Dassault Systèmes Reports Strong Revenue and Earnings Growth and Upgrades 2015 Financial Objectives

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Dassault Systèmes (Euronext Paris: #13065, DSY.PA), the 3DEXPERIENCE Company, world leader in 3D design software, 3D Digital Mock Up and Product Lifecycle Management (PLM) solutions, today announced IFRS unaudited financial results for the second quarter and six months ended June 30, 2015. These results were reviewed by the Company’s Board of Directors on July 22, 2015.

Summary Highlights

(unaudited)

• Organic, constant currency new licenses revenue growth of 9% in Q2 and 11% in H1
• Good SIMULIA, DELMIA, EXALEAD and GEOVIA brands performance
• Q2 Asia non-IFRS revenue up 20% in constant currencies on strong demand across portfolio
• Strategic initiatives: Smart Cities, Additive Manufacturing, Multi-physics Simulation
• Upgrades 2015 Non-IFRS EPS Growth Objective: 18% (was 15-17% previously)

2015 Second Quarter and First Half Financial Highlights

(unaudited)

*In constant currencies

“Dassault Systèmes’ second quarter and first half financial performance were driven by good customer dynamics for our solutions in a wide range of industries. We also made significant progress in advancing strategic initiatives,” commented Bernard Charlès, Dassault Systèmes President and Chief Executive Officer.

“Among these is 3D printing, which represents game-changing possibilities in terms of production business models. Additive manufacturing requires unique software specification-based design capabilities and intimate understanding of new materials, all of them at the core of our Research & Development efforts in the past years, or acquired with BIOVIA.The3DEXPERIENCE platform makes it possible to industrialize comprehensive additive manufacturing processes.

“Addressing Smart Cities, we’re developing ‘Virtual Singapore’, the digital twin experience of the city-state and a world first, based on our 3DEXPERIENCity solutions, in cooperation with the Singapore Prime Minister’s office. Over the course of the last 20 years, Dassault Systèmes has been deploying digital twins for many complex industries, from aerospace to biotech. We’re now applying it to cities, some of the most complex products ever created – in order to improve infrastructure development, risk management or traffic optimization, for example. Large-scale simulations of an entire city showcase what is possible using the 3DEXPERIENCE platform. With ‘Virtual Singapore’ we will have a ‘master model’ to represent, simulate and optimize an urban experience.

“And recently for Internet of Experiences, Netvibes, part of our 3DEXPERIENCE platform, with its dashboard intelligence, has introduced a revolutionary innovation of its stand-alone product. Called ‘Dashboard of Things’, it introduces ‘programmable intelligence’, whereby businesses and consumers can very easily program automatic interactions between apps and devices, to provide further value to its 7 million users. This is an example of how Dassault Systèmes gives meaning to the Internet of Things.”

2015 Second Quarter Financial Summary

(unaudited)

*In constant currencies

• IFRS total revenue increased 16% on software revenue growth of 14% and services and other revenue growth of 30%. On a non-IFRS basis, total revenue increased 14%, on software revenue growth of 12% and services and other revenue growth of 28%. (All growth rates in constant currencies.)
• From a regional perspective and in constant currencies, Asia had the strongest performance in the second quarter with non-IFRS total revenue growth of 20%. The region displayed strength across all geographies. Non-IFRS total revenue for both Europe and the Americas increased 12% in constant currencies, led by France and Southern Europe and by North America in the respective regions.

Non-IFRS new licenses revenue increased 17%, with the strongest growth coming from large customers in the quarter. New licenses growth also benefited from acquisitions completed in 2014. Non-IFRS periodic license, maintenance and other software-related revenue increased 11%, reflecting strong maintenance growth and 2014 acquisitions and accounted for 70% of non-IFRS total software. (All growth comparisons are in constant currencies.)

By product line, non-IFRS software revenue increased 4% for CATIA, reflecting strong growth in new licenses revenue on a high comparison base; ENOVIA increased 1%, reflecting the transition underway with good 3DEXPERIENCE platform prospects. Other software increased 35%, with the inclusion of Quintiq acquired in September 2014 and Accelrys in April of last year and year over year improvement across brands, including DELMIA, GEOVIA and EXALEAD. SOLIDWORKS software revenue grew 11% on new licenses growth and strong recurring revenue. (All growth comparisons are in constant currencies.)

