François Bordonado - IR Bernard Charlès - VC and CEO Pascal Daloz - EVP, CFO and Corporate Strategy Officer

Jay Vleeschhouwer - Griffin Securities, Inc. Monika Garg - KeyBanc Capital Markets

Good afternoon ladies and gentlemen. Thank you for standing by and welcome to Dassault Systèmes' Q1 2018 Earnings Investor Call. At this time, all participants are in a listen-only mode. A short overview will be given followed by a question-and-answer-session. [Operator Instructions] I must advise you this conference is being recorded today. And I would now like to hand the conference over to François Bordonado, Investor Relations. Please go ahead sir. François Bordonado: Thank you for joining us on our first quarter earnings conference call. Presenting today are Bernard Charlès, Vice Chairman and Chief Executive Officer; and Pascal Daloz, Executive Vice President, CFO, and Corporate Strategy Officer. Some brief reminders. Dassault Systèmes’ financial results are prepared in accordance with IFRS. During 2018 the first year of implementation of IFRS 15 we are providing IFRS financial information on those and IFRS 15 and IAS 18 basis. So all figures and comparison on this call are presented under IAS 18 and are on a non-IFRS basis with revenue gross figures in constant currency unless otherwise noted. We have provided supplemental IFRS 15 and IAS 18 non-IFRS financial information and IFRS, non-IFRS reconciliation schedules in our earnings press release. Some of the comments on this call will contain forward-looking statements that could differ materially from actual results. Please refer to today's press release and to the Risk Factors section of our 2017 Document de reference. A copy of this morning’s webcast presentation is available on our Web site, and these prepared remarks will be on our Web site shortly after the call. I would now like to introduce Bernard Charlès. Bernard Charlès: Thank you. Good morning and good afternoon to all of you. We delivered a very good start to the year on a broad basis growth with 3DEXPERIENCE software up strongly. The first quarter performance and activity demonstrated the improving breadth and balance of our growth. Our strong software licensees on earnings per share results were well aligned with our outlook and well support our 2018 financial objectives. We benefited from licensed revenue up 14% in total, and acceleration in 3DEXPERIENCE licenses revenue which increased over 50%, both figures in constant currencies. All three sales channels, all major brands and 9 out of the geos contributed to the performance in a significant manner. The first quarter also well illustrated our social industry experience strategy at work. Social is evident in the increasing Cloud adoption and the introduction of 3DEXPERIENCE for SOLIDWORKS community. The wins we will be discuss -- we will discuss are illustrating how we are game-changers, driving customer-centric innovation, whether our clients’ customers are consumers, citizens or even patients. Finally, based upon our first quarter achievements and outlook for the year, we are reconfirming our financial objectives with a licenses revenue target of 8% to 10% at constant currency. The 3DEXPERIENCE platform and industry solution experiences are bringing strong value to industry leaders, who are serving as references as they lead transformations in their sectors, and to industry shakers, who are changing the game and looking to scale rapidly. And together they are triggering a major evolution. You can see this all around you and all around the world. We are experiencing a truly global Industry Renaissance in some way, bringing new ways, real and virtual, of inventing, learning, producing and trading, triggered by transformations industry leaders are undertaking and the impact of newcomers to different industries. The leading businesses of the future will be those that empower the workforce of the future and their value networks with knowledge and know-how to deliver new categories of sustainable solutions. From our perspective, Industry 4.0 is yesterday’s way of thinking, with people applying new technology to old ways of working together. That is not enough. And digitalization is not enough either, it can be a catalyst but it needs more. Tomorrow is about the makers and innovators, basically the ecosystem, about inventing new things and changing the way you do things in order to innovate with the end-customer or consumer in mind, leading also to the creation of new type of services and new content that industries can offer to their clients. Our 3DEXPERIENCE platform functions as an -- functions as truly as an operating system powering our industry solutions experiences with, of