François-José Bordonado - VP, IR Bernard Charlès - President and CEO Thibault de Tersant - Senior EVP and CFO

Jay Vleeschhouwer - Griffin Securities John King - Bank of America Merrill Lynch

Thank you for standing by. I'd like to welcome you all to Dassault Systemes Third Quarter 2015 Financial Results 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 that this conference is being recorded today. I'd like to hand the conference over to François, Investor Relations. Please go ahead. François-José Bordonado: Thank you. Thank you for joining Bernard Charles, CEO; and Thibault de Tersant, CFO to discuss our 2015 third quarter and nine months financial performance. This conference call follows our web casted presentation earlier today in London. For your information, Dassault Systemes’ financial results are prepared in accordance with IFRS. We have provided supplemental non-IFRS financial information and reconciliation tables 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 2014 Document de Référence. Revenue growth figures are in constant currencies, unless otherwise noted. I would now like to introduce Bernard Charles. Bernard Charlès: Thank you for joining us here on the earlier web cast. Our third quarter was well in line with our objectives. We had a solid performance at the top line, operating margin, and bottom line. The expansion of our addressable market is translating into a more dynamic set of growth drivers, which animate our financial performance. This is visible in our industry diversification results with Energy [indiscernible], life science, marine and offshore and consumer packaged goods among the leading performers this quarter. While it is visible in our brand results, where we are broadening coverage of our customers key domains and processes. DELMIA, SIMULIA and ENOVIA, along with BIOVIA were strong contributors to the quarter. Deployments are making a significant difference for our clients, reducing program development cycle time and optimizing product cost or product reliability in a very meaningful manner, for example, with DELMIA. In the broad context of digital manufacturing, we are providing strong support to our clients, helping them to leverage top line opportunities, as well as bottom line improvement. Looking at the third quarter, total revenue increased 9% in constant currencies. Importantly new license revenue was up 11% in total, or 9% on an organic basis, in constant currencies, on a high base of comparison. Our operating margin came in at 31.2%, on a strong expense focus, currency benefits and R&D tax credit adjustments. In turn, our EPS growth was 29% in total or 20% before reversal of tax reserves of €0.04. Turning to the result in more detail, let me begin first with Asia. We had a strong base of comparison in Japan, where new licensees have been up 66% in constant currencies a year ago, meaning third quarter 2014. Meanwhile, China's level of new business activity was negatively impacted by lengthening of ordering process by customers. In total, revenue was flat in constant currencies for Asia during this quarter. In the Americas, revenue increased 12%, on the strength of U.S., substantial year-over-year improvement in Latin America. Europe was the best performing region, with all major geos showing good growth, further from a sales channel perspective, the results were also broad-based, leading to new licensee's revenue growth of 32% on a total revenue growth of 13% on constant currency. So in spite of the softness in Asia, we delivered well in line with our revenue objectives, thanks to Europe. On a year-to-date basis, revenue growth is very similar across our three regions; moving to our brands, let me begin with CATIA; 2015 is a transition year from revenue perspective for CATIA. With [indiscernible], we have signaled before. We have also discussed the fact that China is an important component of CATIA's geographic expansion. So with lengthening of decision, CATIA software growth of 3% in constant currencies, in the third quarter, reflected this additional factor. On a strategic factor, CATIA continues to advance, so we see a significant potential over the mid-term. SOLIDWORKS software revenue increased 9% in constant currency, led by recurring revenue growth. ENOVIA delivered a 15% increase in new licensees revenue in Q3 of this year, on top of last year's 35% growth in the same quarter. In total, ENOVA software revenue increased 8% in constant currencies, with important decision in automotive, oil and gas, and in defense, among others. Other software had a number of drivers; DELMIA is benefiting from growing interest from companies looking to increase their