First Half 2018 versus 2017 Financial Comparisons on an IAS 18 Basis
(“IAS 18 IFRS and IAS 18 non-IFRS”)
- On an IAS 18 basis, total revenue increased 9% (IFRS and non-IFRS). Excluding acquisitions, IAS 18 non-IFRS total revenue and software revenue increased 6% and 7%, respectively. (All growth rates are in constant currencies.)
- On an IAS 18 basis and in constant currencies: Software revenue increased 10% (IFRS) and 9% (non-IFRS). Licenses and other software revenue increased 10% (IFRS and non-IFRS), with double-digit growth for CATIA, SOLIDWORKS, ENOVIA, SIMULIA, DELMIA and GEOVIA. Non-IFRS Recurring revenue, comprised of Subscription and Support revenue, represented 72% of non-IFRS software revenue. Non-IFRS Recurring revenue increased 9% reflecting strong growth in Subscription revenue, including the acquisition of EXA, and continued strong Support renewal rates in all three regions.
- IAS 18 non-IFRS software revenue increased double-digits in constant currencies in Transportation & Mobility, Marine & Offshore, Consumer Packaged Goods-Retail, Architecture, Engineering & Construction and Natural Resources.
- On a regional and IAS 18 basis: Asia non-IFRS software revenue increased 15% with double-digit growth across all countries. In Europe non-IFRS software revenue increased 6% with notable performances in Southern Europe as well as Russia. In the Americas, non-IFRS software revenue increased 9% led by Latin America and a solid contribution from North America. High Growth Countries non-IFRS software revenue increased 21%. (All growth rates are in constant currencies.)
- On an IAS 18 basis, 3DEXPERIENCE software revenue increased 22% in constant currencies in the first half of 2018.
- IAS 18 IFRS and non-IFRS services revenue increased 2% in constant currencies, with double-digit growth in 3DEXPERIENCE related services activity, offset by lower services activities for certain smaller brands in the 2018 First Half.
- IAS 18 IFRS operating income increased 6.5%. IAS 18 non-IFRS operating income totaled €462.0 million, representing an increase of 3.9% as reported and 13% in constant currencies. The IAS 18 non-IFRS operating margin was 28.7% for the 2018 First Half, compared to 28.2% in the year-ago period, reflecting underlying organic improvement of 160 basis points, offset in part by negative currency effects of 70 basis points and acquisition dilution estimated at 40 basis points.
- The Company’s IAS 18 IFRS and non-IFRS effective tax rates decreased from 32.8% to 25.3% and from 33.3% to 28.3%, respectively, principally reflecting the U.S. Tax Reform Act of 2017.
- 2018 First Half IAS 18 non-IFRS financial revenue was €10.3 million, compared to € (0.2) million in the 2017 First Half on higher financial net income and lower foreign currency exchange losses.
- IAS 18 IFRS diluted net income per share increased 12% or 22% at constant currency. IAS 18 non-IFRS diluted net income per share totaled €1.30, representing increases of 13.0% as reported and 23% at constant currency.
(Discussion on an IAS 18, non-IFRS basis, with revenue growth rates in constant currencies)
Pascal Daloz, Dassault Systèmes’ Executive Vice President, CFO and Corporate Strategy Officer, commented, “Building on the strong start to 2018 in the first quarter, our second quarter financial results were aligned well with our objectives, bringing us to a solid first half performance, with software revenue up 9%, 160 basis points of underlying organic operating margin improvement absorbing both currency headwinds and acquisition dilution, and earnings per share up 13% as reported and 23% at constant currency. Cash flow from operations was also strong, increasing 9% in the first half to €645 million.
“Looking to the full year outlook, we are now targeting IAS 18 non-IFRS total revenue growth of about 9% to 10% in constant currencies, confirming acceleration in 3DEXPERIENCE activity as our first half results demonstrated, and healthy software growth for SOLIDWORKS for the year in total while anticipating a high base of comparison in the third quarter. We are then updating our financial objectives for new acquisitions. Our new revenue range is €3.41 to €3.44 billion, incorporating the second quarter currency upside.
“In turn, we are upgrading our EPS objective, targeting IAS 18 non-IFRS earnings per share of €2.95 to €3.00, representing growth of about 10% to 12%, reflecting higher activity, currency and improved effective tax rate for the year. At constant currency, this would represent a growth rate of about 15% to 17%.”
The Company’s third quarter and full year 2018 financial objectives are
given in IAS 18 on a non-IFRS basis: