Francois-Jose Bordonado Bernard Charles - Chief Executive Officer, President, Director, Member of Scientific Committee, Chairman of Dassault Systemes SolidWorks Corp, Chairman of Dassault Systemes Simulia Corp, Chairman of Dassault Systemes Delmia Corp, Chairman of Dassault Systemes Corp and President of Dassault Systemes Holding Canada Inc Thibault de Tersant - Chief Financial Officer, Senior Executive Vice President, Director, President of Dassault Systèmes Europe Sas and President of Dassault Systèmes Holdco Sas

Zachary R. Ajzenman - Griffin Securities, Inc., Research Division Michael Briest - UBS Investment Bank, Research Division Frederick T. Grieb - Crédit Suisse AG, Research Division Derric Marcon - Societe Generale Cross Asset Research

Thank you for standing by, and welcome to the Dassault Systemes 2013 Second Quarter Financial Results Call. [Operator Instructions] I must advise you that this conference is being recorded today. I would now like to hand the conference over to François Bordonado, Investor Relations. Please go ahead. Francois-Jose Bordonado: Thank you, François. Thank you for joining Bernard Charlès, CEO; and Thibault de Tersant, our CFO; for our 2013 second quarter conference call. We held our webcast presentation in Paris earlier today and have placed the presentation on our website. Two brief reminders before we begin. Dassault Systemes' financial results are prepared in accordance with IFRS. We have provided supplemental non-IFRS financial information, which is explained in the reconciliation tables included in our earnings press release. Some of the comments we will make on this call will contain forward-looking statements, which could differ materially from actual results. Please refer to our risk factors in today's press release and in our 2012 document reference. I would like now to turn the call over to Bernard Charlès.

