First Half 2018 versus 2017 Financial Comparisons on an IAS 18 Basis
(“IAS 18 IFRS and IAS 18 non-IFRS”)

• On an IAS 18 basis, total revenue increased 9% (IFRS and non-IFRS). Excluding acquisitions, IAS 18 non-IFRS total revenue and software revenue increased 6% and 7%, respectively. (All growth rates are in constant currencies.)
• On an IAS 18 basis and in constant currencies: Software revenue increased 10% (IFRS) and 9% (non-IFRS). Licenses and other software revenue increased 10% (IFRS and non-IFRS), with double-digit growth for CATIA, SOLIDWORKS, ENOVIA, SIMULIA, DELMIA and GEOVIA. Non-IFRS Recurring revenue, comprised of Subscription and Support revenue, represented 72% of non-IFRS software revenue. Non-IFRS Recurring revenue increased 9% reflecting strong growth in Subscription revenue, including the acquisition of EXA, and continued strong Support renewal rates in all three regions.
• IAS 18 non-IFRS software revenue increased double-digits in constant currencies in Transportation & Mobility, Marine & Offshore, Consumer Packaged Goods-Retail, Architecture, Engineering & Construction and Natural Resources.
• On a regional and IAS 18 basis: Asia non-IFRS software revenue increased 15% with double-digit growth across all countries. In Europe non-IFRS software revenue increased 6% with notable performances in Southern Europe as well as Russia. In the Americas, non-IFRS software revenue increased 9% led by Latin America and a solid contribution from North America. High Growth Countries non-IFRS software revenue increased 21%. (All growth rates are in constant currencies.)
• On an IAS 18 basis, 3DEXPERIENCE software revenue increased 22% in constant currencies in the first half of 2018.
• IAS 18 IFRS and non-IFRS services revenue increased 2% in constant currencies, with double-digit growth in 3DEXPERIENCE related services activity, offset by lower services activities for certain smaller brands in the 2018 First Half.
• IAS 18 IFRS operating income increased 6.5%. IAS 18 non-IFRS operating income totaled €462.0 million, representing an increase of 3.9% as reported and 13% in constant currencies. The IAS 18 non-IFRS operating margin was 28.7% for the 2018 First Half, compared to 28.2% in the year-ago period, reflecting underlying organic improvement of 160 basis points, offset in part by negative currency effects of 70 basis points and acquisition dilution estimated at 40 basis points.
• The Company’s IAS 18 IFRS and non-IFRS effective tax rates decreased from 32.8% to 25.3% and from 33.3% to 28.3%, respectively, principally reflecting the U.S. Tax Reform Act of 2017.

• 2018 First Half IAS 18 non-IFRS financial revenue was €10.3 million, compared to € (0.2) million in the 2017 First Half on higher financial net income and lower foreign currency exchange losses.
• IAS 18 IFRS diluted net income per share increased 12% or 22% at constant currency. IAS 18 non-IFRS diluted net income per share totaled €1.30, representing increases of 13.0% as reported and 23% at constant currency.

Business Outlook
(Discussion on an IAS 18, non-IFRS basis, with revenue growth rates in constant currencies)

Pascal Daloz, Dassault Systèmes’ Executive Vice President, CFO and Corporate Strategy Officer, commented, “Building on the strong start to 2018 in the first quarter, our second quarter financial results were aligned well with our objectives, bringing us to a solid first half performance, with software revenue up 9%, 160 basis points of underlying organic operating margin improvement absorbing both currency headwinds and acquisition dilution, and earnings per share up 13% as reported and 23% at constant currency. Cash flow from operations was also strong, increasing 9% in the first half to €645 million.

“Looking to the full year outlook, we are now targeting IAS 18 non-IFRS total revenue growth of about 9% to 10% in constant currencies, confirming acceleration in 3DEXPERIENCE activity as our first half results demonstrated, and healthy software growth for SOLIDWORKS for the year in total while anticipating a high base of comparison in the third quarter. We are then updating our financial objectives for new acquisitions. Our new revenue range is €3.41 to €3.44 billion, incorporating the second quarter currency upside.

