Good afternoon ladies and gentlemen and thank you for standing by. Welcome to today’s Dassault Systèmes Q2 2019 Earnings Investors Conference Call. At this time all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advice you that this conference is being recorded today Wednesday 24 of July, 2019. I would now like to hand the conference over to our speaker today François Bordonado. Thank you, please go ahead, sir. François-José Bordonado: Thank you Sherry. Thank you for joining us on our earnings conference call, with Bernard Charlès, Vice Chairman and CEO; and Pascal Daloz, Executive VP, CFO and Corporate Strategy Officer. Dassault Systèmes’ results are prepared in accordance with IFRS. Most of the financial figures on this conference call are presented on a non-IFRS basis, with revenue growth rates in constant currencies unless otherwise noted. Some of our 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 Factors section of our 2018 Document Référence. All earnings materials are available on our website and these prepared remarks will be available shortly after this call also. I would like now to introduce Bernard Charlès. Bernard Charlès: Thank you for joining us today. When we unveiled our new extended purpose in 2012 and then our 3DEXPERIENCE platform in 2014 we saw the possibility now we see the realities. Coming all together as industries, companies, and users embrace the 3DEXPERIENCE platform on the immense value of the virtual world on real world to work together. As our progress during this year’s first half demonstrates, we are focused on addressing three centers of gravity customer-centric, citizen-centric, patient-centric experiences. All three are well aligned with our purpose, as Dassault Systèmes wants to provide people business with 3DEXPERIENCE universe to imagine sustainable innovation capable of harmonizing product nature on life. So let’s look at our score card the mid-year 2019. Within the backdrop of a more volatile global environment, our revenues and earnings came in at the high end of our Q2 financial objectives. Key details include record quarter for 3DEXPERIENCE and strong first half. Our software growth for health -- for the first part of the year was well balanced across our core and diversification industries with double-digit growth for both. Since 2012, we have shared our expectations that one day Life Science would become a core industry for Dassault Systèmes. With the completion of the Medidata Solution acquisition subject to regulatory and shareholder approvals that there is just a few months away of it. Therefore, looking at our progress I think it is a solid score card, importantly, we are preparing the future thanks to the enormous talents at Dassault Systèmes, we are working to advance the company, but equally important our impact on the world. The core to our progress and opportunities for the future is the 3DEXPERIENCE platform. The challenges for all major industries are very significant without a platform to help them connect all possible contributors they will not be able to maximize the innovation and performance. This is true for industries and it’s also true for cities in health for passion care. Let me begin with industries, with our largest industry transportation and mobility to provide you with some examples. Thanks to our platform strategy PSA has selected us as the preferred digital partner for transportation on across all provider 8,000 of them. The digital transformation started with the Version 6 was upgraded to 3DEXPERIENCE, started as one of the first customer to adopt our platform and we were absolutely impressed to see the transformation of money losing company to an extremely cash risk company. This shows the power of innovation. The Guangzhou Automobile Group, GAC from China with five global R&D centers both in China and the U.S. has decided to move to the 3DEXPERIENCE platform to using our Power’By functionalities with the platform they will be able to increase their R&D efficiency and collaboration across more than 4,500 users. Renault Group, a largest 3DEXPERIENCE users since day one is now adding 3DEXPERIENCE on the cloud for its in-house innovation laboratory for disruptive mobility solutions for urban areas. Just a few words on the aerospace sector where there is a significant innovation underway. In a number of areas on where the 3DEXPERIENCE platform is becoming mainstream. Saffron [ph] Electronics is using the 3DEXPERIENCE platform to support the digital transformation and master the configuration management process of integrating software electronics and physical aspect of their products through its lifecycle. Dassault Aviation our sister company has expanded its use of 3DEXPERIENCE platform with not only ENOVIA, but Big Data Analytics on cockpits EXALEAD and NETVIBES to leverage AI on Big Data to improve fleet management, as well as new category of services for the equipment as it regards to the service with their clients. An American startup Boom is designing a supersonic passenger jet, SOLIDWORKS customer indeed moving to the 3DEXPERIENCE it would be fast forward car, supersonic. SOLIDWORKS customer Boom has decided to move to the 3DEXPERIENCE platform to support their ambitious effort from concept design through manufacturing. Moving to High-Tech. This industry faced a number of challenges as its balanced, its reach into every part of our lives from wearable devices to connective experience, including smart products. The product cycle are very fast, but are backed by years of intensive research, which is often less visible. High-Tech must deal with an entire launch of issues around safety [indiscernible] and of course security. We are working with Bosch Car Multimedia who has adopted the 3DEXPERIENCE platform on our model based system engineering approach to test and validate their digital models. Fuji Xerox a joint venture is using our SIMULIA magnetic studio called CST Studio Suite to virtually simulate electromagnetic compatibility before constructing physical prototypes. Now let’s move briefly to our work addressing constructions cities and territories. With upwards of 70% of the global population to be in urban environments the city that we survive on strive in this the case ahead will be those that are focused on improving the experience of its citizens. In this morning’s presentation in Paris we highlighted one of our architecture clients the firm is using 3DEXPERIENCE platform to help Hong Kong entities analyze how to improve workability on citizens’ experience through pedestrian flow simulation with a complete digital model of the city. Addressing the workforce of the future highly ranked Southern California Institute of Architecture is an incubator for new generation of problem solvers redefining architecture looking out on other industries in other areas and using the 3DEXPERIENCE platform to create new approaches on rethinking solutions to problems. Moving to Life Sciences, beginning with proposed acquisition of Medidata Solutions. We held a detailed joint call on the day of our announcement on June 12. And Medidata is a leader in the difficult transformation of the life science industry for clinical development commercial and real world data intelligence. This acquisition reinforces our position as a science based company by providing the life science industry with an integrated business experience platform for an end-to-end approach to research on discovery, development, clinical testing, manufacturing on commercializations of new therapeutics from small to large molecules on, of course, help technology on practices. Demonstrating our further support for patient-centric experiences in life science is BioSerenity a startup was being part of our 3DEXPERIENCE lab. It is developing wearable medical devices on digital point of care solutions that leverage textile innovation and artificial intelligence. Importantly, its products enable patient-centric care to move from the hospital or clinic to the home with online telehealth services. These devices could also be used in clinical trials, of course. Well illustrating the role of modeling and simulation in life science for practitioners is our Living Heart project, the first commercial on personalizable model of the human heart, now available to anyone on the 3DEXPERIENCE platform in the cloud. Today, at our North American headquarters in Boston, we are holding the fifth annual meeting of the Living Heart Project Community, with representatives from industry, research, clinical practice, as well as regulatory agencies. We are also pleased to announce that the U.S. Food and Drug Administration has signed a five years extension to the Living Heart project collaboration on project to use a 3DEXPERIENCE platform on the Living Heart as a virtual passion population to reduce the time, cost and regulatory burden on human on animal testing. The role of Life Sciences is a critical enabler for global innovation was further underlined by the release this morning of the Annual Global Innovation Index with the theme this year focused on medical innovation landscape over the next decade. The study illustrates how critical is the life science industry’s continued transformation towards patient-centric experience. With that, Pascal, you have the floor.

