François Bordonado - IR Bernard Charlès - CEO Thibault de Tersant - CFO

Monika Garg - Pacific Crest Jay Vleeschhouwer - Griffin Securities

Good afternoon, ladies and gentlemen. Thank you very much for standing by, and welcome to your Dassault Systèmes First Quarter 2017 Earnings Call. [Operator Instructions] I must advise your conference is being recorded today, on Wednesday, the 26th of April, 2017. And now I'd now like to hand over to your first presenter today, François Bordonado. Please go ahead. François Bordonado: Thank you, Sophie. Thank you for joining Bernard Charlès, Vice Chairman of the Board of Directors and CEO; and Thibault de Tersant, Senior Executive VP and CFO, to review our 2017 first quarter business and financial performance. This conference call follows our requested presentation earlier today in London. For your information, Dassault Systèmes financial results are prepared in accordance with IFRS. We have provided supplemental non-IFRS financial information and reconciliation tables in our earnings press release. Some of the comments on this call will contain forward-looking statements, that could differ materially from actual results. Please refer to today's press release and to the risk factor section of our 2016 Document de reference. Revenue growth figures are in constant currencies unless otherwise noted. I would now like to introduce, Bernard Charlès. Bernard Charlès: Thank you. Thank you for joining us here, and good morning, and good afternoon. Before reviewing the first quarter, where we had a solid start, let me share my personal perspective with you. We've 3DEXPERIENCE Dassault Systèmes, if you're nearing the next generation innovation platform supporting great tools for client seeking products, customer experiences on new business models. Our platform on the industry solution experiences. We are introduced with very well with our customers requirements. We now reached a much broader scope of our clients departments. We believe 3DEXPERIENCE is a game changer for industry standardization with the platform phenomenon. In turn with 3DEXPERIENCE we are now addressing a much larger software market scope, USD 26 billion, doubling of our previous perimeter and we have a significant revenue opportunity on runway. On an individual customer basis, we have the potential to expand our relationship across multiple department on -- from a revenue perspective, double our safe footprint within an individual client on each ecosystem. In that regard, while it took a number of years to reach our first billion, our second was reached in 6 and we've cross this €3 billion milestone this past year in 2016 in 4 years. Thibault will review our revenue goals with you, but the midpoint is €3.3 billion for 2017, our first year on the road for the €4 billion in total revenues. Finally, I believe SOLIDWORKS has developed a unique position in the entry-level market as companies continue to standardize on it, resulting in an expansion of its market leadership based upon results for 2016, SOLIDWORKS and market footprint reached $1.25 billion. Moving now to the first quarter. Our financial result came in slightly above the high end of our objectives. Total revenue increased 8%. The operating margin was stable at 26.2%. Our EPS increased 4% or 15% excluding the year ago tax benefit. Importantly, we gained improved visibility on the year. As a result, we are reconfirming our 2017 financial outlook on upgrading our financial objectives for currency as Thibault will detail. Looking at the highlights, first it was a strong quarter for SOLIDWORKS all around the globe. Second, we had an excellent dynamic in our largest industry, transportation and mobility, with software revenue up double digits. Both 2014 and 2015 were very good from a financial perspective for transportation and mobility. It was softer last year and we see returning to strengths again this year. And in our second largest industry, Industrial Equipment, we are continuing to expand our leadership thanks to both SOLIDWORKS and 3DEXPERIENCE. Third, we had a strong level of growth in consumer products, product