Francois Jose Bordonado - VP, IR Bernard Charles - President and CEO Thibault de Tersant - Senior EVP and CFO

John King - Bank of America Merrill Lynch Gal Munda - Berenberg Michael Brest - UBS Charles Brennan - Credit Suisse Alex Tout - Deutsche Bank

Good morning, everyone. I’m Francois-Jose Bordonado, Dassault Systemes Investor Relations. From the company, we have Bernard Charles, our Vice Chairman, Vice Executive Officer, Chief Executive Officer, sorry Bernard, and Thibault de Tersant, our Senior Executive Vice President, Chief Financial Officer. I would like to welcome you to Dassault Systemes’ 2016 Fourth Quarter and Full Year Earnings Presentation, which is also being webcasted. At the end of the presentation, we will take question from the audience and from participants on the webcast call. Later today, we'll have another conference call at 3.00 PM Paris Time. Dassault Systemes’ financial results are prepared in accordance with IFRS. In addition, we have provided supplemental non-IFRS financial information for understanding of the difference between the two, please see the reconciliation tables included in our press releases. Some of the comments, we'll make during today’s presentation will contain forward-looking statements which could differ materially from actual results. Please refer to our risk factor in our 2014 Document de Référence. Let me now introduce Bernard Charles, Vice Chairman, Chief Executive Officer.