Thank you, Bernard. Hello, and thanks to all for joining us today. I think our first half business and financial performance very well illustrates our key growth driver at work. They have helped position us very well with respect to the completion of our five years plan to double EPS to about €3.5 in year 2019. More importantly, they are demonstrating that the principal components of our year 2023 plan are well in place and animating our results with the 3DEXPERIENCE platform strengthening organic growth, our industry diversifications and our addressable market expansions. Reviewing briefly our results, we came in at the high end of revenues, software and ahead on EPS, based on a strong operational performance. Both revenue and earnings per share were up double-digits in Q3, as well as H1. Importantly, 3DEXPERIENCE traction is continuing to increase and in turn is representing a great portion of our software and license revenue. For Q2, 3DEXPERIENCE software revenue increased 52%, bringing first half growth to 40%. 3DEXPERIENCE licenses revenue growth was up even higher for both periods. On a regional basis, Americas software increased 16% in H1, led by our direct sales channel. We had a number of 3DEXPERIENCE win from aerospace to energy to consumer goods, strong recurring revenue growth, as well as the benefit from the acquisitions. In Europe, software revenue grew 11% for H1, person for each one with Q2 up 13%. The strongest performance were in Northern and Southern Europe, as well as Western Europe. We had a number of large 3DEXPERIENCE deals in automotive, aerospace and industrial equipment. In Asia, software revenue was higher by 9% for Q2 and H1, with a mix performance growth was very good in China and India. And from a channel prospective both value solution and professional channel had a strong growth in license, as well as the recurring software revenue. Zooming in on brands, CATIA software revenue increased 12% in Q2 and 9% for H1, with licenses revenue up double-digit in both periods. CATIA is now a key driver of our 3DEXPERIENCE software revenue growth. ENOVIA grew 9% in Q2 and was up 14% in H1, on a double-digit license growth as well reflecting the high level of 3DEXPERIENCE activities for the first half of the year. SOLIDWORKS is seeing moderations of its growth on a mix results from license activities, with strong growth in Asia and more difficult compares in Europe and in the Americas. Recurring software revenue performance continues to demonstrate very stable renewal rates and overall software revenue growth was 4% in Q2, as well as H1. Other software increased 20% in Q2 and 21% in H1, led by a very good dynamic in manufacturing with our DELMIA brand and a solid performance in simulations with SIMULIA. Moving to our financial performance, the key part of our year 2023 five years plan is the progressive improvement of our organic revenue and software growth towards high single-digits. Looking our total revenue and software revenue they both grew 9% in H1. For the full year, we would expect these to be a little lower, but all-in-all several hundred basis points improvement over year 2018 and year 2017. On an organic basis license and other software revenue increased 7% in Q2 and 8% in H1, well supported by CATIA, ENOVIA and DELMIA among key brands. Recurring software revenue increased 9% on an organic basis for both Q2 and H1, with subscription growth led by CATIA and ENOVIA. We saw a solid performance across most top brands with respect to support revenue growth. On an organic basis services revenue increased 15% in Q2 and 12% in H1, with a strong growth in 3DEXPERIENCE related services activity, in our manufacturing and global operations as well and in digital marketing with a significant improvement by 3DEXPERIENCE. A key take away on the services is as a forward indicator and opportunity enabler. As we help our clients deploy 3DEXPERIENCE platform once in place it leads to a follow on others. So a key priority for us and for our services partner is to ensure that its well-planned implementation and timely rollouts with the scope of the transformation and visions. In additions to a good top-line performance, I think, we are also delivering well in terms of profitability. For H1, our operating margins stood at 31.8% ahead of last year by 140 basis points. We had an organic improvement 220 basis points more than offsetting and estimate 120 basis points of the acquisition dilution. For the first half currency had a 40 basis point benefit to the operating margin. EPS