Dassault Systèmes' CEO Presents at the Acquisition of Apriso Conference (Transcript)

May.29.13 | About: Dassault Systemes (DASTY)

Dassault Systèmes S.A. (OTCPK:DASTY) Acquisition of Apriso Conference Call May 29, 2013 9:00 AM ET

Executives

Jim Henderson – President and CEO, Apriso

François-José Bordonado – Vice President, Investor Relations

Bernard Charlès – President and Chief Executive Officer

Thibault de Tersant – Senior Executive Vice President and Chief Financial Officer

Analysts

Adam D. Wood – Morgan Stanley

Mohammed E. Moawalla – Goldman Sachs International

Amit B. Harchandani – Citigroup Global Markets Ltd.

Charles A. Brennan – Credit Suisse Securities Ltd.

Jay Vleeschhouwer – Griffin Securities, Inc.

Operator

Thank you for standing by, and welcome to the Dassault Systèmes May 29 2013 Conference 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 advice you that this conference is being recorded today.

I’d now like to hand the conference over to François Bordonado, Vice President, Investor Relations. Please go ahead.

François-José Bordonado

Thank you, Lola. Thank you for joining on this conference call to discussion the expansion of our 3DEXPERIENCE business platform to global manufacturing operations with the acquisition of Apriso. On today’s call are Bernard Charlès, our CEO; Thibault de Tersant, our CFO; and Jim Henderson, Apriso’s CEO.

Before we being, let me remind you that some of the comments we will make on this call will contain forward-looking statements, which could differ materially from actual results. Please refer to our Risk Factors in our 2012 document de référence.

I would now like to turn the call over to Bernard Charlès.

Bernard Charlès

Thank you for joining us. Before beginning my formal remarks, I’m and we’re are very pleased here to welcome Jim Henderson, Apriso’s President and Chief Executive on the call with us today to introduce you to the company and we look forward to welcoming each individual at the completion of this acquisition plan early July.

Lead by Jim Apriso has a great team of nearly 300 talented and dedicated people. The company has developed an excellent software solution bringing strong value for clients and showed great momentum since more than five years. It complements very well our DELMIA application portfolio and our 3DEXPERIENCE strategy and platform. Dassault Systèmes brings worldwide sales coverage on a broader set of customer relationship, which will enable Apriso to overcome its main inhibitor to even more growth, which is it’s bundled. And together we totally provide a complete offering for customers across discrete manufacturing industry covering from product concept to the worldwide product launches in store.

With today’s announcement we are entering a new domain, manufacturing operations management, representing an expansion of our addressable market by about $1 billion over the mid-term.

As you all know, we are seeing an increased interest on customers for the digital manufacturing market as a whole. We’ve been present in the manufacturing domain with our DELMIA brand, which is focused on helping global companies model and stimulate the production line in the plants prior to the start of production.

Over the last year, however, we have begun to expand our coverage to operations beginning with the aerospace industry with great success thanks to the addition of interesting. Now, we’ve proposed acquisition of Apriso, we are positioned to work with companies across a number of our discreet industries focusing on volume manufacturing, therefore, expanding the coverage to the 12 industries we focus on.

We choose Apriso because its software has several key attributes that are critically important to truly helping the world’s largest manufacturers of products. First, it brings flexibility enabling companies to quickly adapt to market changes while driving best-in-class manufacturing processes intelligence.

Second, at the same time, that it offers flexibility Apriso’s software also enables companies to introduce process standardization across multiple factories. Especially, manufacturers are able to track and compare the results achieved across the company’s many manufacturing sites on established best practices.

Third, it enables operations monitoring in real-time across many plants and, therefore, the ability to better synchronize product release for our 24 manufacturing operations. Importantly, thanks to the improvements companies are able to extract on the manufacturing operations across a wide number of production sites, they are able to launch new products much more efficiently and in fact, these improvements enable them to offer even more new products, thanks to the efficiency gains. So, Apriso brings them significant value.