• IFRS operating income increased 58% to €157.7 million. Non-IFRS operating income increased 31% to €212.4 million on revenue growth, currency benefits and operating margin expansion. The non-IFRS operating margin increased to 29.4%, compared to 28.5% in the year-ago second quarter, with organic operating margin improvement and currency tailwinds more than offsetting acquisition dilution.

• The IFRS effective tax rate increased to 36.8% in the 2015 second quarter compared to 35.6% in the year-ago quarter. The non-IFRS effective tax rate increased to 36.1%,compared to 34.4% in the 2014 second quarter.

• IFRS diluted net income per share increased 50% to €0.39 per share, compared to €0.26 per share on a two-for-one split-adjusted basis in the year-ago quarter. Non-IFRS diluted net income per share grew 25% to €0.53, compared to €0.43 per share on a two-for-one split-adjusted basis in the 2014 second quarter on higher revenue, currency benefits and operating margin expansion.

2015 First Half Financial Summary

(unaudited)

*In constant currencies

• IFRS total revenue increased 16%. Non-IFRS total revenue increased 17%, with software revenue growth of 15% and services and other revenue growth of 28%. Excluding acquisitions and in constant currencies, non-IFRS total revenue growth accelerated to 7% in the 2015 First Half from 4% in the 2014 First Half and non-IFRS software revenue growth increased to 8% from 5% in the year-ago period. (All growth rates in constant currencies.)
• Excluding acquisitions and in constant currencies, non-IFRS new licenses software revenue increased 11% in the First Half 2015.
• For the 2015 First Half, the Company benefited from strong growth in most core industries well supported by growth of a number of the diversification industries. Specifically, The Company experienced solid new business activity in multiple industries, most notably Transportation & Mobility, Aerospace & Defense, Marine & Offshore, Life Sciences, CG, Energy, Process & Utilities and Natural Resource.
• On a regional basis, for the 2015 First Half, Europe represented 43% of total non-IFRS revenues, the Americas 31% and Asia 26%. The strongest performance was recorded in Asia with 19% growth, led by Korea and India, well supported by growth in Japan and China, representing the two largest regions. Non-IFRS revenue in Europe increased 15%, led by France and Southern Europe. Non-IFRS revenue in the Americas increased 17% on software and services growth in North America.(All growth rates in constant currencies.)
• Non-IFRS software revenue increased 15%, with new licenses revenue growth of 20% led by Asia. Periodic license, maintenance and other software-related revenue increased 14% (IFRS) and 13% (non-IFRS) with a strong performance across all three regions. Recurring software revenue represented 71% of total software revenue for the 2015 First Half and was comprised of maintenance and periodic licenses (rental or subscriptions). (All growth comparisons are in constant currencies.)

• By product line, non-IFRS software revenue increased 4% for CATIA, 14% for SOLIDWORKS, with new SOLIDWORKS seats licensed up 10%; and Other Software, which included the 2014 acquisitions of Quintiq and Accelrys, increased 45%. On an organic basis, Other Software increased 14%. (All growth comparisons are in constant currencies.)

• The non-IFRS operating margin was 27.7% for the 2015 First Half, slightly lower than the 28.1% recorded in the year-ago period. For the 2015 First Half the Company delivered an organic operating margin improvement of approximately 100 basis points.

• IFRS diluted net income per share increased 43%. Non-IFRS diluted net income per share increased 22% to €0.96 per diluted share, compared to €0.79 per diluted share on a split adjusted basis. Both IFRS and non-IFRS net income reflected strong revenue growth, organic operating margin expansion and the positive influence from currencies, offset in part by higher effective tax rates.

Cash Flow and Other Financial Highlights

Net operating cash flow was € 151.5 million and €416.8 million for the three and six-months ended June 30, 2015, compared to €172.3 and €354.6 million for the 2014 respective periods. Second quarter 2015 changes in working capital includes the payment of €60 million in connection with ongoing tax proceedings. Excluding this item, operating cash flow would have been increasing 23% compared with the same period of 2014.