Thank you, François-José. Good morning. Welcome on the agenda today. We have business review for the full year of course, and some insight about Q4. And more importantly what, where do we go next on our -- what we have done last year, can feed the plan that we have, which is to double the EPS between 2014 and 2019 as you all know by now. So, let’s go to that first on the Q4. On the Q4, we think we have done what we said we would do, lift the revenue up 10%, the new license or so is up 10% and the EPS is up 10%. So, I decided of having double-digit growth, we have to build the infrastructure to create that for ­-- in a sustainable way of course, really driven by SOLIDWORKS, which is up 13% remember we think that SOLIDWORKS is a way for us to get the footprint that serves later on the additional value we can built on top of it, and I will come back on that topic with 3DEXPERIENCE platform. Europe was strong, up 13% and we continue to prove that the policy or the strategy we have set for the diversification, 12 industry, 69 segments is providing good results and the software is up 16% excluding exchange rate on the diversification side, I will also come on some of those showcased here. So, for the full year, what I would like you to keep in mind is we play on three levels for growth. One is, how can we change our value proposal for the client? We call this industry solution portfolio. When we started in this industry was very fragmented, with piece of software for design, piece of software for simulation and so on. More and more clients want to have integrated solutions, which leads some of the competitors to say that we are closed system, which I believe it’s not the case and I will prove to you why it’s not the case. So, industry portfolio. Knowing the industry having clear solutions for each of the industries we serve, not only industries, the 12 we know, but the segments of those industries. You don’t do a car like you do a truck orders. Second thing is a common platform for reversing [ph], and served the way we deliver solutions with the cloud phenomenon is something we want to use, so we want to illustrate that, that’s built-on-value. The second is continue to invest on to build world-class brands, domain expertise, the best in design, the best in simulation, the best in production. And of course, acquisitions on organic development are the core on reserves, are the core of that. The Dassault pillar [ph] is really related to the efficiency of our reach to the market and the proximity with clients, when it comes to the channels on the geo-organization and as you will remember we have direct sales, we have value sales and then we have volume name here. So, let’s give you this first, the dynamic on the new license with 3DEXPERIENCE. When we use the name 3DEXPERIENCE, it’s about the platform on associated applications, business applications. It’s up seven point in contribution to the software revenue, it was 29% of total revenue in 2015. It represents 36%, so that's traction is being built up. On the new license revenue is up to 30%. It’s an important sign. First, this is not an add-on, this is a game changer, the world is going platform, we are going platform and we want to serve customers with platforms. It’s not a packaging issue, it’s a way to transform the business to be the catalyst on the enabler for them to change their business a few cases here. Valmet, interesting company, because you can say, it’s extremely complex, extremely highly configured sophisticated equipment in heavy industries. Old days you buy your system to design, you buy your system to produce the parts, you buy another system to run the plant. In the future, the platform provides what we call single source of tools, which is basically old digital definition of what you need so you can produce those products, manage them, maintain them properly. We call this single version of tools. It’s a good example where a very fragmented digital environment that Valmet is now being unified on one platform. That's the takeaway from that showcase. You can imagine that we put a lot of our attention to make this possible in every industry we serve, it takes time, because it’s a big challenge for clients but you do know that independently of the software industry, every industry are now embedding software inside what they do to serve their clients. The second factor is the vertical diversification. You notice here that we have increased again the contribution of the new industries in the total revenue. So, we have a good balance, because industries have their own cycles and we want to really reduce that cycle dependency by serving on reusing what we have for many industries. So, we improve it by one point. On the driving industries of High-Tech Marine & Offshore, Energy and Process Utilities and you see here the split there. We are attacking new sectors, architecture, engineering and construction is far beyond old sectors in digitalization and we believe now, we have very unique solutions for that again moving some one was being doing forever digital drawings to move to 3D master on digital twin, it takes time, but we have solutions on some [ph] to the cloud, I will also show you that. High-Tech up 16%. Signing with major telcos like Ericsson, not only for design, but also -- with also semiconductor Samsung Electronics. On consumer electronics in Japan and China, you see here big names. Now people say well, you do a plane at Dassault Systemes, you do cars, what can you do for those companies? They don’t do hardware only, they do software, electronics and hardware. Well, single version of tools. How can you at Ericsson transform 40 systems, which are used to do collaboration into one collaborative platform? That's the core of it and that's what we are doing with Ericsson to help them transform the way they develop, produce, support and sell and support. On the same formula [ph] of players and we believe that the platform phenomenon goes far beyond storing the data somewhere and so about creating a new environment to power the application, power the business processes and that's unique for what the Dassault Systemes is doing, we call this 3DEXPERIENCE platform. Marine & Offshore, revenue up 55% extremely complex projects, long cycle time. You see here big wins of course with DCNS, they have signed a huge contract and the need to be able to deliver those things multi-disciplines, of course commercials, Navy in China is being readopting our platform as well as Europe on U.S. and of course certification agency you may have seen that we have signed, we build every task, they do a lot of engineering to verify the compliance with the norms and the rules, on the insurance process and they don’t do that on paper, they want to do that by doing simulation, so having a common platform is a value here, Royal Caribbean [ph] and Azure clients, it’s a sector where complexity, long life cycles and basically multi-discipline. Energy, process and utility and all the sector which was massively fragmented, with a lot of drawing sort of card [ph] everywhere, piece of simulation, but no single view. So, we believe we are transforming for the long-term that industry, software revenue is at 12%, the key wins are in nuclear. Energy sector in France, Japan, China, Korea, Argentina, you'll remember what we did in Russia and Korea in the past, expanding in Hydro and Wind, all the key wind power players are adopting our 3DEXPERIENCE platform. On deep diversifying in oil and gas. Mostly for the simulation of material science and also the bio phenomenon, less on the installation itself, first because they are very slow process to be transformed and we prefer to focus on new type of installations. You see all the name ExxonMobil from multi-simulation, Outokumpu, Hydro Quebec, Niaep [ph], this is Niaep [ph] and there are other names, but they have not been announced yet. On the third aspect of it is the cloud offering. On the uniqueness of our platform 3DEXPERIENCE, it’s the same exact platform whether it's on the cloud on premise. So, customers were preparing their investment for in-house installed software, can evaluate our software on the cloud. We have 16 industry solution experiences, ready for cloud, 67 industry process and then about 175 roles, roles are basically the targeted function in the companies that we can serve. And we have eight datacenters and we are going to open three new datacenters and we will be aligning our datacenters with fiscal on legal policy, to be able to tell to customers yes, your data are in these geographies on stage there, for security reasons of course on many other factors. More to say on that, but lot of time today. What kind of usage I've done with our cloud users? While astonishing, it's in new industries, extremely complex project, not little things. This is very sophisticated architect Kengo Kuma & Associates in Japan, they are working for many project for the Universal Expo and they have adopted the full native cloud for everything they do. What is the value for them? Very simple. They can involve online; all suppliers were going to provide the equipment on PCs that will fit in those buildings. So, it's like for the - every image foundation here years ago, when Garry was using our platform, it was not cloud, it was on premise, but they connected to all the people providing any single part to make this with own [ph] foundation and you notice if you visited, there is not one part similar to the other. So, you better have to do it well in the plant before you deliver onsite otherwise it will cost you too much. So, this is what is happening. Cloud usage for extremely complex project. So, that’s building on value. In summary, our platform industry portfolio and the focus on making these available on premise, on the cloud. The second domain is leadership by brands and I would like to cover on what you call domains of expertise. We have 11 brands, six of them are number one in the world, people have to -- need to forget that, I can understand why, because we mix them to provide solutions, but we still continue to build this leadership by brands, to have the world’s best brands, because they serve at the end of the day to users while the solution serve the company and the process serve the team. So, good growth on the SOLIDWORKS side, which is basically once again the entry point for the world of 3D, with software up 12%, new license up 7%, and really a strong fourth quarter up 15%, recurring is also strong up 15%, which for entry solution is not very common to recurring revenue this way, which is preparing us for model, which is consistent with the cloud solution and we are gaining significant market share we believe and in 40% of the case with this place existing installation with new licenses. And also, domain brand, SOLIDWORKS, BIOVIA, we invested in BIOVIA, we invested in life science and material science. This is an interesting client. You'll remember the reference on P&G, Procter & Gamble, Unilever, they are adopting BIOVIA for their science platform for all research activities, optimize operation, stabilization. And they want to really use -- of course it will, they will be using both BIOVIA based on the 3DEXPERIENCE platform as well as the simulation tool. More to say, but those kinds of companies are going digital not only for retail and selling but to build and produce where they need to do. On the manufacturing side, we believe that the move on the wave of industry 4.0 or next-generation industry or Made in India or manufacturing 20-20 no matter what the names are, it calls for digitalization of on digital continuity between creation and production, DELMIA is up 17% driven by transportation mobility, aerospace and defense on industrial equipment and diversification industry moving offshore energy and process utilities where they are using these construction aspect or production aspect depending about what you do here outstanding example, so you'll remember we want Ericson on the 3DEXPERIENCE platform to unify 40 mega system and we are now expanding Ericson on all the plants with industry 4.0 on the DELMIA offering. This is what I just said. It’s manufacturing operation. How do you improve manufacturing operation? And this applies also to consumer packaged goods. When you do product introduction around the world and you need to synchronize 30 or 40 plants to produce shampoo bottles, you need to organize this DELMIA Apriso is the best solution to do that and we are targeting those. Now, you’ll remember, we are quite QUINTIQ which is in the supply chain, people were saying, well, this is far from what Dassault Systemes is used to do. We do collaboration to connect suppliers, but why are you buying some single related to optimizing your supply chain for DHL, Walmart, you'll remember that what we said, because I believe supply chain will not stay the way it is, it will become a value chain and supply chain is dead in my mind, it will become value chain. People are going to reconfigure dynamically, with whom they work, for which project. So, we want to learn from that. And we have QUINTIQ, we have the software up 23%, we have key wins in financial and business services, but organizing good flows of Passenger, Transportation, Marine & Offshore for cruise line. Energy, Process and Utilities, metal industry. When it comes to the management of flow of people energy, resource allocation, it’s based on very old software, which needs to be reengineered and that's how our target, it's not a huge line yet, but we believe that with this kind of growth, we can showcase on this kind of customer showcase, we can show how supply will become value chain. More to say on that also. So, the main acquisition, you take the landscape of our brand, six of them number one, two or number two and those are our babies, we need to develop them. So, we have done three key acquisitions last year. One is a world-class