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DASSAULT SYSTEMES SA
DASSAULT SYSTEMES SA
Good Q4 16 including higher new licences revenue
03 Feb 17
In Q4 16, based on non-IFRS standards, total revenue (€883m, +10% at constant currency) and the operating income (€311m, +8%) were respectively 4% and 5% above expectations. The operating margin was 35.3% of revenue while a range of 33-35% of revenue was targeted. New licences revenue was up 10% at constant currency to €263m which is a good achievement (+8-12% anticipated). Q4 16 (IFRS standards): Revenue was up to €875m (+10%, also +10% at constant currency) including the acquired company CST. Organic revenue growth was satisfactory at +8%. Excluding the currency effects and including CST, software revenue increased by 9% while services/Other revenue grew by 16%. Software revenue growth was driven by Europe (+12%) thanks to a strong performance in France, Germany and Russia. Growth was similar in Asia and the Americas (+6%). India and South Korea were the most dynamic countries in Asia while the development in North America was affected by a high basis of comparison. Operating income increased to €227m (+5%) corresponding to a margin rate of 26% of revenue (-1.1pts). R&D and marketing/sales costs (respectively +11% and +14%) increased at a higher pace than total revenue and Other operating expenses surged to €-14.3m (vs €-5.6m in Q4 15). Group net profit was €143m (+13%) after net financial income of €7m (vs net financial cost of €-2.8m in Q4 15) and a lower income tax rate (+1.5pts to 38.7%). FY2016 (IFRS standards): Revenue reached €3,056m (+8%, also +8% at constant currency), including the contribution of CST as from 1 October 2016. Organic revenue was up 6%. Excluding the currency effect, software revenue was up 8%, o/w +6% organically (vs +8% organically, non-IFRS in 2015) while services/Other revenue was up 7%. New licences revenue was up 5%, non-IFRS. All geographic areas grew by 8% at constant currency. France, Southern Europe, China, India and Latin America were the most dynamic. Operating income was €672m (+6%), in line with our expectations. The margin rate was under control (22% of revenue, -0.3pt) taking into account the significant Other operating expenses (€-41m net vs €-12m in 2015). Group net profit was €472m (+11%) after higher net financial expenses (€-10.5m vs €-0.1m in 2015) and a lower income tax rate (-4.3pts to 31.6%). Operating cash flow declined slightly (-2% to €622m) due to higher tax downpayments and largely exceeded capex (€57m, +30%) and the consideration paid for acquisitions (€263m net of the cash acquired), the return to shareholders, i.e. the payment of the dividend (€102m) and the repurchase of shares (€127m). The proceeds from the exercise of stock-options was €27m. The group has structurally a net cash situation which amounted to €1.49bn at year-end 2016 (vs €1.35bn at year-end 2015).
Long decision-making at customers for the 3DEXPERIENCE
25 Oct 16
Dassault Systèmes performed well in Q3 16 despite the fact that new licences revenue growth did not accelerate and was at the same pace as in Q2 16. Q3 16 (IFRS standards): Total revenue reached €735m (+9%, +9% at constant currency and including the change of perimeter). Excluding currency effects, software revenue growth (+9%) was driven by Asia (+18%/+17% non-IFRS) thanks to China and South Korea. The activity was less dynamic in the Americas (+6%/+3% non-IFRS) due to the weakness in Latin America and Europe (+5%/+4% non-IFRS). The operating income increased by 8% to €161m, leading to an operating margin of 21.9% of revenue (-0.1pts). There was a significant increase in R&D costs (+15% to €132m) given a tax credit reversal. The amortisation of intangibles related to acquisitions amounted to €37.8m (-12%) and there were significant other operating expenses (€-12.8m vs €-0.6m in Q3 15). Group net profit increased to €113m (+7%) after rather stable net financial costs (€-0.8m vs €-1.0m in Q3 15) and similar income tax rate at 28.2%. Financial situation: The substantial net cash situation increased to €1.46bn on 30 September 2016 (vs €1.35bn on 31 December 2015). On 9-month 2016, the operating cash flow declined slightly to €526m (-1%) due to a significant increase in the change of WCR related to higher tax downpayments and timing effects of tax refunds during Q3 16. Nevertheless, the operating cash flow exceeded 9-month cash out-flows which included net capex of €32m, the acquisition of companies (including CST) for €246m net of the cash acquired (vs €18m in 9m 15), the purchase of treasury shares for €52m (vs €28m in 9m 15) and the dividend paid in cash to shareholders for €102m. The proceeds from the exercise of stock options were €16m.