manufacturing flexibilities through the digitalization of manufacturing. We are also benefiting from good traction in manufacturing operation management, with DELMIA Apriso. SIMULIA's growth reflects strong traction in a number of industries and expanded process coverage. After growth restating in the first half, GEOVIA was -- restarting in the first half, GEOVIA was hit by further headwinds in the mining sector. For BIOVIA, it has crossed its one year anniversary, and I am pleased to see them do so with a strong software performance in all three regions. Now let's talk about manufacturing digitalization; for many years, we have highlighted the value of bringing the digital world to manufacturing in a more comprehensive fashion. The world of manufacturing is going through a whirl dramatically in the coming years. In the past, it might have been a choice to transform, today, its no longer the taste, it is an imperative. As a result, we are seeing a high level of interest from companies in a number of industries. There are key issues of how to increase the manufacturing flexibility in the world to manufacture any product anywhere. They are focused on increasing the reliability of the products and they are exploring a number of manufacturing initiatives, such as additive manufacturing, as we discussed last quarter. Our results have been very encouraging with a strong momentum developing in multiple industries, including aerospace, industrial equipment, energy and process utilities. We will continue to invest here on a developed and integrated approach adding Apriso in manufacturing operations management in 2013. In that regard, the world's largest wind turbine company, Vestas Wind Systems, selected DELMIA Apriso. This was a significant win, demonstrating the competitiveness of our solution of our larger legacy software players. Turning to a review by industries, we are benefiting from the expansion of our activity in targeted diversification markets. Diversified industries represented 31% of our third quarter software revenue. Life sciences, energy process and utilities, marine and offshore, and consumer package goods are key industries driving diversification. In our core industries, aerospace and defense software revenue increased double digit, excluding currency benefit in the third quarter. Let me share or show that in heavy industries, their move to digitalization. In energy, process and utilities, new licensees revenue doubled in constant currencies year-to-date. We have a good dynamic in power, where we are working with companies ranging from renewable energies to nuclear plants to hydroelectric dams, and we are diversifying in process with metal and mineral, as well as with oil and gas. We are meeting with very good success line. We are bringing significant business value with our industry solution experiences, driving greater sustainability, while also driving CapEx positivity, under OpEx savings. Our industry solutions will cover three areas; first, with a strong connection between engineering and production; with our sustainable wind turbines on integrated plant engineering industry solution experiences. Second, in construction management, moving from a paper world to a digital world and in turn, helping to deliver complex projects on time and on budget, with what we call optimized plant construction. And third, in ongoing operation by providing a tight connection between digital and real, with a solution called efficient plant operations. Now, let me share several customer examples; in Finland, a company called Outotec, a global leader in mineral and metal energy and water [indiscernible] technology adopted our 3DEXPERIENCE platform, on two industry solutions; the first one, single source of speed, and the second, integrated plant engineering to achieve digital continuity from customer order to delivery and seaporting [ph] operation by their customer. A second example is in China, where we are working with Guangxi [ph] hydropower design research institute to optimize hydropower dam construction. And in Russia, [indiscernible] has expanded its use of our solution, adopting 3DEXPERIENCE platform expanding usage of our optimized plant construction industry solution, on adding our new efficient plant operation to manage the complete nuclear power plant lifecycle. Finally, earlier today, during our web cast in London, we ran a video provided by Jaguar-Land Rover, highlighting why our 3DEXPERIENCE platform is a game changer for them in terms of optimizing collaboration on leveraging data intelligence. It is a short video, so I encourage you to take a look at it. Let me pass the call now to Thibault.

