Next week, 3DPrint.com will be attending SOLIDWORKS World, which will be taking place in Los Angeles from February 5-8. We’re looking forward to it for a number of reasons, but it’s Dassault Systèmes, creator of SOLIDWORKS, that really has a lot to celebrate as they go into next week’s event. The company has released their financial results for the fourth quarter and year ended December 31, 2016, and the numbers paint a positive picture of an overall successful year for the software manufacturer.
“Dassault Systèmes made good progress in 2016 delivering on our strategic initiatives, importantly led by our Industry Solutions portfolio based on our 3DEXPERIENCE platform where software revenue increased 25%. 3DEXPERIENCE traction is strong, evidenced in the number of watershed decisions we are winning in the twelve industry sectors we serve,” said Bernard Charlès, Dassault Systèmes’ Vice Chairman and Chief Executive Officer. “Looking ahead, based on our progress and outlook, we believe 2017 will represent an inflection point for Dassault Systèmes with 3DEXPERIENCE, making us very confident to achieve our five-year objective to double EPS which we reaffirmed this past year.”
The 3DEXPERIENCE platform has certainly been a profitable source of business for Dassault, as prominent clients in the areas of aerospace, naval defense, infrastructure and more have adopted the system, which Dassault is continuing to develop and expand.
“We further strengthened our Design and Engineering portfolio with expanded multiphysics and multiscale capabilities in simulation with the addition of CST in full spectrum electro-magnetic simulation, critical for every stage of electronic system design, and Next Limit Dynamics whose new generation fluid dynamic simulation technology solves certain fluid flow challenges better than traditional means,” added Charlès. “Our 3DEXPERIENCE Manufacturing portfolio benefits from both a unique level of completeness and from our sales specialization model, giving us a leadership position in Industry 4.0.
With 3DEXPERIENCE, we made a massive bet at Dassault Systèmes that companies wanted to be able to bring their different disciplines together, in a holistic manner to drive their innovation – in products, in new business models and in customer experience successes. The 3DEXPERIENCE business platform has proven uniquely suited thanks to its ability to power processes across the different disciplines, from ideation, design, scientific simulation and manufacturing to marketing and sales, feed them with meaningful data analytics, and ensuring the automatic propagation of changes across all disciplines. As a result, companies are achieving very significant improvements in innovation of smart products, project management and global efficiency of the value chain.”
A few highlights from Q4 and full year 2016, as released by Dassault:
- Q4 total revenue up 10%, new licenses revenue up 10%, EPS up 10%
- 3DEXPERIENCE software revenue up 25% in FY
- Diversification Industries 31% of total software revenue in FY (30% in 2015)
- High Growth Countries up 15% in FY
- Manufacturing & operations optimization FY traction: DELMIA up 17%, Quintiq up 23%
- Recurring software revenue 71% of total software revenue in FY, up 8%
- 2017 Non-IFRS financial objectives initiated: targeting 6-7% revenue growth
In the fourth quarter, revenue growth was boosted by the acquisition of Computer Simulation Technology (CST) at the end of September. Regionally, non-IFRS software revenue was highest in Europe, increasing by 13% with France, Germany and Russia leading. India and South Korea led a 7% increase in Asia, while software revenue in the Americas went up by 6%. Non-IFRS revenue from new software licenses increased by 10%, with double-digit growth in the sectors of Aerospace & Defense, High Tech, Energy, Process & Utilities, Business Services and Marine & Offshore. After 3DEXPERIENCE, the highest growth was driven by SOLIDWORKS, which showed a 13% increase in non-IFRS revenue.
For the full year 2016, IFRS total revenue increased 8%, with non-IFRS total revenue up 7%. The fastest-growing industries were Industrial Equipment and Business Services in Core Industries and High Tech, Consumer Goods-Retail, Energy, Process & Utilities and Marine & Offshore in Diversification Industries. Non-IFRS software revenue increased by 8% in both Asia and Europe, and 6% in the Americas, with double-digit growth in Latin America. In terms of total software non-IFRS revenue, Europe represented 43%, the Americas 30% and Asia 27%.
“We finished the year with financial results well in line with our expectations, with total revenue, new licenses revenue and earnings per share all up 10% in the fourth quarter. Over the course of 2016, we saw evidence of the increasing traction triggered by our different growth drivers. 3DEXPERIENCE software sales were up sharply in total and for ENOVIA and CATIA related sales in particular. Our brand value creation was visible both with SOLIDWORKS, and with our Manufacturing offer,” said Thibault de Tersant, Senior Executive Vice President, CFO. “Here our strengths derive from the power of integration and the power of the individual brand capabilities combined together with design and simulation with CATIA and SIMULIA, virtual and real manufacturing with DELMIA and planning & optimization with Quintiq. We also made good progress in Industry Diversification and in expansion of our global market footprint with the strong performance from High Growth countries. However, the full extent of the power of our growth drivers was hidden by the Version 5 transition.”
In addition to the acquisition of CST, Dassault Systèmes acquired Next Limit Dynamics, creator of Xflow technology, on December 9. The acquisition will strengthen Dassault’s presence in the strategic computational fluid dynamics market and enable them to increase their industry solution experiences for multiphysics simulation on the 3DEXPERIENCE platform, while the acquisition of CST will give them access to full spectrum electromagnetic simulation of smart homes, autonomous cars, wearable electronics and other IoT devices.
Dassault Systèmes expects another solid year in 2017. They kicked the year off with an announcement made at CES 2017 that users of the 3DEXPERIENCE platform can now view, explore and validate product designs, at any stage of the process, in immersive virtual reality thanks to a newly incorporated HTC Vive Business Edition virtual reality system. (You can learn more about the newest features of 3DEXPERIENCE here.) Goals for the year include a first quarter non-IFRS total revenue objective of about €740 to €750 million, and a total revenue growth objective of about 6-7% in constant currencies at €3.275 to €3.300 billion for full year 2017.
“For 2017, we see a year of solid new business activity, translating into similar new licenses revenue growth to that of the 2016 fourth quarter, and recurring software revenue normalized for the higher renewal rates at SOLIDWORKS we have benefited from in 2016,” said de Tersant. “We will continue the increased investments begun last year, leading to an operating margin objective of about 31.5%, embedding about 50 basis points of organic improvement exclusive of acquisition dilution and currency effects. Finally, our earnings per share objective is about €2.65 to €2.70, up about 6-8%, but neutralizing the one-time, 5 cents effect of the tax reserves reversal in first quarter of 2016, our 2017 EPS would grow by about 9-11%. (All figures on a non-IFRS basis.) Looking forward, our objective is to further animate our revenue drivers, leading to acceleration in our growth in the coming years, leveraging the investments we are making.”
Dassault held a webcast and conference call yesterday, both of which can be accessed online here. Full financial information and figures can be downloaded as well. Discuss in the Dassault Financials forum at 3DPB.com.