New licences back to growth
21 Jul 16
Q2 16 was above guidance with non-IFRS revenue of €754m (guidance: €735-745m) and non-IFRS operating margin up 1pt to 30.4% of revenue (guidance: 29-30% of revenue). The other good point was the increase yoy in new licences revenue following a decrease yoy in Q1 16. Q2 16 IFRS figures - Revenue reached €754m (+5% and +7% at constant currency). Excluding the currency effect, revenue growth was driven by software revenue (+9%) while services & other revenue decreased (-2%). All geographic areas contributed to software revenue growth. Asia was the weakest (+4%), mainly Korea, India, and Southern Asia, compared to the Americas and Europe (respectively +11% and +10%) – all growth rates at constant currency. - The operating income increased by only 2% to €161m, corresponding to a margin of 21.4% of revenue (-0.6pt). There was an increase in the cost of services & other revenue (+6%), while services & other revenue decreased and R&D expenses and G&A costs increased at a higher pace than total revenue (respectively +8% and +11% vs +5% for total revenue). In addition, other operating expenses increased to €-11m (vs €-4m in Q2 15). - Group net income was rather flat at €101m (+1%) after higher net financial expenses of €-7.6m (vs €+3.1m in Q2 15) and lower income tax rate (-3.6pts to 33.1%). H1 16 IFRS figures - Revenue reached €1,445m (+6% and +7% at constant currency). At constant currency, revenue growth was mainly attributable to software revenue (+7%). Services & other revenue increased moderately (+2%). By geographic area, the Americas and Europe were the most dynamic (respectively +10% and +8%) while Asia was weaker (+5%). - Operating income increased to €284m (+6%), corresponding to a stable margin rate at 19.6% of revenue. - Group net income was €191m (+12%), after higher net financial expenses of €-17m (vs €+4m in H1 15) and a lower income tax rate (-9pts to 27.5%). - Operating cash flow was substantial as usual (€449m, +8%) and main cash outflows were the purchase of treasury shares for €43m and the payment of the dividend for €102m. The group ended H1 16 with a comfortable net cash situation of €1.64bn which enables the funding of acquisitions by cash, as will be the case to acquire CST. CST is a German company specialised in electromagnetic and electronics simulation which had revenue of €47m in 2015. Dassault Systèmes will pay €220m in cash. The operation is expected to be completed in Q4 16.
Satisfactory quarter given the high basis of comparison
22 Apr 16
Q1 16 earnings – IFRS standard Revenue reached €691m (+6% vs +30% in Q1 15) and was in the upper range of guidance. The growth rate was similar at constant currency (vs +17% in Q1 15). Excluding currency effects, software revenue increased by 6% (vs +16% in Q1 15) and services & other revenue grew by 8% (vs +27% in Q1 15). The recurring software revenue represented 74% of total revenue software. Revenue growth was attributable to all geographic areas: +8% in the Americas driven by the US, +7% in Asia led by China, +6% in Europe thanks to dynamic activities in Southern Europe and Central Europe. Operating income increased to €122.5m (+11%) which corresponded to an improvement in the margin rate of 0.7pt (vs +1pt in Q1 15) to 17.7% of revenue. Net financial expenses were €-9m (vs net financial income of €0.7m in Q1 15). Group net profit surged to €90m (+29%) due to the low income tax rate related specifically to the reversal of a tax reserve (20% vs 36% in Q1 15). The operating cash flow increased to €309m (+17%) after an improvement in the change of WCR. Considering traditionally low net capex (€9m) and no payment related to acquisitions, and the purchase of treasury stocks for €34m, the group ended Q1 16 with a net cash situation of €1,590m.
