Dassault Systèmes shares sink 16% after weak Q3, full-year guidance cut

Investing.com -- Dassault Systèmes shares tumbled more than 15% on Thursday after the French software company reported weaker-than-expected third-quarter results and reduced its full-year 2025 revenue forecast, citing slower activity in its life sciences business.

Revenue for the quarter reached €1.46 billion, up 5% at constant currency but flat including foreign exchange, missing the company’s 5-8% growth target. 

Jefferies said the result missed consensus estimates by 3%, describing the outcome as a “headline miss.” 

License revenue declined 13% year over year versus guidance for a 10% increase, resulting in an estimated €50 million shortfall. Subscription revenue rose 9%, slightly above the 5-8% range.

Operating profit was €440 million, below consensus by 2%, while the margin improved to 30.1%, compared with guidance of 29.8%. 

Dassault maintained adjusted earnings per share at €0.29. Operating cash flow reached €186 million, stronger than the company’s second-quarter guidance of about €100 million and ahead of consensus expectations of €99 million.

Jefferies noted the company’s lowered outlook, saying “there is a downward revision to the full-year guidance, with 4Q being cut to mid single-digit growth versus the previously implied growth of around 10%.” 

Dassault now expects full-year revenue growth between 4% and 6%, down from 6-8%. 

Margins were trimmed by 10 basis points, implying 3% lower EBIT, while the earnings forecast of €1.31-1.35 per share remains unchanged. 

Morgan Stanley said Dassault’s results showed “lacking growth momentum,” with constant-currency revenue growth of 4.6% and a “wide-ranging 4Q guide of 1-8%.” 

The brokerage said weakness in license revenue offset stronger subscription trends and that “Life Sciences software revenue was weak and declined 3%.” 

Industrial Innovation was described as the “bright spot” with 9% constant-currency growth, while Mainstream Innovation was “modest,” partly affected by the Centric PLM software transition. 

Kepler Cheuvreux in a note said that “revenues in Q3 reached €1,461 million, up 5% at cc (flat including FX), 1pp below our estimate.”

The brokerage said Industrial Innovation grew 9% with “solid performance from SolidWorks,” while Life Science fell 3% “on lower clinical trials instead of being moderately up.” 

Kepler added that “operating profit reached €440 million, a 50 bps margin expansion to 30.1%,” and “operating cash flow resisted better than expected at €186 million.” 

The brokerage reiterated its “buy” rating and €42 target price, noting that “75% of the business is on a strong trajectory,” but “Life Science was again the issue.”