course, our brand applications and as a business model, thanks to the marketplace services. Digital experience platforms are the infrastructures of the 21st century: they have transformed retail, transportation and [indiscernible] hospitality services, the industrial world is next. The 3DEXPERIENCE marketplace positions Dassault Systèmes as a catalyst as well as an enabler of this transformation by connecting buyers and sellers of design and manufacturing content as well as services worldwide. Among the first services of the 3DEXPERIENCE marketplace, which we opened last January, is 3D printing services enabling any buyer, someone who wants to produce a 3D part, to find a seller, someone who is going to produce that 3D part. So we are becoming part of a transaction, the transaction bringing together the buyer and the seller, hence the term marketplace. The sharp increase in 3DEXPERIENCE licenses revenue in the first quarter proves that our 3DEXPERIENCE platform. Thanks to the comprehensiveness of our offer, of course, coupled with the Power’By approach, opens up entirely new market opportunities. The platform brings unparalleled added value for customers in terms of leadership as well as innovation. The 3DEXPERIENCE platform’s unique values brought to clients is driving growth, increasing contribution and cloud adoption. During the first quarter, 3DEXPERIENCE licenses increased 53% in constant currencies. From a mix perspective, it contributed 34%, a 9 point increase over the year-ago timeframe. Go Lives are continuing with existing 3DEXPERIENCE customers extending their usage and new 3DEXPERIENCE investments are commencing with large customers, including adoption of the 3DEXPERIENCE Power’By offer by customers in Transportation, Mobility, Aerospace & Defense. Formally introduced earlier this year, Power’By will enable all customers to benefit from the 3DEXPERIENCE platform’s value immediately without any need for migration of legacy data. There are three levels: to enable social collaboration; to leverage hybrid data for product configuration and bill of materials; or to use the full capabilities of the built in application on 3DEXPERIENCE platform. We also saw our 3DEXPERIENCE cloud activity grow substantially year-over-year. Our cloud offer represents for large and small companies, the possibility to reduce to zero the distance to their own clients. For the SOLIDWORKS users’ community it represents the opportunity to benefit from a wide range of cloud services, from 3DEXPERIENCE PLM services, to Marketplace, or to SOLIDWORKS xDesign, a browser-based solution. Kärcher, the world’s leading supplier of cleaning technology, has adopted the 3DEXPERIENCE platform on the cloud to digitally transform its existing processes worldwide and be first to market with efficient, resource-conserving cleaning systems, products and services. Kärcher is a member of the German Mittelstand, comprised of Germany’s midsized companies, who are world leaders in their market segments. In Transportation & Mobility, EVELOZCITY, a new electronic vehicle start-up in the United States focused on urban mobility, has adopted 3DEXPERIENCE on the cloud with CATIA, SIMULIA and ENOVIA process and solutions. Moving towards our new business in the quarter, Lufthansa Cargo, among the world’s leading air freight carriers, offering tailored logistics solutions for a wide range of challenging freight consignments, has selected QUINTIQ to balance costs and service levels for optimal customer satisfaction. More broadly, QUINTIQ provides solutions to complex planning puzzles that all airlines face every hours of the day. It is able to capture and request unique constraints, such as contract-specific requirements, labor regulations, and resource availability as well as capabilities. Airline companies can define their efficiency, customer service and profitability targets and QUINTIQ gives the tools and the feedback needed to plan according to those targets, and also gives to planning departments the flexibility to handle last-minute schedule changes. Finally, just a few words on the Life Sciences business. In Bio-Pharma, companies are shifting towards patient-centric innovation in order to create more personalized and effective medicine. Manufacturing and quality control of biologics are much more complex and challenging than chemical components triggering a shift to more predictive and adaptive manufacturing processes. In this regard, Gilead Sciences has selected our BIOVIA brand and our ‘Made to Cure’ industry solution for continued process verification to produce "as designed" and "as registered" every time. Let me now turn the call to Pascal. Pascal, you have the call.