increased 19% in Q2 and 20% in H1, reflecting revenue growth, operating management and currency benefits the non-IFRS effective tax rates were up slightly for both periods compared to the year ago time frames. Takeaway here is at our business and operating performance drove double-digit non-IFRS EPS growth for both Q2 and H1. Our net operating cash flow was up sharply in H1, increasing 38% to €894 million. The three principal contributors were growth in net income and non-cash items, accounts receivable management and lower tax down payment in year 2019 where we now benefit from a U.S. tax change on foreign driven intangible assets enact in year 2018. For the full year, we anticipate strong growth in the net operating cash flow moderating, however, from the H1 growth rates. Unearned revenue, now called contract liabilities total for €1.02 billion at June 30th. This represent an increase of 8% at constant currency and perimeters impact. Before moving to our financial objectives, let me give a brief update on the proposed acquisition of Medidata. First, now from a timing perspective since the announcement on June 12th, we have now received antitrust clearance in United States, as well as Germany. We continue to work constructively with regulators to obtain the required regulatory approvals. The ACC [ph] has approved the Medidata prospectus and Medidata shareholders meeting to vote on the approval of the merger has been scheduled for August 16th. We are expecting to finalize the transaction in the third or fourth quarter if all the conditions to closing are completed by then. Second, if the transaction has been complete by our third quarter earnings, we will have Medidata to our financial objectives for Q4 and year 2019. In our Q2 presentation, we have a chart on the transaction summary including our financial plan -- on the financing plan. There are no changes to what we shared with you on June 12, in that regard. Finally, please save the dates November 13th, for a half day deep dive meeting on our Life Sciences strategy offer and growth outlook. We plan to host the event in New York. At the same time the Medidata will have their user conference. Now, let's move briefly to our guidance beginning with full year 2019. First, we are confirming our total revenue growth objective of 10% to 11% at constant currency. Second, we are upgrading our reported revenue range for the better evolution of currency in Q2 of €20 million and update our exchange rates assumption for Q3, bringing a €15 million increase. As a result, we are moving the midpoint of our reported revenue range higher by €35 million and we are also upgrading our EPS by €0.05 at the midpoint. As a result, our total revenue range is now €3.880 billion to €3.910 billion and our EPS range is €3.45 to €3.50. Our operating margins target tightens to about 32.5% from 32% to 32.5%. And we now estimate an underlying improvement of about 100 basis points exclusive of IFRS-16 and currency up from our prior estimate to about 80 basis point. Fitting from a more favorable supply mix with a higher contribution from the recurring software. For Q3, we are targeting a revenue range of about €890 millions to €905 million and an operating margin of about 20% to 30% and an EPS range of about €0.70 to €0.74. Our revenue range embeds license growth rate of 8% to 12% and the recurring software revenue growth rate of 9% to 11%. Finally, just a further reminder that our Q3 and full year financial objectives are presented on a non-IFRS basis, with a revenue growth rate at constant currency. For the purpose of our guidance, we are using one point $1.15 rate per €1 exchange rate in Q3, and then $1.20 rate for Q4. For the Japanese yen JPY130 rate per €1 exchange rate before hedging for H2. To conclude, from a business perspective, our platform strategy is a game changer for customer-centric, citizen-centric and patient-centric experiences. 3DEXPERIENCE is a significant contributor to our direct sales and in progressing moving forward in our indirect channels. From a financial perspective based on the first half results and our outlook, we are well positioned to meet our five years goal of doubling our non-IFRS earnings per share to about €3.5 for year 2019. And as we look to the future, we are taking major steps to prepare our runway for growth over the next decade. We will now be happy to take your questions and thank you for your participation on this call and our earlier webcasted meeting held in Paris. Bernard Charlès: Sherry, can we have the questions, please.