CST electronic watch here, my arm is on antenna. When you remove the watch from the arm, the watch receives less signal then when it is on my arm. So, we need to understand those phenomenon’s, magnetism is very essential coming forward because we have so many, the air now is very busy with frequencies and we need to understand not only the effect on people, but how you optimize those products and how you manage the consequences of the use of those products specifically for wearable, now be astonished that we are winning also High-Tech for those reasons as well as the life science, electric mixed signal on living half program is one of example of that. CST is the work master of the best technology for that on the world leader based in Germany. And those friends came to us and they said, we want to be with you. And they did not listen at any other offer. Private company, the founders said, we want to be with you, because we like your strategy on the purpose of your company, real story. XFlow based in Madrid, a top star having created a very, very powerful module for CFD. So, may be with a few millions, I can do better than with $1 billion for those of you who'll remember what I mean, referring to and we are going to win in the CFD market with this new breakthrough technology. OCTENS [ph], this is for DELMIA and it's about expanding the planning function of industry 4.0, because planning was done by critical systems. I have not said, DIP. By critical systems and planning is going to be done real-time. And that’s what we want to do on what OCTENS [ph] is doing and connecting this with DELMIA on the new digitalization of production is something that we believe is relevant. This is the most technical chart, I will not spend too much time there, I apologize at first. But I want to explain one thing, the world of simulation is at the beginning. It’s massively fragmented, and we have a clear strategy to integrate it. It’s called multi discipline, I can evaluate magnetisms, stress, vibration et cetera on multi scale from atoms to products. And if you look at the last 10 years, the investment we have done, we are feeling each of those dots, step-by-step. And you see here many example of those where we believe that the world of simulation is not going be a verification process, it's going to be a design process. It has been used for verification, it’s going to become design. A very simple example and I read a paragraph from a bunker that I was absolutely wrong yesterday [ph]. Dassault Systemes is the world leader in 3D printing. We have been doing secret project with defense for more than 15 years, but we never talked about it. And now it's becoming public. But we have made public that is unifying older solutions on Dassault Systemes solutions for 3D printing and what we called ADDITIVE LAYER MANUFACTURING. Sophron [ph], Boeing as many of the other are most advanced players in that sector and it’s becoming now deployed for lower sophisticated technology. But to do 3D printing, you need to do massive simulation. Why so? Simply said, when you print laser with powder, you get the shape which is absolutely a distortion of what you intended to do. So, you need to understand the distortion. So, you're creating a shape, which is the deformed part, so you print a good one. So, the floristic circle is there between the process, simulation and design. In the future, designers will not design, our robots will design for them based on the simulation and we are doing that right now. When people asked, me do you do things on AI, of course we do. Even in V5, there are a lot of AI old based millions [ph] of technology secret inside which may get out that we are the best system for that and we are going to continue to expand. Multi scale, multi-physic one step further is next limit CFD inserting that, it's a very small technology. But you know it’s a beautiful mathematics. It’s Lattice Boltzmann, its scales, its fast and it’s better that for you, I know you are top specialist in math. Now, just talk -- I think Lattice Boltzmann is better and we are going to change that we're - we just start up in Madrid that has invented that on created a technology which is beautiful. So, don’t be scared with the $1.7 million revenue. We are going to help this thing to grow it. And you see the references already and those are not so small name, so we want to do physic simulation, multi-physic, multi-scale all of these on one platform called 3DEXPERIENCE platform. The third pillar for growth for the future is really related to efficiency, being closed to our partners, customers, and customers and of course providing the value. On that line, we are doing exactly the opposite of most of our competitors. Most of our competitors believe that they will not need partners. We go exactly the opposite way, we go like Microsoft partners first to serve customers. We are much closer to Microsoft on that standpoint and we believe that that's the right thing for the type of market we serve. The second remark is we have hybrid distribution direct for certain selected customers, value with big partners who invest in knowledge and processes and then value the proximity on small companies. And we will continue to do that even with cloud, because not to confuse the delivery system, how you'll reach and what the customer are looking for in terms of help to transform their businesses. So, finally high growth countries, we have increased the sales coverage, we have grown 15% on the proportion of total revenues about 17% plus one point compared to '15. And you see a beautiful reference expanding in these fast-growing countries and there is a full list here, I will not go through it. Now, strategy update quickly. We don't lose sight of what we want to do, with CST and Dassault Systemes, I want to be with you because they like our purpose. Our purpose is to use the power of the platform on the digital world to help to improve the real one. So, it's not about just analytics of what is happening, it's comparison between what would be perfect in the virtual world and what need to be done in the real one. Harmonizing product need [indiscernible] on life that's what we do, the strategy is clear. Social means inclusiveness. Industry means portfolio. That talks to you. And experience means the value is not in the product, the value is in the usage of the products. So, how do you create a virtual world that simulate the usage as opposed to the product. So, here is an illustration of it. You remember the spiral of innovation, you have an idea, you abstract the idea, you design, you try to do a prototype, you produce, you simulate, you see if it has a values, you try with your clients, this new - you go into Silicon Valley, we won most of them in the last two years, those clients who are doing physical goods, most of them, including all electrical vehicle programs, because they love that's spiral. How it works? [Audio-Video Presentation] All of the sequences you saw in that video are real implementation at customer site, however it's not one customer. And for many companies it's still scaring, because there is a panic in their site to say, how I am going to transform myself to be able to approach in the new way. I am serious and that’s probably the slowing factor for us, because when I look at all the start that we want in the last two years in the Silicon Valley to do electronic, electric planes, to do electric cars, to do drones, is because they are startup on the take it from that perspective and they create new things exactly using the platform. But for someone who has massive legacy, it’s very hard. And this is why some of the transition we have, we have some clients takes more time, it’s not related to the capabilities, its related to the transformational aspect of things, but I am sure that for those of you for low some of those industries, you see that all the CEOs are talking about all they are going to digitize their enterprise and they are inviting CDOs and whatever C-digital officers trying to find a way there. The panic call here, if this is possible, how can it be orchestrated. So, it’s a good news for the long-term and it has to be orchestrated, but I believe that this is one of the biggest challenge for Dassault Systemes is to make sure we help them with partners to go through this transformation. We serve three levers, value, how many millions can I save for company at the enterprise level, at the team level. Why is it that those teams could be more efficient together and at the user level, why is it that I am becoming a champion, I don’t know analysis and simulation, but I can be an engineer when I was a designer? And I believe that the fact, the statement which is done those days, which is technologies destroying job is done that way because people look at backward. I believe that designers will become engineers and that we are going to have to ask engineers what they are going to do in innovation. Not deals a way around. We can now have designers who can do better job than engineers, with the robots we provide and the platform we provide. So, the question is on the responsibility for companies on a social standpoint, is how do I open new jobs to create my future as opposed to reducing the costs of the job, because we can elevate the capacity of those people as we speak, and that's something very profound from a social standpoint, I think was a barren disease, but I think it's worse to think about it. On a goal for the question of continuous super [ph] training to. Now the cross industries is very key, we are the only company on the planet to serve all these industries at the same time in the world of design, simulation, projection and connecting those things together has a lot of advantage in AI sensor connectivity, mechanical, electronic what you call cyber, advanced materials and of course managing software content and that’s what we do. And of course, the example of what we are doing in the city, is an extreme example, but it shows that it's possible and the project with Singapore is going extremely well. Now speaking about industry 4.0, we are in the center of that. With 3DEXPERIENCE manufacturing. To address the difficult challenges on more sustainable, more agile projection systems, I have a quick video that illustrates that very well. [Audio-Video Presentation] We are addressing manufacturing in a way never done before by looking at the end result before you look at how you do it. On this transformation with DELMIA appraisal often supply moving to value chain easily at the heart of it. You have companies who are manufacturers like GE and others saying we have now analytics to analyze our installations. They have to be compared to some thing, because if you analyze the real world without having a reference in the virtual world, you don’t know how to conclude and we call it the virtual twin on the connection between the two is the 3DEXPERIENCE platform. So, you're going to get many, many data, you can store them, but if you don't know how to compare them to and to what you should compare them to, you cannot conclude. With this project are going on and all the videos you have seen are today presented on one single platform called 3DEXPERIENCE platform. Dassault Systemes is becoming a platform company and we use our platform for our own development and we will be using our own platform for the commerce side of it. Now, two last illustrations, because we don't want only to do B2B, we want to do B2B for C and we are learning from B2C. Two examples, one on the impact of approaching the holistic way, a city for our system enabled city under construction aspect. Construction is far behind in terms of digitalization. What you see here is how new infrastructure are being inserted in the city of Singapore doing full simulation before, this was not before, before people were going on the field and trying to put the bridge where they could put it. Now it's done, but more importantly, there is something underground and we have the underground modeling and capabilities, there are a lot of installation, fluidics and many other things, pipes and so on. Have you noticed in Paris, how many cities, how many time people rework things and how slow it is to transform an area? Now, this can be stimulated and I think China is adopting those solutions. Of course, the big transformation is training on building the new processes because capabilities are there. Thus, so that's an example of how implication of these full simplification is what we do... [Audio-Video Presentation]. This product is free, so why I do talk about a free product to an investor? This is first because the number of users is now a unit of millions, not hundred or thousand. Second, because I know that some companies want to have this product for the business are observing what we publish to you. So, I want to make sure they see that we are serious in that. Third, most of the content you have seen here is produced with SOLIDWORKS and consume with HomeByMe [ph]. And the people who are SOLIDWORKS users and will have SOLIDWORKS next week Monday, and probably we’ll have 8,000 people in Los Angeles are producing those kinds of equipment for - find it in our regular life, and knowing that how it can be consume in 3D is a major differentiator for them. And of course, it's free for the user, but the one who publish, pay for it, if you click on it. We are learning from that the model is sustainable. It has to grow. I think we should target 700 million users not millions, but I think we are going to continue to learn. So, you cannot categorize Dassault Systemes in one category. And we are not going to stay in one category and if you look at all consultant analysis about categorization of software, we don’t care at all about those categories, we have a plan, which is clear and this is the one we want to realize. With that, I think it's your turn Thibault. Thank you very much.

