Shares of Dassault Systemes fell sharply by 9% on Thursday, following the company’s announcement that it had lowered its annual operating margin growth forecast for 2025. This decline positioned the software maker at the bottom of France's mid-cap SBF 120 index and the CAC 40 blue-chip index, reflecting broader investor concerns about tariff-induced market volatility. 

Dassault’s revised outlook now predicts an operating margin growth of 50-70 basis points, down from its previous estimate of 70-100 basis points—a decision attributed to growing uncertainty and extended decision-making cycles within its customer base.

Chief Financial Officer Rouven Bergmann addressed these challenges, noting the introduction of tariffs as a significant factor affecting the company’s financial landscape. Bergmann emphasized the need for flexibility in such a volatile environment, stating that the adjusted margin outlook would allow Dassault to make critical investments to support its long-term growth strategy. 

Among these investments is the development of Gen 7, a faster and artificial intelligence-enhanced upgrade to its flagship 3DEXPERIENCE software. The company believes this advanced platform will play a pivotal role in navigating an increasingly unpredictable market.

Despite the margin revision, Dassault maintained its overall 2025 guidance for revenue growth of 6%-8% and earnings per share growth of 7%-10%. However, first-quarter results painted a mixed picture for the company’s performance. While total revenue rose by 4% to €1.57 billion ($1.78 billion), it fell short of analysts’ expectations of €1.60 billion as compiled by Visible Alpha and cited by Morgan Stanley. 

Software revenue, which saw a year-on-year increase of 5% to €1.43 billion, met analyst forecasts, buoyed by growth in aerospace, defense, transport, mobility, and high-tech sectors. In contrast, services revenue experienced a decline, contributing to the overall revenue miss.

For the second quarter, Dassault has forecast revenue growth between 3% and 7%, signaling cautious optimism amid ongoing challenges.

 Analysts, including those at Jefferies and Stifel, pointed out the softened revenue guidance for the next quarter and the reduction in operating margin as areas of concern for investors. This sentiment echoes trends seen in other companies within the sector, such as Swedish peer Hexagon, which recently issued a profit warning due to economic uncertainty and slower growth in key markets like North America and China.

The broader implications of tariff-related disruptions have forced companies like Dassault to recalibrate their strategies. Bergmann acknowledged the importance of adaptability, emphasizing that investments in technology and innovation—such as the Gen 7 platform—are essential for ensuring long-term competitiveness. These measures highlight Dassault’s proactive approach to managing external pressures while remaining committed to its strategic objectives.

Dassault Systemes operates in a high-stakes environment, catering to industries such as automotive, aerospace, defense, and high-tech manufacturing. Its ability to deliver innovative solutions like the 3DEXPERIENCE platform places it at the forefront of software-driven digital transformation. However, the evolving global trade landscape and fluctuating economic conditions have added complexity to its growth trajectory.

 The company’s decision to revise its margin forecast reflects a pragmatic effort to balance short-term pressures with a long-term vision for sustainable growth.

As investor confidence wanes in response to near-term uncertainties, Dassault remains focused on leveraging advanced technologies and operational agility to navigate challenges.

 The company’s leadership is aiming to capitalize on opportunities in high-growth sectors, underscoring its resilience in a dynamic global marketplace. 

While the path forward is marked by volatility, Dassault’s emphasis on innovation and adaptability positions it as a key player in shaping the future of software-driven solutions across multiple industries.