Good day and thank you for standing by. Welcome to Dassault Systèmes' 2023 Third Quarter Earnings Presentation Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Beatrix Martinez. Please go ahead.

Thank you. Thank you for joining us on our third quarter 2023 earnings conference call with Bernard Charles, Chairman and CEO; Pascal Daloz, Deputy Chief Executive Officer and Chief Operating Officer; and Rouven Bergmann, Chief Financial Officer. Dassault Systèmes results are prepared in accordance with IFRS. The financial figures discussed on this conference call are on a non-IFRS basis with revenue growth rates on a constant currency basis unless otherwise noted. Some of the comments on this call contain forward-looking statements that could differ materially from actual results. Please refer to today's press release and the Risk Factors section of our 2022 universal registration documents. All earnings materials are available on our website and these prepared remarks will be translated short after this call. I would now like hand it over to Bernard Charles. Bernard?

Thank you Beatrix. Good morning and good afternoon everyone. Thank you very much for joining us today. It's always a pleasure to be with you. In the third quarter, we outperformed in both revenue and profitability. We delivered a strong acceleration in growth, driven by large deal momentum with software revenue up 12% above the high end of our target branch. In particular, subscription revenue grew 18%, accelerating sequentially. We also delivered above our profitability objective. Objectives with an operating margin of 31%, while continuing to invest in our future growth, increasing count by 5%. Our EPS was consistently strong, up 20% at constant currency. Consequently this strong results position us well to confirm the full year objective, and by the way most probably achieve our current five years plan that was initiated at the end of 2018. What I would like to convey today is that we find ourselves in a pivotal moment. Profound transformations are currently reshaping every sector of the economy. Our strategic positioning -- unique positioning I should say with the Virtual Twin and the capacity to experience it for everything what, how, and who is really unique. Not only it provides us the opportunity to power our growth for the future, but more importantly, to bring significant value even more to our gigantic customer base. We can assist our clients in [Technical Difficulty] of innovation and [Technical Difficulty]. Rouven will provide more detail inside into our financial performance, while Pascal will update you on how we have executed our vision and provide a business overview by sector domains and geography. So now Pascal it's your turn.

