Good day and thank you for standing by. Welcome to the Dassault Systèmes 2022 Q1 Earnings Call. [Operator Instructions].Please be advised that today’s conference is being recorded Wednesday the 27th of April 2022. [Operator Instructions] I would now like to hand the conference over to your speaker today, François-José Bordonado. Please go ahead. François-José Bordonado: Thank you, Heady [Ph]. Thank you for joining us on our first quarter of 2022 earnings conference call with Bernard Charles, Vice Chairman and CEO; Pascal Daloz, Chief Operating Officer; and Rouven Bergmann, Chief Financial Officer. As you know Dassault Systèmes results are prepared in accordance with IFRS. Most of the financial figures discussed on this conference call on a non-IFRS basis with revenue gross rate in constant currencies unless otherwise noted. Some of our comment on this call contains forward-looking statements, which could differ materially from actual results. Please refer to today's press release and the Risk Factors section of our 2021 Universal Registration Document. All earnings materials are available on our website, and these prepared remarks will be available shortly after this call. I would like now to introduce Bernard Charles.

Thank you, François-José. Good morning and good afternoon to all of you. And thank you for joining us. It’s fully a pleasure to be with you in person today. We delivered a good start to the year with broad based growth across regions, product lines and sectors, despite the complex geopolitical and micro economic backdrop. For the first quarter of 2022, the total revenue grew 8% with both license fees and subscription revenue up double-digit on the – this follows a high 2021 comparison basis. Earnings per share increased 20% driven by operating leverage, thanks to our strong business model. Our strategy growth drivers performed well. 3DEXPERIENCE on cloud revenue both increased 21%. Our platform on cloud have been critical for enabling released resiliency providing clients to scale rapidly. [Indiscernible] on the incumbents transforming. For 2022, we have increased our EPS objective to 9% to 11% growth driven by our improved operating performance. It’s clear from our results this quarter the team we have established is executing very well on capitalizing on our sustainable growth drivers. The investments we have made in innovation are paying off for our clients across all sectors of the economy. Pascal and Rouven we discuss our operating and financial performance in more detail soon. Now, I like to share some perspective on our strategy on the business environment. The world, economy and society are transforming at an unprecedented pace. With science-based virtual twin experience we are playing a critical role in these transformations on powering our clients to serve the greatest challenges on resiliency to sustainability. By combining a multi-scale, multi-physics approach with embedded analytics on real world evidence, virtual twin experiences are a catalyst for sustainable innovation to imagine, create test new materials, new processes, new solutions on new usages. We have recently introduced the Life Cycle Assessment Solution on the 3DEXPERIENCE platform to transform the sustainable innovation process. Combining virtual twin technology on life cycle assessment capabilities offers new ways to establish sustainability requirements early on, and measure the sustainability of decisions before actually implementing them. You may remember our science based targets for greenhouse gas emissions reductions were approved by the science based targets initiative last July, 2021. It’s clear from that perspective we walk the talk: this new solution is a major advancement towards our purpose to harmonize product, nature and life. By leveraging the virtual worlds to elevate and improve the real world, together we can drive meaningful progress towards a more sustainable and harmonious future. Our next frontier will be to make the power of virtual twin experiences accessible to everyone on the planet -- to take this virtual twin experiences mainstream. I've talked about strategy to see the implication, let me now share a couple of proof points. Today I want to focus on Life Sciences. Our teams are delivering incredible innovation on execution to advance clinical trials on new treatments for patients. Virtualization on AI are changing the game, MEDIDATA Synthetic Control Arm, SCA leverages AI, our newly data assets from over 28,000 clinical trials. With SCA, we can visualize the passions for the clinical trial control arm, the served [Ph] arm of the clinical trial. This accelerates innovation, reduces cost and most importantly fosters a more compassionate approach. For some disease, it's very difficult to recruit and maintain the control room. MEDIDATA Synthetic Control Arm can enable the strides to move forward on advanced treatments. Our recent announcement with Celsion on Plus Therapeutics highlight the potential for this true revolutionary innovations. Of course, we work in conjunction with FDA to provide these unmatched capabilities on our teammates to achieve better outcomes for passion. And also ground breaking innovation is BIOVIA Generative Therapeutics design. By combining AI chemistry on structure based modeling, we can accelerate drug discovery with virtual creation testing on selection of novel candidates. We are delivering on a promise to bring new science or new opportunities to increase the pipeline of potential therapeutics. Gilead has selected BIOVIA technology to advance its discovery of new drugs on its commitment to passion first approach to medicines. Innovation is about progress. Ultimately, all progress is human. With these technologies, we are extending our handprint having a real positive impact on society, improving people's lives. Now I will hand the presentation over to Pascal to continue the discussion.