[French] Thank you for joining us here on the webcast held earlier today. Looking at our performance for the second quarter on the first half of 2013, I think it is clear that we are managing well this period of market softness which began at the second half of 2012. At the same time, our attention is focused on moving quickly to position ourself on the broader 3DEXPERIENCE market, and this is reflected in everything we are doing across Dassault Systemes. Turning to our financial results. In the second quarter, total revenue increased 6% in constant currency, and earning per share increased 9%. Please note that our employee base is larger by 6% compared to last year results. Similarly, for the first half, I think we have delivered solid figures in light of the environment, with total revenue up 7% in constant currency, and earnings per share up 10%. This results reflect the investment we have been making in expanding our geographic footprint within each of our 3 regions, Europe, the Americas and Asia. One year ago, Europe had a record second quarter. This year, Asia has been the top performer with total revenue up 13% in constant currency in the second quarter and 11% for the first half. In addition, our progress demonstrates the value of our strategic investments. For a long time, we have believed in the significant return on investment DELMIA can bring to customers and we have persisted with our investments. With DELMIA, companies can design their manufacturing processes as they are designing their products, illustrating the value of digital assets continuity from designs through the manufacturing. And now we are becoming a major player in manufacturing operation management, called MOM. It's a section of the software market. With the acquisition of Apriso, extending DELMIA's reach to a new complementary market with high growth potential. In February, we indicated that 2013 is about accelerating our 3DEXPERIENCE strategy rollout with an ambitious R&D delivery plan. This morning, we announced V6 release 2014, a major milestone, as I will discuss shortly. Now, let's speak briefly about Asia. Really, an enormous opportunity for us. We start from an excellent base, with the largest presence in Japan among PLM providers. From this departure point, we have been building out our business over a number of years, strengthening our presence in South Korea, India, South Asia and China. From a financial perspective, Japan and China are part of our top 5 regions for new licenses, and in the second quarter, all 5 countries within Asia delivered double-digit new licenses revenue growth. Looking at China, we really started from nowhere just 6 years ago. In fact, China was our first initial step to what eventually became the full management of our sales channels, setting up an indirect channel there from scratch. So we are particularly proud to have been named the #1 comprehensive PLM player in China. CATIA is an important part of our success in China. At a recent forum, Philippe Laufer, CEO of CATIA, presided over record attendance on interest. So China presents an interesting picture of what we can do. The opportunity is in front of us, but we have made very good progress in the last 6 years. And this progress is happening at the same time in South Korea, India, along with increased targeted focus in Japan, on South Asia, of course. Just to give you one recent customer example. Let me mention Qoros, a joint venture between Chery Automotive (sic) [Automobile] and Israeli Corp. in China. They have selected CATIA Version 6, ENOVIA V6, to accelerate the delivery of their new vehicle in the premium segment. From Asia, let's turn to DELMIA. It has had a great first half. Our DELMIA brand helps companies address their business challenges in manufacturing. How do I shorten my time to produce in order to meet my customers' requirement? This is a critical issue in many industries. Manufacturers continue to push for quality improvement both for the end consumer experience and to reduce the critical problems of cost overruns supported from [ph] they work. At the same time, companies are also trying to address how to do their built into the production system, the ability to be flexible on a job [ph]. DELMIA helps companies successfully answer these critical manufacturing businesses issues and provides an excellent return on investment to customers. Looking at its performance in Q2, new licenses revenue was up 69% for DELMIA and by 65% for the first half in constant currency. And looking at each revenue, it is equally distributed over the 3 regions. So very well-balanced demand. Michelin is one of the DELMIA's key customer. A very interesting company where we are helping them improve key business metrics: agility, quality, inventory and resource utilization. In May, we spoke with you about our Apriso acquisition agreement and we closed it earlier this month. Very simply, it extends our addressable market by about $1 billion and makes us a major player in the manufacturing operation management space in 10 of the 12 industries we are targeting. Why is Apriso leader? Three concepts: flexibility, standardization and operations management. Companies can standardize their best manufacturing processes, have the flexibility to address local manufacturing needs and can manage and know 24/7 what is happening across all their plants worldwide. The manufacturing operations management market is still early in the game. The runway ahead of us is very significant, and the number of home-grown resources is large. So we believe our entrance into this market is coming at the right time and we're entering it with the right technology and with the right leader. Very big companies with massive operation are relying on Apriso. Moving to some V6 business highlights. V6 is in production and providing high value to customers in the aerospace and defense industry. Bell Helicopter ranked Dassault Systèmes as their #1 preferred supplier on their business system modernization program. They stated that utilizing ENOVIA V6 and CATIA V6, they could really bring their designers and manufacturers, engineers, their quality engineers and their customers support personnel together so that they can truly collaborate in one central source. One of our industrial equipment customers, Metso Pulp, Paper & Power, illustrates the value of CATIA V6 brings to globally run companies. CATIA V6 is architected to enable companies to design and build anywhere, knowing that they are dispersed on the unserviced team all around the world. The collaborative aspect of V6 with the CATIA application is truly a breakthrough. For everyone, I'll remind that the CATIA V6 application is based on the 3DEXPERIENCE Platform. In the medical device industries, Smith & Nephew is a perfect example of the attraction we're seeing for our newly designed industry solution experiences. They purchased our licensed to cure industry solution to address the regulatory compliance challenges of the industry. Now, this morning, we unveiled Version 6 Release 2014. It represents a major milestone for several reasons. First, it is about creating a business 3DEXPERIENCE Platform. It's not an IT platform, it's a business experience platform. And so, it is completely aligned for packaging by industry and by business process to speed up deployment at customer site. Second, it is a business platform. So it is open and inclusive so that companies can use it to power certain applications that are being developed for the new experience economy. Third, we are introducing a groundbreaking user interface and we have named it the IF WE Compass. Fourth, the platform, based on our V6 architecture, is on premise and on public and private cloud. Finally, we have embedded many key technologies among them, the ability to enable the formation of social communities, to enable automatic dashboard-ing and to enable companies to leverage big data, combining internal information with information intelligence on the web. We will be proceeding on a limited basis with selected customers in many types of industries and incorporating their feedback for the upcoming general release call V6 2014X. Let me turn the call to Thibault now.

