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Dassault Systemes S.A. (DASTY.PK)

Q2 2012 Earnings Call

July 26, 2012 4:30 AM ET


François Bordonado – IR

Bernard Charlès – President and CEO

Thibault de Tersant – SVP and CFO


Grégory Ramirez – Bryan Garnier

Josep Bori – BNP Paribas

Amit Harchandani – Citigroup

Mohammed Moawalla – Goldman Sachs

Marc Geall – Deutsche Bank

Michael Briest – UBS


François Bordonado

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Good morning, everyone. I’m François Bordonado, Dassault Systèmes Investor Relations. From the company, we have Bernard Charlès, our President and Chief Executive Officer; and Thibault de Tersant, our Senior Executive Vice President and Chief Financial Officer. I would like to welcome you to Dassault Systèmes Second Quarter and First Half 2012 Earnings Presentation, which is also being webcasted.

At the end of the presentation, we’ll take questions from the audience and from participants on the webcast call. Later today, we’ll also hold a conference call. Dassault Systèmes financial results are prepared in accordance with IFRS. In addition, we have provided supplemental non-IFRS financial information. For an understanding of the differences between the two, please see the reconciliation table included in our press release.

Some of the comments we’ll make during today’s presentation will contain forward-looking statements which could differ materially from actual results. Please refer to our risk factors in our 2011 Document de Reference.

Let me now introduce Bernard Charlès, President and Chief Executive Officer.

Bernard Charlès

Good morning. Thank you, merci, François-José. Good morning. Thank you for participating to this analyst meeting. There is an interesting news flow. The impression I have each time we have this interesting quarterly days is I’m speaking about the past, as we are already wired for the future. Q2 was a good strong quarter. As you most probably have already seen on the announcement, we have strong organic growth, double digit.

On February 9, 2012, we framed for you where we see the future in terms of our long-term vision for 2021. There is a tendency often in this market to forget the long term. So I want to refer to February 9, 2012 to say that what we formulated there at that time was equivalent to the way we formulated PLM in June 1999.

And therefore, the 3DEXPERIENCE platform, which is at the very heart of what we are doing for the next 10 years, is a very critical element, not necessary on your financial model. It’s too early to say. But on the trends in terms of how are we, again, going to transform the way companies are engineering, creating, managing innovation on production systems around the globe, no matter if you do physical goods products or even now, today, natural resources. So I will come back on that.

So the awareness of the campaign which we are doing for the first time ever in 30 years is a very, very interesting one. It provides visibility which is high, not really in the level of awareness yet, but the level of visibility that behind the world-class brands that we have with CATIA, DELMIA, ENOVIA, SIMULIA. There is a company in these companies called Dassault Systèmes.

For investor, it might be an obvious remark. But you will be surprised to know how many users are still – they don’t know our products, that they don’t know necessary that Dassault Systèmes is the company producing those products. So we still have a long way to go, but I think we are making progress here.

I’m also very pleased, of course, with the incredible fast-track process we have been following for the acquisition of Gemcom, the world leader in mining for modeling and simulation. I’m coming from Australia. I visited mines. It’s very different from the way you produce airplanes, obviously. But there is a lot of potential there and it’s a huge, huge GDP contribution, I think is $1.8 trillion GDP for mining in the world and it’s about natural resources.

We are updating our financial objective for the full year. Hopefully, we will reach the €2 billion and that’s a nice milestone, at least, to look at, a nice rounded number, as Thibault would say.

So let’s review the business, the Q2 performance. As you will notice, the gross excluding exchange rate is up 10%, with new license up 9%. As you will notice, a large proportion of new licenses are rental licenses. We like this model. We support this model. We promote this model. It provides flexibility. It provides long-term visibility. And, as you know, we have very, very stable customers there.

And the point is, it prepares ourself very well for online, subscription-based, cloud-based set of solutions where the model will be consistent with that and we – it provides a good visibility. The EPS also is going up nicely, up 19%. You know the leveraging factor. I think it’s visible here. So for the full year – the first half, up 10% ex exchange rate. For the growth of the revenue on – for the EPS, up 15%.

Now if you look at where this is coming from, from a product line standpoint, I think it’s a good quarter for both PLM product lines as well as SOLIDWORKS, with an excellent PLM growth at 9% year-to-date on for the quarter, ENOVIA up 9% on the quarter, 13% for the first half.

Also PLM, which means SIMULIA digital manufacturing on the new baby brands, up 13%, SOLIDWORKS is up 15% for a total aggregate of 11%. So we are very pleased with SOLIDWORKS, while we really continue to put a lot of attention to really continue to expand this provisional channel to be really truly a volume channel. So it’s a good indicator. Nothing in terms of visibility going forward.

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