Thank you, Bernard. Hello, everyone. It's a pleasure to be with you today. As Bernard said, all progress is human. And relationships are essential in driving and realizing the value of innovation. This underpins our strategy across all the sectors of the economy. Remember, our objective is to be the trusted partner to support our clients, both the incumbent and the new entrants, with the game changing innovation and to maintain our relationship over the long time for a reason. And of course, we have made many historical examples, but let's look at some of the current proof points we have. Starting with contract research organizations. Today having supported more than 28,000 clinical trials globally, MEDIDATA is a trusted partners of the top heroes, including ICON [Indiscernible], Parexel, IQVIA, and many, many others. Our world leading technology of the industry standard, not only to support but also to operate and execute clinical trial across all the different phases. The largest heroes are standardizing on MEDIDATA Rave, as it's the only integrated platform that combines AI, patient engagement and clinical data management and this at scale. The value we provide to our Hero [ph] Partners is a competitive advantage in the ability to help sponsor deliver drugs to market faster and much more efficiently and ultimately advancing our collective mission. Another example also in the life sciences, is Boehringer Ingelheim. We have been building a long standing relationship of trust with Boehringer over the last decade, so it's a pleasure to announce that Boehringer Ingelheim has renewed and broader what we do with them, expanding from MEDIDATA Rave to MEDIDATA AI and MEDIDATA patient cloud to accelerate the decentralized clinical trial. Our partnership has enabled Boehringer Ingelheim to double the number of image study each year since 2018. And it also supports on-going trial with thousands of patients and hundreds of global sites. We look forward to continuing to support Boehringer mission through the next decades. Turning now to the manufacturing sector to deliver sustainable product experiences. Consumer Company need an integrated approach to product development, one that includes modeling for rapid formulations and keep in mind that many of those companies they have to reformulate the entire product portfolio in the coming years to be compliant with new regulations like H and manufacturing and for manufacturing and sustainability. To manage this tremendous complexity, it requires our science based 3D experience platform with its multi scale and multi-physics approach. We are seeing significant momentum in the consumer packaged goods industry and much more specifically in health and beauty. Because after you know having L'Oreal L’Cito [ph] now we are proud to announce that Shiseido has decided to go with us to extend its leadership position and meet rising demand. The company is producing over 100 million SKU annually and introducing new product experience daily. So we are pleased to support Shiseido initiative with our manufacturing solutions including Perfect Production on 3D experience to streamline manufacturing across Asia, Europe, U.S. to increase resiliency, boost productivity and accelerate product launches. In infrastructure and 3D, energy is at the core of the current resiliency and sustainability challenges. We are seeing new entrants bringing truly disruptive innovation similarly to what we saw play out in transportation and mobility and also much more recently in aerospace. This new comer I had hoped in our technology on 3DEXPERIENCE platform and on the cloud. To advance sustainability, Naarea start-ups in developing a nuclear reactors that are small, modular and utilize industrial ways to produce energy. To support its ambitions, the company has selected virtual twin experience on 3DEXPERIENCE and also the cloud for designs, simulation and validation with the end-to-end traceability. We are looking forward to following Naarea progress and it makes nuclear energy safer, more reliable and sustainable. As you can see the investments we made a decade ago are paying off for our clients and our testimony to the value we bring to our relationships. Now I want to turn to our first quarter 2022 results. Revenue growth was broad based across geographies, product lines and sectors demonstrating the diversification we have achieved in our addressable market as well as the quality of our execution. Starting with Geo, the first quarter, the software revenue increased by 7% in Americas to reach 40% of the software revenue. This was driven by a strong performance in life sciences and aerospace. In Europe, Europe increased 6% to 35% of the software revenue despite our suspension of operations in Russia. We saw a good resilience throughout the regions and France and thousands of Europe grew double digit led by aerospace and industrial equipment. Asia Pacific rose 13% to 25% of the software revenue, driven by acceleration in Japan, Korea and India and good momentum which continue to be very high in China, with China growing at 20% during the quarter on a strong comparison basis. Now let's zoom on the product line performance for the first quarter of 2022. Industrial innovation software revenue rose 5% to €654.4 million, representing 54% of the software revenue. CATIA demonstrated a very strong performance driven by double-digit license and subscription growth and punctuated by cyber systems, showing the strength of these differentiated offerings. ENOVIA also reported high double-digit growth in both license and subscription software revenue. In Life Sciences revenue growth 13% in the first quarter, to €254 million, and representing 21% of the software revenue. MEDIDATA delivered a strong performance growing double-digit against this quarter, and MEDIDATA continued to experience very good momentum across its product portfolio, including MEDIDATA Rave, MEDIDATA AI and MEDIDATA Patient Cloud, as well as across end market including pharmaceutical and biotechnology company and contract research organizations. BIOVIA also performed well, achieving a double-digit growth during the period. Moving to mainstream innovation, software revenue increased 12% to €297.2 million representing 25% of the software revenue. SOLIDWORKS continue to perform well growing double-digits and on the back of a strong comparison base of 18% growth in Q1 last year. Our 3DEXPERIENCE WORKS family, the cloud based solutions are also showing good adoption during this period. And CENTRIC PLMs deliver another quarter of high double-digit growth as well as gains in diversification in food and beverage. As you can see how our growth was broad based across product lines and brands. And both CATIA and SOLIDWORKS have demonstrated a strong momentum and perform extremely well. So and I just want to remind you that in the design market, we are ranked first and at more than twice of the size of the strong player. Every year we gain a remarkable 0.5 market share and we achieved this by converting 2D to 3D users, displacing 3D competitors and expanding our footprint in our large installed base. We therefore ask the financial analysts who are reusing the industry analyst report without checking the figure it contains to take a critical approach before spreading wrong information. This critical approach would have been revealed significant inconsistencies, in particular with one of our competitors reported figures. Now turning to our strategic growth drivers and again, these are year-to-year growth in constant currency. In the first quarter of 2022, we continue to see a very good 3DEXPERIENCE momentum with revenue increasing 21% driven by subscription growth, and 3DEXPERIENCE now account for 30% of the total software revenue, an increase of five points collectively collective to last year. Cloud revenue also raised 21% driven by continuing trends in Life Sciences and 3DEXPERIENCE. Cloud now accounts for 21% of our software revenue at two points versus last year. 3DEXPERIENCE and Cloud are critical for enabling resiliency and helping Life Science to scale rapidly and against both the new entrants and the incumbents transforming. As you can see from our results, our growth drivers are well balanced and durable. And I think now, I will hand over the presentation to Rouven to discuss revenue profitability and our 2022 objectives. Rouven, the floor is yours.