Yes, sir. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And we have several questions now. Our first question comes from the line of Jay Vleeschhouwer from Griffin Securities. Your line is now open sir, please ask your question.

Thank you. Good morning, Bernard, good morning, Pascal. I have a number of questions, let me start with SOLIDWORKS, since we are a bit concerned about the comment you made regarding weakening license growth. Are you anticipating taking steps to stimulate growth perhaps as we’ve seen in the past with respect to promotional or other kinds of activity also at SOLIDWORKS world earlier this year DS communicated for the channel an objective of evolving your sales focus to what called at the time solution focus selling and industry aware selling among other objectives. Could you comment on whether any of those new modes of selling or focus are having an impact on the business? Then a couple of additional questions. Bernard Charlès: The SOLIDWORKS channel is going through a significant upgrade, if I missed this so. Because what we see being the evolving customer demand is -- wants to take advantage of DELMIA WORKS that was announced at the beginning of the year following the acquisition in last January, January 2019 of IQMS. And basically most of the SOLIDWORKS users in the world on company are producing things. So being able to provide to them MES and ERP functions in very affordable way requires a channel transition to elevate the capacity and knowledge to cover that. The second elevation possibility for -- or plan for the channel is really related to the platform itself using the collaborative business innovation on top of what we call Power’By in our jargon, basically to provide with desktop SOLIDWORKS all new collection of services online for collaboration, and this is going on. On the served -- and of course with that comes with a pretty nice result, on science this quarter the SIMULIA WORKS, which is the capacity for SOLIDWORKS users to really add online services of simulation. And they like it very much because for some of them it’s too complex to use current legacy of even competitor solution and we believe that going with the cloud set of services. And last but not least also more and more of them are expecting native cloud mobility applications. We had an excellent feedback on the product called Is design [ph] and by the way when 2020x will be released in a few weeks, it will be called 3D CREATOR which is web based mobile way to create 3D. So the reason why I go through this list Jay is because partners and we held a major partner summit a few weeks ago in Paris, worldwide summit. They are all looking for how to orchestrate double-digit growth for the next 20 years basically as they enjoy the double-digit growth in the last 20 years selling almost only SOLIDWORKS. So all this is going on as we speak, which makes -- it creates disturbances, it creates the stretch use of the capacity on training program. I think it's the right thing to do and it's basically the right thing to do at this point in time because we know that the timing for platform move is there. So that's basically what we observe being the main reasons. Today the main reason is not because customer prefer to select some other solutions. That's not the case. We still are prefer a preferred solution globally in all countries. And to tell you a little bit more we think also that we have reached a very high level of clarity that we need to progressively resolve with new provisioning of the licenses, but we’ll come back on that topic. So all-in-all channel is busy, the executive team is very focused. They like the new excitement it creates the young SOLIDWORKS and with the power of the platform on expansion. And we need to make it this happen across the world.

