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Dassault Q1 Conference Call

reprinted by permission of Ralph Grabowski, editor

April 27, 2003

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"Business conditions continue to be tough," says Dassault Systemes, and aren't going to get better. Q1 revenue fell 7% compared to a year earlier, while net income fell 13%. Looking ahead to Q2, revenues are expected to fall by 3-6% to e180-185 million. The world's largest CAD company is not expecting any rebound for the rest of the year. Despite the gloomy outlook, Dassault is determined to increase its market share in 2003. [I find it interesting that it's the large CAD vendors having a tough time. Smaller vendors, especially niche vendors, are improving their financial pictures.]

The financial data from Dassault is confusing. The company is based in France, so its results are in euros. Important parts of its sales - SolidWorks and IBM - are, however, based on US dollars. The weakening of the US dollar affects the results negatively or positively, depending on whether euros or dollars are utilized.

Dassault further confuses its results by comparing some results "sequentially" (from the previous quarter) and "year-over-year" (same quarter a year earlier). As an example of this mix 'n match approach, SolidWorks sales were up 15% year-over-year (6,043 new seats in Q1), but the average price per seat increased 7% to US$5,285 sequentially. [I guess the idea is to pick 'n chose those stats that look the best.] How can the average price of SolidWorks increase? The company sells a higher-priced version called SolidWorks Office, which more customers purchased.

In the bad news department, CATIA V4 and V5 sold 6,874 new licenses, a drop of 17% over the previous quarter. Of those, about 33% were sales of V4. Dassault separates its products into two groups:

1. Process-Centric Software
  • CATIA (CAD)
  • Delmia (CAD)
  • Enovia (PLM)
  • Smarteam (PLM)
  • Spatial (technology)
2. Design-Centric Software
  • SolidWorks (CAD)

CATIA V5 R11, soon to be announced officially, features predictive PLM, virtual clay modeling, and industry-specific dialects of PLM. SolidWorks 2004 is due this summer.

Recurring revenue [code for "subscriptions"] is 55% of the total of software revenue, up from 49% a year ago. PLM represents 10% of the business.

In the last quarter, the company cut expenses by 3%, yet increased head count by 1%. It has 459.6 million euros in cash. It does not anticipate helping Rand further financially. http://www.3ds.com.

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