Good afternoon and good morning to all of you. My comments today are based upon our non-IFRS results. In our press release tables, you can find the reconciliation of our non-IFRS to IFRS data. In addition, revenue growth rates are stated in constant currency. Let me briefly review key highlights with you. First, we said that new licenses would return to growth in the second quarter, and they did at 4%. Based upon the evolution we saw in the quarter, we can reaffirm that the second half will see acceleration in our new licenses revenue. Second, we delivered strong earnings-per-share growth while also expanding our business. Earnings per share grew 9% in the second quarter and 10% for the first half. Headcount is up 6% compared to June 2012, with a large part of the increase coming through our acquisitions as well as selective hires in key areas. We added to our financial resources with a new EUR 350 million credit facility. We increased our annual dividend by 14% and offered the option of stock or cash. And finally, we are upgrading our earnings per share objective for 2013. With that, let me we now share a few details. Turning to software revenue, the growth was 6% in the quarter. Recurring software revenue was also at 6%. Approximately 3 points of the recurring software growth in the 2012 second quarter relative to slippage of renewals from the 2012 first quarter. So recurring software revenue increased about 8% to 9% in constant currency, normalizing for this timing shift last year. For the 2013 first half, software revenue is higher by 7%, on a strong growth in recurring software revenue, which grew 9%. Renewal rates remained stable at a high level and new licenses increased by 1%. We've had a nice quarter for services, with new Version 6 engagements leading to a 9% increase in our revenues and a positive service margin of 11%. On a regional basis, Asia delivered strong performance, with revenue up 13% in constant currency and broad strength. The Americas had software performance increasing 8% in the second quarter and 10% for the first half. Here, I'm mentioning the software revenue. And in Europe, there is a softer macro environment, but also keep in mind that in second quarter of last year, Europe grew by 19%. Turning briefly to a review of our PLM and SolidWorks businesses. Let me share a few points. In PLM, total software revenue increased 6% and was led generally by Asia. CATIA, SIMULIA, and DELMIA all had double-digit new licenses revenue growth in Asia. The Americas also delivered a solid performance. Europe was soft and, on a comparison basis, the 2012 second quarter was a very strong quarter for PLM businesses. Turning to other PLM, SIMULIA, is the largest portion, and here the results were solid. Bernard has covered DELMIA, which had a great second quarter and first half performance. We have now completed the first full year since the Gemcom acquisition. The integration has been going well. At the same time, as we all read, the mining sector is under a good deal of pressure, reflecting the reduction of raw material prices. When we acquired Gemcom, it was clear that the environment would be challenging for some period of time. Now, there is a significant potential over the midterm here, and we have purchased the market leader, and even in this softer period, we are certainly gaining over other players in this space and growing our market share. Despite the market softness, ENOVIA Version 6 base portfolio is seeing progress along several fronts. First, its business value delivered and feedback from current users. Second, we are seeing some nice wins with important companies across several industries including life science, industrial equipment and transportation and mobility, as well as in CPG and energy. SolidWorks revenues increased 6% in constant currency, driven by recurring software as well as new licenses revenue growth. New units were lower by 3% under a very high comparison base, as we run a major promotion last year. But on the maintenance side, the business is very healthy as indicated by the level of on-time renewals, a statistic that we track closely, as well as the overall rate of maintenance renewals, which remained very stable. Turning to our profitability. Non-IFRS earnings per share increased 9% for the quarter and 10% for the first half on higher revenue and financial income. For the first half of the year, the operating margin is stable. Turning to our cash flow and balance sheet. I would like to review several items. With respect to cash flow, we generated EUR 353 million for the first half of the year, with a very nice cash conversion rate. The year-over-year comparisons for cash flow for both second quarter and first half largely reflect the great progress we made last year in improving our accounts receivable management processes. These improvements benefited working capital last year and continue to do so this year although not at the same magnitude. In June, we took advantage of favorable rates to lock-in a further 5-year credit facility in the amount of EUR 350 million and we drew the full amount down at that time. Our cash balance sheet at the end of June totaled EUR 1.5 billion. Earlier this month, we completed the Apriso acquisition for about $200 million. Turning now to unearned revenue. On a sequential basis, the increase, excluding currency effects, was about 4% increase, in line with our billing timing in Asia. There was a very significant quarter-to-quarter currency impact and revenue increased by about EUR 24 million from activity while currency had a EUR 17 million impact in the other direction. Looking to our guidance. We are upgrading our EPS objective and updating our revenue objective. This is principally based upon reaffirmation of our second half revenue outlook, updating our currency exchange rate assumptions and tax rate and adding Apriso. Our non-IFRS revenue growth objective in constant currency is now 7% to 8%, up 1 percentage point. We are updating our currency exchange rate working assumptions which add EUR 20 million to reported revenue. And we're adding EUR 20 million for Apriso. It has a higher service mix than the overall so you should assume about 35% to 40% of Apriso revenue are services related. From an earnings perspective, our new objective is a non-IFRS earnings per share of EUR 3.57 to EUR 3.67, representing growth of 6% to 9%. The 9% increase is coming from EUR 0.07 for higher activity, a lower tax rate and currency combined and EUR 0.02 from the addition of Apriso. Our non-IFRS operating margin objective is between 31% and 32%, fairly stable compared to last year in spite of the Apriso acquisition. For the third quarter, we are setting a revenue objective of about EUR 520 million, representing growth of about 8% to 9% in constant currencies. On the earnings side, we are assuming earnings per share of about EUR 0.92, or 3% growth. Please bear in mind that last year, EPS and reported revenues were helped by currency movements in a very significant manner. We are assuming a non-IFRS operating margin of about 31%, which would represent a decrease in comparison to the year ago period. As it is the first 3 months of integration of Apriso, we are taking some normal caution. In our earnings presentation on our website, we have provided a bridge for you. And now, let me turn the call back to Bernard.