So let's start with a few comments following the Capital Markets Day. Today our clients are driven by the ambitions to bring about metamorphosis, which is much more than the transitions where they not only embrace the sustainable economy shifting from linear to circular approaches, but also to achieve with fewer resources their goal. We are also focusing on nurturing the experience economy transitioning from product to experiences, characterized by personalization contextualization and automatic updates. This dual forces of sustainability and experience are essential element to our heritage, but also to our ambition the next horizons we just defined for 2040. Within this landscape, the Virtual Twins have center pillars of the company's knowledge and know-how proved to be essential not only delivering the innovation phases, but throughout the entire product life cycle. Over the last 40 years, our primary focus has been on innovation. Now we are increasingly expanding our focus from innovation to experiences. --: The Virtual Twin enable also what we call the human center generative experiences. Each one matters in fact. Human center means empowering humans. Generative means automatically creating based on the data sets and experience refer to the overall interaction and responses of the users. So these human center generative experiences are shifting the value from the physical asset to the software. And our clients today rely on them to establish direct connections with their new customers delivering personalized connected smarter and safer experiences. This is truly the essence of the experience economy. And as an example of these rapid adoption is the development of the software-defined vehicles by the automotive industry and this trend may further accelerate the uptake of Virtual Twin. At this stage you might be wondering how we are fundamentally different from our competitors. What sets us apart is our capacity to offer a scientific representation of the world's complexity through our science-based Virtual Twin Experiences. When suitable, we combine our modeling and simulation capability with generative artificial intelligence to create human center generative experiences. And this concept is already implemented in the industry. And on the -- you have some examples of this. For example engineers can use the generative experience to explore new materials for the next generation of battery creating a space of possibilities that open up new possibilities. We empower the short-term workers to seamlessly bridge the virtual and the physical work to enhance their experience, fostering synthesis that elevates their capabilities. And we also assist business people and engineers in making informed business decisions, helping them to navigate the complexity of fluctuating raw material prices. Those are examples. Now let's turn now to our operational highlights for the third quarter. During the third quarter, we saw a significant number of large commercial agreements, notably in the manufacturing sectors. And what is motivating the customers to sign this transaction now is primarily the response to our customers' pressing needs to gain a competitive advantage, maintain profitability, meet regulatory sustainability deadlines and decouple the economic growth from the resource consumption. Now let's see what is happening in each sectors. Our solution are gaining momentum in the manufacturing sector for the reasons mentioned, specifically in Transportation & Mobility, Aerospace & Defense, Home & Lifestyle and Consumer Packaged Goods & Retails. While we are entering in a less favorable investment cycle in Life Sciences, we firmly believe that the demand for new, efficient and affordable drugs will necessitates a breakthrough innovations. And regarding infrastructure, I've mentioned on several occasions that our virtual twins are relevant for addressing the sector challenges. Our focus now is really on the go-to-market strategy to address the problem of the market fragmentations. And to tackle this, we plan to establish partnership, and I will say a few words about one of them. Now let's see and let's zoom on some specific example. Starting with manufacturing industry, during the quarter, we reached a significant milestone in our partnership with Jaguar Land Rover. We renewed and extended our collaboration for the next five years, aligning with their "Reimagine" strategy, which center on their transformation into what they call the digital-first company. And this partnership is built on the four key pillars: first, expanding the 3DEXPERIENCE platform usage from a little bit more than 8,000 to a little bit less than 20,000 users. This is also established JLR value network to operate globally within a unified environment. We are also providing a hybrid subscription model, cloud and on-premise to support their flexible cloud migrations. And finally, we are committed to achieving the net zero carbon emission by 2039 with our solutions. The point which is probably new for you is this cloud-native model play -- which is playing a crucial role in their decisions and underscore our leadership also in the cloud market. Now turning next to Life Sciences. As you know, over the last years, we have strategically directed our investment to support the growth of the therapeutic domain but also the domain expertise of the clinical trial. This brings us differentiation and position us to anticipate the next transformation in the clinical trial through patient-centricity first and generative AI second. One of those domains is really the decentralized clinical trial, which is a primary driver of our growth for Dassault Systèmes, MEDIDATA. And here is a customer example that substantiate my point. AbbVie along probably with Moderna