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1. Company Snapshot

1.a. Company Description

Dassault Systèmes SE provides software solutions and services worldwide.It offers SOLIDWORKS design software for 3D design, electrical and printed circuit board design, product data management, simulation, manufacturing, and technical communication; CATIA, an engineering and design software for product 3D computer-aided design; GEOVIA for modeling and simulating the earth; and BIOVIA that provides the scientific community with advanced biological, chemical, and materials experiences.The company also provides SIMULIA that delivers realistic simulation applications; DELMIA, which enables global industrial operations; 3DVIA that provides 3D space planning solutions; and ENOVIA that enables to plan and track the definition of success for customer.


In addition, it offers Centric PLM, a product lifecycle management software solution; 3DEXCITE, a real-time 3D visualization software; NETVIBES, which enables organizations to gather, align, and enrich big data; 3DEXPERIENCE platform that provides organizations a holistic and real-time view of their business activities and ecosystem, as well as connecting people, ideas, data, and solutions together in a single environment; and MEDIDATA, a clinical research study software that provides evidences and insights to pharmaceutical, biotech, medical device, and diagnostic companies, as well as academic researchers.Further, the company provides consulting, deployment, outcome based, and training services.It primarily serves companies in the transportation and mobility; industrial equipment; aerospace and defense; high-tech; life sciences and healthcare; energy and materials; home and lifestyle; construction, cities, and territories; consumer packaged goods and retail; marine and offshore; and business services sectors through distributors and resellers.


Dassault Systèmes SE was incorporated in 1981 and is headquartered in Vélizy-Villacoublay, France.

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1.b. Last Insights on DSY

Dassault Systèmes' recent performance has been negatively impacted by a decline in net profit margins, which slipped to 18% from 18.5% previously. The company's annual earnings growth slowed to 1.2% from a five-year average of 16.7%. Analysts have also reduced their price target from €35.56 to €34.91, citing macroeconomic uncertainty and competitive pressures. Furthermore, the company has cut its full-year revenue growth outlook to 4-6% from 6-8% due to lower-than-expected growth in Life Sciences and CENTRIC PLM businesses.

1.c. Company Highlights

2. Dassault Systèmes' Q3 Performance: A Strong Showing with Growth Across Core Industries

Dassault Systèmes reported a solid Q3 performance with 5% revenue growth, driven by strong demand across core industries. The company's operating margin was 30.1%, and earnings per share (EPS) grew 10% to EUR 0.2928, slightly below estimates of EUR 0.2953. The subscription business saw a significant 16% increase, now accounting for almost half of the recurring revenue. As Rouven Bergmann highlighted, "top line growth and margin expansion are the company's top priority, and the 3DEXPERIENCE platform is driving the business model shift."

Publication Date: Oct -24

📋 Highlights
  • Subscription Revenue Growth:: Subscriptions grew 16%, now contributing nearly half of recurring revenue.
  • EPS & Margin Expansion:: Earnings per share rose 10% to EUR 0.29, with operating margin at 30.1% (up 100 bps).
  • 3DEXPERIENCE Cloud Momentum:: Cloud revenue surged 36%, driven by 3DEXPERIENCE and SOLIDWORKS adoption.
  • Industrial Innovation Growth:: Transportation & Mobility sector saw 18% growth, with Industrial Innovation up 9% Q3.
  • Strategic AI & SaaS Progress:: 3DS OUTSCALE enables secure AI deployment, while Centric leadership shift aims for EUR 1B threshold.

Segmental Performance

Industrial Innovations, especially Transportation & Mobility, saw significant growth, with a notable 18% increase in the sector. The company also saw a strong momentum in 3DEXPERIENCE and SOLIDWORKS. Key wins include Stellantis standardizing on the 3DEXPERIENCE platform on the cloud, AbbVie signing a 5-year contract for clinical trial solutions, and Korea Hydro & Nuclear Power using the platform for nuclear reactor decommissioning.

Guidance and Outlook

For the full year, the company reaffirmed its earnings guidance, expecting EPS growth between 7-10%, with total revenue rising 4-6% on an adjusted basis. The company attributes its performance to its focus on running a profitable and efficient business, accelerating SaaS adoption, and investing in AI and industry-specific solutions. The 3DEXPERIENCE platform is driving Dassault Systèmes' business model shift to subscription and recurring revenue growth.

Valuation Metrics

With a P/E Ratio of 29.77 and an EV/EBITDA of 16.44, the market seems to be pricing in a certain level of growth for Dassault Systèmes. The company's ROE of 13.29% and ROIC of 8.96% indicate a relatively healthy return on equity and invested capital. Analysts estimate next year's revenue growth at 5.6%, which is slightly higher than the company's current guidance.

Cloud and AI Adoption

Dassault Systèmes is leveraging AI and cloud to drive growth, with 3DEXPERIENCE cloud revenue growing 36% in Q3. The company has won significant contracts, including with Ford and Apple, and is confident in its long-term targets. The operating margin improved 100 basis points for the quarter, driving strong EPS growth of 10%.

Future Prospects

The company expects subscription revenue to surpass maintenance revenue in absolute terms starting in 2026. Recurring revenue accounts for 84% of total software revenue year-to-date. Pascal and Rouven are confident in the company's growth targets, with AI and cloud as 2 main growth drivers, and are committed to continue investing in innovation, clients, and shareholder value.

