Dassault Systemes Shares Slump After Results, Guidance Disappoint

By Nina Kienle

Dassault Systemes shares dropped after the French software maker reported fourth-quarter results and laid out 2024 guidance below analysts' expectations.

At 1002 GMT, shares were down 9.3% at EUR43.74. Still, shares are higher than a year ago, when they traded at roughly EUR38.00.

Reporting on a non-IFRS basis, Dassault Systemes said Thursday that overall revenue climbed to 1.64 billion euros ($1.77 billion) from EUR1.58 billion in the fourth quarter of 2022. Software revenue increased to EUR1.48 billion from EUR1.43 billion, while services revenue rose to EUR167.3 million from EUR155.3 million.

Operating profit increased to EUR589.8 million from EUR552.1 million, with Dassault's operating margin up to 35.9% from 34.9%.

Citi analysts had expected overall revenue of EUR1.67 billion and an operating margin of 36.3%.

Net cash from operating activities for the quarter amounted to EUR293.4 million, below consensus of EUR455 million, Jefferies analysts wrote in a note to investors. For 2023, net cash from operating activities came in at EUR1.57 billion, below consensus of EUR1.74 billion, they said.

The company's contract structures involve an element of upfront revenue recognition, Jefferies analysts said, commenting that "the risk of this approach is that customer payment schedules do not match the revenue recognition profile, leading to a mismatch between the cash flow and profit and loss."

Weak cash flow will most likely keep the revenue recognition debate alive, the analysts said.

For 2024, the group expects non-IFRS total revenue of EUR6.35 billion to EUR6.43 billion, or 8% to 10% growth, and an operating margin of 32.5% to 32.8%. Citi analysts had forecast revenue growth guidance of roughly 9.5% and a 33.3% margin for the year.

Write to Nina Kienle at nina.kienle@wsj.com

(END) Dow Jones Newswires

February 01, 2024 05:27 ET (10:27 GMT)

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