Thank you for that. Pascal, return to you. At the end of your prepared remarks you spoke of preparing the company for the next year's growth. And I'd like to ask you about certain internal investments you are making. As you probably know, we track your headcount very closely or your plans to increase headcount. And there is really interesting trends going on over the last 6 to 12 months. Specifically, at DS, there has been a material increase in your number of openings that you’re looking to fill in Asia after years of almost under investing in headcount in Asia, you're now significantly ramped up in that respect. And your job openings there are even more than in the Americas. When we look at it by brand, the number of openings connected to DELMIA are significantly higher. And it's even higher than the openings for ENOVIA, SIMULIA and SOLIDWORKS. So maybe if you could talk about those trends and what your expectations are or ambitions are vis-à-vis headcount? So and then, secondly or last question, you mentioned partnering Bernard, I assume you meant the SOLIDWORKS and BT [ph] channel partners. But let me ask you a broader question regarding partnering given the trends in the industry. I recall about a dozen years ago at ECF in Paris, you talked about your partnership at that time with Microsoft, which we've not heard very much about in the intervening dozen or so years. And yet Microsoft has clearly shown a significant increase in interest on their part in your world in manufacturing and industry. They speak of multiple use cases around their cloud business for intelligent supply chain, connected product innovation and so forth. Some really interesting ambitions there. So, perhaps this is a speculative question, but maybe update us on how you see yourselves working more closely with them, be it in the obvious interest they have in your world and kind of technologies you have.

Hey Jay, the first question related to the opening positions we have. You're right, I mean, I recognize you serving our website. But I have to confess that we are giving more visibility on the opening position on the sales and services side and what we do for research and development. So clearly be careful when you do this, because you only have one facet of what we do in term of investment and where we are putting the resources. Now coming back to your questions, on the services and sell side, clearly it’s well aligned with where the growth is coming from. So right now, as you pointed out, the manufacturing space at large is growing very well for us on both sales and services. And this is the reason why you see many DELMIA position being opened. Now if I project myself a little bit on a long range. I think for the next five years, we will ask to have more self-productivity compared to what we did in the past. And we will invest more in research and development given the broad scope of what we do. That's some indicators I want you to take into account when you will build your model. Because clearly if you check the balance in the last decades, we have invested a lot to structure the go-to-market and seeing the acquisition of IBM in fact. The IBM sales force, we will continue to reinforce, but not at the same pace. And the cloud, all the new mobile edge computing solutions we are developing, seeing investment on research and development and we will continue to fuel the engine with the appropriate resources. Bernard Charlès: Related to the partnering with Microsoft, we have enjoyed great partnership on the desktop, windows and servers. And there are a lot of customers who are still using this environment. When it comes to the evolution with cloud, with our priority really with very strong support from the clients, with Amazon, as well as with our own cloud call 3DS cloud scale when we provide private cloud, private public on dedicated cloud, which are very core for many of our customers. So that's today, the choice. We don't notice any specific customer attention on the Microsoft environment in the manufacturing sector. They have a lot of legacy existing environment, but when it comes to mobility, aside of point solutions, I think the 3DEXPERIENCE platform contains integrated services for collaborative innovation, which are extremely well received by clients and the numbers shows it. So, now there are, of course, certain services that are used on -- but that all what I can say at this time.

Very well. And by the way the supersonic car you mentioned, Bernard, sounds intriguing, I think would be very popular here in New York. Bernard Charlès: I apologize. Of course it was plane. I was embarrassed. Maybe, it's a secret win.

Thank you for these remarks. François-José Bordonado: Next question, please.

Thank you, sir. Our next question comes from the line of Nicolas David from ODDO. Your line is now open. Please ask your question.

Yes. Hi, Bernard. Hi, Pascal. Thank you for taking my question. Actually I have two if I may. The first one is, could you give us, please more detail regarding the -- what drove actually the strength of CATIA in Q2, which sectors and what kind of deal? Was it just the natural migration of the V5? Or it more a larger transformation deals with, I would say, steep as ramp up? And I have a follow-up then. Bernard Charlès: Okay. So, the vast majority of the growth for CATIA is coming from the 3DEXPERIENCE version of CATIA. I gave some numbers this morning. But I just want you to keep in mind that more than 50% of the new license for CATIA through our direct sales force is on 3DEXPERIENCE. And now close to 20% for the indirect channels. So clearly, it's -- I mean, it's a threshold. Answering your question from sector standpoint, the vast majority is coming from the auto sector, as well as the aerospace sectors and industrial equipment. So the traditional CATIA V5 install base. And the point is the following most of our customers that have embraced 3DEXPERIENCE platform with the collection of roles. Most of them being ENOVIA role at the beginning. And now with new generation of EV car, with the new robotic systems for the industrial equipments. The discover the power of CATIA 3DEXPERIENCE, because the scope of what CATIA 3DEXPERIENCE is capable to do is much broader than the CATIA V5. And this is a reason why the traction is -- so I mean, is significant for this quarter and for H1.

