Dassault Systemes shares jump on solid fourth quarter, 2023 forecast

© Reuters. FILE PHOTO: A logo of Dassault Systemes SE is seen on a company building in Paris, France, January 27, 2023. REUTERS/Sarah Meyssonnier

(Reuters) -Dassault Systemes shares jumped on Thursday as the French software maker forecast revenue growth of between 8% and 9% in constant currency for 2023 after reporting a resilient fourth quarter in-line with expectations.

The group, which sells software to automakers, planemakers and industrial firms, guided for annual revenue of between 5.93 billion euros and 5.98 billion euros ($6.59 billion to $6.53 billion) compared with 5.67 billion euros in 2022.

Including currency fluctuations, the company expects annual growth of around 5%.

The company's shares, which lost more than a third of their value last year, were up more than 6% at 1200 GMT, outpacing the French blue-chip CAC40 index, which fell 0.1%.

Citi analysts said the full-year outlook shows resilience.

"Against a backdrop of relatively muted expectations coming into the print, we expect this update will be seen as somewhat reassuring," it said in a note to clients.

Subscriptions revenue grew 18%, while licence sales showed a 5% increase.

Jefferies analysts said it was a good performance in an industry fast shifting to a subscriptions model, noting however that it was "hard to know how sustainable this dynamic is over the medium term".

The group reiterated its intention to keep both license and subscription models to respond to customer needs.

Dassault Systemes, whose clients include global giants such as Ford, Bosch, Boeing (NYSE:BA), Adidas (ETR:ADSGN), Coca-Cola (NYSE:KO) and Pfizer (NYSE:PFE), reported total revenue of 1.58 billion euros in the fourth quarter, up 10% on the year in constant currency and slightly above analysts' forecast of 1.57 billion euros.

The result was also at the upper end of the company's own guidance range of 1.53 billion euros to 1.57 billion euros.

The group is on track to reach its 2024 earnings per share objective, it said in a statement.

Dassault Systeme's software sales in China, where demand has lagged, especially from small and mid-sized customers due to strict COVID-19 lockdowns, showed mid-single-digit growth in the fourth quarter.

"China's reopening is a good sign. We are still a little bit careful for the H1, which we do expect to be back on the growth where it should be," Chief Financial Officer Rouven Bergmann said on a conference call with analysts.

The group also added it now has more flexibility to consider a "sizable" acquisition.

"The question is, is it the right time, are we prepared to do this, is the business plan okay, and are we capable to create value on top of it," Chief Executive Officer Bernard Charlès told the call, without giving more details and referring analysts to its next capital market day.

($1 = 0.9075 euros)