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Investing.com -- Dassault Systèmes (EPA:DAST) on Thursday posted a mixed set of first-quarter 2025 results, with total revenue rising 3.5% year over year on a constant currency basis to €1.57 billion.
This came slightly below consensus expectations of €1.59 billion. The revenue miss was primarily driven by a 10.5% decline in license revenue, well below consensus forecasts of 2.4% growth, which Goldman Sachs attributes to a soft quarter-end and slower momentum in Solidworks.
Recurring revenue, however, was a bright spot, growing 7.5% year over year and outpacing consensus estimates.
This helped drive overall software revenue growth of 4.6%, in line with company guidance. Goldman Sachs noted that strong contributions from CATIA, ENOVIA, and DELMIA led Industrial Innovation to 8% growth.
Meanwhile, Life Sciences remained flat, as MEDIDATA continued to face headwinds from contract research organizations.
Solidworks also had a subdued start, and Centric PLM was affected by the timing of renewals, contributing to a modest 2% rise in Mainstream Innovation.
Operating income totaled €486 million, reflecting a margin of 30.9%, just shy of the 31.0–31.3% expected by analysts. Still, free cash flow stood out, reaching €813 million, roughly 10% ahead of consensus.
Goldman Sachs pointed to strong working capital dynamics and lower capital expenditures, with free cash flow conversion hitting 167%, well above historical norms.
By geography, performance was uneven. Citi flagged that the Americas led with 7% growth, bolstered by strength in aerospace and defense, transportation, and high-tech.
Asia grew 5%, though decelerated by softness in Southeast Asia, Korea, and India. Europe, impacted by tariff-related uncertainty, posted just 1% growth.
Dassault maintained its full-year revenue growth guidance of 6–8% ex-fx. Recurring revenue expectations were narrowed slightly to 7–8%, and license revenue guidance was trimmed to 2–6%.
Operating margin guidance was revised downward to 32.3–32.6%, while EPS guidance of €1.36 to €1.39 remains unchanged.
The outlook for 2Q25 is more cautious, with software revenue growth expected between 3–7% and operating margin projected at 29.8–29.9%.
Citi noted that this implies an acceleration in the second half of the year, putting pressure on execution amid a volatile macro environment.
Separately, Dassault expanded its strategic partnership with Airbus, extending the 3DEXPERIENCE platform across all civil and military aircraft programs—a move viewed by analysts as a meaningful competitive win.