I'll be short. In summary, we are focused on delivering for the short term by meeting our financial objectives. And at the same time, we are pushing forward on our 3DEXPERIENCE strategy on advancing our growth drivers by delivering what we consider is a breakthrough solution for many industries in the year to come. Thibault and I would be happy to take any questions now.

[Operator Instructions] Your first question comes from Jay Vleeschouwer from Griffin Securities. Zachary R. Ajzenman - Griffin Securities, Inc., Research Division: This is Zach Ajzenman, for Jay. We have a few questions. First, do you expect that the introduction of industry solutions in 2014 will continue at the 2012, 2013 pace of releases. Might there be configured simulation apps based on SIMULIA?

The Industry Solution, yes, indeed, will continue at a similar place. We are extending the scope of covering the consumer insight or customer insight, depending about which sector you are, to the customer -- to the product delivery and service delivery. On the -- I'm not sure I get your question related SIMULIA, but I'm assuming it's clearly related to the SIMULIA integration, in which, by the way, is given in their full process, same with the 3DEXPERIENCE Platform because all applications are using the same platform, the same user interface, the same experience and they are old applications [indiscernible] label, on premise and on the cloud we're starting with 2014X, officially. And that's what we are experimenting -- not experimenting, but proving with a very large quite large list of customers around the world right now. Zachary R. Ajzenman - Griffin Securities, Inc., Research Division: Okay. Could you comment on the momentum of industry solutions via your BT and value channels, respectively?

The Industry Solution has been starting extremely well in new industries, CG, CPG, Energy, when I think energy as not as a CAD consumer but as for energy solutions. On I've been [ph], for reason we knew, slower in traditional sector because the traditional sector are used to look at your solutions by looking at CAD, CAM, CAE, on PDM or PLM. But this is changing. And I think we see that changing now with new players adopting the 3DEXPERIENCE Platform. That's basically the dynamic we've seen in the last 16 months -- 12 months. Zachary R. Ajzenman - Griffin Securities, Inc., Research Division: Okay, could you comment on the adoption or migration to ENOVIA V6 from your legacy ENOVIA LCA and Smart team basis? DS announced -- I'm sorry...

No, no, no. It's okay. Everything which is so-called V6-related, no matter which application it is. Now that just use the common 3DEXPERIENCE Platform. All the application set that are part of previously ENOVIA environment, are also based on the 3DEXPERIENCE Platform, for example, program management, sourcing for apparel, compliancy for life science. All those are application sets that are now on the same common platform. So in some way, what was an IT infrastructure capabilities has become one platform collection of apps. And that's what makes it possible to have a consistent architecture for cloud, on premise, private or public cloud. Zachary R. Ajzenman - Griffin Securities, Inc., Research Division: Okay. Part of your growth strategy is expanding your universe of users. Aside from SolidWorks, what your brand is seeing or is likely to see the most material growth in new users?

Maybe we will make sure we leave space for someone to ask a question because we need to take all the questions. The -- I'm not sure I got the full scope of your question. But on the SolidWorks side, if it's related to the current team we're discussing here, the new product portfolio that goes with SolidWorks, like mechanical conceptual, which is part of the 2014 delivery for 2013, are based on the 3DEXPERIENCE Platform for the software dimension of it or the cloud dimension of it, and for the capacity to take advantage of the circular body environment. And I think we are getting very, very strong positive feedback on customers on that. We believe that what was previously called Desktop CAD will go software on the cloud, and that's the move we want to not only create, but fulfill as a market demand.

Your next question comes from Michael Briest from UBS. Michael Briest - UBS Investment Bank, Research Division: Thibault, I think this morning you talked about the potential for quite large core PLM activity in the second half and the potential of migrations, as well as Industry Solutions. Can you talk a little bit about more of whether we're hitting a tipping point on V6 adoption amongst large auto areas, is that what you're talking to? And then in terms of the industries, I don't know, can you talk a bit more about perhaps long term where the headline suggests it's more challenging. Is that impacting on adoption positively or negatively. And, Bernard, on cloud. We discussed it a bit this morning, but maybe a bit more color on how you expect the customers to adopt and to clarify on the revenue model, will it be basically the same rental charges you currently charge, pound for pound or dollar for dollar?

