Dassault System is still in open mode

Dassault Systems is a leading manufacturer of computer-aided design and product lifecycle management software, serving customers such as Boeing and Tesla throughout the production process. The company’s revenue is largely dependent on the transportation, mobility, industrial equipment, aviation and defense sectors.

Dassault Systèmes has a strong market position in computer-aided design (CAD) software for automotive, aerospace, defense and industrial.

With 90% of all aircraft and 80% of all cars in the world manufactured using Dassault Systèmes software, we believe the company will remain firmly rooted in engineering teams thanks to the high replacement costs and network effect found in the average CAD software, SolidWorks.

In our opinion, the company has a broad competitive bulwark (“wide moat”).

It has adapted well to new trends in its market exposure, such as electric vehicle design software, which has made us even more confident in its fortress’ longevity and ability to deliver a high return on investment.

Outside of CAD offerings like Catia and SolidWorks, Dassault Systèmes has a wide range of intelligence, collaboration, content sharing, and simulation software, all of which operate to serve a part of product production, whether it’s drug research and development, planning or organizing a clothing production line.


The most popular of these disparate offerings is Enovia, a product lifecycle management software, which is used across a variety of industries to connect engineers, marketing and supply chain teams to better organize the product life cycle (PLM).

Dassault Systèmes holds the largest share of the PLM market, and this exposure is responsible for nearly half of the company’s $100 billion steerable market.

While there are new entrants to the PLM and CAD mid-market spaces, we believe Dassault Systèmes will be able to work to reduce any additional share that new players take in its markets by increasing its adoption of its platform.

The platform aims to connect a large part of the offerings of Dassault Systèmes in one place.

We believe that over the next two years, Dassault Systèmes will be able to significantly increase revenue from its platform.

With a larger percentage of customers on the platform, we wouldn’t be surprised to see customers decline and replacement costs increase because the platform retains the benefits of using all software from Dassault Systèmes, which was previously more differentiated.

reasonable evaluation

Dassault System Investor Day on June 16 had a consistent message: the view that Dassault is just an aircraft design company is outdated.

We agree with the organization with such a wide gap in its self-perception that it is clear to us that Dassault is addressing new markets in what we call the “metaverse organization.”

We define the metaverse enterprise as the use of the digital worlds to achieve business goals such as accelerating time to market for manufacturers.

After the capital markets day, we are confident of reconfirming our fair value estimate of €37.

This leaves Dassault trading in the 3-star zone, and so we recommend investors to refrain from buying or selling stocks.

During its day with the financial community, Dassault reiterated its 2024 non-EPS target of €1.20 per share, which we believe we can not only achieve but exceed, because we believe a healthy margin expansion is in store. for work.

Alongside the BPA goal, Dassault has announced its goal of reaching over €2 billion in cloud revenue by 2025, which we believe could be a more ambitious but certainly achievable goal in the coming years.

100 billion euros

Dassault said it is currently dealing with a €45 billion market, but there is a potential for this total addressable market to reach €100 billion by expanding broadly across existing vertical exposures: manufacturing, life sciences, healthcare, infrastructure and cities.

We believe that market expansion is definitely a reality for Dassault Systèmes, as it has been clear throughout the day that companies are increasingly relying on simulation and numerical modeling to reduce manufacturers’ lead times.

We believe this is a support engine for Dassault, and is part of our evaluation model assumptions.

Certificate from the electric vehicle manufacturer Rivian Show how much companies rely on digital simulation.

Rivian said it was only performing two physical crash tests after many variations of digital crash tests using Dassault Systèmes solutions.

To put this digital addiction into perspective, it was reported in 2007 that a Volvo model had undergone as many as 100 crash tests prior to its launch.

Because physical crash tests are so expensive to run, we believe Dassault’s value to customers increases as its software gets smarter, supporting our margin expansion forecast.

Rivian also shared details of how the delivery trucks are made. Amazon president. Use the Dassault platform to model the truck’s manufacturing process before it goes into service.

This allowed Rivian to begin manufacturing vehicles in real life much faster than not being able to model manufacturing processes in Dassault software.

© Morningstar, 2022 – The information here is for educational purposes and is provided for informational purposes only. It is not intended and should not be considered an invitation or encouragement to buy or sell listed securities. Any comment is the opinion of its author and should not be considered a personal recommendation. The information contained in this document should not be the only source for making an investment decision. Make sure to contact a financial advisor or financial expert before making any investment decisions.

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