Good morning. Let’s switch to the last fancy part of the presentation. But some of the figures however bad it would deserve a video. In total revenue, we did a 7% growth in 2016, Q4 was growing at 10% and that fully organic view point growth was 8% in Q4 for the total revenue and 6% for the full year. New licenses were up by 10% in Q4 and were 5% for the full year, where recurring revenue was up 9% in Q4 and 8% for the full year. So, very good performance at both levels in Q4. Looking now at our brand, CATIA, was up by 4% for the full year and 2% in Q4 and the transition towards 3DEXPERIENCE is there and you can see the 3DEXPERIENCE, CATIA revenue up by 42% during 2016. Q4 2015, was a very good quarter for CATIA and ENOVIA with large transactions at the end of the year, China was very strong in Q4 of last year and is certain year continue which matters a lot for CATIA and ENOVIA growth. However, looking at the full year, ENOVIA was up by 6% but was up by 11% in new licenses. SOLIDWORKS was up 12% for the full year, with an acceleration of new license revenue in second half compared to first half. And certain in fourth quarter the highlight is on what we call other software with very good performances of SIMULIA in scientific simulation, DELMIA manufacturing has Bernard mentioned we had a very good year for DELMIA and for digital manufacturing and for QUINTIQ as well in optimization and logistics. So, 21% was the growth of other software leading to total year revenue growth of 8% for this brands some of them coming from acquisition. A good performance therefore. From a GO standpoint, there was I think I mentioned for Europe in Q4 at 13% growth driven by very good attraction in France actually and also in Germany. In Americas, we grew 6% in Q4 and in Asia 7%. Asia was actually relatively strong and China is remaining the volatile country you know, so the performance for full year in China is very good, progressing very well, but the growth depends and varies significantly from a quarter to another in China which explains that it was a little weaker in Q4 and also the influence on CATIA and ENOVIA. But for the full year, I really believe that we had a very good well balanced growth across geographies. 6% in Americas, 8% in Europe and 8% in Asia, so well balanced. In services, we had a strong growth in Q4 at 15% showing actually a few significant goes live 3DEXPERIENCE and in some cases until the go live is given, we need to keep not recognizing the service revenue, it had of course a very good influence on the gross margin of services at about 28% in Q4 and this helped improve the gross margin for services to 14.7% level up by a 150 basis points compared to last year speaking for the full year. Little more work to be done on services gross margin at the full year level, but certainly a good trend for services business in Q4. From an operating margin standpoint, you may remember we had said that the organic improvement of margin would be limited to 50 basis points for 2016, because of investment we have to do in R&D and also certainly in sales in order to improve our coverage and you have seen in Bernard section, the progress we are making in high growth countries, we cannot name them emerging countries anymore, they've emerged a long time ago already, but these are the countries where truly our growth only depends on the staffing we are putting on the field. So, we are doing these investments and they started to accelerate in the second half of 2016 to fuel our future growth but in spite of those we were able to deliver 70 basis points for improvement at the organic level of the approaching margin with currencies diluting it by 20 and acquisitions by 10. EPS was up 10% in Q4 and 11% for the full year. In addition to the performance of the operating income was also the lower tax rate and you may remember that we said, we identified in first quarter of 2016 that we were able to take some reserves reversals in taxes because of tax credits being completed satisfactorily, so we had a few one-time events in first quarter of 2016, representing $0.05 of EPS, to bear that in mind. The performance of Q4 at EPS level is unaffected by a New Year, one-time events by the way. The operating cash flow and the evolution of our net cash position was actually good in 2016, and I will explain, why I think it is good. Because at a first glance, its $622 million, $11 million below the performance in 2015 and what you can see as well is that we are at about 1.5 billion euros in net cash position and when you had the loans that we have, we are at 2.5 billion euros in cash at year-end, in order to continue to contemplate acquisitions. So why am I saying that cash flow from operations is good, it’s because the only element that is penalizing it, is the timing of tax done payments. 2015 was a good year, it triggered higher tax on payments in across 2016 and therefore the balance of taxation we have to pay in 2017 is much lower than was the case one year ago. So, you see it’s really a timing question on taxes for 117 million, if you accept to put that aside just for a moment, you can see that the performance of cash flow was actually good. In addition, I know that – revenue is a line that, everybody wants to look at and in order to verify that, it is growing in accordance with recurring bookings which is the case for 2016 with – up by 7% tax effects which is very consistent with recurring bookings across 2016. Financial objectives, I know this is more interesting section. We are in fact looking at the economic environment and if you ask me, if anything I believe it’s going to be somewhat more volatile in 2017, but I don’t believe this is a significant point of worry for the systems, because of what we are doing and because of the need of innovation. In all the geographies, we serve. So, we are using for that reason our performance in new licenses in the fourth quarter of 2016 has the template for growth during the year 2017. The recurring revenue was in 2016 favored by the very significant bike in subscription renewals of SOLIDWORKS at the end of 2015. Let me explain, maybe here, we trans the conditions for customers waiting to go back under our maintenance for SOLIDWORKS, in this fourth quarter of 2015, we announce that this would trends at the beginning of 2016, so we had the nice increase of renewals for that reason, I don’t regret it. This bumped up the recurring growth for SOLIDWORKS and you have seen that it was very good, in fact much higher than the in facing installed base for SOLIDWORKS and brought the benefit of 2 points of growth for recurring revenue across 2016 which is not repeatable. In terms of operating margin, we want to keep the same objective of 50 basis point improvement in 2017, in order to be able to continue to invest to develop our market. And this is really because of the potential of 3DEXPERIENCE that we see and is becoming more and more of use with the customer deployments that have happened. The tax rate will go up slightly because of the tax givers also we did in the first quarter of 2016, which of course are not repeated in the guidance for 2017, so we are planning on a 33.5% tax rate. And in terms of currency ascensions we are targeting at ¥110 per euro and ¥117 per euro and many other currency ways of course product currencies. So, the net result of all of that is revenue growth pretty similar in 2017 to what it was in 2016 with the growth of 6% to 7% for the year, but this is embedding 8% to 10% increase in new licenses showing an acceleration there and recurring normalized at 6% growth for 2017. Based on that we are planning on guiding to an EPS comprised between 2.65 euro and 2.70 euro then increase of 6% to 8% of the EPS. We saw the onetime tax benefit. In 2016 this EPS growth would be 9% to 11%, so pretty much double-digit. The first quarter is essentially the same revenue growth 6%to 7%. EPS small decline because of the $0.05 of first quarter 2016 and so essentially this is the guidance that we are initiating for 2017. And with that, I think Bernard and I now we can answer your questions.