Good afternoon and good morning to you all. My comments today are based upon on our non-IFRS financial results. In our press release tables, you can find a reconciliation of our non-IFRS to IFRS data. In addition, revenue growth rate are stated in constant currencies. In all cases, the reported revenue reserves were generally significantly higher. Let me provide you with a few key highlights before going into a detailed review of our financial performance. Our financial performance was well aligned with our third quarter objective, demonstrating our multiple growth drivers. Thanks to Europe and the Americas, we were able to absorb the market volatility in Asia. Software revenue increased 9% in total and 7% on an organic basis. Year-to-date, software revenue is higher by 13% and 8% on an organic basis. Turning to our guidance, we are well positioned to achieve our full year financial objective, so we are confirming them and upgrading for currency and reversal of tax reserves. As our fourth quarter embeds organic double digit new licensees revenue growth in constant currencies, we anticipate of course, a strong finish to 2015. We are also confirming our two financial goals of double digit organic, non-IFRS new licensees revenue growth, excluding currency benefit and non-IFRS operating margin expansion of about 100 basis points. Year-to-date, non-IFRS new licensees revenue is up 11% in constant currency, and our organic non-IFRS operating margin progression is up 80 basis points. Turning to our software results in greater detail, and excluding currency, new licensees revenue increased 11% in the third quarter, of which 9% was organic. Year-to-date, new license revenue growth was 17%, of which 11% was organic. Recurring and other software revenue increased 8% in the third quarter and 12% year-to-date, thanks to a good dynamic all along the year, in terms of maintenance revenue. On an organic basis, recurring and other software revenue increased 7% in both third quarter and year-to-date. Services and other revenue growth of 13% and 23% in the third quarter and year-to-date, reflected the additional acquisitions through [indiscernible]. In our core services business, we are engaging more with system integrator partners. As a consequence, on an organic basis, services revenue growth was flat for the three and nine month periods. Turning now to our non-IFRS operating margin, it came at 31.2% in the quarter. We benefited from an organic improvement of 70 basis points, and currency represented 90 basis points, offset, in part by acquisition valuation of 100 basis points. In addition, we benefited from an R&D tax credit of 90 basis points, that we were actually expecting later in the year in the fourth quarter. While most of our operating performance metrics are helping EPS, I wanted to bring our financial revenue to your attention. In the third quarter, and most certainly on the year-to-date basis, financial revenue of €2.7 million versus €11 million in the 2014 first nine months, is reflecting lower interest income, as rates we earned converge now to current market interest rates. While we are on the topic of financial revenue, I also wanted to highlight that we entered into a new bank syndicate credit facility, with an initial term of five years and two one year renewals. We completed the agreement and fully drew down €650 million last week, and through SWOT arrangements, locked in very favorable borrowing rates for the initial five year period. Market conditions for borrowing are certainly quite unique at present. So while they might continue, we felt it made good sense to enhance our financial flexibility, as we look to the remaining four years of our financial plan and roadmap, which includes acquisition, well fitting our strategy and our purpose. Turning now to our earnings; third quarter non-IFRS EPS increased 29% to €0.58 in total. Included within this was a €0.04 reversal of tax reserves, related to the completion of prior year's tax audit. Excluding this item, the strong EPS growth was due to top line growth, currency benefit, and operating performance. On a year-to-date basis, EPS is up 24%. On top of earnings growth, our cash flow is also very good at €113 million in the third quarter and €530 million year-to-date. Our performance for the first nine months is actually understated by the tax reassessment payments we have made, totaling €60 million. We believe that these tax reassessments are not legally funded, and so we are disputing them of course. Payment [ph] revenue increased 12%, excluding currency impacts. Our DSOs were 66 days, showing a further improvement over the second quarter. Moving now to our financial objective, let me begin with our fourth quarter outlook. Starting with software, we are targeting a double digit increase in organic new licensees revenue and solid recurring revenue growth, leading to total non-IFRS software revenue growth of about 8% in constant currencies. Our new licensees revenue target for the fourth quarter, illustrates that we expect to see a pretty good dynamic. Let me remind you that, in the 2014 fourth quarter, new licensees revenue increased 24% and 12% on an organic basis in constant currency. With respect to services revenue, we expect to see a decrease in constant currency, as we engage more with system integrators in our industry services group. For the full year, we are reconfirming our 2015 objective, and upgrading for currency, with respect to our revenue range and for currency and the one time tax benefit for our earnings objective. For total revenue, we are targeting 12% growth in constant currency, so this is unchanged from the second quarter. On a reported basis, we are upgrading our revenue range by €10 million to €2,820 million to €2,830 million for the currency upside of the third quarter. With a softer economic climate than in the first half of the year, and an ambitious fourth quarter already, we think our 2015 revenue growth objective in constant currency is more than appropriate. We are reconfirming our non-IFRS operating margin objective of about 30% compared to 29.8% in 2014. For EPS, we are adding €0.01 for currency coming from the third quarter, and €0.04 because of the reversal of the tax reserves last quarter that I already mentioned, bringing us to an earnings per share objective of about €2.20, which is up 21% year-over-year. We are maintaining our assumptions of a U.S. dollar exchange rate of $1.15 per €1 and the yen exchange rate of 135 yen per €1 for the fourth quarter, rates which are now very close to the current exchange rate. And by the way for the other currencies, we are also now very close to market rate, when we look at the rates we have taken in our guidance. Just to comment for the ones, we think that there will be another upside in currency in Q4, that's what we see today, with current market rates. Adding actual and fourth quarter leads to a full year exchange rate assumptions for the U.S. dollar, $1.12 per euro and for the Japanese yen, 134.8 yen per €1. Let me now turn the call back to Bernard. Bernard Charlès: So in short, our financial results and outlook demonstrate the multiple drivers of our growth. We also benefit from a good balance in our sales channel and in the different geo animating our three geographic regions. We benefit from an ongoing relationship with a large and loyal I would say, client base, well evident in our high level of recurring software revenue, representing 75% of our total revenue in the third quarter, on 72% year-to-date. Importantly, we are pushing to deliver greater value for companies, as digitalization takes center stage, with our 3DEXPERIENCE as a business platform and as a core enabler to that objective. Thibault and I are now happy to take any questions. And we thank everyone for their participation in this call on earlier today.

