By Anna Peverieri

(Reuters) -France's Dassault Systemes lowered its annual operating margin growth forecast on Thursday due to tariff-related market volatility, sending the software company's shares tumbling.

Its shares had fallen 9% to the bottom of France's mid-cap SBF 120 index SBF120 and the CAC 40 blue-chip index by 0740 GMT.

Dassault, which sells its software to automakers, airplane manufacturers and defence companies, now sees its 2025 operating margin rising by 50-70 basis points, compared to its previous growth expectation of 70-100 bps.

"The introduction of new tariffs has created a more volatile market environment, which could lead to longer decision-making cycles," Chief Financial Officer Rouven Bergmann said in a statement.

Both Jefferies and Stifel pointed to the 2025 operating margin growth cut in notes to investors, with the former adding that revenue growth guidance for the second quarter was also "soft".

Dassault's results echoed Swedish peer Hexagon, which issued a profit warning earlier this month that cited lower growth in its North American and China markets in the last two weeks of March due to economic uncertainty.

Dassault maintained its 2025 outlook of 6%-8% total revenue growth and 7%-10% earnings per share growth.

Bergmann said it lowered its operating margin outlook to have more flexibility and make necessary investments to support long-term growth, notably regarding Gen 7 - the faster, artificial intelligence-enhanced upgrade of its 3DEXPERIENCE software.

He added that it will help the company navigate an environment that has become more volatile than the company had expected at the start of the year.

Dassault said its total revenue rose 4% to 1.57 billion euros ($1.78 billion) in the first quarter, limited by declining services revenue.

Analysts were expecting 1.60 billion euros on average, according to a Visible Alpha consensus cited by Morgan Stanley.

Software revenue increased 5% year-on-year to 1.43 billion euros, in line with expectations of 1.44 billion euros.

The division's growth acceleration was driven by aerospace and defence, transport and mobility and high-tech, the group said.

Dassault Systemes forecast revenue growth of 3% to 7% in the second quarter.

($1 = 0.8817 euros)

(Reporting by Anna Peverieri in Gdansk; editing by Milla Nissi, Varun H K and Joe Bavier)

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