France's Dassault Systemes shares slump on reduced licence target
Reuters
Published Oct 26, 2022 06:22
Updated Oct 26, 2022 14:06
By Karol Badohal
GDANSK (Reuters) -French software maker Dassault Systemes' shares dropped more than 5% on Wednesday, erasing Tuesday's gains, as investors reacted to reduced licence growth expectations in its third-quarter results.
The company, which sells software for carmakers, planemakers and industrial companies, raised its full-year earnings and revenue forecast, due in part to the stronger dollar, after reporting higher-than-expected quarterly results.
However, it lowered its 2022 objective for licences and other software revenue growth on a non-IFRS constant currency basis to 5-7% from 9-11% previously.
Jefferies deemed the publication an "underlying disappointment, with licences falling short of expectations".
The company's third-quarter software revenue grew by 8%, at the lower end of its guidance, but licences and other software revenue declined 2% year-on-year, the brokerage noted.
"We see this as a reminder of the cyclical risks at Dassault, which makes the extent of the current valuation premium hard to justify," Jefferies said.
The company reported total revenue of 1.37 billion euros ($1.36 billion) in the quarter, up 8% on the year in constant currencies and above analysts' forecast of 1.33 billion euros, driven by strong subscription and support growth.
"The bottom line of all of this, when you look at the total revenue mix, is that we accelerated the growth in subscription revenue, and this transition is well underway," CFO Rouven Bergmann said in a call.
"We are progressively increasing the share of recurring revenue while we continue to deliver the top-line revenue and profitability objectives despite the lower growth contribution from the licences," he added.
Dassault Systems increased its non-IFRS diluted earnings per share target for 2022 to 1.12-1.14 euro from 1.08-1.10 euro previously.
It also raised full-year revenue target to 5.61-5.65 billion euros.
The company's shares were down 5.1% at 1205 GMT, having gained 4.2% a day earlier.
The move also reflected big tech stocks' fall globally after grim results from Alphabet (NASDAQ:GOOGL) Inc and Microsoft Corp (NASDAQ:MSFT) stoked fears of a global economic downturn.
Get The App
($1 = 1.0047 euros)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.