (772.3)   22.3   (750.0)  
General and administrative   (209.6)   30.9   (178.8)  
Total share-based compensation expense       € 91.6      
               

(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 260.1 million diluted shares for YTD 2018.

 



Contact:

Dassault Systèmes
IR Team
François-José Bordonado/Béatrix Martinez
+33.1.61.62.69.24
United States and Canada:
Email Contact
or
Dassault Systèmes
Press
Arnaud Malherbe
+33.1.61.62.87.73
Email Contact
or
FTI Consulting
Jamie Ricketts
+44.20.3727.1000
or
Arnaud de Cheffontaines
+33.1.47.03.69.48