good, retail, as well as Architecture, Engineering & Construction. Two verticals where we plan to extend our presence over the coming years. In total, diversification industries represented 32% of the total software revenue in this in the quarter, with High Tech being our largest sector. Its software growth was very good in the quarter -- in this first quarter too. Fourth, our global footprint continued to expand, thanks, in part to the progress we are making in high growth countries. Moving to our performance in more detail, let's begin with one of our growth driver, domain leadership, focusing this quarter on SOLIDWORKS. During the first three months of this year, SOLIDWORKS software revenue increased 12% in constant currencies, led by higher new licensees activities. Its performance was solid all around the globe, thanks to its products and high performing software with core SOLIDWORKS on its specialized software applications. Improvements to SOLIDWORKS team have made working also closely with its three centers on its extended and active user community. Importantly, users and companies are coming to SOLIDWORKS, whether they were using 2D or 3D to reach their goal of full digitalization. Now let's look at another key growth driver, our industry value proposition, beginning with T&M, transportation and mobility. Within this vertical, we are focused on six sub segments. Automotive OEMs, on suppliers, trucks and buses, race cars and trains. During the first quarter, transportation and mobility software revenue increased mid-double digits. Now what accounts for our leadership is their triggering our last market opportunity for us in transportation and mobility. First, our industry solution expense provide support to a much larger set of user roles. Car, truck and train programs leaders for digital continuity, manufacturing personnel, innovation labs, on professionals in design studios, marketing and sales, professionals on system engineering with electrical and software engineers. In terms, from a business perspective, this means we are now touching most of the critical department of a company from product planning on design studios to engineering and product development to manufacturing, marketing and sales. For example, we are now working with Volvo HR, commercial vehicle, a joint venture between H&R Motors and Volvo truck, looking for program digital continuity. They have adopted the 3DEXPERIENCE platform on their solution called modular global unsecured. It's an industry solution to support several key business objectives. We are replacing our legacy U.S.-based competitor on providing the client with digital continuity for its truck programs, especially important given the high level of variance to be configured, managed and supported. A similar illustration is for Asia, a global automotive business supplier, what we call Tier 1, where the business focus is on program digital continuity on manufacturing. The company is adopting the 3DEXPERIENCE platform with a solution called modular global unsecured as well as Target Zero Defect industry solution experiences. These solutions, leverage applications from their CATIA brown portfolio, DELMIA, SIMULIA as well as ENOVIA. The third example is FCA, Fiat Chrysler Automobiles. We selected on the -- is deploying our 3DEXPERIENCE platform with the solution called drive emotion, an industry solutions that will help them integrate all their global design studios. This was a competitive win leveraging CATIA's domain expertise, design studios are part of our company's innovation lab. The next example is Ford, which is among our largest customers. We work with them in many areas but one of that you might not think of is marketing on sales. Leveraging 3DEXCITE, Ford has created an immersive virtual reality experience for consumers. Some of you may be familiar with it, the Mustang of our marathon experience and it is for hub in Manhattan. Importantly, thanks to 3DEXCITE, clients have a very affordable solution for virtual reality scenery creating a virtual showroom in hours rather than weeks. Now let me share one final perspective