Dassault Systemes expects strong 2018 start on software growth

(Reuters) - Dassault Systemes expects a strong start to 2018 after fourth quarter revenue from new licences grew by a better-than-expected 16 percent, boosted by growth in its mid-market product design software Solidworks.

Shares in the French firm were up 6.5 percent to 98.94 euros at 1007 GMT on Thursday, putting them on track for their biggest single-day percentage rise in 2 years after Dassault said it expects first quarter new licenses revenue growth of 9 to 15 percent, well above the 11 percent growth achieved in 2017.

Revenue at Solidworks, a design software used by engineers on products ranging from airplanes to consumer gadgets, grew by 14 percent for the year.

Morgan Stanley analysts said the overall results were reassuring and said Dassault's total revenue growth outlook of eight to nine percent was "conservative".

Despite exceeding most of its financial objectives for 2017, Dassault has been facing currency headwinds since the second half of 2017. It expects these to continue in the first quarter of 2018 and reflect on the operating margin for the whole year.

"The main surprise is the operating margin guidance, which is set at 31-31.5 percent, down from 32 percent, versus expectations at around 32.5 percent," analysts from Kepler Cheuvreux wrote in a note.

This reflected a cautious target for the new chief financial officer Pascal Daloz, who will take over from Thibault de Tersant from next week, Kepler's analysts said.

Dassault's cash flow was 745 million euros for 2017, slowing in the last quarter from a 28 percent increase in the first nine months to a final 20 percent growth.

Dassault made several acquisitions in 2017, including U.S. peer Exa Corp for 400 million dollars, finalised in the last quarter of the year.

"I tend to see the glass half-full, the cash flow is truly the dynamic of our business and to have it growing twenty percent is a good performance," de Tersant told reporters.

(Reporting by Manon Jacob; Editing by Gopakumar Warrier and Alexander Smith)