We’ll take first question from the room. Ladies please, the floor is yours.

Yes. Good morning. This is Bernard [ph] from Exane BNP. I have two question. So, first one is maybe more for Bernard or it’s on digital manufacturing. I would like to understand your next steps of your product roadmap and strategies there because of growth, we have already good basis with DELMIA, QUINTIQ. But I would like to understand if you need to if you feel the need to go further down like on CATIA, PLC of if you need to get closer to have good company or if you need for example developing exportation system for manufacturing, for being standout. And the second question is more for Thibault, I would like to drill down a bit on your guidance for '17 on margin on the 50 bps improvement, Is it fair to say that you consider that the 3DEXPERIENCE rollout is accretive for gross margin but on the other hand you have some investment to do on CFD offering or like also digital manufacturing and if you can help us assess, yes, I’m sure you're good for investment in this offering. Thank you very much.

Thank you for your two questions, I will - as you suggested address the first one. The evolution of manufacturing system is not going to be the extrapolation of what was done in the past. There are many reasons for that, the nature of equipments are becoming smarter much more modular and also processes are evolving a lot, just to take a few example 3D printings relatively manufacturing. We now see companies will become service providers and if you need to create parts, you can just send them and they will produce for you. In short, I think what is happening in traditional manufacturing is what happened in the High-Tech, very different nature of production system. So, we are focusing on the processes, composites, electrical, flexible boards, many things that are really new. We don’t plan to echo your question on Q4 being precise. We don’t plan to invest in the pure operating system of the plant itself. Equipment are going to be smarter, in fact they are our clients who produced those equipment's. But on the engineering of the manufacturing process, the planning on the full chain continuity to order to fulfilment, not on the financial transaction but doing the job so the solution can be delivered. That's the focus of Dassault System and I think the basis that we are, with DELMIA Apriso of them on putting that on the common platform is a very strong base. As a matter of fact, it's changing a lot in many leaders industries. Now, we need to apply it to the 12 sectors in their different matters. So, those the expansion will come from the specificity of each sub-segment of the industry. For example, a plant at PNG and they have many of them, does not work the same as the one of the 110 plans of value. They have different meters for that. So, we want to specialize in those industries. I think we are very welcome, I was surprised about how much we're welcome with those clients. The last part I want to mention is if you are a little bit familiar with how a plant work, you have this every morning meetings with the companion, they discuss about how they locate resources and now they do. We are everything we are doing is human centric, it's not automation for automation, its human centric. We believe that the elevation of the capacity of people is the best way to have high performance high quality plants. That's what we call the to your tactics needs and so on where big screens in the morning people kind of locate resources and kind of a conversation collaborative work in the plant. If you recall, maybe you want to look again about the video we presented about Airbus Helicopter plant in now and now we digitalized it, but it's a very interesting lesson about how we elevate the companion's performance in a big way from that standpoint. So, our eccentricity or I have competitor who are focusing on automation. I don’t believe that this will address well the problem. We do go automation, we produce things automatically. When you do so you're printing it's automation by definition because not done manually but everything else from our priority is on elevating human capabilities in doing their job on making them champion in what they do. So, from that standpoint I think there are lot of great things. Oculus from Microsoft, when you put this augmented reality, people see the real product, they see how they should perform. Those are real value. In the old system, you have to train, you have to, now they know what to do and you can help them. HTC, so all these AR environment is really creating new things. And finally in manufacturing, I believe the world is going to change, we've massive adoption of new material science approach, which this is why you want to notice again that BIOVIA is the world best material science, Sweden Nobel Prize got the Nobel Prize using the BIOVIA material science. I'm understanding the Nagoya University on mid tools about in capital of certain MIT. On a material science is going to change in a big way to way human kind produce things. With hybrid materials, on live quantities. This is not theory anymore, we will have abidation of those things on it's the topic is now. So, that's for the first question. Yeah, the margin expansion in 2017, we certainly insist on having the margin expansion, at the same time the opportunities are so many, that we have accelerated investment starting in second half of 2016. As a result, if you look at our staffing, it has increased by 9% in 2016 and essentially well balanced across anti and marketing and sales. When you look at it with the same kinds of growth in both domains in you know and the city experience remains of course the main investment factor. Every discipline that we do has to be well integrated into 3DEXPERIENCE portfolios. And in sales, very clearly we are improving our coverage of the countries where we see a potential that is today unlimited by the feet on the streets you know and China is a good example, but there are some others.

We have many question from the call. So, Martina, would you please give the floor to Stacey [ph]?

Hello.

Hello.

Yeah, hi. It's Stacey Colin with JP Morgan here. Thank you, very much for taking the call. For Q4, you talked about 10% growth in new license. Can you just talk what that was organically and then as you give the guidance for similar levels into 2017, I guess that was 8% to 10% in the 2017. How much of that is organic and how much with acquisitions. That was one question. And the second one was just speaking in a bit on the investments that you're making and or how long you are expecting those to last I guess or should we think of some sort of margin inflection point say boring acquisitions that we might see in 2018 or it's still too early to say?

Thank you, Stacey. In fourth quarter, new licenses were growing at 10%. The acquisitions were bringing very little in new licenses because I remind you that CST is essentially licensing and our subscription model. So, we had about one point coming from acquisitions and the rest was purely organic. For 2017, likewise Q4 is a good template for 2017. The investments in fact are going to continue, if you want my humble opinion, based on the prospects that we see. But if you look now, the influence on operating margins my stimulation is that auto plan growth will accelerate in the years to come. So, it is more the topline growth which is going to take care of the margin accretion than the fact that we would slow down investments.

Okay.

We will now take our next question from John King, from Bank of America Merrill Lynch. Please go ahead.