with you on transportation and mobility. Here I would like to thank one of our clients, Bosch, who invited us to showcase our technology at its Bosch connected world Internet of Things conference recently. Many of you know, Olivier Sappin, our Vice President and industry leader of G&M. At the Bosch event, he illustrated the vital role, that a virtual testing environment will play as a key enabler for autonomous driving. Importantly, we can be a critical trusted partner for companies in the domain of vehicle electrification in automobiles driving on in the area of connected unshared mobility. For vehicle electrification, virtual testing is needed to help invent more efficient batteries, on to do so, one needs to master new materials. So vehicle electrification for the future really begins at the level of material science and simulation for different materials, two areas of strong focus at Dassault Systèmes. Thanks to the BIOVIA acquisition. For autonomous driving, virtual testing is an immense utility and frankly -- it's of immense utility and frankly, it will not be possible without it for several reasons. Among them, it is estimated that meet multibillion miles would have to be driven to certify those kinds of solution. A large portion of this mileage will need to be completed through virtual testing. Therefore, imagine, for an instance, how do you envision all the potential scenario that an autonomous car could encounter and test them in the real world? For example, in the city, the car should detect a cyclist and avoid collisions at night or during bad weather conditions. All those scenarios need to first be evaluated through a virtual testing environment. Now think about the second aspect of it, which is, certification. Each car configuration will need to be certified. It would be uneconomic to do physical testing. Virtual testing will be critically important. And in terms of system engineering, while our software could be used and would help software engineers to be more productive, our principal focus is on providing an environment for a full system make-up with software and hardware. All these includes with electronics, circuit board, electrical cables, mechanical components are now integrated into 1 unified virtual system make-up for experiences, that will be used for virtual validation with simulation to decrease the number of physical prototyping on the cost related to physical testing. Another industry I would like to touch on today is Consumer Packaged Goods retail. Sales to this vertical are under 5% of our total revenue, but we see significant opportunity for expansions. Therefore, we were pleased to see a strong double digit 26% increase in software revenue during the first quarter. Among our clients on sectors, Unilever has selected BIOVIA, the 3DEXPERIENCE performance SIMULIA for managing and leveraging its scientific data and to increase its virtual testing. We are starting the implementation this quarter with a solution called Perfect Lab, leveraging BIOVIA's applications. We are expanding at Procter & Gamble, with 3DEXPERIENCE platform. In product development, P&G is reaching 18,000 users on the 3DEXPERIENCE platform. It was an early adopter of our Perfect Shelf industry solution experience and is using Perfect Product and Perfect Shelf. On with Quintiq, we are expanding into food and extending our work in retail with the industry solution experience, product value -- perfect value chain. One of our growth driver is safe efficiency leading to a broader global footprint. Among the best performing geo in the first quarter where high gross countries where software revenue increased 17% in constant currencies, for example, our clients include Dassault Cleveland, ranked second in India for commercial vehicles. And on a global basis, we ranked the fourth largest manufacturer of buses in the world. They have adopted our 3DEXPERIENCE platform on signal of our industry solutions. Their business objectives is to deliver, right the first-time innovation from concept to production to very selected market. Let me stop at this point and turn the call to Thibault.