3. NewsRoom

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[Latest] Global 4D Printing in Healthcare Market Size/Share Worth USD 14240 Million by 2034 at a 84.6% CAGR: Custom Market Insights (Analysis, Outlook, Leaders, Report, Trends, Forecast, Segmentation, Growth Rate, Value, SWOT Analysis)

Dec -04

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Is Dassault Systèmes Fairly Priced After 2025 Share Price Slide and DCF Upside?

Dec -03

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European Enterprises Strive for AI Innovation and Compliance, ISG Says

Dec -02

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A New Era of Sovereign AI: Dassault Systèmes and Mistral AI Deepen Their Partnership

Nov -26

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Caidya Reimagines Next Generation Clinical Trial Innovation and Study Delivery with Medidata AI-Powered Experiences

Nov -20

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Dassault Systèmes (ENXTPA:DSY): Evaluating Valuation After Prolonged Share Price Weakness

Nov -19

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Rhone Powers Operational Efficiency and Streamlines Product Development with Centric PLM

Nov -18

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National Cancer Institute Broadens Partnership with Medidata to Bring Unmatched Continuity of Medical and Clinical Data for Lead Protocol Organizations

Nov -18

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.20%)

6. Segments

The Sale of Software Solutions and Services

Expected Growth: 10.2%

Dassault Systèmes SE’s growth is driven by increasing demand for product lifecycle management and 3D design software, as well as the need for digital transformation in industries such as aerospace, automotive, and healthcare.

7. Detailed Products

CATIA

3D design and engineering software for creating and simulating complex systems

ENOVIA

Collaborative innovation and product lifecycle management (PLM) software

SOLIDWORKS

3D computer-aided design (CAD) software for mechanical design and engineering

DELMIA

Digital manufacturing and production planning software

SIMULIA

Simulation and analysis software for product performance and behavior

Apryse

Cloud-based 3D design and collaboration software

3DEXPERIENCE

Cloud-based platform for product design, engineering, and simulation

8. Dassault Systèmes SE's Porter Forces

Forces Ranking

Threat Of Substitutes

Dassault Systèmes SE operates in the software industry, specifically in the computer-aided design (CAD) and 3D design market. While there are alternative software solutions available, such as Autodesk's AutoCAD and SolidWorks, the company's strong brand reputation, extensive product offerings, and compatibility with various industries make it a preferred choice for many customers. However, the increasing demand for cloud-based and open-source solutions could pose a moderate threat.

Bargaining Power Of Customers

Dassault Systèmes SE serves a diverse customer base across various industries, including aerospace, automotive, and architecture. While customers may have some negotiating power due to the availability of alternative solutions, the company's software is widely used and has become an industry standard. This limits customers' ability to dictate prices or demand significant concessions.

Bargaining Power Of Suppliers

The company sources components and materials from various suppliers, but it is not heavily reliant on any single supplier. Additionally, Dassault Systèmes SE has a strong financial position, which allows it to negotiate favorable terms with suppliers. The company's focus on software development also reduces its dependence on physical components.

Threat Of New Entrants

The software industry, particularly the CAD and 3D design market, has high barriers to entry due to the need for significant investments in research and development, marketing, and customer support. Established players like Dassault Systèmes SE have a strong brand presence, extensive product portfolios, and large customer bases, making it challenging for new entrants to gain traction.

Intensity Of Rivalry

The software industry is highly competitive, with established players like Autodesk, Siemens, and PTC. Dassault Systèmes SE competes with these companies in various markets, and the competition is intense. The company's strong product offerings and brand reputation help it maintain market share, but it must continue to innovate and invest in marketing and customer support to stay ahead of competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 21.57%
Debt Cost 4.33%
Equity Weight 78.43%
Equity Cost 7.56%
WACC 6.87%
Leverage 27.50%

11. Quality Control: Dassault Systèmes SE passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Sword

A-Score: 5.9/10

Value: 4.0

Growth: 5.7

Quality: 5.4

Yield: 9.4

Momentum: 4.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
Asseco SEE

A-Score: 5.8/10

Value: 4.1

Growth: 6.7

Quality: 6.9

Yield: 4.4

Momentum: 9.0

Volatility: 4.0

1-Year Total Return ->

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Linedata Services

A-Score: 5.6/10

Value: 7.7

Growth: 6.4

Quality: 7.1

Yield: 5.6

Momentum: 0.5

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Garmin

A-Score: 5.6/10

Value: 1.3

Growth: 6.4

Quality: 8.4

Yield: 3.8

Momentum: 9.0

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
SAP

A-Score: 4.7/10

Value: 1.1

Growth: 4.2

Quality: 8.1

Yield: 1.9

Momentum: 6.0

Volatility: 6.7

1-Year Total Return ->

View Full Report
Stock-Card
Dassault Systèmes

A-Score: 4.2/10

Value: 2.0

Growth: 6.4

Quality: 8.0

Yield: 1.2

Momentum: 1.5

Volatility: 6.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

23.57$

Current Price

23.57$

Potential

-0.00%

Expected Cash-Flows