Thank you, Bernard. Good morning, and good afternoon to all of you. Thank you for joining us. In my presentation today, I will cover our first quarter business review, financial highlights and finish with our financial objectives. We apologize for the technical problems last quarter which inadvertently cut off short the Q&A portion of the call. So let’s begin. We expected a strong start to the year, continuing the strength we saw in the fourth quarter and that was the case. Total revenue increased 9%, near the high-end of our 7% to 10% constant currency guidance range. Revenue, as reported, was €771.2 million, versus our guidance range of €750 million to €770 million. So our currency assumptions were well in line with actuals. The operating margin expanded net 80 basis points at 27%, at the high-end of our 26% to 27% range. We improved our operating margin 240 basis points, which enabled to absorb 110 basis points currently -- currency, sorry, headwinds as well as offset 50 basis points dilution from the acquisitions. EPS, thanks to the combination of the revenue, operating margin expansion and the lower tax rate, grew 11% as reported and 26% at constant currency. EPS was €0.59, compared to our range of €0.54 to €0.57, so well in line with our EPS objective. Now let’s look in more detail beginning with our software revenue performance by region. So, in the Americas, software revenue increased 11%, led by North America with strong performances for SOLIDWORKS, SIMULIA, DELMIA and BIOVIA. In Europe, software revenue was higher by 6%, on a strong comparison base and was led by France and Southern of Europe. The most dynamic region during the quarter was Asia, up 16%, where we enjoyed a broad-based growth across Japan, China, Korea and India and across our three sales channels. All of our major brands, CATIA, SOLIDWORKS, ENOVIA and SIMULIA, delivered strong software revenue growth. The broad-based growth during the quarter also benefited from the good breadth from an industry perspective. We had six industry with double-digit software revenue growth including Transportation & Mobility, Industrial Equipment and Aerospace & Defense within our core industries; and within diversification, a very good performance from Natural Resources, Consumer Goods & Retail and Architecture, Engineering & Construction. Moving to our brands, CATIA licenses revenue were up double-digits led by Asia on a strong growth in both our direct and indirect sales channels, and in the Americas with a good progression in indirect sales. 3DEXPERIENCE transactions represented more than half of CATIA’s top 20 global wins in the quarter, coming from Aerospace & Defense, Transportation & Mobility, Marine & Offshore and Industrial Equipment. We estimate that CATIA is involved in 80 electrical vehicle programs, including the recent win with EVELOZCITY, and becomes a reference in this domain. ENOVIA’s software revenue increased 11% this quarter, driven by large deals and on a regional basis, was led by Asia and Europe. 3DEXPERIENCE represented over 75% of the license software for ENOVIA. SOLIDWORKS also had double-digit license revenue growth on a strong performances in Asia and the Americas. Other Software grew 14%. In addition to SIMULIA, we had a good performance in manufacturing with DELMIA and in mining with GEOVIA. Today, let me focus on our SIMULIA brand and share some further details with you. Over the last two years we have significantly enhanced our multi-physics simulation capabilities. We now cover more than 70% of the core physics market with leading technology in structural, electromagnetic, in particular high frequency which is so critical to enable Internet of Things or Smart products, Smart mobility and Smart industry, and finally in advanced fluids simulation with the next-generation Lattice-Boltzmann technology with the EXA acquisition completed in November of 2017 and our earlier fluids acquisition. In turn, we have strengthened our market leadership position and we believe that among the -- all the PLM players we are on a pro forma basis in the number two position from a software revenue perspective. Moving to the services, we indicated in February that year 2018 will be a start-off point for growth over the next several years, given the large increase in committed services engagements that we have. In the first quarter, we had a strong growth in 3DEXPERIENCE related services. Overall services revenue was flat on mixed performances by several brands, so services came in about €6 million below our target. Operating margin. Our first quarter operating margin of 27% came in at the high-end of our objectives and increased 80 basis points compared to the year-ago first quarter. As mentioned earlier, we had an underlying improvement of 240 basis points in the operating margin, absorbed currency headwinds of 110 basis points, and offset acquisition dilution of 50 basis points. Earnings per share was also well aligned with our objectives. EPS increased 11% with currency headwinds hitting our true progression. In constant currency, EPS increased 26%, benefiting from our revenue growth, operating margin performance and lower effective tax rate. Our cash flow from operations was up 17% in the first quarter to €407 million, reflecting our net results and improvement in working capital. Excluding currency effects, unearned revenue under the IAS 18 increased 9% in total and 6% on an organic basis, well aligned with recurring revenue growth figures on the same basis. In the appendix of the earnings press release, we discuss the impact that IFRS 15 has on an unearned revenue and therefore the figures are not comparable at March 31st under the IFRS 15 and IAS 18. This is due to the fact that the March 31, 2018 balance sheet line item unearned revenue has been reduced by €158 million under the IFRS 15, reflecting mainly the one-time permanent difference of €110 million, and the higher amount of recurring revenue recognized in the first quarter under IFRS 15 compared to IAS 18 in the amount of €49.4 million. Finally, we are reconfirming our full year objective for year 2018 on a non-IFRS financial objectives for revenues, operating margin and earnings per share as well as our principal currency exchange rate assumptions. Underlying our objectives, let me provide key details: we are reconfirming our target for license revenue growth of 8% to 10% in constant currency for year 2018, to reflect improving breadth, with an increased contribution from 3DEXPERIENCE and a good growth for SOLIDWORKS but on -- moderating from the year 2017 pace. We expect recurring revenue up 7% to 8% in constant currencies, coming from solid growth in both Subscription and Support revenues. For services, we are confirming that it will be back on track, on growth in year 2018, up about 9%. With software performing better than services in the first quarter, we did moderate the growth rate for services from the 12% growth initially. We are confirming an effective tax rate of about 29.7% for year 2018 compared to the 33.2% in year 2017. These assumptions aggregate to a total revenue growth of 8% to 9% in constant currency, an operating margin of 31% to 31.5%, which embeds acquisition dilution of about 60 basis points and negative currency impacts estimated at 40 basis points; and an EPS of €2.83 to €2.88, representing growth of 6% to 8%, or 11% to 13% at constant currency. Turning to the second quarter, let me begin with some key details supporting our financial objectives. First, with respect to the licenses revenue, we are targeting a growth rate of between 6% and 10% in constant currencies, which would bring our first half licenses revenue growth rate to between 9% and 12% at constant currency. Second, a good level of recurring software revenue growth, up between 8% and 9%, and third, services growth of about 9% to 14%. Combined altogether, we are targeting a total revenue growth of 8% to 10% and an earnings per share of about €0.65 to €0.68, representing a reported growth rate range of 5% to 10% on an heavy currency headwinds, the EPS growth rate at constant currency would be about 16% to 22%. So, let me turn the call back to Bernard. Bernard Charlès: Thank you, Pascal. I believe that the first quarter of 2018 illustrates very well where we want to go this year. First, we delivered a strong start to the year on improved breadth and balance. Our long track record of performance, with growth in revenues, earnings and cash flow have been enriched by our multiple growth drivers. Second, our results demonstrate our strategy at work and our focus on strengthening our execution. As a result, we are expanding our market positions across the major value streams of our clients. Third, the 3DEXPERIENCE platform power both as an operating system and as a business model are now both evident with the introduction of our first marketplace set of services. Fourth, 3DEXPERIENCE on the cloud opens up new market opportunities for industry expansion, to new types of users and for business model expansion. We look forward to welcoming many of you to our Capital Markets Day on June 15, 2018 to meet with all members of the executive team, some of our next-generation leaders and several of our clients. Pascal and I would now like to open the call to your questions and thank you for your participation in this call and earlier this morning at the webcast.

