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DASSAULT SYSTEMES SA
DASSAULT SYSTEMES SA
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).
Solid growth amplified by currencies and tax-related items
22 Oct 15
Dassault Systèmes had a good Q3 15 characterised by strong revenue and earnings growth amplified by currency effects, a good achievement in terms of new licences revenue and various positive tax-related items. Q3 15 (IFRS standards): Total revenue reached €676m (+20%, +11% at constant currency and including the change of perimeter). Excluding currency effects, revenue growth was driven by Europe (+17%/ +13% non-IFRS) and the Americas (+12%). The activity was less dynamic in Asia (+1%/ 0% non-IFRS) but the basis of comparison was challenging (+22% last year). The operating income surged by 45% to €148.8m, representing an operating margin of 22% of revenue (+3.8pts). The amortisation of intangibles related to acquisitions amounted to €42.8m (+24%) and there was practically no other operating expenses unlike last year (€-0.6m vs €-9.8m in Q3 14). Group net profit increased to €105.5m (+48%) after net financial costs of €-1m (vs €+5.6m in Q3 14) and a lower income tax rate (-5.4pts to 28.2%) due to a reversal in tax reserves. The substantial net cash situation increased to €1.23bn on 30 September 2015 (vs €825m on 31 December 2014). On 9-month 2015, the operating cash flow reached €530m (+19%) and exceeded cash out-flows which included net capex of €31m, the acquisition of companies for €18m net of the cash acquired (vs €935m in 9m 14), the purchase of treasury shares for €28m (vs €151m in 9m 14) and the dividend paid in cash to shareholders for €98m. The proceeds from the exercise of stock options were €25m.
Driven by solutions other than CATIA and ENOVIA
24 Jul 15
Q2 15 earnings (IFRS standard). Revenue reached €716m (+29%, +16% at constant currency and including the acquired companies). Excluding currency effects, revenue growth was significant in Asia (+22%), largely ahead of the Americas (+15% despite lower activities in Latin America) and Europe (+13%) driven by France and Southern Europe. The basis of comparison was particularly favourable for the Asian activities (flat revenue in Q2 14). The operating income surged to €157.7m (+58%) after the amortisation of intangibles related to acquisitions of €37.5m (+25%) and lower other operating expenses (€-4m vs €-11m in Q2 14). Group net profit was €100.3m (+51%) after a higher income tax rate (+1.2pts to 36.75%). On 30 June 2015, Dassault Systèmes still had a significant net cash situation of €1.15bn (vs €825m on 31 December 2014). In H1 15, the operating cash flow amounted to €417m and was largely above the cash out-flows which did not include significant acquisitions of companies unlike last year (€18m vs €657m net of the cash acquired in Q2 14) and very little purchase of treasury shares (€5m vs €130m in Q2 15). The dividend paid in cash to shareholders was €96m.
Making Mobiles Better
17 Jan 17
Mobile phones are increasingly the key connection for the modern world. This means that the performance of mobile phones, and their networks, is going to become more critical for all the apps and businesses that rely on them. New technologies such as VR, AR, and AV will need better, more reliable connections to really move into the mainstream. In this thematic piece we attempt to identify some of the most important issues facing mobile phone networks and their users, and start to identify solutions and enablers that will solve these problems and create value by doing so.
Panmure Morning Note 18-01-2017
18 Jan 17
Blancco technology, a leading provider of data erasure solutions and mobile device diagnostics, has announced that its underlying profits are ahead of expectations. Organic sales growth remains strong, the group continues to win larger ticket orders and the mobile diagnostics is performing ahead of plan. Consequently, we are raising our FY17 PBT forecast from £8.0m to £8.3m.
N+1 Singer - NCC Group - Interims confirm underlying business sound
19 Jan 17
NCC’s interim results were largely flagged in the detailed trading update released in December. Group revenue increased 35% to £125.8 (organic growth +18%) and adj. EBITDA grew 15% to £21.3m. The group’s issues relating to contract losses/deferrals in the period were previously announced and are already included in our forecasts. The group has maintained its interim dividend at 1.5p, which we believe is an indication of the strong underlying business. Separately, NCC has announced that Paul Mitchell intends to step down as chairman in May ’17. We continue to believe that NCC remains a highly attractive asset in an area seeing strong structural growth and see the current share price weakness as an opportunity. We retain our Buy recommendation and 233p target price.
N+1 Singer - NCC Group - Rebuilding credibility from a sound base
24 Jan 17
NCC’s interim results last week held few surprises. The group issued a detailed trading update in December, giving full details of H1’17 trading and the impact of the contract losses/deferrals seen in the period. We make no major changes to our P&L forecasts today and retain our fundamentally positive view on the stock. The announcement that Paul Mitchell intends to step down as Chairman comes shortly after the appointment of Brian Tenner as CFO. We see the refreshed exec team as part of a wider renewal of the investment case, which will continue with the capital markets day next month. We believe that NCC remains a highly attractive asset and retain our Buy recommendation with a target price of 237p.