Dassault Systèmes Revenue Down 6% in 2009

In reporting fiscal year 2009 and fourth quarter 2009 results, Dassault executives presented a picture of victory over adversity that was more about the victory of their vision than the adversity of their results.

Note: Euro-to-Dollar conversions in this article are $1 = €0.6757, the exchange rate on December 31, 2009.]

February 18, 2010–It was a tough 2009 for everybody in design automation software, and Dassault Systèmes was no exception. Last week the company reported sales were down 6% year-over-year for the fiscal year ending December 31, 2009. In reporting the results of the fourth quarter and the full year, CEO Bernard Charles and CFO Thibault de Tersant kept trying to spin a picture of victory over adversity that was more about the victory of their vision than the adversity of their results.

For the year, Dassault reported revenue of €1.25 billion ($1.84 billion) compared with €1.33 billion ($1.96 billion) in 2008. Net income of €170 million ($251 million) was down 15% from €200 million the prior year.

In 4Q09 revenue was €339 million ($497 million), down 7% from a year earlier. Net income was up almost 37% from a year earlier, to €77 million ($113 million), as Dassault pushed operational reform throughout all of 2009 to save money and focus the company on being ready for recovery.

Dassault increased R&D head count by 4% in 2009, while overall operational expenses were down 18% in 4Q09. Total head count on December 31, 2009 was 7,835, down from an all-time high of 8,019 on March 31, 2009. The staff reductions were largely through attrition. The SolidWorks division, for example, did not lay off anyone during 2009, but quite a few employees transfered from one project or group to another.

The acquisition of IBM PLM, formerly Dassault’s largest channel partner (and, if you go back far enough, its only channel partner), is expected to close in April. [Editor’s addition: It did.] The company expects the deal to contribute €165 million ($176 million) in revenue in 2010. We expect most of this increase to have a positive effect on earnings per share.

New license revenues dropped 29% for the year. License revenue accounts for about 25% of Dassault’s revenue. This rate of decline is consistent with that of other CAD/PLM companies. Incorporating the IBM PLM acquisition into the mix, Dassault expects revenue growth of 15% to 17% in constant currencies for 2010. Restated, the company’s revenue objective for the first quarter of 2010 is €280 million ($414 million) to €300 million ($443 million).

The full-year outlook for 2010 projects revenue of €1.41 billion ($2.08 billion) to €1.44 billion ($2.13 billion).

In the fourth quarter, revenue by regions: