The 2024 Dassault Systèmes Analyst Event Highlighted Strong Financial Growth, Despite an Uncertain Future

The 2024 Dassault Systèmes Analyst Event held yearly in Vélizy-Villacoublay was a good mix of active solution demonstrations, booth tours based on specific industry verticals, small breakout sessions, and large presentations. While the logistics of the event were exceptional, the distinct lack of innovative features was clearly noticed. The majority of presentations and demos focused on longstanding customer success stories and how Dassault Systèmes has been a staple in the manufacturing domain since the 1980s. The highlighted innovation within existing Dassault products was extremely limited with the standout topic being how Medidata is utilizing Artificial Intelligence (AI) and the connection with BIOVIA for faster time to drug discovery, thorough documentation of clinical trials, and diversification of drug trial applicants.

Even with the lack of product-related innovation, Dassault Systèmes has posted promising financial gains that warrant further inspection. The 3DEXPERIENCE platform has gained 32,000 new logos, 135,000 new users, and doubled in annual revenue since 2018. The overall Dassault business has grown at a Compound Annual Growth Rate (CAGR) of 11% from 2010 to 2023 with an expected CAGR of 13% until 2028, primarily through the heavy use of acquisition and the shifting revenue stream from perpetual licenses to Software-as-a-Service (SaaS) subscriptions.

Two new major announcements were made during the Dassault Systèmes Analyst Event, and both were forward-looking initiatives: Virtual Twin as a Service (VTaaS) and the Generative Economy.

Virtual Twin as a Service is by no means a fully fleshed out concept at this time, but has the initial building blocks to become a useful tool for evaluating and redefining how manufacturing processes and operations are utilized. The fundamental core behind the VTaaS initiative is to connect all digital services through a thread of virtual twins of both the complete manufacturing factory and the extending external network. This will happen under the roof of 3DEXPERIENCE, and the heavy lifting will be performed by MODSIM and 3DEXCITE. Currently, no active deployments of any complete VTaaS operations exist, as this is still conceptual; however, Dassault highlighted the first step with an example from Renault. Using point-cloud scanning and Light Detection and Ranging (LiDAR), Renault was able to create a virtual twin of a factory in less than 6 weeks, when the average time was expected to be 18 months. This is a small step toward creating larger-scale virtual twins; however, it is a long step away from the proposed interconnected digital thread of virtual assets across a cloud network. Ultimately, this seems to be an industrial metaverse play with a rebranded Dassault name for added distinction and marketing prowess.

The Generative Economy is an overarching Dassault goal with a tentative data of 2040. Much less defined than VTaaS, the Generative Economy aims to build on VTaaS by adding elements of the circular economy and the future capabilities of Generative AI. The Generative Economy will leverage SaaS 3DEXPERIENCE and the power of the cloud to merge aspects of the circular economy and generative AI so manufacturers can slowly pivot toward Industry 5.0. Although headlining the keynote presentation, the Generative Economy initiative lacked a tangible roadmap and seemed to be a patchwork of existing technologies and ideas. When individually speaking with Dassault employees, it became apparent that none were actively working on the project, and most were unclear about the trajectory of the initiative. The impact of the 2040 Generative Economy initiative is hard to ascertain, as the project still needs sound boarding and internal reworking at Dassault. The current state of the Generative Economy is nothing more than a marketing gimmick combining buzzwords that attract value, with little to no substance at this moment in time.    

The 2024 Dassault Systèmes Analyst Event was a mixed bag of correct execution, but subpar content. The heavy focus on both VTaaS and the Generative Economy retracted from the value of the event, as these questionable initiatives instilled a degree of skepticism among analysts. While the value of utilizing virtual twins as a digital thread and expanding digitization outside the four walls of the factory is a revenue generating prospect, it is essentially Dassault Systèmes attempting to create an Industrial Metaverse. In terms of progression, it is clear that Dassault is riding on the coattails of Siemens, which displayed the same technology of mapping entire factories and cities more than a year ago. Dassault should continue to research and build out VTaaS; however, Dassault should understand it is coming from a place of weakness and does not lead the current market.

The 2040 Generative Economy initiative needs to be warehoused or, at a minimum, tightly reworked internally. The information displayed at the Analyst Event was not a great first introduction and did not distill confidence in the analyst community that this was a feasible or desired solution. If Dassault does not go back to the drawing board with the Generative Economy, the most likely outcome will be akin to carbon emission reduction pledges. Dassault might hit 25% of what it intends to achieve with the Generative Economy by 2040; however, there is no practical way to fulfill the entire initiative. Dassault is currently promoting a concept that when stripped to its bones, has an undefined roadmap, unclear end results, and employees that don’t fully grasp the concept. This is a recipe for disaster.       

For Dassault Systèmes to succeed in the long term, short-term and incremental gains must be prioritized. Dassault has witnessed promising financial growth from all business units by promoting the 3DEPERIENCE brand and getting users on board with Platform-as-a-Service (PaaS). Dassault needs to continue the progress it has made over the last 5 years and further promote 3DEXPERIENCE to new and existing customers. This will allow Dassault to continue the current trajectory of converting its revenue stream from licenses to subscriptions, as cloud and SaaS become more relevant to manufacturers. Having long-term initiatives that seek to redefine how manufacturers operate in the future is critical for revenue growth, but the current state of proposed solutions is not up to par with what customers expect from Dassault Systèmes.