Thank you, Bernard. First quarter was a solid period in terms of laying the foundations for the year. From a financial perspective, our revenue and earnings came in slightly above the high end of our guidance. Our cash flow performance in the first quarter was strong at €348 million and from a balance sheet perspective, turn around revenue exceeded €1 billion for the first time. In the first quarter, our total revenue increase of 8% was led by strong growth in recurring software revenue and services. Excluding acquisitions, our organic revenue growth was 6%. Software revenue increased 7% with new licenses and other software increasing 6%. Recurring software revenue increased 8% in the quarter and it represented 74% of total software revenue. We've had a very strong quarter in terms of renewal activity, with the higher level of contract completed and signed during the period. For the first half, we expect recurring software revenue growth to have reached about 7%. Moving to regional review, let's begin with Asia, where software revenue increased 6%. China and India have strong growth as did South Korea. We saw more mixed result in Japan during the first quarter. In Europe, with total software growth of 10%, we benefited from strong growth in several geos, most notably, France and Southern Europe this past quarter. In the Americas, software revenue increased 5% in constant currencies, with Latin America software results showing a strong improvement. In North America, we continue to see extended sale cycles with large results. Moving to our software results by product line. CATIA grew 4% overall with solid growth across the three regions. ENOVIA software revenue results were more muted in the quarter increasing 2% with fewer half deals in the quarter. Based on the pipeline of opportunities, we believe ENOVIA will post another year of strong new license revenue growth in 2017. SOLIDWORKS led the performance this quarter with software revenue up 12% on strong new licensees activities. Multiproduct sales were also good. We believe that SOLIDWORKS is benefiting from its leadership position in its market, as Bernard noted. Other Software increased 10% including the results of CST, which performed well in line with our expectations. SIMULIA, outside of the CST also had a solid quarter. Looking at our SIMULIA offer, we now cover more than 75% of the estimated $5 billion simulation software market. And with the 3DEXPERIENCE platform, we are well-positioned to help companies manage their multiphysics simulation results. Quintiq and EXALEAD also delivered strong quarters. Services and other revenue increased 10% in the first quarter. We also saw an improved gross margin of 8.1%. Our operating income in the first quarter increased 10% to 200 million. And the operating margin was 26.2% with acquisition dilution and investments offset by net currency benefits. As I will review in the outlook, we are expecting to generate organic operating margin improvement for 2017 as a whole. While our operating income increased 10%. Earnings per share increased 4%, due to a much reduced effective tax rate in the year-ago period, related to a tax reserve reversal. Excluding this impact, EPS would have increased by 15%. Our operating cash flow in the quarter was 348 million. It increased 12% benefiting in part from return in timing of U.S. tax non-payments from first quarter to second quarter, which is of course generally impacting the working capital evolution. We also have an increase in earning revenue of 9% in constant currencies well in line with our recurring software revenue growth of 8%, also in constant currencies. Turning to our financial objectives. As we indicated in the earnings press release, we are reconfirming them and upgrading them for the full amount of the first quarter currency upside. We are also introducing our second quarter objectives. Let me update you on the macro backlog. Since early February, we have seen some slight improvement in its visibility in a few currencies and specific to our businesses, one area of improvement was in mining, where after a [indiscernible] period of weakness that seems to be the new investments due to the new raw materials pricing. To balance this, I can see higher volatility from a macro backlog from a geopolitical [indiscernible]. We are adding, if we now look at the full year guidance, we are adding €40 million to our revenue range rounded by the way to 50 million bringing it to 3.29 billion to €3.35 billion. This represents a gross range of 6% to 7% in constant currencies, which is unchanged compared to February. Our operating margin target is maintained at about 31.5% and invests an estimated 50 basis points of organic improvements excluding currencies. For EPS, we are increasing the range by €0.02 to €2.67 to €2.72. This represents an EPS growth target of 7% to 9% or 2 points of growth higher to 9% to 11% if you were to exclude the 2016 €0.05 tax reserves reversal of the first quarter of 2016. Sharing some more color on software, based upon our visibility, we expect new licenses and other software revenue growth in the range of about 8% to 10% for the year, with increased seasonality favoring the second half of the year and in particular, fourth quarter. This objective of new license growth of 8% to 10%, is of course unchanged compared to what I had shared with you early February. For recurring software revenue, we have EBITDA growth of about 6% on average for the remaining three quarters. For the second quarter, our revenue growth target is about 6% to 7% in constant currencies leading to a range of about €805 million to €815 million. In an IFRS operating margin of about 29.4% to 30.4% and non-IFRS EPS growth of about 5% to 9% to a range of €0.60 to €0.62. At our annual shareholder meeting, which is coming up in May, our Board of Directors is proposing a 13% increase in the annual dividend for the fiscal year of 2016 based on our 2016 results. And now, let me turn the call back to Bernard. Bernard Charlès: In summary, we lead out our perspective on 2017 in February. We see a year where we are progressing toward an inflection point for 3DEXPERIENCE. It is clear that we are bringing the next generation innovation platform to the market. The revenue opportunity for us over the midterm is significant. As the fit between customer needs on our offer are very strong. Our focus therefore, could use to be on improving our execution. We are seeing progress in our different geographies and are working to replicate the successes -- the success of our best-performing ones. In addition to our sales on marketing, we have strengthened our post-acquisition process, which are leading to improvements in the performance of our different acquisitions. Thibault and I would now be happy to answer any questions and thanks, everyone, for their participation on our earlier webcast on this conference call today.