Thank you, Pascal. Hello, everyone. It's a pleasure to be with you on this call today. I'm very pleased with our first quarter 2022 performance. Clearly we are off to a good start. We delivered strong revenue growth well aligned with our Q1 objective, and we did this on the back of a relatively high 2021 comparison base. From a profitability perspective, we outperformed while at the same time, we continue to make strategic investments in our business and achieved our ambitious hiring targets. EPS are up a strong 20% for the quarter at $0.27. These results clearly highlight the resiliency and the momentum of our business model. And we achieved these results despite the negative impact from discontinuing our business in Russia, with €5 million in lower revenue and €2.5 million of additional expenses to cover litigation risk when compared to our Q1 objectives. Now let's look at our Q1 year-over-year comparisons for revenue. And the growth rates the growth rates that I will be highlighting here are all in constant currency and non-IFRS. Total revenue grew 8% to €1.32 billion. Software revenue also grew 8%, including the impact of Russia, as I mentioned earlier. Licenses and other revenue rose 10% to €235 million and against a strong comparison base of 25% growth in the first quarter of 2021. Subscription and support revenue increased 8% to €971 million driven by double-digit subscription growth, reflecting strong MEDIDATA and 3DEXPERIENCE performance, as well as strengthening in our support revenue as expected. Service revenue was up a strong 9% and we achieved service revenue, services gross margins at 16% substantially better than last year, which was 12% thanks to the efforts we made to improve our utilization. Now let's zoom in on our Q1 operating margins and EPS. We delivered a strong operating margin of 35%, outperforming our target of 32.7% by 230 basis points at the midpoint, and on a year-over-year basis, increasing 117 basis points. This was driven by lower discretionary spend, such as travel, marketing and event activity which were lower than planned due to continued travel restrictions in certain parts of the world. Also, we saw good improvement in operating performance. The impact of discontinuing our business in Russia was offset by the revenue upside and a marginal favorable currency impact on the operating margin level. At the same time, we are well aligned with our hiring objectives. Total headcount grew 7% and year-over-year and within the R&D function, we are actually up 9% year-over-year. We also saw diluted EPS above the high end of our guidance growing a strong 20% or approximately €3.05 cents to €0.27, compared to our guidance of the range of €0.23 to €0.24. This was driven by strong operating performance as mentioned earlier, contributing €0.02 to the overall performance. In addition, FX contributed €0.08 and lower tax rate €0.07. Just one comment regarding the tax rate. The lower rate in the first quarter 2022 is mainly the result of a higher fee tax deduction in the United States, resulting from the new requirement effective January 01, 2022 to fully capitalize R&D expenditures for tax purposes. At the time when we issued the guidance, it was assumed that capitalization requirement would be cancelled for the year. Now turning to cash flow on the balance sheet items. Cash and cash equivalent totaled €3.009 billion [ph] compared to €2,979 billion [ph] at the end of last year, an increase of €29 million. Our net financial debt at March 31, 2022 so by the end of Q1 2022 decreased by €257 million to a negative €632 million compared to a negative €889 million at December 31 2021. This puts us well ahead of the schedule of our deleveraging objective. And I'm sure in this context; you noted that our cash and operating performance is reflected in the improvement of our Standard & Poor’s credit rating from a single A minus to a single A as it has been announced yesterday evening. Now, let me provide some additional color on what is driving our cash position this quarter. First, cash from operations was €630 million, which is slightly downward this last year in parts driven by one-time items, and the timing of changes in working capital. Second, we continue to repay our debt loan repayments of €232 million, third, cash from operations was used for treasury stock repurchases of €328 