are strong advocates of the decentralized clinical trial at scale, making them references in the field and their commitment to decentralized clinical trials come with three key reasons. Firstly, this approach helps to increase the frequency of the data capture in the clinical trials, thereby providing a more substantial amount of data and measurements. And this data richness is really the pivotal for informed decisions making and announcing the understanding of the trial outcomes. Secondly, decentralized clinical trials offered the opportunity to gather much more comprehensive contextual information and holistic data. This broadens the perspective and helps to better grasp the factor influencing clinical trial outcomes. This, obviously, improving the data analysis quality. Thirdly, this approach broadens the diversity of patients participating in clinical trials and it's not limiting to the patient available in the specific hospital or site thereby promoting a much more accurate representation of the general population. Now let's move to Infrastructure & Cities. Here is the example of the partnership I was mentioning previously, which enable us to start addressing the highly segmented infrastructure market at scale. And this is involved WSP. WSP is an interesting company. It's one of the largest engineering firm in Infrastructure. Their headquarters in Canada and they are the industry leaders in the various sectors such as energy, waste, construction and transportation infrastructure. WSP is making a significant investment in Virtual Twins to expand its portfolio and introduce new services for efficiently managing infrastructure projects. So with WSP, we are doing two things. First, we advanced our infrastructure strategy in order for them to be equipped and to basically use the 3DEXPERIENCE platform for all the major infrastructure projects worldwide. And secondly, they want to use the Virtual Twin as a way to develop new services to operate the infrastructure projects when it's done. So to conclude, I think we are confident that this kind of partnership will really enable us to scale our Virtual Twin in this sector and promoting a greater efficiency and sustainability. Now, let's move to our third quarter results across our geographies. In Europe, we saw an acceleration with a revenue growth of 21%. This growth is broad-based with an increased subscription adoption and is driven by large transportation deals and also large deals in Home & Lifestyle. In the Americas revenue growth was [Technical Difficulty] benefiting from continued momentum from subscriptions. And by sector, there were strong performances in Transportation & Mobility, Aerospace & Defense, Infrastructure, Energy & Materials. And in Asia, there was an improvement with a revenue growth of 5%, thanks to a double-digit growth in India and a solid performance in Japan. While there was some softness in Korea, China demonstrated resilience with a 6% increase despite more challenging macroeconomic condition in this country. Turning now to the Product Line performance for the third quarter. Industrial Innovation software revenue saw an excellent performance and rose by 18% and now represents 54% of the total software revenue. Our brands benefited from the large 3DEXPERIENCE deal activity with the market share gains demonstrating the unique positioning of Dassault Systèmes. And CATIA, SIMULIA, ENOVIA, DELMIA and NETVIBES show a double-digit growth during this period. In Life Sciences, software revenue rose by 3%. MEDIDATA achieved a mid single-digit growth in the cloud subscription revenue building on a stronger comparison base even stronger this quarter than the last one. And as previously mentioned, this performance is affected by an industry-wide reduction is start following the post-COVID surge. However, we are seeing substantial growth in the areas like decentralized clinical trial with MEDIDATA Patient Cloud. And this transformative approach is shaping the future of the clinical trial and will compare or balance the value compressions. We really -- I really invite you to learn more about the industry transformation at our upcoming events next -- taking place on November 6, 7 and 8, 2023 in New York City. In the mainstream innovations SOLIDWORKS, we see an increase by 7%. And SOLIDWORKS transition to subscription is really accelerating at the high double-digit rate and the two catalysts behind the shift released the 3DEXPERIENCE cloud-based solutions and options. Please note that we are navigating this transition with SOLIDWORKS year-to-date growth in the mid to high-single digits. And subscription is now representing a third of the new bookings as well. Additionally, we observed a consistent momentum with CENTRIC PLM driven by the Home & Lifestyle and Consumer Packaged Goods and Retail. And this momentum is notably reflected in an increasing contribution from the large deals. And I think we are well positioned to become a global leader and make this a big impact on these three consumer-driven industries. So, conclusions, the strength of our performance in the core industry together with our diversification across sector and domain position us extremely well to achieve our 2018 2023 objectives of doubling EPS within the five-year period as initially planned. And our plans are always being ambitious. And we -- and when we craft them we are highly motivated to achieve them. While it may be a little bit premature to claim early success. But our performance for this quarter has put us in a very good position to reach our goal. Furthermore this accomplishment lay a solid foundation for the upcoming financial plan. Now I think it's time for Rouven to say a few words about the Q3 performance and the outlook for Q4. Rouven, you have the floor.

Thank you, Pascal. And also thank you for joining our call. Good morning and good afternoon. As you heard, clearly, Q3 highlights strong performance and the anticipated acceleration in the second half of 2023 with software revenue up 12% year-on-year above the high end of our objective. This momentum is driven by continued acceleration of subscription revenue growth, up 18% year-over-year reflecting an increasing share of large 3DEXPERIENCE wins. Continued good momentum with SOLIDWORKS adopting the subscription model and strong performance from CENTRIC PLM. These subscription growth drivers are broad-based and evidence across geos and industries. And they give us the confidence that our annual subscription revenue growth will continue to accelerate moving forward. Despite the temporary lower contribution of MEDIDATA as explained during our last earnings call. For the first nine months, recurring revenue now accounts for 81% of total software revenue, which is up 80 basis points versus last year. To complement the strong software revenue growth, we also saw a rebound in upfront license revenue up 20%. All of the above is reflecting the strength in new business growth and the anticipated acceleration versus the first half of the year. Services revenue was up 2% at constant currency in line with our objective. Following the strong top line performance, we also advanced towards expanding our profitability as evidenced by an operating margin at 31% up 50 basis points year-on-year and EPS at €0.28 all above the objectives. Consequently, with these strong results in Q3, we confirm our full year objectives. And before moving to our long-term growth drivers, let me briefly share a few remarks highlighting the impact of the large transactions this quarter. The framework is the following: we are expanding our relationships with existing clients as well as winning new ones, which we refer to as value-up and value-wide. From a revenue growth perspective, you see a healthy contribution to in-quarter growth in upfront license revenue, but more importantly, we are building the run rate and momentum in our subscription growth. To this end, we signed several multi-year subscription deals where the customers have the flexibility to adopt our cloud at day one laying the foundation for long-term ratable revenue growth. Consequently, the increasing share of predictable revenue provides greater visibility and resiliency. Our strategic growth drivers of 3DEXPERIENCE and Cloud are at the center of the shift to our subscription model. 3DEXPERIENCE revenue rose 46% in Q3 at constant currencies. This reflects a share of 40% of 3DEXPERIENCE addressable software revenue, the highest contribution ever. In the first nine months, 3DEXPERIENCE revenue grew 18% to represent 34% of software revenue. Cloud revenue rose 10% in Q3, representing 25% of software revenue. While MEDIDATA's growth contribution was lower this quarter as anticipated, due to the strong comparison base of the growth in 3DEXPERIENCE Cloud remains at a very healthy clip. So we are well positioned to continue to capitalize on our leading position in key industries capturing above-market growth with 3DEXPERIENCE and cloud. Now, let's review how we performed relative to the objectives we set for the third quarter. To make it simple, we delivered strong results beating all our key objectives. Total revenue was €24 million above the mid and €13 million above the high-end, offsetting a negative currency impact of €12 million. The operating margin was 70 basis points above the midpoint at 31%, net of negative currency impact of 40 basis points and we continue to invest to support our strategic initiatives with a net headcount growth of over 1,100 for the first nine months which is up 5%. Most importantly, this overperformed in Q3 highlights the impact of our expense -- highlighted the impact of the expense carryover which muted the margin performance in the first six months is now behind us and we are back to a normal trend with a year-over-year improvement of 50 basis points. The strong operating performance of Q3 translates to €0.28 in EPS driving the upside which is the high-end of our objectives. In addition, the contribution of higher financial income was neutralized by negative FX impact. In summary I've been talking with you about our revenue growth acceleration since the beginning of the year. As evidenced by the strong Q3 results, we are delivering against what we said. While I will be addressing the full year outlook in a moment, it is important to highlight that we are trending well within our objective ranges for the first nine months. This further strengthens our confidence in our full year financial plan for revenue and profitability. Now, turning to cash flow and balance sheet items. Cash and cash equivalents totaled €3.368 billion compared to €2.769 billion at the end of 2022, which reflects an increase of €599 million. At the end of the quarter, our net cash position totaled €378 million, an increase of €605 million versus the net financial debt of €227 million at December 31, 2022. Now, let's look at what's driving our cash position at the end of the third quarter. We generated €1.272 billion operating cash flow year-to-date in line with last year. Net income adjusted for noncash items and the balance of changes in working capital are almost flat year-to-date versus the first nine months of last year. And we expect the operating cash flow to resume to growth in Q4. To sum up, operating cash flow was mainly used for the cash dividend paid in Q2 of €276 million, the net purchase of treasury shares for total of €240 million CapEx of €103 million and repayment of lease liabilities of €63 million. Lastly, the total FX impact is not significant this year as compared to the first three quarters of last year. Now, let's turn to our fiscal year 2023 objectives. There are two key messages that I want to share with you. First, we are confirming our guidance for revenue and operating margin, while increasing the outlook for EPS to €1.20 at the midpoint of our range, which used to be the high end previously. The second point addresses the notion of risk associated with a back-end loaded year, which some of you expressed. As mentioned before, Q3 highlights the anticipated growth acceleration in the second half and this puts us in a position of strength to derisk our Q4 -- for our Q4 outlook and remove these concerns. As such, we keep the midpoint of our total revenue objectives unchanged, while narrowing the range of total revenue to be now at €5,945 billion to €5,985 billion. For the margin, we apply the same logic, no change to the midpoint of 32.5%. In fact, we are compensating the FX settlement with a stronger operating performance. This reflects the positive trend of the margin uplift in the second half of the year versus the first six months as mentioned before. To summarize our full year 2024 objectives, we maintain growth rates at constant currency for software revenue at 8% to 9% and total revenue at 8% to 9%. This implies upfront license revenue in the range of 3% to 4% and recurring revenue to be in the range of 10% to 11% with subscription growth unchanged in the range of 16% to 17%. Services revenue is expected at 8% to 9% growth. The operating margin remains at 32.3% to 32.6% with no change to the midpoint. Before closing let me provide you with a few additional data points that will help to shape your model for Q4. Given the strong operating performance of Q3 we now project software revenue to grow 8% to 10% in Q4. This implies recurring revenue growth in the range of 10% to -- 11% to 13% with subscription revenue increasing in the range of 18% to 23%. We slightly adjust upfront license revenue to be now in the range of minus 1% to plus 3% as we remain confident for the full year on the range of 3% to 4% as mentioned before. These objectives reflect continued momentum in subscription revenue growth from new deals and an increasing contribution from our run rate. Now one additional comment regarding MEDIDATA. We expect growth to reaccelerate in Q4 to achieve double-digit growth for the full year. In terms of profitability, we expect the operating margin in the range of 35.8% to 36.6% and diluted EPS of €0.35 to €0.37. This reflects a year-over-year improvement of 190 basis points and 10% to 14% growth ex-FX respectively. Of course, for additional information and to review what we've just discussed, please take a look at today's earnings presentation. In conclusion, as evidenced by the strong Q3 results we are on track to achieve our full year plan for revenue and profitability. Q3 performance is broad-based driven by growth in 3DEXPERIENCE closely aligned with the growth strategy as discussed during the Capital Market Day. Our subscription revenue is driving the momentum of the company, while we deliver the productivity gains in the second half as planned. Finally, the confidence in the full year plan is supported by rebalancing our Q4 growth with a strong Q3 upside. And now Bernard, Pascal and I will be very happy to take your questions.

