Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dassault Systemes SE (DASTF, Financial) reported a 4% revenue growth in Q3 2024, driven by an 8% increase in subscriptions.
- The company saw strong performance in life sciences, consumer industries, and aerospace and defense sectors.
- The 3DEXPERIENCE platform continues to gain market share, with a robust pipeline in industrial sectors.
- Medidata showed a broad-based improvement, with a recovery in global clinical trial starts and new product launches.
- The company secured almost 100 significant competitive deals across key markets, demonstrating the value of its solutions.
Negative Points
- The automotive sector in Europe and the US faced volume contractions, impacting short-term decision-making and revenue.
- Q3 software revenue growth was at the lower end of guidance, with upfront license revenue down by 7%.
- The company faced headwinds from a mega deal anniversary, impacting software revenue growth.
- The automotive sector's slowdown led to a EUR40 million shift in deals, affecting Q3 revenue.
- The company adjusted its full-year revenue growth guidance to 5% to 7%, down from 6% to 8% previously, due to market volatility.
Q & A Highlights
Q: How is Dassault Systemes planning to leverage the more consolidated US channel for cross-sell opportunities, and what is the strategy regarding the structure of your channel?
A: Pascal Daloz, CEO, explained that the separation between CPE and CRE will remain due to different customer engagement needs. The consolidation in North America is seen as beneficial, providing stronger partners with the capacity to expand into new verticals. The strategy is to maintain an ecosystem approach rather than acquiring partners, allowing specialization and expansion into new markets.
Q: Can you provide an update on SOLIDWORKS' performance and the objectives for large transactions and new packages for smaller accounts?
A: Pascal Daloz noted that SOLIDWORKS saw an 8% growth in units this quarter, with a focus on re-energizing the core market of smaller companies. The strategy involves balancing volume and footprint growth while addressing the needs of larger accounts without compromising the volume approach.
Q: What is the status of the new DS data centers, and how does Dassault Systemes plan to expand its cloud business infrastructure?
A: Rouven Bergmann, CFO, stated that the data centers are on schedule, with decisions based on business cases. The company uses AWS for scalability and expects limited new data center needs due to existing coverage. The focus is on leveraging the platform for infrastructure and cities, with modeling and simulation tools complementing the platform's capabilities.
Q: Are there any updates on large deal delays, particularly in aerospace and defense, and what gives confidence in Q4 deal conversions?
A: Rouven Bergmann confirmed active discussions in aerospace and defense, with options for large transactions. The pipeline remains strong, and while the auto sector faces challenges, the company is focused on timing decisions for optimal value. The confidence in Q4 comes from an intact pipeline and active discussions.
Q: What are the expectations for Medidata contract renewals, and can you provide insights into Centric's revenue mix and growth sustainability?
A: Pascal Daloz expects Medidata renewals to increase by around 10%, driven by new innovations resonating with customers. Centric's revenue is about 50-50 between cloud and on-premise, with a fast progression towards cloud. While triple-digit growth is not expected to sustain, a decent growth rate is anticipated, aiming for EUR1 billion in the coming years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
