French software maker Dassault Systèmes plunges 21%, on track for worst day ever

Core Viewpoint - Shares of Dassault Systèmes experienced a significant decline, dropping as much as 21% in early trading, marking a potential worst trading day for the company following disappointing fourth-quarter earnings and revenue guidance [1][2]. Financial Performance - The fourth-quarter earnings report revealed a 5% drop in software revenues for the final three months of the previous year [2]. - For the full year, total revenue remained flat at 6.24 billion euros ($7.43 billion), with software revenue showing minimal growth at 5.64 billion euros, falling short of analyst expectations of 6.3 billion euros [3]. - The company provided revenue growth guidance of 3% to 5% for 2026, indicating a cautious outlook [3]. Strategic Direction - CEO Pascal Daloz emphasized the company's commitment to leading the Industrial AI transformation through its 3D UNIV+RSES offering, framing it as a long-term strategy to redefine industry operations and competition [4]. - The company aims for disciplined execution and alignment of resources around strategic priorities to achieve measurable impacts in 2025 and 2026 [4]. Market Context - The decline in Dassault Systèmes' shares is part of a broader trend referred to as the "SaaS apocalypse," reflecting concerns about the sustainability of growth among previously high-performing software companies [5]. - Analysts from UBS characterized the earnings report as a "weak finish and a weak guide," indicating a lack of confidence in the company's future performance [5]. - The company has set a goal to achieve at least 7% annual growth from 2024 to 2029, necessitating a growth rate of 8.2% to 8.9% in the years 2027 to 2029 to meet this target [6].