Operating income and expense net this quarter included non-recurring expenses related to the headquarters move.
In addition, they also affect restructuring expenses related to improving efficiencies within the organization to reduce infrastructure cost including co-location of DS teams. These non-occurring expenses totaled about €6 million during the third quarter.
In the fourth quarter Dassault Systemes will recognize a sizeable gain of sale of real estate in the GAAP results. But the gain will be excluded from the non-GAAP results.
Dassault Systemes has factored into its fourth quarter and fiscal year outlook signs of weakening results in September due to the economic crisis.
Dassault Systemes is targeting a 2008 software revenue growth objective of about 12% in constant currencies within operating range of 12% to 13%, thanks to its diversification strategy, sales channel expansion and recurring revenue model.
Looking to the fourth quarter, the company is assuming about €10 million impact from lower activities.
Currency on the other hand has an estimated positive impact of about 30 million in comparison to the assumptions previously used in preparing the objectives.
Netting currency and activity leads to a net increase in the reported revenue range to between €1.34 billion to €1.35 billion from €1.32 billion to €1.33 billion, previously.
- Year-over year currency still has a negative effect based upon the assumed rates in comparison to 2007 average exchanges rates for both the U.S. dollar and Japanese yen.
- Based upon this level over revenue growths Dassault Systemes is also targeting to improve the2008 non-GAAP operating margin by 50 to 100 basis points in comparison to 2007.
Dassault Systemes has effectively shifted down around of range improvement by 50 basis points on its previous target of 80 to 100 basis points improvement. So the company expects that for full year its non-GAAP operating margin will show steady improvements over 2007, but less than what Dassault Systemes has achieved year-to-date.
The company is increasing its 2008 non-GAAP EPS objective range to between €2.15 to €2.20 from €2.10 to €2.17 previously.
The outlook is based upon the foreign currency assumptions for the fourth quarter - the U.S. dollar to euro exchange rate of $1.45 up to a euro and the Japanese yen to euro exchange rate of 145 yen to a euro reflecting the fact that currencies continue to be very volatile at this point in time.
Based upon the objectives for the full year, Dassault Systemes has set the fourth quarter 2008 non-GAAP total revenue objective of about €385 million to €395 million and a non-GAAP EPS objective of about $0.79 to $0.84.
ENOVIA had a dynamic quarter with a software revenue growth of 19% in constant currencies.
This performance was driven by industry vertical diversification. The specialized applications by industries, Industry Accelerators, have been important in securing and helping customers achieve faster deployments of the software. ENOVIA is also progressing with V6 adoptions with a recent win with Piaggio Aero, a leading aerospace company headquartered in Genoa, Italy.
Procter & Gamble Company (P&G) has chosen to implement ENOVIA V6 PLM solution as its enterprise-wide PLM back.
Solidworks delivered good software growth up 13% in constant currencies and up 19%, if reported in U.S. dollars.
Driving these results were strong growth in subscription revenue, which was up about 20% in constant currencies. Unit growth was more subdued at 2% on lower and new license activities in Americas offsetting to a large extent, growth in Europe and Asia.
Year-to-date unit growth was up 9%, ESP was stable. Solidworks brand is also an example of the value of specialized applications in broadening revenues sources on driving revenue growth. Solidworks analysis on product that are management specialized applications, posted revenue growths above 20% in constant currencies during this quarter.
SIMULIA delivers strong software revenue growth in the third quarter.
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