Looking at who Apriso for customers. Customers demonstrate very clearly the significant value of its software. Thanks to its technology, sales and service team. Apriso has developed a world-class customer base, including some of the world’s largest and most successful manufacturers across multiple industries, including consumer packaged goods, life sciences, industrial equipment, automotive, and high tech, to just name a few.

We interviewed several of their customers as part of our due diligence process and received extremely positive feedback. If you step back, you can see that we now have truly closed the full loop from aviation context to physical product launch on manufacturing operations we make.

In combination, our software solutions staffs on the very beginning, with the product idea then enable our customer to verify that. It will become a rewarding experience for users before going to detailed design simulation, production planning, manufacturing operations, finally, delivery of the product experience to the ultimate user of the product.

This complete perspective brings significant value for companies and is well illustrated by their customers in today’s acquisition press release sharing their views on the combination of our two companies.

For Saint-Gobain, for example, the ability to innovate product and manufacturing and logistics processes are critical. They currently use Apriso to manage the distribution and execution of quality, logistics, manufacturing, and compliance processes across more than 60 sites worldwide. Our second customer, for example, is from Cummins, a global leader of engines handling power generation more with products going into a number of markets.

Two key challenges that global manufactures in general face are product proliferation and globalization complexity, resourcing from many location, manufacturing in many location, and in delivering a wide variety of products all around the world. Together, we offer them the ability to manage both products and process on a global basis, so that can accelerate the new product introductions as well as configure products to meet the needs of the specific market and customers.

Apriso has achieved a great track record of growth, thanks to its direct sales team. In combination with the much larger sales channel resources of Dassault Systemes, we believe there are significant opportunities to leverage the success they have achieved.

Finally, I think a good combination at the end of the day will be determined by both the strategic elements on how close these two organizations fit together. Even it is clear that we share many common views with respect to our passion, to help our customers’ advice and resolve the most critical production processes, including the success of their product launches, the value we place in working together, and on building a strong ecosystem of partners.

I’d like to introduce Jim – Jim Henderson, and turn the call over to Jim at this point in time.

Jim Henderson

Thank you, Bernard. It’s a pleasure to be here today. Let me share the enthusiasm Apriso has for this strategic move. We’ve had the opportunity to speak with our employees earlier today as well as a number of partners and customers and I think everyone is very pleased with the direction Apriso is taking coming together with Dassault Systèmes.

Bernard mentioned that we have just under 300 employees. Our headquarters is in Long Beach, California, near Los Angeles; and we are represented in Europe with major offices in Krakow and Paris; and in Asia, we are present in Tokyo. Krakow is our largest office and our principle R&D center for the company. We operate through a direct sales force and work closely with a network of partners. We’re very proud of the technology that we’ve developed and it’s proving itself in the marketplace everyday with world manufacturing leaders.

Just to give you some insight, our product line is called FlexNet. It’s a global manufacturing platform utilizing a proprietary business process management or BPM technology. It enables us to configure execution applications in manufacturing. Our BPM tool has been configured to deliver MES applications for production, warehouse management for material logistics, plant maintenance, time and labor, quality and supply chain processes.

The platform also includes three additional applications that run above the plant to enable our customers to synchronize and coordinate the manufacturing network. We call it global process manager, which allows our customers to distribute and manage best manufacturing processes across our multiple locations and manufacturing process intelligence to provide real time analytics and visibility across our manufacturing locations and what we call global traceability and genealogy which enables them to manage something call as-built and as-manufactured histories across their entire manufacturing network.

We are the leading MOM or manufacturing operations management we are leading at MOM market. In terms of mobility offering FLEXnet products on technology such as iOS, Android, and Windows 8 tablets and phones, and additional key component of our business is in the initial services provided to customers, in connection with this we’ve also developed a strong ecosystem of partners with systems integrators including people like Accenture, Hewlett-Packard, IBM as well as TATA, Capgemini and Atos. Among others to work with us as we move from the first initial production sites and which allowed our customers to extend our solutions to many additional sites going forward.