[Operator Instructions] Your first request comes from the line of Monika Garg from Pacific Crest. Please go ahead. Your line is now open.

Can you talk about how SIMULIA are going? Maybe you can share some quantitative numbers. And at some time, would you look to breakout SIMULIA revenue, also. Bernard Charlès: Thibault, do you want to take it?

Yes, and I'll do it. SIMULIA in the first quarter was growing by 20% in revenue terms. Total revenue in software.

And would you at some time look to break out SIMULIA revenue?

Well, we could, but I think that the area where we are going to continue to increase the data that we give is more aligned to the way we package our roles and solutions, which is by industry.

Okay, you know now BDC talked about in their recent earnings call that they will be discontinuing perpetual license in Western Europe and Americas and maybe they might do it in another geography. After this has done the same. Will you look to kind of move to the subscription model or you think for you the right strategy is to offer those perpetual and [Indiscernible] licenses.

Okay, well, first of all, since the beginning of the company, we have been offering our customers the choice between subscription and perpetual licenses. And we have such an area, always had a share of the new licenses being in subscription. So we know very well the topic. And my observation is that there is a good fraction of the market, which suddenly prefers the perpetual licenses. So we are of the opinion that we should offer our customers the choice between the perpetual model and the subscription model, and then to try to enforce one model, doesn't work so well. Actually, I would even go further and I would make the observation that the strength of our new license sales of SOLIDWORKS are suddenly due to the quality of the product, our leadership position and our channel. But also to some extent, to the fact that, inventor in many geographies is now only offered in subscription. And that customers, which are small in size, want to be assured they can continue to use the product, even in -- if in a given year they cannot pay for the subscription. So our packaging in terms of continuing to capture more recurring revenue, and by the way, our share of recurring revenue is already higher than the ones of -- all of other software players in our field. We are 74% of recurring software revenue. Our view is that it is the success of our solutions on the cloud that will continue to drive this recurring portion of our software revenue to increase and in a natural manner. Bernard Charlès: So for years, we are pleased with the balance between the 70% and 74% on 26. And we see this lasting and the cloud is playing, of course, a different game. So there is no reason for us providing the visibility for the last several years on this model to change it.

All right. Then when you hear GE, Siemens, Schneider Electric, they all talk about this digital industrialization and industrial IoT-based solutions. How are you looking to participate in this trend? Bernard Charlès: Most of the companies you talked about are our clients too, by the way, should be noticed and GE is a very big client to Dassault Systèmes, so we do participate, and we continue to expand with GE with high-quality partnership. I think it's normal for those companies to talk about it, provided the service they offer to their clients connecting extremely complex equipments, sophisticated equipment, and they want to provide not only for power or energy or optimization. Not only their hardware, but they want to provide smarter set of services associated with their hardware. Now clearly, if you take the equipments, which are produced in the work of energy for optimization, a large share of those are created, designed, simulated, produced even with Dassault Systèmes software. So I think there is a kind of misunderstanding in the market. The question is, are all industries adopting digitalization, not only to create and produce or lifecycle management they produce, but are all industries on the effect of the economies are creating new offer for service associated to the product they create? The answer is yes. So that's a trend, where we are participating on all fronts. In PLM, A&D, Aerospace & Defense, energy, High Tech. You name all the 12 sectors we support, we are participating there. So I think I want to remove the confusion between what we do in those sectors and what those sectors wants to offer to their clients, which is the result of the use of our product, it's simply said. So we see this as only positive for us in a significant way because the digital asset they produce with our solutions are being reused to create new service offering for what themselves they provide to their clients.

That makes sense. Then the last one, you know, on the geography performance, Europe grew very nicely, Americas growth was just modestly lowered 5%. Any particular reason? Bernard Charlès: Thibault, any comments on that?

Well, in the U.S., actually, is an area where we've been working on significant convections. And these convections happened to take more time. As you know we are in the transition between our former version, version 5 and now 3DEXPERIENCE, which is bringing an enterprise solution. And so, I think that's the situation. Larger comps are putting this solution and the sale cycle is a bit longer than when you just have to add one license to an existing installed base, but this is essentially it in the US.

[Operator Instructions] Your next request comes from the line of Jay Vleeschhouwer from Griffin Securities.