Okay. Bernard Charlès: CATIA Cyber is very important just to -- because CATIA Cyber is about integrating as Pascal said software electronics and mechanical hydraulic and multi-discipline that’s very uniquely positioned I think there is no competitor that can do this level of integration and you see it can drones, in a smart systems on future intelligent systems.

Thank you for that. And my follow-up would be on the rental model reduction. Because I think this morning you mentioned seeing an acceleration not in the U.S. maybe beyond the Boeing ramp up what's really material and something you see really because of the cloud or is it because some client decided to choose the rental model on the traditional on premise license? And also do you see this acceleration going on for the next quarter and could it be a slightly cannibalizing the license, traditional license model and maybe this is why you shaved slightly your license guidance for H2, I don’t know maybe more color on that would be helpful.

The rental model has been largely adopted by the Diego space sectors satellite. As you know for the flexibility it’s not new and given the good dynamics of the aerospace sector this is a good explanation about the good momentum we have on the subscription standpoint. The second trigger is really simulations activities or the stimulations business, which is also having a good momentum and those are good drivers for the succession. The cloud is coming in addition to that and definitively the cloud is hiding some point, but it’s -- we will not explain on what percent of the growth with only the cloud. And the second question was related to what, Nicolas?

It was about do you expect these acceleration of rental model maybe canalizing a little bit your traditional license business? And maybe could you explain why you cut slightly your license -- your guidance for H2? Bernard Charlès: In fact for H2 I made this adjustment and you are right in the previous guidance, I was giving a range for the license between 10% to 12% and I narrow the range from 9% to 11%. But at the same time adjusting the guidance on the recurrent part on the high end, which is 10% growth. So if you do the math it’s nothing more than almost €10 million between the two. And the €10 million if you do the computations, because I do not want to disappoint you guys on the SOLIDWORKS growth, you remember I guide the market by saying the growth will be between €5 million to €10 million and just because now we have the first half being much more close to five, I took this into account in the new license that’s the point. It’s for me a way to derisk if you want, but the reality the contribution is software side is the same and there is no real cannibalizations between the two. Now you have the explanation.

Okay, that’s very clear. And by the way congrats for the very strong results. Thank you. Bernard Charlès: Thank you.

Thank you. And next question comes from the line of Gal Munda from Berenberg Capital. Your line is now open, please ask your question.

Hey, guys. Thanks for taking my question, got a few. So the first one, I just like to expand a bit on the subscription likely said in the morning call you mentioned the subscription is the future. That statement, can you just kind of tell us your plans for subscription, if subscription is the future, which accelerate the business model transition in the future. And so what would be the rough timeline we know that some of your American peers have done so over the last couple of years, is that something that’s on horizon? And then, I have a quick follow up for Pascal. Bernard Charlès: If you look at this was -- of course the subscription is the future as it relates to cloud and mobility also it is as it relates to what we call social collaborative platforms where you are very inclusive to all members of companies on supply chain and so on. The -- so that's a logical evolution. The -- at the time you have a mix between the platform on desktop applications, you are by default with subscription. Because when it comes to the entire SOLIDWORKS install base, the plan is to have all the users using the 3DEXPERIENCE Power’By on the cloud, for collaboration sharing. I would say very similar to what Adobe did for their software solutions. So it's a logical nature of the evolution of the business model. And then when customers discover that the same functionalities can be web based or desktop, it also come automatically as a subscription model. Now, what Pascal mentioned this morning, is that, subscription doesn't mean that all months or years are equal. As we have created models that customer likes very much, I think you mentioned Pascal, this morning similar, where there is kind of significant upfront and then followed by a subscription fee on clearly customers like this model definitely it provide them flexibility. And that's what I meant this morning, and I think it's the right way to go.

