Dassault Systemes shares fall as revenue forecast disappoints

(Reuters) -Dassault Systemes said on Thursday it expects revenue growth of 8-10% this year at constant currencies, below analyst expectations and sending shares in the French software maker down around 9% in early trade.

The group, which sells software to automakers, planemakers and industrial firms, expects full-year non-IFRS revenue of 6.35 billion to 6.43 billion euros ($6.86 billion to $6.95 billion) in 2024 after it rose 9% last year.

Analysts in an LSEG poll forecast the company to report 2024 revenue of 6.48 billion euros.

The group's operating margin for the fourth quarter stood at 35.9% on revenue of 1.64 billion euros, just below expectations of 36.1% and 1.66 billion euros, respectively.

It sees an operating margin of 32.5% to 32.8% this year, compared with 32.4% in 2023.

Overall quarterly software revenue amounted to 1.48 billion euros, up 8% due to strong growth in subscriptions throughout the year. Subscription revenue brought in 1.12 billion euros in the fourth quarter.

Sales of its flagship software platform 3DEXPERIENCE, which offers 3D modelling, data management and project management tools, slowed to 21% in the fourth quarter from 46% in the previous quarter.

The group said it continued to invest in China, where sales returned to double-digit growth in the last quarter of 2023, as well as in the construction and infrastructure sectors.

"We are confident, even though we are cautious (...) We expect an improving situation versus 2023," finance chief Rouven Bergmann told journalists in an earnings call.

The company's Medidata unit, which analyses patient data for clinical trials and where revenues have been falling since the COVID-19 pandemic, was still the weakest contributor to the group's total revenue in the fourth quarter, due to a high comparison base and continued slowdown in clinical study starts.

"We have experienced some softness in the life sciences industry ... But we also believe this will stabilize in 2024," Bergmann said.

In the first quarter of 2024 Dassault Systemes expects its revenue to grow between 7% and 8% in constant currencies, with an operating margin of 30.6% to 30.7%.

($1 = 0.9258 euros)

(Reporting by Dagmarah Mackos and Lina Golovnya; Editing by Sherry Jacob-Phillips and Mark Potter)