Cost-cutting and better-than-expected SolidWorks sales lifted Dassault’s results, despite total revenue rising only 1% from a year earlier.

Dassault Systèmes (DSY.FR) turned in a positive first quarter, with net profit up 31% on essentially flat revenues, when compared to a year earlier. On a year-over-year (YOY) basis, the company posted gains in most revenue categories.

Dassault’s stock price advanced 5.1% to €48.98 on the news.

Total revenue for the first quarter of 2010 (ending March 31, 2010) was €311.9 million ($411 million), up only 1%. The difference between the large percentage rise in income and flat revenue is due to aggressive cost management throughout the year, and currency fluctuations. Net profit rose to €37.8 million ($49.9 million), from €28.8 million ($38 million) a year earlier.

Evaluated on a constant currencies basis, new license revenue increased 19% in the quarter, year-over-year (YOY).

Revenue comparisons, by categories, in Euros, over the last five quarters (M = Millions):

Dassault has valued the IBM PLM acquisition at $600 million; Dassault paid $460 million. Estimated deferred revenue is $140 million. The IBM share of Dassault’s named-account software revenue in 1Q10 was €50 million.

Cash per share on March 31, 2010 was $10.09, the highest it has been for Dassault since we started tracking this figure in 2008.

The Final Analysis
Dassault Systèmes growth was not torrid in the quarter, but clearly business is turning around, especially for SolidWorks, which generates more net profit per sales dollar than any other Dassault division. If the year-ago comparisons continue to hold throughout 2010, then the SolidWorks division and its legendary reseller network did a good job of preventing price erosion in 2009. A year ago the average price of a SolidWorks seat was $7,086; in 1Q10 it was $6,944 down only 2%.

CATIA is a mature market with slower growth rates even in good economic times. Adoption of V6 in traditional markets continues to be sluggish. Dassault is doing a better job selling its web-based V6 technology into new PLM markets such as life sciences and apparel.

Dassault, PTC, and Siemens PLM all realize that MCAD is a mature market and that growth will come in the wider circles of users beyond the CAD seats. We see signs that active maintenance is stalling out in the neighborhood of 200K-250K seats for each of the major 3D MCAD products (NX, SolidWorks, Inventor, CATIA). It is unlikely any MCAD product will see double-digit percentage growth again, no matter the economic climate. By all accounts the merging of IBM PLM into Dassault is going well. With more than $1 billion in cash, we would not be surprised to see DS make a one or two technology “tuck-in” acquisitions in the next few months. Most likely targets are in simulation, where demand is strong and there are so many good small companies, and in support of PLM for emerging market segments and regulatory compliance.

Seven charts follow.

Contributing Analyst L. Stephen Wolfe, P.E. contributed research for this article.