Thank you. [Operator Instructions]. Our first of these comes from Jay Vleeschhouwer. Please go ahead.

All right. Thank you. Good afternoon Bernard and Thibault. Two general market trend questions for Bernard first, and then two financial questions for Thibault. Bernard first, at your analyst meeting last year and on other occasions, you have mentioned that your number one priority is to acquire new customers and new users, particularly in your core markets. And so the question there is, how would you assess your performance in that respect, in terms of new customer and new user acquisition or growth? And secondly the question has to do with the evolution of the PLN market. When we look at ENOVIA revenues for the last year, not just the quarter, it would appear that when we convert those revenues that you report back into dollars, ENOVIA revenues seem to have declined versus the year earlier, 12 month period. And by the way, we would expect the same for PPC's Wind Show, where their year just ended, their PLM revenues too will have declined. Hard to say, of course what's going on with [indiscernible]. So the question there is, do you believe that this recent performance over the last year or so is temporary, perhaps related to macro conditions in certain markets, you mentioned China, or large deal timing? Or do you think there is something more fundamental going on, in terms of the customer's preferences and requirements for PLM or -- in terms of how PLM software is expected to conform to a customer's processes, methods and so forth. Thank you. Bernard Charlès: Thank you for the questions. On the first question, related to new customers or new users, I think its relatively easy to relate the power of diversification with significant growth in terms of new clients. In fact, every year, at the end of the year, we publish statistics on that. In average, in the last three years, we added about between 19,000 and 21,000 new enterprises every single year. That's a reality. And I am not aware of any of our competitors publishing such kind of data. So that's from a customer standpoint. When it comes to the user standpoint, it’s relatively easy also to relate the expansion of users. Why so? Because, whether you look at the growth of our traditional programs or you look at CATIA, SOLIDWORKS, and now SIMULIA; or the new brands, BIOVIA, ENOVIA or DALMIA Apriso, specially for manufacturing operations. All this is new footprint. So the footprint of both new customers are published. We don't publish per se, the number of new users, but it’s a significant expansion, thanks to the diversification of our brands, and the growth of our core brands. When it comes to the second part of your question, which is related to the ENOVIA trends, you asked to take into account three factors, that we show that we can affirm that winning a big way in terms of numbers of companies. In the last three years for ENOVIA, we have gained [ph] and replaced hundreds of PVM on competitor's legacy system everywhere around the world. We [indiscernible] companies like Ashok Leyland, Renault Group; there are many users, Suzuki Maruti was announced, Mahindra and Mahindra was announced. In China, most of them now are looking for PLM infrastructure. So that first factor, in terms of not the revenue, but the companies which are switching to legacy or our competitor's legacy solution, is by far the highest in the competitive landscape. The second factor, because I said there are three factors, the second factor is the presence of ENOVIA in the 12 sectors we serve. And when we do diversification, we start small in revenue, but its big in potential. When we win in the high tech, in the heavy industries, all the references we have done. In the last three quarters, you take each of them, the customers, almost each of the big references we have announced, they are all going with ENOVIA too. And the third factor is about what is ENOVIA in the context of the 3DEXPERIENCE catalog; because it is now well known by the entire market, that the 3DEXPERIENCE platform is going far beyond, PVN/PLN platform. It does integrate ENOVIA Core to do PVM/PLM function. But it does business modeling of the company, and its becoming a collaborative business platform. On the ENOVIA brand for Dassault Systeme, its becoming a collection of applications on top of the 3DEXPERIENCE platform. We had the opportunity to explain that in the last 16 months. This is what is happening, and in fact, it became the fact since a version that was called Version 6 release 2014 X which is a year ago. All new clients are going by default with this new infrastructure. So those are the three factors. So I think there is a bias, in terms of looking at the numbers from a revenue standpoint, because it does not represent the customer market share growth nor it does represent the user growth or the industry [indiscernible] growth. That's in short what I would say. Maybe Thibault, I don't know if you have the data in mind for the remark on the revenue, that I think -- there is something wrong here.