million. This comprises our long term incentive plan for 2022 as well as our shareholder participation plan. This number is higher than last year as we took advantage of market fluctuations and purchased our shares at a relative discount in Q1. Also, I want to remind you that our policy regarding equity compensation is unchanged, specifically 5% of our revenue of share based compensation expense. So now let's focus on cash from operations €630 million representing a slight decrease of 2% year-over-year. Now, I want to remind you that this compares to a 40% increase last year, so resulting in a higher comparison basis this quarter. What are the major drivers of the slight decline this year? First, we saw a lower decrease in trade receivables resulting from higher billings at the end of the quarter, despite strong collections of our Q4 receivables. The trade balance is up reflecting strong business growth in Q1. Regarding the impact on cash, we expect to catch up and this trend will reverse in the coming quarters. Second, accrued compensation. The decrease, the decrease in accrued compensation was much higher year-over-year due to the strong business result in 2021 that drove higher bonus payments in the first quarter of 2022. And third, we received a one-time withholding tax reimbursement in the first quarter of 2021, resulting in a higher unfavorable comparison base when we look at our first quarter results. Now let's turn to our fiscal 2022 objective. First, total revenue, we are reaffirming our total revenue growth rate objective of 9% to 10% in constant currency, but to a slightly higher absolute range of €5.355 billion to €5.405 billion, incorporating an update to the U.S. dollar rate from initially $1.17 to now $1.15 for the remainder of 2022. This adjustment to our currency assumption, along with the first quarter FX benefit is a €67 million impact on our total revenue objective. In addition, we are reflecting the impact of Russia, which is negative €21 million for the year on revenue, as well as incorporating our Q1 over performance. So with the FX adjustment, we are more than compensating the loss of revenue from discontinuing our business in Russia. Second, let me turn to the operating margin. We are increasing our full year objective to the range of 33.4% to 33.7%, a rate of approximately 65 basis points at the midpoint. This increase mainly reflects our strong operating leverage and lower travel and marketing expenses in the first half. And importantly, it also reflects continued execution against our ambitious hiring targets throughout the rest of the year. We are more than offsetting the negative impact of Russia. Third, joining us now to the EPS. We are raising our 2022 diluted EPS objective to 9% 11% growth, as reported reaching €1.04 to €1.06. This compares to previously 3% to 6% growth reaching €0.98 cents to €1 previously. The FX benefit of €1.4 almost offsets again the negative impact from Russia. In addition, we're capturing Q1 over performance as well as reflecting the change in tax rate for the first quarter only. This result in the full year tax rate of 22.5% compared to 23.2% previously. As it relates to the revenue components reflected in our updated total revenue objective, we are targeting software revenue growth of 9% to 10%. Licenses and software revenue growth of 10% to 12%, and recurring revenue growth of approximately 9%. Service revenue is targeted at the range of 8% to 10% all at constant currency. So before closing, let me also briefly share our objectives for the second quarter. Total revenue growth is expected to be in the range of 9% to 11%, with license revenue in the range of 14% to 19%, recurring revenue of 8% to 9%, and services revenue of 9% to 11%, at constant currency. Operating margin of 31.7% to 32.4%, and diluted EPS growth of 11% to 16%, to a range of €0.24 to €0.25. Now, for additional information and to review what we've discussed I’ll refer to today's earnings presentation. Now, in conclusion, for the full year 2022, we reiterate our objectives for total and software revenue to grow 9% to 10% ex-FX we confidently raised our EPS target to reach now, in 9% to 11% growth. We expect a solid second quarter, and we look forward to keeping you apprised of our progress throughout the rest of the year. And now I'll hand the call back over to Pascal.