Good morning. Thank you, for taking the questions. I've three if I can. So, the first one was related to 3DEXPERIENCE licenses. I guess Q4 you had a tough comp but it seems that they were declining a little bit. So, what's the expectation for the aggressions we'd experience in 2017, and which kinds of industries might drive that. It seems that 2016 was underpinned by some of the newer industry. So, do we hear any pickup in terms of adoption of automotive and aerospace, I mean, your core industries on the 3DX side. The second one I think is associated potentially. But the large deals that’s in Q3, can you just confirm is that closened in Q4. Which industry that related to and is that now behind us in terms of revenue recognition or we've got part of the optimism in 2017. Is that deal you could see continue to, you know, license grace coming from that? And the third one, probably for Chiva, was just to see now, that's in 2017. You know, the Q1 growth obviously is interior, at least benefiting from an easy comp. I guess, the guidance doesn't really seem to reflect that. So, just any commentary around how you see the licenses falling through the next few quarters? Thanks.

Okay. Yes John. So, the 3DEXPERIENCE licenses, there was a very strong count, we did mega deals in Q4 2015. So, that's two and but certainly for 2017, our expectation is a very strong growth in new license revenue with 3DEXPERIENCE. Actually for the full-year in the same magnitude as what we have seen in 2016 which was 30% at least and this spending in many industries I really believe when we look at our pipe, that we have an opportunity in 2017 to perform well essentially in all our targeted industries and with for example some possible acceleration in industrial equipment. Some acceleration in transportation mobility and it was also mentioned a consumer package goods as an area where we should see an acceleration. The third quarter deals were closed in Q4 so there is it is done, you know. Now there are a few Q4 deals which didn't close and that's a normal process and we are expecting to close them in first half of 2017. You are absolutely right that the guidance is put on for first quarter. And I think that's part of experience, right. First quarter is like third quarter not the favorite quarters of CFO. First quarter is shorter than normal quarter because of the sales kick offs and all the turning programs and vacations in China and things which are peculiar to the first quarter. So, it's reality, in reality it's a two month usual time quarter to close the business and there is no way to trigger for customers to close at the end of the first quarter because lot of them looking at CapEx as first half and second half. So, we see more triggering in order to close transactions when we finish the second quarter and we finish the fourth quarter. So, the net of it is yes we are being prudent with the first quarter guidance.

Great. Thank you.

Next question, Julian, please.

We will now take our next question from Gal Munda from Berenberg. Please go ahead.

Hi, everyone. Thanks for taking my questions. I have got a few if I can. The first one is just the comment, you had a very strong quarter you said in SIMULIA. Now we saw the deal announced this morning about MS involving MSC, considering we were expecting kind of to go to private equity now being in a listed company hands. How do you expect the competitive environment to change going forward in that respect? And second question is you mentioned 2% pointing back to solid growth charge backs to recurring revenues growth. What was the impact on the overall growth from the charge backs? Thank you.

Okay. Related to SIMULIA, as you may have me speaking this morning, we have I believe a unique approach to world of simulation. And it's coming from multiple reasons. First of all to world of simulation is highly fragmented today, so that it's called multi-physics multi-scale. The second thing is I have a mixed respect for what is available on the market today. Most of those software are very old software. 30 years old, old architecture, most of what exist in simulation. There is reason for that, is the conservatism. Companies have calibrated, they use the same software, they don't want to change because they know that this simulation they know what kind of result it can give. But let me give you an illustration of that. Aerospace. When we made the decision for SIMULIA, the works turned up was MSC in that strong. We crunched them in Aerospace. And I think it's a news which is on papers today I guess. Why? Because the world of Aerospace becoming non-linear. On SIMULIA, is the world's best non-linear simulation system. Same for composite on many of the planes are in composite now. So, I could do that long list for each of the simulation processes. And I believe that what is happening with electrical mobility, what is happening in AV industries, is going what is happening with 3D printing, is calling for new generation of simulation engines on a platform for multi-physics, multi-scale. The question is do we have done investments that are paying off? Yes. The entire growth of SIMULIA is on non-linear world since the beginning and we are extremely happy with CST, same thing, the world leader in that sector. And is no much other solution. That is Bozeman for CFD. The CFD market has been owned by few companies, with very old software. We believe we can change that. So, we are very confident and we are not going to stop there to continue to change the very math foundation of this world, why? Because our future robots what we call them cobots that are helping designers to be engineers or scientist are going to be part of the solution. Today if you look at living heart program from those system which is now recommended by the FDA as the best platform for all human research on heart surgery; our platform is recommended. Do think it's because of the shape of the heart? Of course not. It's the power of the simulation engine. And the reason why we are winning almost all 3D printing key benchmarks in the world is because we do simulation better than others. So, I am very confident, I am feeding you with good elements. 12 years ago, I almost agreed to buy MSC, 15 years ago and at the last minute I concluded no. Because I have a bad habit, I verified the quality of the math. Not the quality of the software. And it has paid a lot because now Abaqus SIMULIA is the world best in this sector. So, we have to be careful, this is not about software, this is about science.

So, I think the other question is on surge of, well, the impact of the surge of so many drugs maintenance subscription, renewals in Q4 2015. The impact is really two points of growth of our recurring revenue for 2017.

For 2017 or?

Yeah, I am measuring it as growth in '17.

Yeah. Sure, I get it, yeah. Okay, thank you.

We will now take --.

We'll take -- Julian we will take one question from the audience and then we will be back to the call.

Okay.

Thank you. I'm Clic Burd [ph], I have two questions. You just mentioned one of your sophisticated software in the life sciences which concerns heart. Two years ago you showed us other familiar software and you said that this new familiar software would double your turnover within five years, so we are now on the beginning of the third year. Do you confirm your prediction of this doubling of your turnovers with the new families, today?

Thibault will blame me for that. I did the slight mistake on almost there. What I should have said is double the EPS. And the reason for that and you will based on the conversation this morning you will understand exactly why because we with the mix of organic acquisition, if you look at the past 10 years, there are evolution between the factor on the top-line or the factor on the margin. In order to not be prisoner of that, in the moves that we have to do we came to the conclusion that the best way to express our five years plan was to say double doubling the EPS. In short, we might have to do moves which are top of our intuitive but more contributive on the bottom line but contributive on the top line and we want to be able to do those kind of moves as long as the technology on those are the right ones. So, that's the only reason. So it is we are on plan. We believe we are going to make it.

So, actually it was not your mistake, it was my mistake, I confirmed you say the doubling of EPS not doubling of revenue. Sorry. My second question was concerning your liquidities, your cash. So, you have a net of $1.5 billion and you have debt for $1 billion and you said that this cash is important for you to size in the opportunity. So, my second question is do you see such big opportunity in the world and will there be any problem with the antitrust agencies of the world because you are now world leader on the size of big opportunity it might cause a problem of your market share.