Thank you. [Operator Instructions] Now, we're going to take the first question from Jay Vleeschhouwer from Griffin Securities. Your line is open. Please ask your question.

Hello. Thank you. Hello Bernard, Pascal and Rouven. Let me start with you Rouven with regard to structural segment profitability. That is to say profitability of the segments not just this quarter but over time. Once upon a time you used to disclose the margins for CATIA and SOLIDWORKS has been over 40%, and I assume that given their scale that remains the case. But there must be other businesses therefore that are well below that, or below the corporate average. So perhaps you could discuss those businesses that you think could or should see margin leverage from where they are today? That would be the first question then a couple of others.

Well, I'll take a start at this. And for – I think Pascal has a few points to add as well. Jay, good morning to you. Maybe I give you the example of MEDIDATA, where you remember when at the time of the acquisition the margin was up 20% and the growth we've generated since the acquisition plus the margin and cash flow progression was about 150 to 250 basis points year-over-year improvement. This is typically, what our ambition is. But we've also been at the right time to take the decision to invest, to ensure that we have the right level of resources and focus. We have done that for MEDIDATA. We have more than doubled the size of the company in terms of head count. While at the same point in time, we were able to significantly elevate the profitability and drive the growth and set it up for long-term success. And the current slower performance is more -- that's a temporary situation, which we'll fix. Of course, we have various businesses with different margin profiles. I will not go down the path of going into each segment. Of course, the more mature businesses have is a good profitability, which allows us to invest into the businesses that we are starting new and that will be the future of Dassault Systèmes like CENTRIC PLM, where we very focusly invest to build the muscle and the infrastructure, the expansion with the right level of resources to grow across all segments. We are signing very large deals with Centric today and we can only do that because we have invested and expanded our reach and our ability to serve these clients. So, it is an ongoing portfolio exercise to ensure that we do the right level of investment while ensuring the overall profitability of the company.

Maybe Jay, what I could add is none of our brands or product line or loss making. None of them, right? And if the question is, do we still have a potential to -- for improvements? The answer is, yes. And Rouven committed to improve on a yearly basis by 40 to 50 basis points the operating margin organically, which means probably we also have the ability to do a little bit more, if we consider that we could do also some acquisition and having a dilutive impact on top of this.

Okay. Pascal, for you, let me ask you about something that we've been talking about since December of 2020, namely your vertical strategy for your cloud infrastructure. And then more recently, you'll recall that we spoke briefly at the analyst meeting in June, about your product road map. And they may be related. But in any case, I'd like to ask about both. So, with cloud infrastructure, how do you think about the capacity that you need to have in place, to hit your 2025 revenue objective of €2 billion? For example, as of the spring of this year, you had about a dozen data centers and that number doesn't seem to have changed over the last year or so to get the €2 billion or to support €2 billion of cloud revenue, how are you thinking about the expanded capacity in regions or a number of data centers to do that? And then with respect to product road map, when we think about what some of your competitors are doing in terms of their architecture and where V6 is going to be by the end of your current forecast period namely 15 years or so, is it too soon to start talking about what we perhaps could call now B7? In other words what's your next generation that you think gets you to the end of the forecast period and beyond?

Thank you Jay for the question. Maybe the last part could be also for Bernard if he wants to have a few things. But anyway let me start with the first part of the question, which is related to the strategy by verticals. So you're right. I mean, it's -- you remember a few years ago almost the new -- the diversification industry we're the one adopting the cloud first. Now we can see different patterns. We have a decent number of significant deals having this hybrid model, whereby, we are giving the ability to ease the transition to the cloud over the next five years. And JLR for example is one of them. This is also happening for the SOLIDWORKS, because as you know the move to subscription with -- for SOLIDWORKS is linked also to the move to the new generation of SOLIDWORKS, which is the one being connected with the 3DEXPERIENCE platform on the cloud as well. Having said that, if you look at the capacity we have on the cloud today there is no need to expand significantly with new data center. I mean, we probably have to open one or two more to cover different region of the world because you remember it's -- the most important is to basically to have the data center being placed to have a latency, which is roughly a car around 10 milliseconds. That's the way to define how to -- basically to define the territory we could cover with one data center. But in parallel, you remember it's a hybrid model. We are also using external capacity, because the system is transparent whenever we use 3DS Outscale as an infrastructure if we are using for example AWS. And by doing so there is no need for us to invest significantly in order to basically have the full capacity to support this €2 billion revenue you were just mentioning. So I think we are relatively well-equipped and this hybrid model I think it's really the right way to go because depending the usages we have an ability to sub-segment the market in a smart way if you want. Now relative to the product road map, I think as you say we have introduced the 3DEXPERIENCE platform on the market in 2012. Now a little bit more than 10 years after the 3DEXPERIENCE platform is the standard in aerospace and defense is also the standard in the auto sector. And we see also the adoption in the large verticals such as industrial equipment accelerating also. So to a certain extent, I think it's probably too early to discuss about what's next. Especially in the context that the 3DEXPERIENCE platform has been designed to be cloud-based first to be modeling and simulation on one hand, but also to have the data science capability on the other hand. And we have enough to some extent to continue to conquest the verticals and the customers we are serving today with it. So that's my answer at this stage. Jay?

