Dassault’s share in the Product Lifecycle Management (PLM) end user software market grew to nearly 26% in 2008, with more than 15,000 new customers added across different industries and countries.
PLM’s CATIA and ENOVIA products remain the key driver for the expansion of the company’s reach into new verticals and new domains. Dassualt has in the past made efforts to enhance its sales channels in order to reach different geographies including higher growth countries such as India and China. This has resulted in higher top-line contribution from these regions and the company plans further investments, which we believe will enable it to sustain growth in difficult economic conditions.
The company expects strong demand for PLM solutions from these high growth geographies across industries such as automotive, aerospace, industrial machinery. However, overall new license revenues from PLM solutions sales, as guided by the company are expected to decline 22% y-o-y in 1Q 09 and 10% y-o-y in FY 2009 on a constant currency basis, impacted by the economic slowdown. Furthermore, it plans to invest nearly €30 mn-€35 mn towards restructuring efforts, although this is supposed to be offset by €35 mn savings expected from investment in FY 2008 related to industry diversification and growth of the sales channel. Despite new license revenues being impacted by the difficult operating environment, we believe Dassault continues to hold upside potential at current levels considering increased demand from higher growth countries, a healthy recurring revenue stream (56% of total revenues) and continued industry diversification plans.
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