Thank you, Rouven. Just a few words to conclude this call. So and to summarize what we say. So first, the world is transforming at an unprecedented pace and sustainability and resiliency of performance. From a sustainability perspective, it is clear that we walk the talk; our new lifecycle assessment solution is yet another proof point. In terms of resiliency, our clients face a number of challenges, from raw materials to workforce, supply chain and inflations. With the investment we have made a decade ago, clearly we are uniquely positioned to help our clients to solve those challenges, and to adopt new business model, increase agility, scale and embrace sustainability. This has created to do have competitive advantages across all the sectors of the economy. So in conclusion, we had a solid start to the year given us confidence to raise our full year EPS target, and putting us at the good trajectory to achieve our near and long term objectives. Finally, we will be hosting our capital market day on June 16. And we look forward to seeing you, all of you in person in Paris. So now I think it's time for Bella Han Rubens to take your question. Thank you.

Thank you.[Operator Instructions]. And your first question comes from the line of James Goodman from Barclays. Please ask your question.

Good afternoon. Thank you very much. On BIOVIA, recall that last quarter, you talked about some multiyear renewals, I think slipping. And just curious what were they signed in this period? And did that help the double digit growth there? And can you say something about the materiality of the deals and the underlying performance or what we should expect for the rest of the year in BIOVIA? And secondly, on industrial innovation, encouraging performance in both CATIA and ENOVIA this period can't help. But wonder if there's anything worth pulling out from your side on SIMULIA or DELMIA in terms of the rest of the performance of that unit? Thank you.

Bernard, you want me to start.

If you like Pascal.

So [Indiscernible] about Bolivia. I’ll tell you were right last time, we communicated to you that we have not been able to renew on time one of the last deal for BIOVIA has been done. In fact, the few weeks after the beginning of the quarter. It's by the way, it's it's a large contract with a European company. When I say large it's not it's not 10 million. It's few millions. Anyway. What has been what we can notice on BIOVIA is the fact that the subscription is growing double digit. And you'll remember one of the things we have to do with BIOVIA is to transition the license model to subscriptions, and I think we are on the right path and it's really happening and taking off. Much more broadly speaking, I think in Life Sciences, it's not only your MEDIDATA and BIOVIA, but we see more and more labs, projects, which are much more PLM centric, if you want, leveraging the rest of what we do whether it's SIMULIA or DELMIA or ENOVIA for the lifecycle management, and we have a significant sizable deal in our pipelines between now and the rest of the year. So I think the trajectory for licensees is really solid. And it's not only the performance of MEDIDATA it's really everything we do. And I should, to a certain extent, congratulate the team we have put in place under the leadership of Michael Pray, who was coming from MEDIDATA and is driving the sales force for the entire sector. I think he's doing a great job to make this happen. Related to the industrial innovation sector, yes, you are right to notice that ENOVIA and CATIA are performing well, both from a license and subscription standpoint, which is echoing what I'm saying, guys, that be careful when you do the statistics to measure the market share, you have to take into account the track record. Now related to DELMIA and SIMULIA, DELMIA had a good quarter. SIMULIA, the growth was much more modest. But I want you to keep in mind that last year, we grew significantly with DELMIA, and we started SIMULIA, because we signed two large deal in the auto sector. And we have real base comparisons effect. So but we are pretty confident on the trajectory for SIMULIA for the rest of the year.

That's great. Thanks very much.

You’re welcome James.

Thank you. Your next question comes from the line of Frederick Poulenc [ph] from Bank of America. Please ask your question.

Hi, good afternoon. Thanks for taking the question. To stay on the topic of cloud, if you can give us an update on proportion of revenues, clients which are in A subscription versus license and B, cloud outside of MEDIDATA. You touched on that transition happening. It's familiar. But if you can give us an update on the other lines of products, whether that's from a from a take up appetite from clients, but also take up you saying in that context, if we can come back on the license guidance for Q2, which is quite strong. So how do we reconcile those two dynamics? And then second, an update on M&A priorities. Any views you have around public versus private valuations, whether you think it's an appropriate time considering that discrepancy that may still be around? Is it a hurdle for you to press ahead? And what are the priorities. I mean, you called out this morning, I think delivery on the infrastructure side as usual, I would say. But if you can just give us an update on where you think are the most attractive opportunities for you.

Okay, so Frederick, thanks for the questions. I started with the first one, round the cloud momentum and also how to reconcile the license guidance for the second quarter. And so overall, as Pascal mentioned, 21% growth for cloud. Cloud represents now 21% of our total software revenue. And the growth drivers on our cloud business of course, MEDIDATA’s performance stands out. But the -- if I look at the portfolio in total, we had also very good performance and strong growth across multiple parts of our portfolio for 3DEXPERIENCE is growing fast in the cloud. Suddenly, we have a lot of new comers that are adopting the cloud first, using 3DEXPERIENCE at different levels of scale. But also incumbence that are transitioning from on-premise to the cloud, with large projects. And we see over the momentum for our subscription and recurring, it's accelerated through these two nice gross drivers. But also, we mentioned SIMULIA before. SIMULIA is subscription business, its consumption base, that’s driving auto subscription growth, and part of it also in the cloud. So that's, to me the summary of the cost drivers. That really is underpinning the 21% cloud growth we have. And I think we can go faster from there as well in the future. And of course the mainstream market remains our large opportunity. This is solid works, installed base to not only transitional SOLIDWORKS, but expanded the usage in the SOLIDWORKS installed base. As it relates to our license objectives for the quarter, and also as the first quarter, I remind you, we're licensed 10% and subscriptions, also growing double digit. So we are continuing with this trend into the second quarter. We have a very good visibility into our second quarter pipeline, which is shaping since the beginning of this year. It's broad based. As we saw the contribution, as Pascal walked through the various growth drivers, it was a pod based momentum across various industries and product segments. That's supporting our Q2, licensed Outlook. So that's, that's the situation.

[Indiscernible] is also contributing.