So that’s just a snapshot of the Company and let me turn this over to Thibault this time.

Thibault de Tersant

Thank you for that Jim. Apriso has developed a very strong track record of growth over the last five years. Its revenue about $50 million that are out in 2012. Looking at overall multi years, Apriso has delivered yearly revenue growth on average of more than 15%. Software revenue represents about 65% of total revenue and services about 35%.

Turning to the transaction, this is a non-cash acquisition in the amount of $205 million for the enterprise value. The acquisition will be accretive to our non-IFRS earnings per share, but we had a slightly diluted impact on our non-IFRS operating margin, which however will be less than 50 basis points over a 12-month period.

We expect to complete the acquisition by early July. This is subject to a pending governmental approval. As soon as the transaction is closed then we will add Apriso to our financial objective at the time of our second quarter earnings press release.

In summary, we think Apriso is a winning addition in a market in which we strongly believe and has started to show good signs of traction. Apriso has developed a strong momentum in its business, and we believe with larger resources of Dassault Systèmes, we can convert this momentum into a much broader market footprint and market leadership in the coming years. And together, we bring the unique value proposition to company truly enabling them to have a comprehensive view of their business.

We will now be happy to, altogether with Bernard and Jim, take any questions you may have. Operator?

Question-and-Answer Session

Operator

Yes. This is the operator. (Operator Instructions) Your first question comes from Adam Wood of Morgan Stanley. Please ask your question.

Adam D. Wood – Morgan Stanley

Hi, thanks very much for taking the questions, and just two if I could, just first of all, from the competitive landscape, could you may be say a world about that, and also looks here is a, you’re moving a little bit closer into the real world of manufacturing, could you talk a little bit about how that brings maybe more into competition with SAP and Siemens, and how far along the line you plan to go there.

And then secondly, just thinking about the available market could you give us a little feel for around the deal sizes that the companies you sold into and how much up sell those customers and as you level the Dassault’s sales force. Thank you.

Bernard Charlès

Thank you, very much, I think I will give the floor first to Jim, because I think he has been done a great job with Apriso to win against companies that were assumed to be the leaders, but and demonstrated that the technology can be the leader, so Jim if you want to speak about that and then I will add may be if necessary anything to it. Hello, Jim can you hear us. Maybe muted, Jim can you hear me?

Jim Henderson

I can, can you hear me?

Bernard Charlès

Yes, we can hear you now Jim, go ahead.

Jim Henderson

Well from a competitive point of view, we think we’re very well positioned against our competition, that we see in the marketplace after today and we do very well in a competitive environment and in terms of deal sizes, Bradbury is a great deal, typically on our longer period of time our customers are looking to deploy our product across their entire enterprise into all other plant locations that may take anywhere from two years to five years to get to complete deployment of the product out. So generally we start with one or two plants, and then that then process will be taken to the rest of their plants, so it’s really hard for the deal size, we would be representative of what we do. And we might look at maybe $150,000 to $200,000 per plant in terms of software, some case invest more, and then there is associated services that goes along within of course all this the maintenance that goes along with the software, so it’s really hard to put a specific number, but we have looked that before, but that might just give you some idea on a per plant basis in terms of deal size.

Adam D. Wood – Morgan Stanley

And would that be taking the entire product set that you’ve talked about the focus always in quite a lot of there are a number of components within the product?

Jim Henderson

No, that doesn’t include all the modules that we have right, so there is additional up sale to that as we come back behind our initial deal sizes.

Bernard Charlès

Maybe we know each other for several years now, Jim has been well connected with our DELMIA team, so what we also discover or learn working with Jim’s team on Apriso is the sector which is supposed to be well covered are still in critical demand for flexibility, agility, which I think fondly and this was a surprise to us. This was really a surprise to us, because we called many customers. Many customers that were additional ERP customers and the reason why they have selected Apriso as we mentioned in the press release is because of the flexibility and agility, and speed of deployment.

