Dassault Systèmes Forecasts 8-10% Revenue Growth Amid Analyst Disappointment
Dassault Systèmes shared its outlook on Thursday, projecting a revenue growth of 8-10% for the current year at constant currencies. However, this fell below analyst forecasts, leading to a roughly 9% decline in the shares of the French software giant during early trading.
Specializing in delivering software solutions to automakers, planemakers, and industrial firms, the company envisions a full-year non-IFRS revenue range of 6.35 billion to 6.43 billion euros ($6.86 billion to $6.95 billion) for 2024, following a 9% surge in revenue the previous year. Analysts participating in an LSEG survey had anticipated the 2024 revenue to hit 6.48 billion euros.
The fourth quarter unveiled a 35.9% operating margin on a revenue of 1.64 billion euros, slightly below the expected 36.1% and 1.66 billion euros, respectively. For the entire year, the company foresees an operating margin between 32.5% and 32.8%, compared to 32.4% in 2023.
Quarterly software revenue experienced an 8% ascent, reaching a total of 1.48 billion euros, driven by substantial subscription growth throughout the year. Subscription revenue contributed 1.12 billion euros in the fourth quarter.
3DEXPERIENCE Platform Performance
The sales of the flagship software platform, 3DEXPERIENCE, providing 3D modeling, data management, and project tools, decelerated to 21% in the fourth quarter, down from the previous quarter’s 46%.
Notwithstanding persistent challenges, Dassault Systèmes remains committed to its investments in China, where sales witnessed a return to double-digit growth in the final quarter of 2023. Simultaneously, strategic investments continue in the construction and infrastructure sectors.
During an earnings call, Rouven Bergmann, the company’s finance chief, expressed confidence in the 2024 outlook while maintaining a cautious stance. He underscored the anticipation of an improvement compared to the preceding year.
In the fourth quarter, the Medidata unit, specializing in patient data analysis for clinical trials, remained the weakest contributor to the group’s total revenue. This was attributed to a high comparison base and a sustained slowdown in the initiation of clinical studies. Despite acknowledging industry softness, Bergmann expressed optimism, foreseeing stabilization in 2024.
Looking ahead, Dassault Systèmes envisions first-quarter 2024 revenue growth between 7% and 8% at constant currencies, accompanied by an operating margin ranging from 30.6% to 30.7%.
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