Okay, perfect. And then as a follow-up, just two quick ones. The first one is considering if we assume that Medidata closes in let’s say Q3, Q4, what does that mean for your kind of M&A strategy over the next, let’s say three, four years. Does that mean that you’d take a break effectively, make sure that you integrated on the platform and you can execute on that? Or would you potentially consider more deals maybe in some other space, as you've talked about construction for a while. So maybe that's an opportunity for you. How do you see that? And then lastly, the question is just for, Pascal, on IFRS 16, can you just give us an indication what the impact was in H1 and in Q2 from IFRS 16 on your income statement? Thank you. Bernard Charlès: Quickly on the M&A, we have -- we had always a very selective and selected on precise strategy for M&A, we did a lot of small midsize acquisitions, as you well know and even the small that we don't necessarily announce, which are very sensitive, few 10s of millions, or below 100 millions, which are very technology and IP sensitive. And we do plan to continue that policy, it happen that Medidata of course is a biggest ever. But the modeling we have done with the company to make sure we keep the freedom to continue to do what we were doing before on that side. And why so, because we have a very strong focus on brand excellence, whether it's CATIA, SOLIDWORKS, DELMIA, SIMULIA, EXALEAD for big data AI with NETVIBES, [indiscernible] or ENOVIA are now the CATIA Cyber Systems. We have very focused acquisition policy, so the Medidata situation based on the past track record, will not change this much. And as you know, our leadership team are very focused on a brand love marks, brand leadership and they have strong autonomy to make the right steps for -- to win. And that's -- so no real change there. It happened that clearly for Life Sciences, it's the step three is big, step one was bio intelligence that was successful research program in France and Europe with seven industry players. Then as it always becoming BIOVIA, which was also very good move and now to sub move connecting research development on production on declining clinical trial as it goes through the approval process. Yes, it's a big one. It's really focused on Life Sciences. So that's basically the policy.

On the IFRS 16, you remember the impact for the full year is -- at the EBIT level is 0.3. And to be more precise, it's an improvement of the operating margin of €11 million and decrease of the financial revenue of €13 million. And if you want to speak per quarter, it's almost equal.

Okay, that's really helpful. Thank you so much, guys. Appreciate it. and thanks for answering my questions. François-José Bordonado: Thanks. We'll take the last question.

Okay, thank you, sir. And our last question comes from the line of Amit Harchandani from Citigroup. Your line is now open, please ask your question.

Thank you. Good afternoon all. Amit Harchandani from Citi. And I just had a couple of follow on questions if I may. Firstly, to begin with, I think when talking about the regions and geographies in the morning call, you touched upon Central Europe or Germany growing a bit softer. I was just wondering if you could expand a bit more on what was that. Is it just a one-off for this quarter? Or is there more to it that needs to happen in Germany, and whether that's the function of competitive dynamics with one of your closest competitors over there? And then I have a follow on question. Bernard Charlès: We have excellent dynamic in Germany, middle stand and cyber systems in multiple industries. And I don't know what you are hearing from the competitive landscape, but I would be surprised we have won almost all the new generation of PDM, PLM selection process. In different groups, we have mentioned also how the cyber systems and many others. So the dynamic is in terms of positioning, competitive positioning, which I understand is your question is very strong in Germany in favor of Dassault Systèmes. I will also notice that, as Pascal mentioned this morning, for the PLM decisions out of 31 decision against our German competitor, 26 of them were won by the system out of 31. And when it comes to PDM competition against our Boston based competitor out of 11,10 were won by us. And I don't even count on that the centric PLM displacement of the PDM in the power sector, where there is a tremendous success of centric PLM in the last 12 months on this. So I think that those numbers speak for themselves. We don’t announce all the wins. But it might be a lot of wrong statement on the market. I don't know.

Thanks, Bernard. The reason that was my understanding as well, and which is why I was a bit puzzled when I saw the softer growth in Germany. And I was wondering if there was anything related to that? And secondly… Bernard Charlès: Which, I missed the point what you said when, can you repeat?

I was just trying to say that when I was looking through the commentary earlier on the previous call with regards to growth in Germany, I think it was a bit slower than I think you called out Northern Europe and you called out strength in Southern Europe. And I was trying to think of whether that was just a one-off in the quarter or there was something else that maybe I would have missed from my side.

