Strong sales in Europe propel Dassault Systèmes to good third quarter

Net income rises 47% as Dassault’s diversification strategy kicks in.

Dassault Systèmes continues to outspend its rivals in brand awareness advertising, featuring imaginative scenarios from the industries it serves. (Source: Dassault Systèmes)

Dassault Systèmes (OTC: DASTY) reported a solid quarter of growth in revenue for the third quarter of 2015. Total revenue in the quarter was €675.7 million ($761 million), up 20% in raw revenue and up 11% in constant currencies. The company said it saw growth in its “diversification” industries, which include life sciences, energy, marine/offshore, and consumer packaged goods.

Net income was €105.5 million ($118.8 million) up 47% from 3Q14.

Unless noted, percentages below reflect growth or contraction in constant currencies as calculated by the company.

Growth was strongest in Europe (up 17%) with the Americas (up 12%) close behind. Revenue in Asia was essentially flat in the quarter, up 1%.

Breaking down the quarter’s revenue further:

Software revenue: €593.5 million (up 10%)
Services and other revenue: €82.2 million (up 18%)

**Overall, PLM revenue was up more than 20% year-over-year.**

Revenue by product line:

Catia revenue: €221.8 million (up 3%)
Enovia revenue: €69.9 million (up 8%)
SolidWorks revenue: €135.5 million ($152.6 million) (up 9%)
Other software revenue: €166.3 million (up 24%)

Dassault 3Q15 SWx revenue — **SolidWorks continues to be a reliable source of growth.**

Revenue by regions:

Americas revenue: €218.7 million (up 12%)
Europe revenue: €291.5 million (up 17%)
Asia revenue: €165.5 million (up 1%)

New license revenue in the quarter was €145.8 million, up 9%. Revenue from periodic licenses, maintenance and other software revenue was €447.7 million, up 11%.

What do we think?

For at least three years Dassault Systèmes has been talking about taking its PLM technology to new markets, what it calls diversification. It seems the work is starting to pay off. This quarter’s revenue growth of 11% is comparing to a very good 3Q14, when revenue was up 14%. Recent acquisitions are now contributing to the bottom line across the board, strongest in life sciences and consumer packaged goods.

The third quarter of 2014 was also the quarter when all the companies in PLM, not just Dassault, started grumbling about the effects of a rising dollar on their global businesses. Asia is still stuttering, but the other regions are showing an interesting, if possibly unexpected vitality as Dassault has adjusted to the new normal for currencies.

L. Stephen Wolfe, P.E., a contributing analyst for Jon Peddie Research, provided research and his usual legendary insights for this article.