Yeah, those two, the second remark is very important one. If I had to make a choice of course all this is related to opportunities on situations. So, we all know that and you all know that but as I said you may have observed that the tendency of that system for acquisition are really related to exceptional talents on technology, more than the contribution to the top-line at first. Of course, at the end it should produce the growth because we want to differentiate. I believe customers select our solution because they know its significant differentiator. And we've demonstrated that for all the brands. Also why is they wouldn't have stayed number one even SolidWorks. So, we inject very precise, that's why I like to say that's a system is at` first and before all a scientific company because I believe that a volume of developing software has only a value if it's to improve a process not for the software, it will do since we do. So, we are very careful, very selective. You may have noticed that in the past six months we said no to acquisition that we're very highly priced but that we could have afforded. I have few in mind. And we really decided not to go because we believe we could do better with the next generation of science based software. So, that's the policy we are going to continue to follow. And we do that in every acquisition we do. The nicest one I think is the small team in the Madrid or the CST they are proof points, SIMULIA was a proof point. Ortems another proof point where they are unique science and technology thing modules. That's the way we are and the way we like to operate and I think that creates the most scaring effect for us is to be in the situation where everything is equal. And there is no reason to have everything equal because there are a lot of differentiation that can be done. Material science, I really believe that this will change the world. And investing what we invested in human genes modeling, on chemistry, on material science from atoms to materials, creating your old materials. There is no one else in town to that. Now all the new is not there, GEOVIA was successful. But it's just the beginning. But there is no one else in town. And I believe the sustainable innovation is just not more of doing of the past, you're saying it's doing different and I see that we've old and new high tech companies we are starting. So, we are going to be reasonable but obsessed with the plan that we have presented to you in terms of strategy. I'm pleased that time and see when to someone else I don't care, or going to the front.

Julian, if you could give the floor to Adam. Please.

Yeah, Adam please go ahead, your line is open.

Right. Good morning [indiscernible] thanks for taking the question. Maybe just first one is kind of a follow-up for last one. That you are seeing more players become involved in parallel spaces. Most obviously see them sometime acquiring around the space, you got Hexagon acquiring MSC this morning. I am just wondering first of all from a customer perspective whether that maybe slows sales cycles down a little bit as companies want to look a little bit more broadly at the technologies that's out there make sure they are making the right decision. And then secondly, does it also make things more difficult from an M&A perspective that evaluations are being pushed up by more people looking into this industry. Maybe secondly, from a capital intense, in data centers should we expect any major changes on CapEx? Just give us a bit around the strength of the services businesses in Q4, not sure what exactly why was it so strong. Thank you.

On the first topic I think, let's take, I will take a few industry just to be try because it's so large topic. You take T&M, transportation & mobility. No matter how successful is Tesla they have chance for ever the world of transportation & mobility. Will they be successful or not they have changed it forever because no one can ignore electrical mobility, smart mobility, and autonomous mobility. So, those cycle now if you admit that for a minute, are not are really industry cycle and those customers are looking for solutions that will help them solve problems they don't well know yet. Why do you think we are building world leadership in iTech? Because we believe iTech is mission critical for smart mobility. I believe that is something that none of deals players are doing. And that's the game changer aspect of what we do. I have taken the example of iTech infusion in all those sectors. I could take the infusion of material science in all sectors. We talk about 3D printing, we can talk about composite, and we can talk about new engineered materials. Now start ups are now creating things that the big one cannot do. Jeff Bezos my friend is doing Blue Origin, he is doing, and he is using our platform. Tesla is using our platform. Sky Dio, Joby Aviation, all those iTech companies and HEV, far day future. Now of course traditional OEMs some of them are moving, some of them are thinking about how to move. So, it's not a question about V5, V6 or V5 3DEXPERIENCE. It's making sure we address the different pieces to help them go where they need to go. And I think that's a unique position for Dassault System on why I believe these industry 4.0 is truly a way that this year to last. And it's not plus of the past or more of the past. Last remark, there is no doubt in the last three years that China has decided to innovate. Zero doubt. It's the priority. Can you believe that they say we want to be the world leader in electrical mobility? This is what they say. They don't say share my market but do it. They are selecting our solutions. So, it's creating a little bit tension across the industries and even to customers we serve because it is a new world is being defined in front of us on things about cities, and so that's the core of Dassault System. That's where we can move almost niche highly efficient applications to business solutions for innovation and I believe that, that will market the total accessible market has grown significantly from that system who were investors on Dassault Systemes ten years ago would have thought that we would become the science platform for CPG companies. No one, but are there now. And we are there for the long term. So we have the luxury to have a stable shareholder structure. I am not -- I sleep well, not being concerned about takeover. And I think I want to claim that we can have the Silicon Valley in the Saclay Plateau. And we are demonstrating it with what we do. So it's question, very clear question with full support from the shareholder to create a long term company Dassault Aviation celebrated 100 year. I want to build a Company that will last 100 years, not 15, 20 like most of the tech companies that are bought by someone else. With that, you have the DNA of the Company.

You had a question on services Adam

Yes.

Our strategy has not changed, so we are not trying to accelerate growth on services. Over the contrary, we are relying upon integrators more and more. In Q4, there was a spike in services growth which was related to one of our implementation, large implementations where the customer had requested that we would be the integrator when go-live. And you know that in some circumstances you cannot recognize revenue until you get to go-live of the implementation. So half of the growth in Q4 was coming from that go-live. And on a more normalized services growth is around 7% and this is truly what we are factoring for 2017.

Just around the capital intensity on those CAD investments. Thank you.

Yes. Our CapEx are remaining at a very reasonable level as you have seen around the 53 million in 2016 if I am not mistaken. And certainly with our cloud starting to shape up, CapEx will have to increase in order to support, I mean larger implementations of our software on the cloud. But in spite of that, the model we have for our prices on the cloud is a model where we are not diluting pricing because we are going to the cloud like some others would do, and so we can certainly absorb more CapEx in our cloud model without hurting margin.

Okay. Thank you very much.

Next question, Julian [ph] please?

We will now take our next question from Charles Brennan from Credit Suisse. Please go ahead.

Great. Thanks for taking my questions. I've got a couple if I can actually. Firstly, just in terms of the overall business momentum I guess we've heard for the best part of two years about your frustration with some of the large legacy customers and the pace of transformation to V6. What makes you so confident that 2017 is going to be the year of inflection? And are there any data points you can frame around that maybe the size of the sales pipeline or anything like that, that can give us some tangible comfort? And then secondly, just a quick technology question. You've highlighted decent growth in the marine & offshore segments of the market. Are you actually focused on the whole design aspect of that market, or are you only focusing on the fit out stage of it? Thank you.

