Dassault Systemes Experiences Nice Three-Dimensional Beat; Shares Fairly Valued

Dassault Systemes reported robust first-quarter results, as 3DExperience not only is the name for the company's core platform offering but also could refer to the quarter's three-dimensional beat. Revenue, operating margins, and non-IFRS earnings all beat our expectations as short- and long-term tailwinds drove results. Management raised guidance for 2022 as a result, informing our value estimate change to EUR 37/$39 per share from EUR 35/$40 per share for the wide-moat computer-assisted design company. The shares are up 4% on results, leaving them fairly valued after a long stretch of trading in overvalued territory over the trailing 12 months, in our view. We reiterate our belief that Dassault Systemes is a moaty application software powerhouse; these results reflected promising operating leverage to come and strength in its software, especially as cloud subscriptions make up more of the revenue mix.