Bernard, let me start with you with some questions based on couple of things we heard at the Dassault conference in Orlando earlier this week, particularly on ENOVIA. So it was very familiar that the company is now saying you have over 2,000 customers that have selected 3DEXPERIENCE that appears to be up about 1,000 from a year or so ago. Could you talk about the proportion of customers that are doing non-classical PLM, in other words, that are in fact moving more towards your new business process vision for ENOVIA as compared with moving on to 3DEXPERIENCE, but for more conventional or classical PLM? And would it be fair to say that the new license revenues for new 3DEXPERIENCE selection is relatively small, at first, perhaps just a few hundred thousand euros or that's not much more than that, but of course you would expect to expand upon that over time. Bernard Charlès: The dynamic of 3DEXPERIENCE of a whole, if you take more than a quarter, but the perspective of the last 2 years has been a very strong dynamic. What should also be well understood to answer your question is the 3DEXPERIENCE is truly a platform. In the -- what does it mean? Simply said, what does it mean? In the past, people were buying designed tools, production tools, simulation tools and then we're trying to connect them through data collector, quality PDM or whatever. On the data collection was in some way, I think, non-synchronized. In the platform world, all the application are based on run, if I may say so, only on the platform. So there is a native data link being produced and being used. That's just to explain the big difference between a traditional PDM approach on a platform based set of solutions. On us, we now articulated all new industry solutions are platform based, which means that in the past, on clients continues to buy CATIA V5, because it's a powerful design tools and then they connect the data to our PDM, ENOVIA or also PDM. When you go to the new world of platform bases, you put the platform first and then you buy the roles you need to buy to fulfill the work you have to fill -- to fulfill. That being said, your question is a very interesting one, Jay, because yes indeed, many clients are taking advantage of using the 3DEXPERIENCE for non-traditional PDM function. For example, to power the legacy applications. We have clients now powering our competitors design tools using the 3DEXPERIENCE platform. And the 3 Power BIs, it's not the PDM, in such a way that they prefer the transition to a more integrated digital flow. One type of usage, we call it Power BI, and we have this almost for all non-data system CAD tools. The second is, they are also using to power the whole legacy. The case of Ericsson last year, 40 PDM system, with -- on which they are based hundreds if not thousands of specific applications, dedicated ongoing application at Ericsson for software development certification and so on. And now, they are using those dedicated applications powered by the experience platform, certain type of usage. The third type of usage is business analytics. Sourcing data from ERP system, dash-boarding those data and creating program management functions or analytics for part simplification, part supply chain process optimization. In this context, the platform is natively used for data analytics and data science. Those are three major type, Power BI of existing commercial products, non-data system, Power BI legacy to modernize the digital environment; and third, digital analytics from different source of data coming from with thanks to what we call the east of the compass, which is indexing and dash boarding with EXALEAD and Netvibes for the specialists to hear the goal. But result is going too much in the weak aspect of it, really to be able to dashboard and use those data for support. That's basically the dynamic underway. Related to your revenue remark, it's absolutely true that you can initiate the deployment of the experience platform not for our native application at first, but to use for digital analytics and then step by step power the new generation of roles, we don't call them application anymore, roles you want to fulfill, which explain the -- in some way, the high number of decision for 3DEXPERIENCE customers in the last two years, including replacement of many, many competitors. And in some away, the modest growth yet generated, because the role deployment takes time because it's a business transformation.

Okay. Second question, with regard to SOLIDWORKS. It was very interesting to hear at SOLIDWORKS world earlier in the quarter, that one of their objectives this year, in terms of go to market is to focus on their largest or large corporate accounts. Not to ignore SMB, of course, but to pay particular attention to the larger accounts in their base. And I'm wondering if that has begun to show in the numbers in terms of more large transactions or increasing your average transaction size for SOLIDWORKS? And then as well, you had a relatively easy comparison in Q1 for new license business for SOLIDWORKS but that's going to become increasingly difficult over the balance of the year given how strong they were last year. So when you look at 2017, how are you thinking about the new license objective for SOLIDWORKS? Bernard Charlès: Well, the -- first of all, the Q1 for SOLIDWORKS is always a busy quarter because with the SOLIDWORKS world, the initiation -- all the initial activities, so anyways it has been -- so we are pleased with the 12%. The corporate account are not really providing specifically visible labor yet, we'll probably be at some top point in time, but not yet, so it's not fully -- not leveraged yet. We continue to expand significantly the footprint in terms of number of customers, not only number of users but number of customers. So the dynamic is very positive and I think that, with what is the product planning for this year to prepare 2018, we have a lot in the pipeline to continue to generate a compelling dynamic for our user community, which is really truly a powerful one. And as you remember, Jay, we announced at the SOLIDWORKS World, at the beginning of this year, the fact that with the last score, SOLIDWORKS capabilities, also if we are able natively on the cloud, on the experience platform through a browser, so no -- not download needed. So multiple device, tablets, phones and so on being produced by the end of this year, which is really a busy timing. And we also announced the connection of SOLIDWORKS with our marketplace, for 3D printing a few weeks ago. So the plan is a plan of sales and be sure to continue to increase their footprint and make SOLIDWORKS even more mainstream than ever, which we think is very important for the future.