Excluding currency impact, what I can say is, from an organic standpoint it is up.

Okay, all right. Thank you. For you Thibault, two quick questions, at the Analyst Meeting again last year, you mentioned that your several year objectives would be that 80% to 85% of your license revenue would be recurring, up from about 72%, 73% today. Could you remind us what the principal growth drivers would be proportionately, to get you to that level of recurring revenue versus the level today? And then lastly for you, could you talk about the investments and resources that you're continuing to devote for your new initiatives; i.e., the AEC markets, you have highlighted it last year, smart cities concept. Your ongoing interest in simulation as well, and then lastly, you didn't really talk about it today so much, but you have highlighted in the past, your views on, what you call smart and connected products. And so the question there is, what your interest is in investments in electronics capability or non-core capabilities related to enabling smart and connected products? Thanks.

Thank you, Jay. So 80% of our software revenue of recurring, is a prediction that will get realized. The timing is certainly a little bit complex to preside, but the drivers will very clearly be, the fact that this market will adopt software-as-a-service offerings more and more, which will be in full subscription and recurring. And therefore, the work force is not that large, because as we said in the call, we already have 75% recurring. So more traction with rental licensees is also something that I can see for the coming years, combined with our cloud offering, I am ready to bet with you. in fact, we should bet some good battle [ph] on this one. Give me three years, we will be at 80%. Bernard Charlès: Related to the investments, I think we [indiscernible] city simulations, map and connected products. There is a kind of very different approach that we are taking within these resolutions, when it comes to Dassault Systeme Solutions, on the experience platform. What we are really building today is, really solutions that covers end-to-end. What it takes for the imagination, the creation, the simulation, validation and the production. We also, in production, have two major levers; one is on the CapEx side and the other one is in the OpEx side. Its clear today, that the massive move from DELMIA manufacturing to go from the CapEx labor to an OpEx labor, is going on right now. All appraisal [indiscernible] product families that are part of the digital manufacturing initiative, are huge OpEx levers. Customer understand it, and they understand it so well, that they start generated this adoption, this fast speed adoption that we see, and we see in the third quarter results; because before, we were on the front end of manufacturing, which was to define how the manufacturing work, but we were not on the back end to make it work in the real operation, and we are there now. The very interesting thing, is that customers are not even looking at the ERP anymore to fix that problem. They consider that they need new type of solutions for manufacturing operations management. When it comes to the simulation, this is becoming multi-scale, multi-physics, where we continue to invest there, we are doing a lot in system, modeling. This is well known, and we are doing things which are not available anywhere else, with MODELICA [indiscernible], becoming a de facto startup of systems. And we are refining even the automotive [indiscernible] with AUTOSAR based on MODELICA. So there is a lot going on in this area, for what we call smart systems. Same in defense, same in aerospace or same in industrial equipment. So we see the IOT as an enabler to something else, which is what we call Internet of Experience; where the value is on the experience, not in the pure connectivity of objects, but how -- with the purpose it serves. So that can show up why many companies have been making the decision for Dassault Systemes approach. I believe, this will continue to be visible in the months and years to come. That's why we are investing there, and we have many targets of course in mind, but as you know, we will keep the philosophy which is good team, good technology and a relevant solution for the mission and the purpose we have set up for the company.