Okay. And maybe to conclude, of course, on SOLIDWORKS, would it be accurate to say Pascal that new SOLIDWORKS seats declined sequentially from the very strong Q2 into Q3. And moreover that perhaps new SOLIDWORKS volume was even lower than in Q1, perhaps up some still year-over-year but was Q3 in fact the lowest quarter for new SOLIDWORKS units of 2023?

No Jay. I think it's not true. In fact, knowing that we're going to speak together, I checked this before the call. So no, we are -- to review the order of magnitude. We are a mid-single-digit growth in terms of units compared to last year of Q2. And if you look at per quarter, it's almost relatively in the same order of magnitude. It's a little bit more than 20000 units per quarter. What is nevertheless maybe taking a little bit your model is the fact that the third of the new booking is subscription-based now, right, which is -- and it was 15% last year. So that's the reason why maybe when you do your computation you have the time to recover the numbers. But roughly speaking, the growth in terms of units is still a good one, solid one. It's going extremely well in Europe as well in Asia. And where we see low single-digit growth is much more in North America, in terms of number of number of units, right?

Okay. Very good. Thank you for that clarification and….

You're welcome.

And that's all I have for now. Thank you.

Thank you, Jay. Thanks.

Thank you. Now we are going to take our next question. Just give a moment. And the next question comes from the line of Jason Celino from KeyBanc Capital Markets. Your line is open. Please ask the question.

Great. Thank you. Good quarter. It seems like the macro environment the business environment seems to be holding in, doing well. When you think about linearity of the strength or linearity of the new business momentum in the quarter, curious, how it kind of shaped out. And if you're able to maybe have some of the early weeks of this quarter soon be tracking.

Jason, yes, in terms of linearity in Q3, I think one of the key characteristics of this quarter is the acceleration in subscription revenue from 13% to 18%, plus the strong contribution from large transactions that we were referring to that Pascal discussed. And there's a part of this, I mentioned in my prepared remarks that you see visible in the quarter, but the majority of the contracted value is going to come in future periods. So from a linearity standpoint, right, this has improved our visibility into the future periods for the subscription revenue which also gives us, I think a good view on the rest of the year. And it helps us then to be prepared for 2024. And in terms of -- if you mentioned this linearity for example Q3, Q4 pull-forward topic. In Q3, we -- there was none -- no really significant change between the, what not was initially in Q4. So what we reported in Q3 was really part of our Q3 visibility. And Q4 from that regard, we have also a solid pipeline, towards the end of the year that's not affected by the Q3 performance. Nevertheless, for the full year, we kept our guidance unchanged, for the reasons I mentioned that now we have improved visibility and achieving our guidance of 8% to 9% in total revenue is now what we are focused on.

Great. Thank you. And then maybe a follow-up on Jay's question on SOLIDWORKS. So, the one-third of new bookings being subscription-based up from 15% last year. That's nice momentum. Is there anything on the go-to-market side that you'd say has been a real catalyst that's been driving that? And then of which maybe 3DEXPERIENCE works family of the brands are seeing the greater strength there?

Jason there are a few things behind this. One is definitively the majority of the portfolio of the WORKS family which has been -- we have enough reference cases to give confidence to the market. But the other part is also I think our resellers they prepare themselves. It was -- if you remember, we had many times this discussion a few years ago about the ability for our distribution network to adopt the cloud solutions to adopt the new generation of SOLIDWORKS and the work stability at large and also to slightly change the business model to foster or to promote in an extensive way the subscription model. And I think we are at a point where it's done. I think the resellers they know how to do this. They are comfortable with basically the transitions. They have made the adjustment also for their own business model. So, that's the reason why you are seeing such an acceleration between last year and this year.

Okay, great. And then maybe one quick one if I can fit it in on SIMULIA. It seems like we've seen some good strengths double-digit growth in multiple quarters. I guess are you seeing kind of that being driven from more cross-sell activity and expansions, or have there been some competitive displacements? Thank you.

It's a little bit of both. But I would say the significant things which is really changing is now simulation is part of the large deals we are signing with key customers. If you remember for a long time simulation was almost on simpler side a decision done by the specialists. And the integration with the platform of all the simulation suite is really making the difference. And that's the reason why it was an extent we have this ability also to displace the competition in some large accounts. Now, having said that there are still domain where the SIMULIA portfolio is really leading the pack. And we continue to display the competition on the structural analysis and also more and more on the fee part. Related to the electromagnetic for the high frequency we have by far the leading solutions on the market and the 5G is really driving the market momentum on this.

Great. Thank you.

Welcome.

Thank you. [Operator Instructions] Now, we're going to take our next question and it comes from Michael Briest from UBS. Your line is open, please ask your question.