Thank you very much. Well I want to make sure I don't miscommunicate. We are not frustrating. Frustrated with our great clients transforming at a certain speed to speed, they can. We are with them, for them, for the long term. As a matter of fact, we inject a lot of technology in V5 that are coming from 3DEXPERIENCE to help them continue to improve the processes. So it's not a software replacement. It's injection of next generation in the existing generation. There is something called power buy, which is working extremely well where V5 get the clients can use the 3DEXPERIENCE on power the V5 CATIA with 3DEXPERIENCE platform, and some huge customers are adopting that approach. So we are not frustrating. I was just noticing that it's clear that we have reached now so many start up in different manufacturing sectors that are doing things differently and we are convinced that the big one will have to follow. And there is no doubt they will have to follow and invent themselves. Of course they have to scale, but they will have to do it on the like the example of Tesla was an interest, is an interesting example. So we are not frustrated we are just taking it into account on working it the best way possible with them for the long term. On the marine and off-shore we want to address everything, everything. The design engineering simulation multi-discipline equipment, cyber system inside, whether it's under the water, on the water on the construction process. On this sector is centered in Asia except for cyber system on different system where it's Europe or USA. But also of course China is transforming because the tonnage built in the world are in Asia and they are adapting our platform. All shipyard in China adopted the 3DEXPERIENCE believe it or not. I will not claim they know how to use it well yet, but they have adopted it. They understand what it is. So we have to be I think many of our European and American companies clients have to be very serious about thinking about innovation and transforming themselves. And sooner the better. So that's the dynamic we have. And I think it's the right thing to do for --

And just to put it in context, what's the revenue run rate in marine & offshore at the moment?

I don't know I don't think we communicate that.

Yes we don't break down. It's still small. It's very the beginning so the growth is very good. But starting from a low base, although we are accumalating very nice wins in marine & offshore.

Thank you.

We will now take our next question from Alex Tout from Deutsche Bank. Please go ahead.

Yes. Hi guys thanks for taking the question. Could you just speak a little bit about your confidence levels on the license growth that you've talked about for FY 2017? Obviously, this year the initial guidance was for double digit and it's come in at roughly half that in the end. You described a volatile environment, Thibault, at one point. Does that make you at all cautious? And have you made any changes to the way that you assess the pipeline that maybe makes you feel you have a better grip on how it looks in 2017? And then could you also talk a little about the nature of the incentive given to SOLIDWORKS customers to renew maintenance? It sounded a bit different from a standard license audit. Just if you could maybe expand a bit on the terms there. Thank you.

Certainly. I think that the number one element in the confidence I would say relative confidence I am confident with the guidance. I think that our license growth is acceptable of acceleration further acceleration going forward for future years. But the basis of it is 3DEXPERIENCE. It's very simple, it is 3DEXPERIENCE. It is the fact that we have seen our growth levers in action in this Q4 and these one are not going to vanish. On the contrary you know they are going to strengthen. I mean our geographic coverage we know what we are doing so we are strengthening it. The diversification, we can very clearly see here you know the acceleration in diversification. When looking at Q4, which normally is a quarter where the average of diversification industries related to revenue is lower than in the rest of the year we see the opposite in Q4 with 32% of total revenue in diversification and this is truly is giving a very visible growth going forward. And of course with the expense of implementations you know the time needed to implement it, the manner in which we can provide examples to current prospects which of course is a measure of shortening the sales cycle whole of that I think is playing in the right direction. I really believe that there will be more macro backdrop volatility you know and so it is because of this growth levers you know that we can be comfortable with our expectation of new licenses. Now you said it. I was not particularly right with the acceleration across 2016 you know we knew that first half would start slow because of the product transition you know and the longer sales cycle time, it took essentially one more quarter to be visible, but it was really linked to a few slippages at the end of Q3, which closed. So I could have been a hero and very right. It was just a question of a few days at the end of Q3, but I accept the blame.

It’s not a blame Thibault, it’s a [Indiscernible]. You are good. On the second question which is related to the SOLIDWORKS evolution of the business model. We observe, I will let Thibault explain what he really wants to add, but we observed that we have made reach, a lot of small companies in the last 20 years selling SOLIDWORKS, small companies, very successful. On, we observe that those companies which are localized around the world, there were everything the life was beautiful, except they didn’t care about growth. So we said, okay we are going to agree on something else. We’re going to reduce what you have, just because life is beautiful, and we are going to make sure we decrease that piece and we increased the piece when you provide growth. That in short, the direction we took and Thibault engineered the model to address that question and its providing the result. The other advantage of it is we are preparing them to be cloud centric at some point in time, which they need to go to. But unlike all our [Indiscernible] competitor in that segment we are going to play and help them go with the cloud wave and make them a part of our ecosystem because we think it’s a real value to do it and we think that the customer enjoys to have this local capacity on support. So on the technicality of it.

I think the one data point that I’d to highlight is the fact that we have reached and remember you know we are speaking about SME market. We have reached a 90% renewal rate of maintenance subscriptions for SOLIDWORKS, which I believe for this market is a very good, very high rate and its completely linked to the fact that we are unleashing the product. Every year there is a new release of SOLIDWORKS with many new functionalities, and better performance and this is truly, this product roadmap that is enabling such very good renewal rate for maintenance subscriptions in my mind. And it did improve.....

Is that 90% renewal rate, is that on volume or value so does it includes price increases or maintenance or split?

There is no price increase. Believe it or not, you know we have kept actually SOLIDWORKS price is very stable. We have enriched the product portfolio so the average price increase, but it's only because we have added products in your disciplines. But each single component has been stable in price for the license and for subscription as well.

Thank you.

We’ll take one very last question.

We will now take our last question from Michael Brest from UBS. Please go ahead.

Thank you, good morning. In terms of subscription offerings in SOLIDWORKS, I think that was launched in October. What have you observed in terms of take up and what you expect this year? And then secondly on the 2019 Outlook, it implies a big acceleration in earnings growth in 2018 and 19, about 14% per annum. Thibault, your comments on margin suggest there won’t be a lot of operating leverage. Do you believe the top line can organically accelerate towards that low teen’s level, or you are anticipating that acquisitions will help get you there, thank you.

So SOLIDWORKS, the [Indiscernible] in customers going back under maintenance subscription was triggered in Q4 of 2015. As you noted, we simply increased, that was the one single price that we increased which is that we put SOLIDWORKS in consistency with the policy we have for all the other products we have which is when you stopped paying maintenance subscription. If you want to go back under it, you have to pay for the lapsed time between when he stopped and when you renew it.

I meant the rental option, not paying an upfront license.

The rent interruption [ph] has just been introduced, is being all out in the channel and so the sales are going to start in 2017, there is no visible sales of rentals at this point because it takes time after you know you put in place the new pricing model to truly – it out across all distributors. Concerning the outlook for 2019, it is doable with or without acquisitions. We are not counting on acquisitions, we certainly would like to make acquisitions, but if we cannot find ones where there is enough value creation, we will not, but we will achieve the EPS goal for 2019 because of the acceleration that we should see 18 and 19 in topline, which is for one part of it, extremely arithmetical with the recurring which is going to enjoy the better new license growth and also the migration throughout 3D experience, which has the higher rate of maintenance. And also because we believe that there is also the new license level some room to do better in after 2017. So it is very much driven by the top line, the topline acceleration will drive an improvement in margin, you know and the result will be achievement of EPS by 2019. I’m not saying it’s a done deal, it’s going to be a lot of work but the growth drivers are there in order to achieve it. This is essentially what I’m saying.

Okay. Thank you.

Okay, with that thank you very much for your interest in Dassault Systemes and we as you know we want to atleast do what we said. Thank you and see you this year for the next quarter.