Strong growth and operating margin in Q4 15.
04 Feb 16
+Q4 15 (IFRS standards)+ Revenue surged to €796m (+18%, +11% on constant currency). Excluding the currency effects, software revenue grew by 11% (o/w +9% organically, non-IFRS) while services increased by 8%. Asia and Americas where performance improved in Latin America were the most dynamic geographic areas (respectively +15% and +12% on constant currency). Operating income surged to €216m (+45%) representing an operating margin of 27.1% of revenue (+5pts). All operating expenses increased at a lower pace than total revenue, the amortization of acquired intangibles related to the acquisition of companies decreased to €-39m (-5%) and the other operating expenses declined to €-5.6m (vs €-7.9m in Q4 14). Group net profit was €126.5m (+27%) after financial expenses of €-2.8m (vs €+2m in Q4 14) and a higher income tax rate (+7pts to 40.3%). +FY2015 (IFRS standards)+ Revenue reached €2,839m (+24%, +13% on constant currency). It included the full year contribution of Accelrys and Quintiq which were acquired in April and September 2014 respectively. Software revenue increased by 13% on constant currency (o/w +8% organically, non-IFRS). Operating income was €633m (+47%), 2% above our expectation, representing an operating margin of 22.3% of revenue (+3.5pts). Group net profit was €402m (+38%) after net financial expenses of €-0.1m (vs €+15m in 2014) and a higher income tax rate (+1.5pts to 35.9%). Strong operating cash flow (€633m, +27%) exceeded capex (€44m, -4%) and the return to shareholders i.e. the payment of the dividend (€98m) and the repurchase of shares (€28m). The cash outflow related to the acquisition of companies was significantly lower than in 2014 (€20m vs. €953m in 2014). In Q4 15, Dassault Systèmes fully drew down a new credit facility of €650m due to mature in 2020. At year-end 2015, the Group had a net cash situation of €1.35bn (vs. €825m in 2014).
Earnings upgrade following acquisition
17 Apr 17
Following the recent acquisition of Ingresso we upgrade our estimates by c10% in 2017. Ingresso owns and operates a software platform which enables sales through global third party distribution channels. This looks another smart acquisition by ACSO who continue to create a more efficient flow in the extremely fragmented leisure and ticketing industry. We increase our T/P to 2000p and upgrade to BUY.
N+1 Singer - Servelec Group - Calling the bottom
20 Apr 17
We are increasingly confident that Servelec’s travails are behind it and the business is returning to growth. Recent share price weakness looks unwarranted in this context and the valuation now looks compelling. Our forecasts are essentially unchanged, but we see medium term upside as the group’s markets improve. Servelec remains a key idea for 2017 and we reiterate our Buy recommendation and 325p Target Price.
Positive trading update
13 Apr 17
Ahead of the April half year close PRSM has updated the market as they expect the Full Year results to be significantly ahead of market expectations. Software deal momentum continues to be very strong. They have signed 151 deals in the 5 months to March which compares very favourably with the 2016 full year of 189 deals. Half year results will be released on 27th June.
Pickup in H2 organic growth as expected
20 Apr 17
Headline revenue growth of 19% reflects a full half contribution of ID Scan and a pickup in organic growth to 12% across the year driven by the excellent performance from the higher margin international services. The mix effects of this growth resulted in EBIT of £17m, 4% ahead of our forecasts, and a 1.1pp improvement in the operating margin.
Small Cap Breakfast
19 Apr 17
Global Ports Holding—Intention to float on Standard List. International cruise ports operator. Seeking $250m raise including $75m primary offer. Dorcaster—Schedule One Update. Admission now expected 3 May. RTO of Escape Hunt raising £14m at 135p Verditek— Intention to float on AIM. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Raising £3.5m. Admission in May. Eddie Stobart Logistics— Schedule 1. Admission expected 25 April but capital raising details TBC. ADES International Holding— Intends to join the Standard List in May raising up to $170m plus a vendor sale. Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa. Admission expected in May. Tufton Oceanic Assets– Offer extended to 9 May to enable investors to complete further due diligence.