No, no but to complement what Bernard state. The market is relatively soft in Germany for the time being. It's not coming from the competitive situations on this. I can prove and if we look at the buy-plans we have big transactions coming from Germany. So I will say it’s much more the timeframe whereby the people who are questioning their investments and especially in the auto sector and especially in the supply chain I should say to be more precise. That’s why we insisted this morning on the incredible dynamic in China in the auto sector because they are investing massively for new generation of technology. And I think this will be as we did of course with Tesla and others and I think that will probably create new challenges for traditional players to rethink about how to insert faster innovation in that product portfolio.

That’s very helpful. I think that clarifies it. And secondly, if I may, you’ve talked about how your revenue streams are revolving contribution from subscription changing overtime some pickup in cloud. And then we always talk about the go-to-market between direct and indirect for the different products. Is this -- could you maybe remind us or help us understand as things stand today if in terms of your various products to what extent is each being driven by direct and indirect? And has anything changed given the shift towards subscription that we need to be aware of? Bernard Charlès: There’s no specific transition from one to the other, let me -- the direct sales force is focused on what we call business transformation with our clients. Then we have a second way of engaging with clients, which is value solutions basically those clients buys the platform and the process on roles, but we got process on roles, they don’t buy capabilities anymore, they buy the possibility to do the new jobs for their workforce we call this process on roles. And then for the volume transaction base the former PC channel, SOLIDWORKS channel is evolving to a more industry centric keep with industry roles and this is powered by the 3DEXPERIENCE platform and mobility on the cloud. So basically what is happening is each of those three nature of engagements are decided based on where the customer is in terms of which value they want to get. And from that standpoint driving all this on the platform standpoint will help to edge who of the best partner should be fulfilling the customer needs. And that’s how we are creating a built-in Omni channel approach for the best engagement for the clients. There’s more to say on this, but it’s very clear from an engagement system with that’s how Boom client was SOLIDWORKS for the prototype and became full 3DEXPERIENCE for the new product that they will produce that’s how company like -- also companies doing robotics I don’t know if you have announced them are also using the 3DEXPERIENCE platform in conjunction with SOLIDWORKS desktop. So that new flexibility is really highly appreciated by the clients.

Thank you for the details, Bernard. Thank you. Bernard Charlès: Welcome. François-José Bordonado: We’ll take one very-very last question. Michael?

Okay. Thank you, sir. Yes Michael Briest from UBS. Your line is now open sir, kindly ask your question, sir.

Thank you, thank you for squeezing me in at the end François. A couple from me just, Pascal, on SOLIDWORKS you talked about weaker license growth. Can you say whether units actually grew or shrunk in the quarter? And then just looking at the guidance for the year, particularly, Q4 implied quite a big slowdown and I know there were difficult comparatives there both on ENOVIA and SOLIDWORKS, is that something your mindful of or is there perhaps also an element of macro caution you’re factoring in? Thank you.

So in term of unit, I think we were flat compared to last year for SOLIDWORKS. But again if you remember last year was an exceptional quarter on this front. Coming back to your second comment related to Q4. I just want you to remind one thing, last year we over achieved by €20 million. And if you take the high end of the guidance, I gave last year it was an overachievement almost higher than $10 million. So if you rebate, if you want accordingly by taking the $10 million up you will see that the growth we are targeting is decent. And at the end, Michael, the most important for me is to deliver the commitment to five years ago to €3.5 where most of you have doubt in a year ago we will be capable to deliver. That's… Bernard Charlès: Doubling the EPS in five year.

Understood. And then Bernard, just one for you. You mentioned piracy a couple of times this afternoon and this morning. Have you got any sense of the quantum of the piracy issue and is this a SOLIDWORKS issue is it more broad in the portfolio?

It goes across all portfolios. So, we will act progressively to clean that and we do it in a professional way. At the end, we want to make sure that our customer is okay with the way, we proceed and up to now it has been very good acceptance, but we need to extend.

Okay. Thank you very much. Bernard Charlès: Welcome. With that, thank you very much for all of you to be -- some of you were this morning in Paris or this afternoon here. And of course we stay connected to address any of the questions you might want us to address. And I think we have now a new date -- two new dates in fact, we have of course the third quarter coming and… François-José Bordonado: At Science in the Age of Experience in Boston in October, mid-October. Bernard Charlès: And we have potentially, if we have been able to close the transaction with Medidata. This half day strategic session with you guys, the 13th of November in New York. So I hope most of you will be able to attend. François-José Bordonado: And thank you very much. And have a good day.

Thank you. This does conclude our conference for today. Thank you all for participating. You may now disconnect. Speakers, please stand by.