Thank you, sir. [Operator Instructions] And your first question comes from the line of Jay Vleeschhouwer of Griffin Securities. Please go ahead sir.

Thank you. Good afternoon, Bernard and Pascal. Couple of questions, arising from two Dassault events that occurred over the last two months. First, SOLIDWORKS WORLD in February, and then last week your customer conference in San Diego. So at SOLIDWORKS WORLD it was quite interesting to hear that the company had communicated the objective to your channel of repaying a $1 billion or more in SOLIDWORKS revenue within the next number of years, and that would be your second $1 billion brand, of course. The question though is what are you assuming in terms of any significant changes expect to sales capacity or product mix to achieve that level of revenue? And are you assuming that you’re going to be able to sustain double-digit new seat [ph] license growth as you saw in 2016 and 2017 to get to that level of revenue? And then couple of additional questions, just I mean from the call last week. Bernard Charlès: Pascal might want to give you -- Jay, thank you for the question by the way and thank you for participating those two -- to those two events as a lot was shared there by also customers. We don’t expect any specific levers. In fact -- as a matter of fact there's a race between I would say, if I may say so, you know well our solutions. It is a race between our SOLIDWORKS brand and our SIMULIA brand. But there's no expectation of any significant changes. I think if we extrapolate, it can be achieved in the timeframe we discuss. The mood of the resellers as you may have noticed -- but we call now the volume channel is a very -- is very positive, extremely positive, they’re motivated. And of course the extension of the services we provide with the 3DEXPERIENCE platform has presented the SOLIDWORKS will help accelerate, but we don’t expect this to be the only reason to make it happen. Pascal?

