This is a summary of the third quarter fiscal 2008 earnings call conducted by Dassault Systemes SA (DASTY) on October 29, 2008.
Management:
-
President and CEO: Bernard Charlθs
-
Senior EVP and CFO: Thibault de Tersant
-
Head of IR: Valerie Agathon
Key Investor Issues:
- EPS rose 26% to 0.49 from 0.39 a year ago and the firm raised its full-year EPS objective to 2.15 to 2.20 per diluted share from 2.10 to 2.17.
- Revenue rose to 319.7 million from 301.3 million a year earlier.
- Dassault Systemes forecast software revenue growth of 12% in constant currencies for 2008, from am earlier forecast of 12%-13%, and full-year revenue growth of 9% from a previous forecast of between 9% and 10%.
Third Quarter Highlights:
Dassault Systemes had a solid third quarter with financial results well in line with the objectives. Software growth was 12% in constant currency and would have been 18% if reported in U.S. dollars.
Last quarter, Dassault Systemes saw a mixed macroeconomic environment.
Being cautious, the company was preparing for a potential tougher second half environment. Naturally, these events did have some effects on the business activities during the third quarter.
- Based upon the analysis on the year-to-date performance, Dassault Systemes is targeting a full year objective of 12% software revenue growth in constant currencies, within the previously announced branch of 12% to 13%.
- Furthermore, Dassault Systemes is targeting an operating margin expansion of 50 to 100 basis points and is increasing its earnings per share growth objective approaching 10% EPS growth.
For the 2008 third quarter, Dassault Systemes had deferred revenue write-downs of 1.4 million operating income, operating margin and earnings per share before amortization expenses for acquired intangibles of 11.4 million, stock-based compensation expense of 4 million and 6 million of other operating expense in connection with the re-location of the corporate headquarters and restructuring expenses.
Total revenue came in at 320 million.
Dassault Systemes ended up with less headwind from currency compared to the assumptions in developing its objectives. Therefore, the company calculates that reported revenue would have been 313 million at the assumed currency rates or within the objective range of 305 million to 315 million that were shared last quarter.
Growth was all organic with softer revenue at 12% in constant currencies.
While Dassault Systemes has a small positive impact from the Engineous acquisition, its divestiture of DSF this year more offset this.
EPS increased 26%. It was $0.49 above the high end of our range of $0.41 to $0.44. These results reflected the inherent earnings leverage as well as the positive impact of currency on financial revenue.
Operating margin was 23.7% ahead of the objective of 22.5%.
This represents a 120 basis points increase in the operating margin for the quarter and year-to-date, the improvements is the same. This demonstrates that the operating margin performance was closely tracking the high-end of the targeted range of 80 to 130 basis points prior to today''s update.
Net operating cash flow improved 7% and year-to-date, the net operating cash flow was up 9% to 262 million compared to 240 million in 2007.
Dassault Systemes finished the quarter with a strong net cash position totaling 630 million as of September 30th.
Revenue growth was strongest in the Americas with revenue up 16% in constant currencies.