Yes, centric to add…

Related to the M&A questions Frederick, the M&A is part of our model. Right. And it's not because we were leveraged that we did, we stopped completely the M&A. We were continuing to do some modest movements, I would say, but nevertheless, critical for the future. The thing I want you to keep in mind, we are purpose driven. And that's how we are guiding our M&A investigation. It’s not to fill the gap from a quarter to another one, or to, to establish a footprint without taking the benefit of the rest of what we do. So why I'm saying this because you're right, I mean, by being close to be fully delivered, deleverage, sorry. And given the market momentum in terms of valuation, it is giving probably good conditions to consider some functional moves. But it's not enough to have this market condition. You also need to have a vision, you also need to have a strategy. And you need to also to have a team willing to join and do it with you. It's taking time. So do not expect me to share the M&A priorities during this call. But I think we are working constantly to make it happen. And the only thing I could say is we have opportunity to expand in all the three sectors of the economy. Always you are mentioning is Architecture and Construction. It's definitely not the only one we can consider to make a significant move, because we are fast former covering everything we can do for all the industry we are serving. So that’s what I can say at this stage.

Excellent. Very clear.

Thank you, Frederick

Thank you. Your next question comes from the line of Jay Vleeschhouwer from Griffin Securities. Please ask your question.

Hello, Jay.

Your line is open. Please ask your question.

Hello. Sorry about that. Sorry. Hello, everyone. You referred earlier in your remarks to your ambitious hiring plans for 2022. This is a subject of course we've spoken of in earlier calls. So two questions there. It's interesting to observe it over a period of many years, your sales openings and R&D openings have been often very similar. But recently there's been a particularly large uptrend in your sales openings as compared to R&D. So maybe you could talk about your thinking in terms of this, this rather large increase in you’re in your sales openings in the last few months. And then similarly, when we look at it by the product or functional area, there have been some recent increases in your ambitions to hire in DELMIA, SIMULIA and Cloud generally. So maybe you could comment on all of that.

You want me to start Rouven? So Jay, I think I know the way you compute the numbers is because you are looking all the all the search. We are finishing on our website, but be careful. Why so because if you look at the numbers, the total headcount increased by 7%. And in research and development, we increased by 9%. So there is a piece you are not seeing because the way we hire people is not by you know doing search is by doing computations between the people. And it's not visible from you. And that's the reference. That's usually the way we hire most of the research and development people. So I would not draw these conclusions. If I if the balance between sales, and I would say the field, in general, compared to the research and development is relatively the same that what we used to do in the past. The second question is related to DELMIA and SIMULIA. Yes, you're right. I think it's specifically in United States, we see more and more traction for this specialized brand sales I would say, and, and we need to be on for the expertise we have. Not because we do not have it, it's because we need to have it at scale. And in all the industry we serve, which is, again, something which is important. Generally speaking, we have a good footprint for the aerospace and YouTube sectors and industrial equipment. But now we are serving more and more the farmer and the biotechnology, the consumer goods and consumer packaged goods industry, and we need to reinforce this, these capabilities. So you're right to mention that it's an area where we are looking for people, but again, it's much more in North America than in the rest of the world.

Thank you duly noted. Secondly, with regard to segment profitability. Once Upon a Time DS used to disclose the operating margin for the CATIA and SOLIDWORKS business. And I know that was many years ago, but presumably, given the scale of those businesses, each of those is still an over 40% operating margin business. And the question then is, what are you seeing or what are you anticipating in terms of the profitability of other businesses, particularly something like in ENOVIA, where historically PLM profitability has often lagged substantially the profitability of a CAD business?

Okay, I will start and again, feel free to add what you Rouven and Bernard. ENOVIA is it's the standard for the group. So it's another way to see it, you take our operating margin and you can make the assumption that ENOVIA is aligned. The real improvement is coming from MEDIDATA from a brand standpoint. You'll remember when we acquired the MEDIDATA, the operating margin was relatively low compared to the rest of the of the product line. And the team did an outstanding job to not only accelerate the growth is diversifying in many different product lines outside of Rave, Patient MEDIDATA, Patient Cloud and MEDIDATA AI is a proof point of this. But also they have improved significantly the operational efficiency. The plan was to improve by 200 basis points per year. And to a certain extent, we are over achieving this plan the last two years.

Okay. And then to finish up, I'd like to ask about two recent Dassault Conferences, one the 3DEXPERIENCE World and then the conference in New Orleans a couple of weeks ago. So at 3DEXPERIENCE World, the company gave its annual priorities and objectives to the resellers, which is always interesting. And one of the objectives for this year was double-digit growth. And the question is, is that still, you're thinking that you can have double-digit growth with a SOLIDWORKS business this year? And do you think that you might perhaps exceed the expectation that 3DEXPERIENCE work specifically, would be less than 10% of the businesses? In other words, could you could could 3DX WORKS, perhaps do even better and become more than attempt of the works business?