“In turn, we are upgrading our EPS objective, targeting IAS 18 non-IFRS earnings per share of €2.95 to €3.00, representing growth of about 10% to 12%, reflecting higher activity, currency and improved effective tax rate for the year. At constant currency, this would represent a growth rate of about 15% to 17%.”

The Company’s third quarter and full year 2018 financial objectives are given in IAS 18 on a non-IFRS basis:

• Third quarter 2018 IAS 18 non-IFRS total revenue objective of about €805 to €825 million based upon the exchange rates assumptions below, growing about 8% to 11% in constant currencies; non-IFRS operating margin of about 29% to 30%; and non-IFRS EPS of about €0.64 to €0.68, 0% to 6%, or about 1% to 8% at constant currency;
• 2018 IAS 18 non-IFRS revenue growth objective of about 9% to 10% in constant currencies at €3.41 to €3.44 billion (reflecting the principal 2018 currency exchange rate assumptions below for the US dollar and Japanese yen as well as the potential impact from additional currencies representing about 17% of the Company’s total revenue in 2017);
• 2018 IAS 18 non-IFRS operating margin of about 31.0% to 31.5%;
• 2018 IAS 18 non-IFRS EPS of about €2.95 to €3.00 representing a growth objective of about 10% to 12%, or about 15% to 17% on a constant currency basis;
• Objectives are based upon exchange rate assumptions of US$1.20 per €1.00 for the 2018 third and fourth quarters; and JPY135 per €1.00 for the 2018 third and fourth quarters before hedging.

These objectives are prepared and communicated only on a non-IFRS basis and are subject to the cautionary statement set forth below.

The 2018 non-IFRS objectives, which are stated on an IAS 18 basis, set forth above do not take into account the following accounting elements and are estimated based upon the 2018 principal currency exchange rates above: deferred revenue write-downs estimated at approximately €5 million on an IAS 18 basis, share-based compensation expense, including related social charges, estimated at approximately €121 million and amortization of acquired intangibles estimated at approximately €163 million. The above objectives also do not include any impact from other operating income and expense, net principally comprised of acquisition, integration and restructuring expenses, from one-time items included in financial revenue and from one-time tax restructuring gains and losses. Finally, these estimates do not include any new stock option or share grants, or any new acquisitions or restructurings completed after July 25, 2018.

Cash Flow and Other Financial Highlights Under IAS 18 For Year-over-Year Comparisons

The Company’s net cash flow from operations for the second quarter and first half ended June 30, 2018 are identical under IFRS 15 in comparison to IAS 18 although some of the line items differ. (See pages 16 and 22 in the Appendix to this press release for further details including a reconciliation of the cash flow statement and balance sheets under IFRS 15 compared to IAS 18 for the quarter, half year and period ended June 30, 2018.)

IAS 18 net operating cash flow for the 2018 First Half increased 9% to €645.5 million compared to €592.4 million in the 2017 First Half on growth in net income and non-cash operating adjustments.

Dassault Systèmes’ net financial position totaled €2.04 billion at June 30, 2018, compared to €1.46 billion at December 31, 2017, reflecting cash, cash equivalents and short-term investments of €3.04 billion and long-term debt of €1.00 billion.

Summary of Recent Business, Technology and Customer Announcements

Customers:

On June 27, 2018, EDF, Dassault Systèmes and Capgemini jointly announced the signing of a long-term partnership agreement for the digital transformation of EDF’s nuclear engineering and its ecosystem. The partnership aims to support EDF in the digitalization of its plant engineering projects with the view to strengthen plant performance and overall competitiveness of nuclear power. It represents a major step in accelerating the digital transformation of the nuclear industry as a whole. In keeping with the terms of the agreement, EDF and Dassault Systèmes are engaging in a 20-year partnership that will sustainably support industrial projects thanks to the 3DEXPERIENCE platform of Dassault Systèmes which is designed to standardize, harmonize and modernize processes and engineering methods. This interactive and evolutive platform will be used by nuclear businesses to access real-time project data. It will also be used to design the digital twins of nuclear plants whether they are at the design, construction or operational phase.