Dassault Systèmes' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Dassault Systèmes SA (DASTY.PK)

Q1 2012 Earnings Call

April 26, 2012 09:00 am ET


François-José Bordonado - VP, IR

Bernard Charlès - President & CEO

Thibault de Tersant - Senior EVP & CFO


Joseph Burette - BNP Paribas



Thank you for standing by and welcome to the Dassault Systèmes 2012 first quarter financial results call. At this time all participants are in a listen-only mode. A short overview will be given followed by a question-and-answer session. (Operator Instructions) I must advise you that this conference is being recorded today. I would now like to hand the conference over to François-José Bordonado, Vice President, Investor Relations. Please go ahead.

François-José Bordonado

Thank you very much. Thank you for joining Bernard Charlès, CEO and Thibault de Tersant, CFO for our 2012 first quarter conference call. We held our webcast and presentation in London earlier today and have placed a presentation on our website. Two brief reminders before we begin.

First Dassault Systèmes financial results are prepared in accordance with IFRS. We have provided supplemental non-IFRS financial information which is explained in the IFRS and non-IFRS reconciliation table included in our earning press release and second some of the comments we will make on this call will contain forward-looking statements which could differ materially from actual results. Please refer to our risk factor in today's press release and in our 2011 Document de referenc. I would now like to turn the call over to Bernard Charlès.

Bernard Charlès

Thank you François-José. Thank you for joining us here on the webcast held this morning. As you saw we had similar pieces of news this morning. First, we reported our financial quarter financial results with new licensees revenue up 18% driving both operating margin expansion of 100 basis points on 13 percentage earnings per share growth. Just two months ago we reported recorded results for 2011 and I am happy to say that we have begun 2012 in a very nice manner.

It is clear from our performance that our growth strategy is very sound and that we’re delivering on it. In February, we outlined with you our purpose as a company to provide businesses on people with holistic 3D experiences to imagine sustainable innovations capable of harmonizing product nature on life.

Indeed with our 3D Experience Platform we are helping companies transform the way they connect designers, engineers and marketers with consumers. Thus more with our software solutions, we can model and stimulate gradually any product in the world and we do this across a number of industries.

Today, we are announcing that we are expanding 3D experiences to nature to be able to model and stimulate the natural world. We’re beginning this effort with the creation of a new brand GEOVIA with the acquisition of Gemcom, our leader in mining industry software solutions. And with our decision to target a new industry, natural resources comprises the mining sector as well as water supply, oil and gas on those related sectors.

I will have more to say shortly. So let me come back to this in a few minutes. The third topic I would like to touch on is our financial outlook. As outlined in our earnings press release, we are upgrading our 2012 financial objectives to take into account the first quarter revenue of our performance and we are updating for currency exchange rates. We remain confident in our business and growth drivers. At the same time we are convinced that retaining our caution with respect to the macroeconomic environment is appropriate.

Turning to our financial result for the first quarter, there are several nice numbers, software growth, operating margin expansion and double-digit earnings growth. But the number one I like to, the best as it gives you a good indication of what customers are thinking is our new license revenue growth of 18% in constant currencies and what was most interesting about the growth is that it came from everywhere, all sales channels, and all geographic regions.

Looking at our performance by brands, illustrates the value of our diversified portfolio. All our major brands had double-digit new licensees revenue growth and in terms of total software growth ENOVIA led the way with 17% growth. SolidWorks did well in the quarter with double-digit growth in both new licensees revenue on recurring revenue, so again demonstrating the relevance of Dassault Systèmes market focus.

Turning to a regional view, Asia had the strongest growth with revenue up 15% in constant currencies led by high growth countries. For Japanese companies the March quarter is their year end and we were pleased to see a good level of activity across our three sales channels. In the Americas, revenue increased 8% in constant currencies. We saw good growth in our professional channel and improving results in our direct sales channels.

Looking at North America, it is a market where we see a lot of potential notably by expanding our business in government high tech, life sciences, financial services and consumer related industries. In Europe we have had two years where it delivered the strongest performance of the group. Entering 2012, our European business again showed a solid level of activity and demonstrated good resiliency in light of macro environment.

Turning to our growth drivers, let's start with our V6 foot print. As we have indicated, we expect that the next three to four years will show increasing adoption of our V6 platform and products coming both on new customers particularly in our growth industries and some customers in our core industries. A perfect example is our progress of our progress’ value. A well known global automatic supplier, ENOVIA V6 is being used to manage its mechatronic data information, targeting to improve world-wide collaboration and enable a single instant view for the 12,000 users online.

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