3D design software specialist Dassault Systemes (NASDAQOTH:DASTY) continued its strong run in 2015 by delivering earnings on Oct. 22 that came in ahead of management's guidance. In addition, full-year estimates were raised in view of the strong third-quarter results. Let's take a look at the third quarter and what management predicts for the rest of the year.

Dassault Systemes results: The headline numbers
Before delving into the figures, here are a couple of reference points. First, France's Dassault Systemes reports in euros so its earnings have been receiving a boost from the devaluation of the euro versus the U.S. dollar. Second, the company reports based on International Financial Reporting Standards, or IFRS, and non-IFRS. You can think of non-IFRS reporting as the same way U.S. companies use non-GAAP metrics to better measure a company's progress.

The numbers:

  • Third-quarter non-IFRS constant currency revenue growth of 9% compared to guidance for 7% to 9%
  • Third-quarter non-IFRS revenue increased 18%
  • Third-quarter non-IFRS EPS growth of 29% compared to guidance for 11%
  • Non-IFRS operating margin of 31.2% compared to guidance for 29% to 29.5%

As you can see, constant currency revenue growth came in at the top end of guidance, and EPS was significantly ahead, partly helped by currency effects.

Guidance:

  • Full-Year non-IFRS revenue growth forecast of 21% compared to previous forecast of 18%
  • Full-Year non-IFRS EPS growth forecast of 2.20 euros compared to previous guidance 2.15 euros

Before you get too excited by the EPS guidance hike, consider that CFO Thibault de Tersant outlined that the increase was due to "currency upside from Q3 and the reversal of tax reserves." Specifically, 0.01 euros is due to currency and 0.04 euros due to the tax reversal.

New licenses
Beyond the headline data, the key metric to follow is new licenses growth. The following chart demonstrates how new licenses growth tends to lead periodic licenses and maintenance growth (responsible for 64% of year-to-date revenue).

New licenses growth slowed a bit in the third quarter, but consider that it's coming up against some tough comparisons from 2014.

Dasty

Data source: Dassault Systemes presentation. All figures in constant currency.

A summary of new licenses numbers from the third quarter:

  • Third-quarter new licenses constant currency revenue up 11% compared to first-half growth of 20%
  • Third-quarter organic new licenses constant currency revenue up 9% compared to first-half growth of 11%

Turning to guidance, Dassault Systemes expects Q4 "double-digit organic new licenses revenue growth ex FX, with strong base of comparison," implying an increase from the growth rate of 9% recorded in the third quarter.

What management had to say
Tersant was keen to point out that Dassault had produced results in line with guidance despite some turbulence in Asia: " Our third quarter financial results were well aligned with our guidance. Thanks to broad-based growth in Europe and the Americas, we were able to absorb the short-term market volatility in Asia as well as high year-ago comparisons in that region."

Indeed, Dassault did see a significant slowdown in Asia in the quarter:

Dasty

Source: Dassault Systemes presentations. 

For reference, Asia has contributed 26% of revenue year-to-date, so any pronounced slowdown in demand from the region is likely to hurt.

Looking ahead
Moving into the fourth quarter, the two big things to look out for are the forecast increase in organic new licenses revenue growth to double digits and growth prospects from Asia. As for the third quarter, it was another strong performance from a company that continues to exceed expectations in 2015.

Lee Samaha has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.