Dassault Systèmes Earnings: Steady Results as Shift to Subscriptions Continues

We maintain our EUR 37 fair value estimate for wide-moat Dassault Systemes after the firm reported first-quarter results that were slightly light compared with our expectations. Management also affirmed previously issued full-year guidance and provided a second-quarter outlook consistent with our model. We conclude that the firm is on track to meet its 2024 targets and is making progress in expanding subscription-based revenue, which we believe serves the best interest of shareholders. The stock has dropped from a high of EUR 48 in January, and we now view it as fairly valued. Despite near-term headwinds, we think the firm is well-positioned to benefit from the growing computer-assisted design and product lifecycle management markets, which we believe will hit $52 billion by 2032, indicating an 8% 10-year compound annual growth rate.