Yes, Jay. Thank you for the question. We will compliment when they announce it. So point number one, the SOLIDWORKS model could fly over a $1 billion with basically the exiting foundation. And let me remind what are the growth drivers. One is basically the 2D to 3D migration. And frankly speaking when I look at the 2D install base, we still have a lot we can do before to convert them into 3D 100%. Two, more and more we’re seeing a traction coming from 2D to 3D migration. And as you may know with SOLIDWORKS and with basically the well package and this well defined price points, we are really significantly -- significant market share gains almost all the entry level and the mid range 3D solutions on the market. And last, but not least, we are basically complimenting the portfolio of SOLIDWORKS with new domain like obviously simulations, manufacturing, and so on. So basically if I mix those two, we have the very strong growth drivers. Now from a number standpoint, remember the 2D and the 3D migrations represent 70% of the revenue of SOLIDWORKS. 30% are coming from all the new expansion we do like EPDM [ph] simulations, manufacturing and so on. And we -- the expansion are going very well as well. My last point is when I look at where the new license growth is coming for SOLIDWORKS, it's also an interesting data point. 55% is still coming from new customers we’re winning, okay? So basically this channel is a fantastic machine to establish footprint on the market. And 45% of the new license are coming from existing customers extending what they have. So this balance, I mean between 50-50 almost is also [indiscernible] if you want to sustain the growth on a long run basis. I hope I gave you some data point, answer your question, Jay.

Okay. Thank you. Yes. So with respect to last week's event, which is more about the rest of the business beside SOLIDWORKS, there did seem to be at least anecdotally some interest in Power’By and adopting V6 and so forth. But how are you thinking about the metrics for the revenue impact for Power’By? In other words, when you think about perhaps additional revenues per customer or adoption metrics what -- how are you thinking about that? And, for instance, we learned last week at the conference that you now have approximately 3,200 customers on V6, up about a thousand over the past year. Would it be fair to say that the average size of new deployments is increasing or maybe you could just talk through some of those metrics and regarding V6 and Power’By adoption? Bernard Charlès: There are several reasons for us to go this way. The first one is, remember, if I look at the SOLIDWORKS install base compared to the CATIA install base, we are not at the same level of the install base being under maintenance, okay? So it is followed by strategy, we want to give access to a new category of services for them to be able to catch the gap we have compared to CATIA when I look at the install base under maintenance. So this is basically a big lever, because not only you’ve the revenue coming from the 3DEXPERIENCE, but also indirectly you have the additional super [ph] revenue stream coming from basically this install base. And it's a strategy we have already put in place partially, you remember with MYSOLIDWORKS, which was exactly basically the point. Two, when we look at the type of services under applications we want to -- have to compliment the SOLIDWORKS desktop with the Power’By. It’s also an interesting case, because with EPDM [ph] we are doing very well to manage [indiscernible] as well as basically the basic product structure. If you have to go [indiscernible] and being able to manage your configurations, I think we want to use this 3DEXPERIENCE platform with PLM services in order to do it. And we see more and more cases like this not only in the large -- [indiscernible] has the large install base for a given customer, but also when people are doing a little bit more complex products. It’s also -- for example, it's a case in the medical devices, in some industrial equipments and the more you have by the way Internet of Things and connected object, the more the configuration is becoming something key. So this is also basically a second reason. It's also to be able to provide an advance PLM capabilities in an affordable way using 3DEXPERIENCE platform on the cloud. And last, but not least, you also have specialized products and is particularly true in the simulation space where we do not have the capabilities available inside the desktop. So it's through this approach, you’re able to connect the desktop with the [indiscernible], with those 3DEXPERIENCE applications, and this will bring additional capability. If I take for example, the architecture and subscription, you know these domain by half and you know that there are some architects, people into this page using SOLIDWORKS to do things. But if you’re able to compliment with the rest of the portfolio we have, automatically you’ve much more broad and comprehensive product solutions. So those are basically the levers. One, against 2D to increase the subscription and the support [ph]. Two, to had additional capability on the PLM services, and three, to be able to expand the scope of solutions by adding some specialized products, which are not part of the desktop solutions. This is the rationale behind Power’By.