Thank you. And Thibault, I have learned over the years, that its always best to let you choose the wine. Bernard Charlès: Next question?

[Operator Instructions]. Bernard Charlès: Okay. If there is no further question, first of all, thank you to all the team who join us here in London this morning. We had an ice audience and I suspect that many things have already been published. There is a last one? François-José Bordonado: John King? Bernard Charlès: John King. François-José Bordonado: John, please go on.

Yeah sorry, just stuck here at the end. Thanks. John King, from Merrill Lynch. Just to quite really recap on some of the growth that you delivered in Q3, I think you called out the new industry expansion as being a driver. So maybe, if you could just give us a view or an idea as to how fast it is growing in organic terms, I guess, there are some elements as the acquisition contribution have. What are you seeing at the moment in Q3, and which of the new industries within that piece, the fastest growing -- help us out, that will be great. Thank you. Bernard Charlès: Thank you John, and I am sorry for trying to close the call before we noticed that the question was coming in. Well a quick comment and Thibault will probably add a few data on it. Clearly, energy is not only a new phenomenon or a real growth driver this quarter. It has been for now the last several quarters, what you call energy and process utilities. This is clearly something significant. As we mentioned this morning, not only with nuclear, but also hydro, wind. There is a lot going on this sector, and I think we see that as a long term growth driver, if and I think we have the right solutions to provide. The other sector of course that we continue to do well with is, consumer packaged goods. There is a lot of learning here, because we are learning a new way of marketing that can serve traditional industries, and that's very useful for cross industry knowledge. High tech, have been going well. We didn't mention this third quarter, but you remember that last year. In high tech we grew about 40%. So no specific comments this quarter, it has to be looked at on a longer period. On [indiscernible], I don't want to minimize the fact that aerospace and defense is back in terms of double digit growth as Thibault mentioned, as well as transportation and mobility. And I am pleased to say, that we have even now, an entire airplane program. For sure, it’s a small airplane, but being developed on the cloud with cloud solution, and its something which is a showcase that has been presented to our forum, and people were absolutely astonished to see that we could develop an airplane on the cloud, and its working very-very well, and I think this airplane will fly next year, will be simplified throughout 2016, so its going to be an interesting showcase. So we are very confident about those sectors, and its not really related to the acquisition per se, because I have not mentioned in that list, the life science. So its really something which is the logical evolution of Dassault Systeme Solutions, more than the pure direct effect of acquisition. The acquisition effect this year, in the last 18 months, has been of course directly related to life science progress, because we have solutions that we did not have before, on life science and chemistry. And of course, we hope to do much more in the supply chain with Quintiq on planning. But that's another story. Thibault, if you want to add anything specific, please don't hesitate.