Yes, good afternoon. A couple for me. Just clarifying on the Jazz [ph] deal. Can you talk about how that works in practice? Does the customer start on-premise and then over time that migrates into the cloud? So the subscription revenues initially on-premise and moving into the cloud? And I think there was a comment this morning it was as large as the Boeing deal given that was supposedly $1 billion over 30 years. Is that correct, or did I mishear that? And then I had a question on Medidata.

Okay. Hello, Michael. Thanks for you question. Let me clarify the first point. So we -- it's a hybrid deal where the customer has the right to use our software in the cloud and on-premise. There are certain parts of the portfolio were to start natively in the Cloud and others they will transition over time to the cloud. But it provides the full flexibility. And, of course, we work with the customer on the road map. It's a five-year transaction but there's a good -- there's flexibility to evolve over time and it's fully committed. So this from our perspective makes the cloud transition really puts it into the hand of the customers as they're expanding through their value network and that was really behind this.

And relating to the second point Michael what we said this morning is on a yearly basis it's the same amount of magnitude between the Boeing contracts and the JLR contract, -- which is 100 millions.

Okay. And actually going back to the CMD you -- when we looked at the cloud ambition Medidata was about two-thirds of it are Life Sciences and then Centric was a good chunk of what was left. It always struck me that the core business wasn't expected to move massively to the cloud. I'm assuming you knew about this transaction in June is that right, or is that maybe an area of upside risk to the cloud ambition for 2028 that this core business moves more quickly?

Michael, I apologize but the line was cut for a moment. If you could please just quickly repeat I got the last part of the question, but I want to make sure, we address it properly if you could quickly recap it would be helpful.

Sorry. Yes. I mean so the CMD the three billion cloud ambitions seem to rely a lot on Life Sciences and Centric and not much on the core. Have your views changed or...

No, no, no. I think, we purposely -- the chart that we have on the cloud adoption across our portfolio is more conceptually and as a framework. The 3DEXPERIENCE platform as you know drives the lion's share of our organic growth in the next plan. And, of course, with this we are building our foundation to the cloud transition of our installed base and our industrial clients through the 3DEXPERIENCE platform who have -- were starting to -- who are selecting parts to start natively in the cloud and others that will transition at a certain point in time based on their priorities. But now for them it's important they want to secure with these transactions the next three to five plus or 10 years with us. And therefore they need to have a stable platform. They need to build their road map, but they want to have a trusted and reliable partner in this. And of course the cloud is -- transformation is centered to that. This is why this hybrid flexible model is so essential on this transformation and it gives us the visibility. As it relates to Centric and Medidata, you know, the Medidata performance this is temporary and it will accelerate. We will see that already in 2024. And for Centric, we see very good -- very strong performance, and increasingly also with the cloud. So -- from the perspective of the 3 billion, I think we are well underway. And we are building the foundation for that to continue to grow, our cloud subscription revenue. And I already expect in Q4 to shape compared to what we reported in Q3.

Okay. And then just finally on MEDIDATA, the sales force a couple of days ago announced the clinical cloud, including one on operations, and I'll read it as it helps life sciences set up and execute efficient trials both traditional and decentralized better support participants clinical site studies and sponsors. Obviously, it's very early, but are you concerned about them as a competitor? Do you know the scope of their ambition?

I can take it if you want Rouven. I spoke with them so to what they are proposing is the infrastructure-as-a-services to give some computing power and storage capacity to us the massive clinical trial. But they are -- they have no intentions to move to the clinical trial operations the way we do it, which is equipping all the patients with the systems to collect the data, to manage the record, to do the certifications, to manage the site, the enrollment of the patients, the report for the FDA which is a domain of expertise by itself and they do not have this ability. However, as you may know many of the large pharma are already using Salesforce for the commercial activities. And you remember they -- basically they terminate the contract with one of our competitors, who has developed a vertical application on this front, with them on their platform. And just because they have the common infrastructure-as-a-service, there is certain time benefit to use AWS as an infrastructure for the commercial activities and the clinical trial. But again, not on the application level neither on the platform level much more as an infrastructure.

Okay. That's very clear. Thank you, Pascal.

You're welcome.

Thank you. Now, we're going to take our last question for today. And the last question comes from line of Laurent Daure from Kepler Cheuvreux. Your line is open. Please ask the question. Excuse men, Lauren, the line is open. Please ask your question.

Yes. Thank you. Thanks for taking my question. A few last ones, if I may. One is on the MEDIDATA business you are kind enough to share with us the bookings the retention rate, I was just wondering how much time it takes to go from bookings to sales growth because between the 120% retention rate, 20% booking growth and only 5% growth would be helpful to understand a bit better the mechanics, and how much time it takes to convert? The second question is very clearly on BIOVIA. When do you expect the transition to subscription to end and to -- not to be a drag anymore? And my final question is on the competitive landscape. So basically, you are looking to continue to win market share in clinical trials. But who do you win up against? And who are the losers in that market, do you think? Thank you.

