Dassault Systèmes extends its decline, JPMorgan cuts – 10/27/2022 at 11:32

(AOF) – In sharp decline yesterday due to disappointing licensing revenue, Dassault Systèmes still lost 2.92% today to €34.62, penalized by JPMorgan, which lowered its recommendation to Underweight. Dassault Systèmes’ decline also comes as tech stocks have been hammered in the stock market. The design office has also lowered the target price from 33 euros to 31 euros. The analyst justified his decision with the faster-than-expected deterioration in license sales for the group.

“While we recognize that a focus on recurring income makes strategic sense in the long term, we expect transition mechanisms and macroeconomic pressures to pose risks to the consensus over the next 12 months,” the broker warns.

Dassault Systèmes licensing and other software revenue growth is expected to be between 5% and 7% at constant exchange rates in 2022 versus 9% to 11% previously. Its performance was really disappointing in the third quarter, where it fell by 2% to 221.3 million euros.

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Main points

– Computer software publishing company established in 1981;

– Turnover of 4.9 billion euros, generated 37% in Europe, 38% in America and 25% in Asia and divided between software for 90% then licenses;

– Business model based on the 3DEXPERIENCE virtual platform of several software useful to customers in their search for sustainable innovations that harmonize product, nature and life, with 3 key sectors – manufacturing industries, life sciences and health and infrastructure and cities ;

– Capital controlled at 40.2% (53.69% of voting rights) by the Dassault family, 5.96% (7.96%) by Charles Edelstenne, chairman of the board of directors of 12 members and 1.72 % (2.15%) by Bernard Charlès, Chief Executive Officer and future Chairman of the Board of Directors in 2023;

– Healthy balance sheet, with A-rated debt reduced to 2,632 million euros and cash of 3 billion euros.

challenges

– Strategy 2025: opening platforms to all players, from suppliers to consumers / acceleration of revenue replication, via the cloud (25% of revenue in 2021, ie 860 million euros and ambition of 2 billion euros) / capitalization in The group’s top 15 brands – Enovia, 3Dexcite, Centric Plm for collaboration applications, Solidworks, Catia, Geovia, Biovia for 3D modeling, 3Dvia, Delmia, Simulia for simulations and Netvibes, Exalead, Medidata for information intelligence then new arrivals – Works for SMEs and IFWE loop on the twin/financial target of 10% annual turnover growth;

– Innovation strategy supported by R&D of 935 million euros with 73 centers employing 41% of employees: 3DExperience Lab, open innovation lab that supports new innovation offers at the prototype stage and is carried out by new businesses, innovators of communities or laboratories/themes supported: city, fashion & lifestyle and life sciences, using additive manufacturing, big data or virtual reality;

– “sustainability commitment” environmental strategy aiming at carbon neutrality in 2040: 2/3 of new licenses with a positive impact on the environment in 2025 / federation of stakeholders;

– Operation of the virtual platform of twin synchronization between real products, including people and data processed in virtual products;

– Visibility of activity, recurring traffic of the software that generates 8/10 of the income.

challenges

– Strong cloud growth is expected;

– After a first quarter of strong operating margin growth, the 2022 target for an increase of 9 to 10% in turnover and 9 to 11% in earnings per share, around €1.05;

– The dividend was reduced to €0.17.

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