In the 2015 First Half, the Company uses of cash were principally for cash dividends of €95.6 million, payment for acquisitions of €18.1 million and capital expenditures of €18.0 million. The Company received cash for stock options exercised of €19.5 million.

At June 30, 2015, the Company’s net financial position totaled €1.15 billion, compared to €825.5 million at December 31, 2014, reflecting an increase in cash, cash equivalents and short-term investments to €1.50 billion, compared to €1.18 billion at December 31, 2014, with long-term debt unchanged at €350.0 million.

Summary of Recent Business, Technology and Customer Highlights

On June 16, 2015, Dassault Systèmes announced collaboration with the National Research Foundation (NRF), Prime Minister’s Office, Singapore, to develop Virtual Singapore, a realistic and integrated 3D model. This project builds upon Dassault Systèmes’ 3DEXPERIENCity, powered by the 3DEXPERIENCE platform, to create a dynamic, 3D digital model of Singapore and connect all stakeholders in a secured and controlled environment. Virtual Singapore is a collaborative platform with a rich data environment and visualization techniques that will be used by Singapore’s citizens, businesses, government and research community to develop tools and services that address the emerging and complex challenges Singapore faces. Virtual Singapore was launched in December 2014 as part of Singapore’s Smart Nation drive.

On June 18, 2015, Dassault Systèmes and Safran, a leading international high-technology group in aerospace, defense and security, announced that they had entered into a strategic partnership for Additive Manufacturing (known as 3D printing in other industries), with the goal to develop an end-to-end digital continuity for the additive manufacturing of aerospace engine parts. The partnership combines Dassault Systèmes’ 3DEXPERIENCE platform with Safran’s expertise in innovative technologies, for the development of a world-class, end-to-end digital solution for additive manufacturing. The effective use of this manufacturing process in the aviation industry can enhance production times as well as product performance in terms of strength, weight and environmental impact.

On June 18, 2015, Dassault Systèmes announced that Hispano-Suiza, a globally-recognized specialist in mechanical power transmission systems for aircraft engines and part of Safran, a leading international high-technology group in aerospace, defense and security, selected the Company’s Co-Design to Target” industry solution experience based on the 3DEXPERIENCE platform to improve the efficiency of its design and engineering programs. ‘Co-Design to Target’ delivers a secure, single source of the truth that facilitates the exchange of data within and between every domain of a company’s aviation design, engineering and manufacturing programs.

On June 15, 2015, the Company announced that Airbus Helicopters, the world’s leading manufacturer of civil and military helicopters and a division of Airbus Group, has chosen Dassault Systèmes’ “Build to Operate” industry solution experience for more efficient and profitable manufacturing operations management of its helicopter programs. Airbus Helicopters was seeking a powerful factory planning and shop-floor solution that would reduce its time-to-market and improve operational efficiency. The “Build to Operate” industry solution experience, specifically tailored for the aerospace and defense industry and leveraging the DELMIA Apriso manufacturing portfolio, will enable Airbus Helicopters to monitor, control and validate all aspects of manufacturing operations with digital precision—ranging from replicable processes and production sequences, to the flow of deliverables throughout their supply chain.

On May 26, 2015 the Company announced that Myntra, India’s largest online platform for fashion and lifestyle, selected its ‘My Collection for Fashion’ industry solution experience to accelerate its internal and external processes. Dassault Systèmes’ My Collection for Fashion is an ISE which enables teams inside and outside a company to engage more efficiently in social innovation, connected design, seamless collaboration and supply chain coordination.

Other Corporate Events

On June 15, 2015, Dassault Systèmes completed the change of the legal status of the Company from that of a French Public Limited Company (Société anonyme) to that of a European Company. The adoption of the status of European Company (Societas Europaea, SE) is reflecting the international dimension of the Company and its growing presence in Europe.

On May 28, 2015 at the Annual Shareholders’ Meeting, shareholders approved an annual dividend per share equivalent to €0.43 per share for the fiscal year ended December 31, 2014, representing an increase of approximately 4% compared to the prior year. In addition, shareholders again approved an option to receive payment of the dividend in the form of cash or in new Dassault Systèmes share. The payment of the dividend was completed on June 25, 2015 with the cash payment in the aggregate amount of €95.6 million and the issuance of 185,709 new ordinary shares.