Okay. Laurent, I said the first one. So you see the overall fundamentals of the business for MEDIDATA continues to be very healthy. We renew with our existing clients. When we renew, we expand. And of course, these bookings are carried forward into our backlog that we recognized over time. That's one part of the story. The other part, we addressed earlier today and over the last weeks as well in discussions, and I know you're familiar with this, but I want -- I have to repeat it here, which is the fact that we have some part of our business, which is volume dependent, which goes through our CRO partners and as these volumes are compressing, they are affecting our revenue that we can book. And this is really what right now the counter effective we see on converting overall our bookings to revenue because you have, of course, on one side, you have the growth, which is coming from the new bookings that are growing very, very well. But at the same point in time, there are certain studies ending, where we stopped the revenue and the net of it has resulted in Q3 of 5% growth. But keep in mind, the baseline in fact, of Q3 2022 was very high with 17% growth, and that will be different in Q4 and then, of course, in 2020, 2024. So as we said, Q4, there's a number of significant deals in front of us. And once we consolidate our bookings for the full year, then we create a backlog for 2024, and we know the conversion of this into next year and the associate and there’s a citing revenue growth. That's the model. I don't know, Pascal, do you want to address the valuable point?

The value, yes, I think we are starting to be close to the end of the transition. So if I have to guess, it's probably an additional -- a little bit less than a year, before to have almost complete the transition. And the last point, which is related to the competitive landscape. As you may know, we are acting in three sub-segments in the clinical trial. One is really the traditional BDC market, where clearly, we are gaining market share still against our hard curve, remember, they are not only being the incumbent, but they used to be the one having the largest market share. In the decentralized clinical trial, I mean, the landscape is much more occupied by startups. And one of them is so-called [indiscernible] and we are getting against them significantly at a point whereby we are rescuing some of their trial right now, being in danger because they have hard time to deliver. And in the AI space, it's much more, I would say, embryonic the competition because you remember, you need to have the data set for this. And we are one of the few companies having the large data sets. And the key competitors, even if we cannot call them competitors, how much more co-competitors, the CLOs [ph] because they are the ones also making some analytics using more and more AI in order to leverage the data they have collected also. But we are partnering with them to import them to do it. So that's how we are continuing to gain market share along the three subsegments of the market.

Do you have -- a very last point but do you have in this market a lot of clients that are using not just one supplier, or is many of them is concentrated?

No, no, many of them. I mean it's -- Life Sciences is not like aerospace or the transportation and mobility sectors. Many of Life Sciences company, they have a highly fragmented information systems and they are using different point solutions. The platform concept, which is really the one we are pushing in this industry is pretty new. So -- but what we can say is on all the three pillars I just mentioned, you will always have one providers, one software providers, which is leading the pack. But it's very rare when everything is standardized on this. So you have a coexistence on many things. And there is a reason for that, because the trial is nothing more than the project base if you want. You have a starting point and end point, and you can use the system the time of the trial and use another one for another trial. So the way we do it at least for the large enterprise we have enterprise agreement giving them the ability to do most of their trials with our systems. With the CROs, it's much more a consumption model is study by studies, right? And for mid-market more and more, they are moving from study by studies to enterprise agreement as well.

Okay. That’s very interesting so much, Pascal.

Thank you, Laurent. I think it's time to conclude. Bernard, if you want to say a few words to conclude?

Yes. Thank you very much all of you for participating. Just for -- I would like to add two remarks. One the key strategy for our scale, which is the abstraction of the cloud architecture, is really serving, as Pascal said, specific client needs sovereignty, extreme secret environment or a highly specific computing environment, when it comes to basic services where we don't need to have our own data centers. But a lot of customers that we have, one highly sovereign insured on extreme secret environment and that's why the architecture is powerful. On the architecture, it's intriguing and I will talk to you more about that, because as Pascal asked me as Chairman not being now in charge of operation at all. He will be the CEO January 1. He is already acting as the CEO. I will have time to spend on architecture and research and it's going to be a fun time for me. Back to my foundations, before I join Dassault Systèmes, so back to square one on, thank you Pascal for asking this. At this on top of my Chairman function, which has started – which we started 1st of this year. Thank you very much all of you. It's always a pleasure to talk to you. And I know that Pascal has invited me to -- for my last call in February for the full year 2023 on the five years plan. So it will be a great pleasure to see many of you and after that I will only act for governance but nothing related to quarterly reports. All the best to all of you and enjoy your day and enjoy the end of the year.

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.