Okay, and just to wrap up with Thibault, a couple of things. The company is obviously highlighting roles and apps as your new deployment paradigm. And my question for you is, are there any pricing or license management ramifications and having a loads and apps portfolio that you're trying to sell and deploy as compared with the former orientation or methods of selling and packaging software? And then finally, Thibault, could you comment on performance of BT versus VS in the quarter and how you're thinking about that for the rest of the year?

Actually, Jay, you're right. We are focusing on holes. Apps and the contents of the holes and the holes are targeted to make the life of our customers and also our sales people easier, because they are adapted to the jobs that have to be done by our users. So we are doing a packaging that is aligned with our industries that we serve and with the processes and the people running these processes inside the industries. The pricing is still very consistent because it's for the hole, our packaging helped, but we are not changing the value of our applications inside the holes

Okay, then the BT, VS question, please?

Well, BT and VS are in fact using these packaging and pricing. We are, of course, also offering some things that is a bit simplified for VS customers with the selection of solution than holes adapted to the bulk of the business in order to have a shorter price list if you want for this business.

But no, what I meant was overall, when you look at BT and VS in the quarter, how did they perform year-over-year and how are you thinking, perhaps with those -- for those channels for the balance of the year, sorry?

Okay. So right now, the -- what we're expecting is to continue some increase in the strength of BT because it has always been the case that we are serving large accounts, and then the supply chain. So today, for 3DEXPERIENCE, there's a focus on large accounts. And on Tier 1 suppliers and certainly going to be followed thereafter by the rest of the suppliers. But so we are counting on some work of a higher revenue increase in the BT for this year than for VS. Having said that, the potential for VS remains very large, and we expect to see a pickup in the growth of VS when we approach second half and more importantly next year. A - Bernard Charlès: Thank you. We'll take one last question.

And your last question today comes from the line of Erik Karlsson.

We all know Dassault as a company with absolutely wonderful products, very appreciated by its customers and probably most of them are addicted to your products, which is a great thing. And correct me if I disagree, but perhaps, your qualities in terms of selling skills are a bit less perfected than your products, which is not so strange given a history with IBM and so on. Could you just help us understand how happy are you with the performance of your sales force today? And if you aren't 100% happy, what are you doing to improve it? Bernard Charlès: Thank you for the observation on -- we take your remark positively for us because it's true that we do not have the same history of building up the different parts of our organization as for many years we have been only developing technology and products. I would say that we have a Professional channel, which we think is world-class. And we believe that we are continuing to develop and deliver, not only on the footprint value, but also in value. And being able even to sell in value in mainstream. If you compare the street price of our solutions versus most of our competitors street price. So they are doing a great job and it's a great machine globally as we mentioned in our talk today. I think for our large clients, we are not where we should be and we need to continue to build up better efficiency there. There are I think two reasons or two elements on it to give you some substance. One is the nature of the engagement themselves with our clients are changing significantly from selling big transaction to really selling a catalyst on an enabler for transformation of the digital enterprises, especially with the platform phenomenon. And that's a big thing. We also think that our sales force need to be more efficient, better trained and we probably need to continue to wire high profile. We can be the showcase for others about how the new business should be conducted. There's no doubts about it and we are really very focused on that aspect. On the VS side, which is basically Value Solutions to mid-tier to large customers, not extra-large, but large customers, we have the same challenge, which is similar, except that we have to really orchestrate it with partners. And the reason why I'm convinced it will work is that the best are really doing well. And by the way, I should say the same for our direct sales force. The best are really good, but we do not have enough of the best to be simple. And we need to scale the capabilities of more to be the best. Same thing in our Value Solutions channel. The best of our partners are doing extremely well. High value, high performance, but many of the one when we endorsed, embarked in the last years are still have a lot to learn a lot to transfer to them so they can become high performing partners too. So your point is very well taken, is a valid one, and it's part of the opportunity on the challenge we have for the quarters and years to come.

No further questions at this time. Bernard Charlès: Okay. Thank you very much for all of you participating this morning and this afternoon. We appreciate your presence, questions, and we continue to be there to give you the proper visibility as we are -- as you know, committed for long-term success of this company as we have been for the last 30 years of track record. Thank you, again, and have a great day.

Thank you. Ladies and gentlemen, that does concludes your conference for today. Thank you, all for participating. You may now disconnect.