Dassault Systemes Shares Fall After It Warns 1Q Revenue Growth Will Miss Guidance
April 02 2020 - 5:13AM
Dow Jones News
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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