Okay. That wasn't quite the question, but I will just ask my final question regarding your cloud infrastructure. You seem to have now few hundred customers on the PLM side of the business that are on the cloud, perhaps more. Is it your intend to have your cloud services provided solely by your own cloud infrastructure, meaning the Outscale or do you think it would be wise to rely increasingly, for example, on the working with Microsoft or other large co-partners for cloud infrastructure?

Today we do leverage Amazon AWS very successfully. It's very efficient. It works well on the way. So we’ve this dual possibilities between our own infrastructure on the -- on AWS. So at this point in time, customers are very satisfied, and it has never been a topic of doubt or debate. In the future, we will do more with local telcos, because we’re putting a lot of attention on [indiscernible] for certain type of usage, where there is a need for a territorial centric services, and we’re that -- those type of customers. And the unique thing about Outscale which is not anymore only seen as one element of Dassault Systèmes is that we’ve created our own PLM for multiple cloud. So we can manage unlimited number of cloud environment, including private clouds. So on-premise cloud for certain large companies. More to be discussed there, but the strategy is very clear and the precise answer is more [indiscernible] telco connection there we want to look at partners who are certified by governments.

I understand. Thank you, Bernard. Thank you, Pascal. Bernard Charlès: Welcome.

Welcome, Jay.

Thank you. [Operator Instructions] And your next question comes from the line of Monika Garg of KeyBanc. Please go ahead.

Hi. Thanks for taking my question. First on SIMULIA, I think if I remember correctly, first time you have mentioned about 15% of revenue for Q1. Is it fair to think that SIMULIA is at least running at 15% of the yearly revenue also and where do you think this business could be a part of total revenue? Bernard Charlès: Hello, Monika. Pascal, you take the question?

Yes, I will take the question. It's really too hard, but you won't. You’re right, I mean, it's first time we’re disclosing the rate of the SIMULIA business in our total revenue. So when I confirm that 15% is basically representing -- I mean, it represent not only for the quarter, but basically for the overall whole year. So you’re right. Why we do it? There are few reasons behind it. One is because it's -- now its material. It have to be visible. And also because we want you to give some capability to benchmark what we do with our peers. And I think if you look at the track record of simulation for the last two years, I think we enjoy a significant growth and good momentum. Obviously, it's a structure and it is which is [indiscernible] of what we do, but also in the new expansion we did recently, the high frequency as well as [indiscernible] dynamic. So this is basically the reasons behind it and your assumption is correct, Monika.

Thanks. And then, you have made some acquisitions, simulation recently. Do you think you have all the pieces of different types of simulation, or you still think there's something missing? Bernard Charlès: The answer to that question has to be put in perspective of the industries we serve. So we are really focusing on 12 industries, 70 segments. And if you look at physical goods, we’ve a quite comprehensive and complete offer. If you look at bioscience, under BIOVIA and Life Sciences, there are lot of opportunities and there is also huge market. And we’re really been clear on the fact that the Life sciences, Biosciences, Biomaterials and so on are the core -- its at a core, it's not adjustment, at the core of the future of Dassault Systèmes. So we’ve [indiscernible] and simulation is expanding due to those three -- if you remember, I call them the COs [ph], one CO is the product you make another CO [ph] is the life science, the life [indiscernible] and we’re going to balance and cover those, because the world of simulation today is very fragmented. It's a collection of niche things. And the problem is that where Dassault work with niche things, they have to be integrated to understand what is happening in the real world. So, yes, in short we will continue to invest.

