DSY Dassault Systemes SA

   By Mauro Orru 
 

Dassault Systemes SE's shares fell Thursday after the company said late Wednesday that non-IFRS revenue growth at constant currency for the first quarter of 2020 should be below guidance as the coronavirus pandemic continues to spread.

At 0835 GMT, Dassault Systemes shares traded 4.8% lower at EUR126.10.

The French software maker said its preliminary non-IFRS revenue for the first quarter should grow between 14% and 17% at constant currency, citing weaker new-licenses revenue and lower services activity.

Dassault Systemes was expecting growth of 20% at constant currency on the low-end of guidance for the quarter before the coronavirus hit.

"We believe that travel restrictions are continuing to have an impact on new license sales and on services revenue, as sales representatives, sales engineers, and system integrators are unable to travel to clients in-person," said analysts at U.S. bank Jefferies, noting travel restrictions are affecting many software companies.

Analysts at U.S. bank Citi said the coronavirus hit on new licenses and services activity doesn't come as a surprise. Citi expects implied new licenses to drop in a range of around 15% and 17% year-on-year at constant currency.

Gregory Ramirez, analyst at European investment bank Bryan Garnier, said the new-license sales decline seems to be in line with the trend the company experienced in the third quarter of 2008, with a decline of 22% at constant currency. If Dassault Systemes were to follow the same trend as in 2008 and 2009, new license sales could fall between 35% and 40% at constant currency for three consecutive quarters, he said, although Bryan Garnier doesn't expect this scenario beyond mid-May.

Dassault Systemes said recurring software revenue represented about 84% of its software revenue for the quarter, and that this is in line with initial guidance, thanks to the good performance of recently acquired U.S. firm Medidata.

Dassault Systemes will release its results for the first quarter on April 23.

Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94

(END) Dow Jones Newswires

April 02, 2020 04:58 ET (08:58 GMT)

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