I don't think this morning I commented a lot about, specifically, migration. I certainly commented about the acceleration in new business that we see for the second half when we look at the opportunities we have in the pipe. And the second quarter was reassuring from that standpoint because the closure rates from the pipe was really there, completed consistent with our guidance. Having said that, there's one comment to be made on the migration activity. We achieved that -- we see CATIA migrations to CATIA Version 6 warming up. And you know that this is largely an assumption of the availability of all the broad CATIA application portfolio, and we gained many points, actually, in second quarter compared to the past in this CATIA migration activity. Concerning your second question in automotive, certainly there is today some softness in the market, in the supply chain in Europe. However, when we look at, again, the opportunities we see for the remainder of the year, we certainly see growth in automotive for the remainder of the year. There is also cautiousness to the extent that the budgets tend to be spent now towards the end of each fiscal year. But the level of activity with OEMs and large suppliers is good and is good basis for what we see in the second half. And concerning the cloud, there is very clearly, exactly the same business model to the extent that on the cloud, we will do subscriptions and they will be equivalent to rental for licenses and of course on top of the license rentals, where we also be at the cloud per se, the availability of bandwidth and compute and storage, with the middle-ware included. but this is incremental revenue and certainly there will not be any cannibalization of the software revenue because of cloud. Frederick T. Grieb - Crédit Suisse AG, Research Division: In terms of the pace of takeout, I mean, it's available today, but do you think 5% will be using it by year-end or next year-end for instance?

I think it's very difficult to do -- it's too early. I think it's too early to know. We think it's going to have an effect on small customers because on new type of markets where they do not have necessary the proper infrastructure for the complexity of application and the richness of application software we do. That's what we see in the early sign of the test we're doing, so it's really welcome in many areas. But I think we will know more by the end of the year.

[Operator Instructions] We have another question from Jay Vleeschhouwer. Zachary R. Ajzenman - Griffin Securities, Inc., Research Division: One follow up for Thibault. We understand that supports for the IBM licenses user management server that many of your customers have been using will end this year and you're encouraging customers to move to your DS license server. Are there any term -- any longer-term financial or operational implications of that?

I think it's really more of a technical topic. There's no change in the business terms at all. It's just the way we serve licenses. And we control them with keys, which is changing, and we need to support broader installations, more products. And so we have actually put together and released for now a few years already a new license server which we call the DSLS. And so we are now moving towards migrating the install base to it. But of course, we're very respectful of the time needed by customers in order to do that. And so, we are not expecting disruption from it.

Thank you. With that, I think, if there is no further question, we thank you very much for participating again on this call and participating to the...

Hold on a sec. Sorry, Bernard, but we have a question. Can you take it, operator?

Yes, of course. Your next question comes from Derric Marcon from SG. Derric Marcon - Societe Generale Cross Asset Research: A very simple question. Can you help us -- help me to reconcile your comment about CATIA, the migration on V6, the good traction you have in some regions and the progress you made on new license revenue versus the software revenue brought at constant currency in H1. So as you know [indiscernible] new license are growing fast. The CATIA installed base consumer is engaging on V6, why we do not see more or higher revenue growth here?

Very simply put, Derric, what I said is that it is starting, the migration for CATIA V6, and second quarter was the first quarter where we saw it. Migrations are not an activity generating immediately significant license revenue but just migration fees. It's small, something that is preparing future growth with the need of installing more applications and -- by customers, and serving new users. So the comment on the CATIA migration is not really something that is contradictory to the global performance in licenses. And the license performance in Asia and in growing countries is extremely good, I confirm it. And it's also pretty good and decent in America, which tells you that it is less good in Europe, which I don't believe is a complete surprise. However, like we said, we see traction for the coming quarters when we review our opportunities including in Europe. But for the time being, there is a situation where automotive suppliers and a few industrial equipment makers, the situation in Europe is not very good. Derric Marcon - Societe Generale Cross Asset Research: Very helpful. But last year, license revenue, new license revenue of CATIA grew at 8%, if I remember well. For Q2, it was up 20% again. So I suppose that new license revenue were growing in H1. So does it mean that recurring revenue for CATIA specifically were flat or slightly declining?

Well, again, the situation of recurring in the second quarter can only be understood, bearing in mind that some orders from the first quarter of 2012 slipped to the second quarter. And this is very much the CATIA situation. So the recurring for CATIA was marginally up in this second quarter of 2013, but was better and more in sync with the license activity you just reminded, if we were to neutralize the effect of the slippage of recurring purchase orders from the first quarter to second quarter of 2012. Derric Marcon - Societe Generale Cross Asset Research: And do you expect CATIA software revenue to grow at a higher pace in H2 constant currency?

Yes, we do.

So with that, I think there's no more question. Thank you very much for participating this morning to the analyst presentation and once again to participate to this call. And of course, we are always available to address any further question. For those of you taking some days off or vacation, please have a great vacation and talk to you in October, end of October. Thank you very much and have a great day.

And that concludes our conference for today. Thank you all for participating. You may all disconnect.