Got it. Then I have a question on demand trend, Caterpillar, the big industrial equipment producer, yesterday said that cost of manufacturing is going up because of some [indiscernible] in U.S. are the reasons. Also said there could be some trade issues between U.S., China, which could impact results which they don’t know yet. So the question I have is could you talk about demand trends you’re seeing in all of your geographies? Has any of your customers highlighted any of these issues? Bernard Charlès: No. Not really. To be simple, the pipeline is a good pipeline as Pascal mentioned this morning. On the -- the type of customers we have and we have large companies and also a lot of midsize and small companies, they will adapt to the business constraints. And we are truly global, I mean, we grew 16% in Asia. And so, you’ve seen quarter-over-quarter in the last 10 years evolution from quarter-to-quarter between America, Asia, and Europe. There's still a lot of things to be built in the world and no specific concerns expressed from a geopolitical standpoint, but not from the investment standpoint.

Got it. Thanks. Just a couple more, if I may. How much of -- is Boeing contributing in 2018 and how much could it be in 2019? Bernard Charlès: [Indiscernible] this one.

Maybe a bit early for 2019, Monika. Bernard Charlès: So -- but [indiscernible] I already answer the question this morning. So I owe you this answer. So it's less than $10 million for this year.

And you know it's not the total revenue [multiple speakers] of course the incremental revenue.

The incremental.

Yes, yes.

This is what we’re talking about, Monika, I’m sure. Bernard Charlès: Yes, yes. I want to make sure up [indiscernible] that they do not make the confusion between $10 million on the revenue we get ongoing.

And for next year the impact will be around one point on a recurrent of the revenue.

Okay. One point on top of the $10 million of incremental this year, right? So -- okay, got it. Bernard Charlès: Yes.

Thank you so much for the color. Then just can you remind the Boeing deal, is it for all the products like for CAD design, PLM, simulation, is it …? Bernard Charlès: No, I mean, and I will answer and you will compliment. So point number one, in the deal right now and we told you some indication about not giving the exact number, but we say it’s more than 3x what we do on the long run. It’s basically the 3DEXPERIENCE platform, the ENOVIA, as well as basically all the product line related to manufacturing. Simulation is not part of it, it's in addition.

Okay. Bernard Charlès: And regarding CATIA, again, it's basically not a [indiscernible] CATIA. For example, all the new things coming from CATIA system [indiscernible] of it.

Perfect. Thank you. Very helpful. Then the last one just here, if I look at 2018 guidance, which you’re reiterating, but there you had guided -- you have guided to license up 8% to 10% constant currency I’m talking only. Recurring revenue, you talked about 7% to 8%. The question is, are you seeing more demand that means for perpetual licenses and that’s why that [indiscernible] much higher than your recurring revenue than from subscription license?

In fact you’re right. I mean, we are offsetting basically the gap in services which is around $6 million, not a big deal with more subscription revenue. So … Bernard Charlès: And we are pushing a lot of subscription. By the way, all the new cloud win by definition that way. So there's [indiscernible] later which is what we like.

Nevertheless, I mean, if you look at this quarter, Monika, the subscription part of the recurring revenue is growing at 26%. And if you -- on a pro forma basis, if you exclude Exa, because Exa is mainly a subscription model. It's plus 10% organically. So I think it's good traction.

Perfect. Thank you so much. Really appreciate your time and color. Bernard Charlès: Welcome.

You’re welcome.

Thank you. Bernard Charlès: So with that -- please go on by the way, sorry

I was just advising you that there are no further question sir.

Okay. Thank you. Bernard Charlès: Thank you very much all of you for participating. As always, we are available to address any further questions and please remember our June 15, right?

Yes. Bernard Charlès: June 15, on the conference for the -- getting -- giving you more visibility. Thank you very much for following Dassault Systèmes. Have a great day and we are up for the next quarter. Thank you.

Thank you. François Bordonado: Thank you. Bye, bye.

Thank you ladies and gentlemen. That does conclude your conference for today. Thank you for participating and you may now disconnect.