So I will start with the first part of the question, and maybe Bernard you could answer to the second one. So yes, the plan is to grow double-digit for the SOLIDWORKS business at large. So it's not only the SOLIDWORKS desktop, it’s basically the entire family of SOLIDWORKS. And we have the we have demonstrated to one that we were on track to make it happen. Growth, by the way in Q1 for the mainstream market is really broad based in across all the GOs and its broad base also from an industry standpoint, where we are seeing an acceleration is really dangerous for equipment, where we see more and more investment in many parts of the region of the world. And SOLIDWORKS is really the first brands benefiting from these large investments happening.

The 3DEXPERIENCE WORKS family is aim at playing the platform phenomenon around not only the SOLIDWORKS users to expand as you mentioned, previously in the previous question with simulation, for example, project management, program management, or even DELMIA WORKS for which by the way, is getting traction. It was a small, very small business when we boarded, if you'll remember IQMS Jay on, we are now learning how to grow the partners to sell it. It's not what we want it to be, but the potential is there on many of the companies doing plastic injection and so on are adopting DELMIA WORKS to do the ERP side of the functionalities. There are MES, including MES, of course, but also ERP in certain countries. We simply on ARP and we don't unfortunately support all standards, yet and all countries languages on start up, but we are improving it. So we still, it was a good move and it will continue. So on the ERP side, simple ERP for small companies, analysis and simulation project management. The intent is also Jay to leverage the 3DEXPERIENCE WORKS to provide native SOLIDWORKS cloud based browser based functionality. So no desktop, but really mobile. And this is, this is getting attention, because it's really about truly mobility, not visual mobility, for visualization, but mobility for design. On the traction that we have with 3D ByMe, what we call 3D ByMe, which is platform based, cloud based browser-based is a good sign on as well as the maker offer. The maker offer is getting traction on the numbers go slowly, because it's about less than $1 per hour per year, right. But it's getting traction on the number of users, and also the adoption, in terms of ease of the experience to adopt this mobility aspect. So that's important for the future.

By the way, if my high school algebra still works, it looks as though you did about 19,000 new SOLIDWORKS commercial seats in Q1, which, if that's right, that would have been, I think, a Q1 record for new SOLIDWORKS seats. And then it goes just to finish up on the New Orleans conference, it was very interesting to hear DS management, highlight model based systems engineering as one of your, quote, big initiatives. And then also, you seem to be coming to market now with generative design capabilities that you had first spoken of about three years ago. So maybe you could talk about, what you think the impact might be of one or both of those in terms of driving the industrial innovation business?

Well the Generative design was widely adopted years ago, 15 years ago, 20 years ago, in the CATIA World. Old advanced CATIA users are already doing Generative design at scale. If you take the big companies, those are this is why CATIA is winning everywhere in aerospace on the automotive. So but making it mainstream as you notice, Jay is a different game because it has to be simplified. But yes, you're right. It's the tendency to go generative because this creates AI-based design guidelines for the users. On the cyber system, we call it cyber system at large not cybersecurity, but cyber system. We believe this is so core, because most of the new little equipments are becoming integration between software electronics and mechanical systems. [Indiscernible] med tech on many results on more and more certification, certification processes are required to guarantee integrity and I will not go through the market structure but as you know it has been very fragmented up to now. You had the softer the look on one side, the tech development on the electronic board on one side and then the mechanical side but there is no holistic integration of the total of course are very smart, advanced system like groans. This is what we do. But those are very specialized customers, but we think this will become mainstream. So 3DEXPERIENCE cyber system, core for the future. François-José Bordonado: Next question please.

Thank you. Your next question comes from the line of Amit Harchandani from Citi. Please ask your question.

Thank you. Hello, everyone. Amit Harchandani from Citi. Two questions if I may. My first question is on the topic of deal sizes, there's sometimes tends to be a perception that larger deal sizes are more at risk when macro begins to worsen. So I wanted to get your perspective on how do the deal sizes in your business look today versus this tree? Because the rising talk of digital transformation tends to also point to more end-to-end deals. So curious to understand how are you seeing deal sizes evolve across different segments, different industries as they shift to the cloud? And to what extent would you see them as being at risk if the macroeconomic backdrop continues to worsen? So that could be my first question. My second question goes to the topic of operating margin, you had a solid operational performance, as you indicated in Q1, and I was keen to better understand some of the underlying drivers, was it sales efficiencies, cross selling upselling, simply better mix? And why does your guidance seem to suggest that not all of this strength in Q1 is going to carry over the remaining three quarters? I appreciate some of the costs are coming back, that maybe you might benefit from better prices as well, keen to understand the operational strength in Q1, and how much of it is sustainable into the coming quarters? Thank you.