No. I think what could be relevant -- that out of our new diversified industry, I can see [indiscernible] having delivered in excess of 40% growth over the last nine months, and these are marine and offshore, where there is extremely good growth. As Bernard mentioned, energy, process and utilities, where new licensees more than doubled this year; life science of course, and its not only because of the acquisition, and consume packaged goods. So all this industry has been performing very well. New industries as a whole, I remember the figure of total revenue growth in the third quarter is 28%. There is a small contribution, which is inorganic. In that, I don't have the precise figure, but I estimate it to be between three and four points.

And is that ex-FX?

Ex-FX of course. Bernard Charlès: Ex-FX yeah.

Great. That's very useful. Bernard Charlès: Thank you, John. There is another question I guess?

Yes, we will take one last question. François-José Bordonado: Derrick, the floor is yours.

Thank you guys. Good morning. I have got just two questions, quick question, and I think it would be possible. The first one, Thibault, can you help us to understand what is the embedded growth of the cost base at this stage or based on the hiring you plan for H2, just to have a rough idea of how we enter into 2016, just on the cost base side? And my second question is about the contribution of the acquisition or the derivative impact of acquisition on your margin. So over nine months, it seems that we don't have any big surprise, compared to what you said at the beginning of the year. Can you help us to understand, what is the profitability of the assets recently acquired in 2015, and what's the outlook for them for 2016? What would be the pace of turnaround, its not about 2016, but the pace of turnaround that you expect for these assets? Bernard Charlès: Before you give the answer, Thibault -- thank you, Derrick, let me say that, its not a bad surprise, it’s a good surprise, as far as I know for the relative aspect of how we are managing operating margin the year before. For acquisition, I mean.

It’s a good surprise. No, its not a surprise actually. Bernard Charlès: It’s a good plan.

We are on target, so its not a surprise. Expense growth, we are actually embarking between 3% and 4%, but we will have to do a few things, you know. We will have to increase salary in 2016 and we also want to accelerate somewhat depends on who -- don't [indiscernible], and we will also have to accelerate somewhat our hiring, because of the opportunities that we see in new industries with 3DEXPERIENCE, etcetera. So I am not giving you any guidance for expense growth in 2016. But you should bear in mind that, we are [indiscernible] to accelerate our investments based on the opportunities that we see. The acquisitions, I think the short answer to your question is, there is a lot of room for margin expansion inside the acquisitions, and we have already started to do it, for the two last ones, which are significant, which are BIOVIA or ACCELRYS if you prefer, with the original name and Quintiq; and I think that we certainly are going to gain a little bit more than one point in margin for both of them, this year, as an illustration of the extension, we are pushing on this.

And Thibault, does the 3%, 4%, expense growth projected for next year, takes into account the streamlining of the cost base of this acquisition -- or let's say, recent acquisition? Is it including the merger that you will take to turnaround the margin further of the rest acquisitions?

No, no, no, no. Again, I am not giving any guidance. So I am simply answering on what is the tailwind of stressing [ph] those acquisitions that we did this year. Bernard Charlès: That we did already this year.

Already done. Without any further investments, further salary increases that we don't know, further hirings. Bernard Charlès: So it will be part of the guidance.

Its pure arithmetic, is what I am telling you. I hope it answers the question?

That's right. And then taking into account, the hiring plan of Q4, or its just the picture at the end of Q3?

No, no, no, no. Again, it doesn't. It is the situation as I look at it today.

Okay, clear. Thank you very much. Bernard Charlès: Okay, with that. Thank you very much for participating, and I would like to communicate to you, two invitations; one for February 4, 2016, a good rendezvous to discuss about the reporting for the full year and 2016 plans, and another one, June 10, 2016, for our capital market day, where we will have fun, present to you great showcase we have done and the one we want to do for the future. With that, thank you very much, and of course, we are looking forward to continue to work closely with you, and address any issues or concerns or questions you ask. Thank you.

Thank you. That does conclude today's conference. Thank you for participating. You may now disconnect.