Okay, I will start with the deal size. It's a question requesting probably to spend the rest of the call. But nevertheless, I will check in real time if you compare the pipeline for 2020 to 2021, we have exactly the same mix in terms of last deals compared to last year after Q1. So, there is no discrepancy between the natural trend we are seeing. Do we consider those deals at risk or not? I will say no. Why so, because we are against we are extremely diversified from an industry standpoint. We're extremely diversified from a geo standpoint. And also the vast majority of the regime we have are coming from long standing, customer we have, so they started that transformation two years ago, and now they are just staying there making it happen. So, the only thing you could happen sometimes is one of them being postponed from one quarter to another one, but I do not consider seeing the risk improving even the situation at the macro level right now.

Okay. And I let me touch on the question around the operating margin. Yes, there is some part of the operating margin improvement is discretionary spend simply lower spend compared to our plan, simply because there are still parts of the world where there's much less business travel. Some of our events, we talked about the SOLIDWORKS user conference, for example, we did as an hybrid virtual event versus initially it was planned as an onsite event. So you have these types of savings, which I would say account for about 60% of the marginal improvements, and that we have shown in the first quarter. The remaining part is really coming from an improved service margin. I have mentioned this in my outline. We are improving the service margin by almost 400 basis points. That has an impact, as well as many data which Pascal referred to earlier, the team did an excellent job in improving the margin while continuing to invest and build the organization to drive the future growth. And the marginal contribution from that business is exceeding our initial plans. And some of it is recurring because the mix of resources certainly in the R&D function with the ability to recruit in India and our development center really has a profound impact on the margin profile of MEDIDATA was the positive impact here, of course. So that's what I would say so about as I said, to summarize 60% is discretionary items and 40% is in operating improvement. Now if you look at it from an entry for the year. In our 60 basis points marginal improvement that we are updating our objectives for that reflects the overall performance from Q1. We stick to our plan that we outlined at the beginning of the year for the quarters, Q2 to Q4. And that includes the hiring objectives that we set. We hired, we grew the headcount 7% for the total company, as we said, it's about 450 people in the quarter net growth. And that plan is continuing, and it's baked into the numbers. I hope that gives you some additional color.

That sense. Thank you. François-José Bordonado: We'll take one last question.

Your final question comes from the line of Johannes Schaller from Deutsche Bank. Please ask your question.

Yes, thank you. Thanks for taking my question. I mean, on the headcount cost side hiring is obviously one driver and the others I guess, like-for-like wage inflation. I think if you talk to a lot of your software peers, it feels like that the expectation for like-for-like wage, inflation has definitely gone up over the last three or six months. And maybe even at some of your counterparts has a bit of a shift towards cash based and away from share based compensation given where software share prices are right now. Can you maybe quantify for us what you expect in terms of like-for-like wage inflation for this year, and then maybe then also going into next year for your workforce? That would be helpful. And then as a second point, I think you alluded to some price increases for some of your products. Can you maybe help us understand that a bit better how big the impact of that would be in the second half of the year? Thank you.

Sorry, can you repeat the second question quickly Johannes? Sorry. I was…

Sorry. The second question was just on price increases, I think…

Thank you, Johannes. Okay. So I start with, with the your point around the wage inflation, and like-for-like. So we are factoring an average of 5% wage increase for the year, across our workforce. I think the way you also have to conceptualize and think is that, in order to manage the inflation overall, from a cost standpoint, it's also a question of the mix of resources and our hiring strategy. I referred, for example, to MEDIDATA where we are successfully offshoring resources in parts of the world where we have better access to talent. That improves overall the mix of resources and gives us flexibility, those things you also have to factor in as we make structural improvements, right to to the overall mix. Nevertheless, of course, we are everyone else competing for the best talent in the market. And, and therefore we made this adjustment, but I think we have an attractive proposition. From the perspective of inflation, as how it is reflected into our pricing, the way we we've instrumentalized or we fit operationalized the price adjustment, through our reseller and partner business, we've we are for SOLIDWORKS partners, for example, we have successfully implemented price adjustment in our CPI, even for our for renewal renewable contract. We have CPI clauses, that adjust for pricing based on consumer price index. So we are protected here. But I think the key part of what aligns with our strategy is at the end, when we have an opportunity to do transformation, we are selling value, and that gives us an opportunity to fight for value. And then we are discussing not inflationary price increases we are discussing price for value, which that's our strategy and that would be really, ultimately is driving our growth forward within our installed base and new customer wins.

Is there a way to put a number to the kind of value increase or price increase since may be combined that affects how much that is driving of your growth for this year?

The price increase is usually not exceeding the inflation, right? Because it is difficult to expect more than that. And again, for the vast majority, it's happening in the middle of the year. So you take the inflation globally you divide by two and you have a good sense of what we are talking about.

That's great. Thank you, and thanks Pascal, very helpful.

With that, I would like to thank you everyone. It was great for us to be in London with on the face to face this morning and it's really a good comeback together. We're looking forward to see many of you in the June capital market capital market day on in the meantime, of course will be pleased to continue to address your questions. Thank you very much. Enjoy your day on. Have a great weekend. Goodbye, goodbye. Thank you.

That does conclude our conference for today. Thank you for participating. You may or disconnect.