So there are a lot of unfulfilled needs, which we believe creates significant opportunity to be like what we like to be at Dassault Systèmes, a game changer. And we think really sincerely together on that we can be a game changer connecting the front-end engineering of production systems, which we do in many sectors in a big way now, the modeling and simulation of the production tools and infrastructure to streamline and go to the operational, on business modeling of the operation. So we are very excited. For us this is not an add-on. We believe that there is an opportunity to provide significant value and that’s why we have made the decision to come together.

Now you mentioned a few players and you mentioned some names in your question, and once again some of those names are hardware providers. Some of these names are application software provider, but it seems to us that the two are not connected well on that. What is today installed is very heavy, complex, costly and that can be changed.

Adam D. Wood – Morgan Stanley

It’s very helpful. Thank you.

Bernard Charlès

Welcome.

Operator

Your next question comes from Mohammed Moawalla of Goldman Sachs. Please ask your question.

Mohammed E. Moawalla – Goldman Sachs International

Thank you. I was wondering if you could just shed some light on to what extent sort of in-house legacy is a competitor for this product. And secondly, you talked about some of the partners you have with the system integrators. How can Dassault potentially leverage these, some of these CPG manufacturing like verticals to push some of their own product down the line? And secondly, just one for Thibault, you mentioned it’s growing at about 15%. To what magnitude of acceleration do you think you can achieve with this once the acquisition is fully integrated?

Bernard Charlès

Thank you very much. Maybe, Jim, you will take the first part about the in-house legacy, and then I will take the second one about leveraging system indicator and Thibault, the third one. So, Jim, you want to start?

Jim Henderson

Sure. In-house legacy is what we typically replace. That has been, I think, a traditional way manufacturers have approached, dealing with plant, operational kinds of issues. So, a great deal of the market is still what I would call in-house legacy type systems and that’s generally what we replace. So to say we compete against that, I guess we do, but it’s more of how do we bring additional value that goes way beyond what their capabilities are today and address business problems they can’t address with their typical legacy solutions today.

So it’s more of creating the value proposition and showing manufacturers where we can take them versus necessarily competing with their in-house system. But the marketplace today, I think in terms of current installations, legacy systems would probably be the largest market share out there today as we see it from that standpoint.

Bernard Charlès

That’s a significant also discovery we add to Jim’s point when we discover that the [word] installed base was for a majority of it, which was not with outlook, not looking at detail, was for us a discovery here. Relating to the leveraging the system integrator, we do have established in many sectors new kind of framework of relationship with the IBM, Accenture or Capgemini and Atos in different industries and different geos, because it happened that even if those companies are global companies, they basically act on their local basis. And of course with Apriso having done that and with FlexNet having a great reputation, in terms of the value that they can bring together that we can bring together if we come together with the same indicator, that’s good news. And I think that’s only going to expand the scope of what we can do together.

And, again, I was impressed when Jim presented to us and his team presented to us the way they were working, provided the size of the company, the way they were working with those large integrators is really something extremely well done. So I think this is all set up in the right way, I think, and there is no disruption. I don’t think we create any. We only create new opportunities here. Thibault, you want to take the second part of the question?

Thibault de Tersant

Sure. I think, first, we have used the past average growth; I indicated 15% for total revenue. If you go to Apriso website, you will see that the software revenue growth was better than that, but the one I indicate is the software revenue growth, and so that’s the one we have used in order to develop the business plan on which we have valued the acquisition. However, there is very clearly a lot of upside and the upside is in two directions; one, the fact that the current customer base of Apriso is very soft from being 100% equipped. We believe it is actually one-fifth equipped in average and of course the number of customers that have a need for the Apriso technology and for in fact our 3DEXPERIENCE solution as a whole is very significant in these diversified industry and also in our traditional one.

So my pick is if we’re not able to at least accelerate the growth rate by five points then you’ll be able to tell us that we’re doing a job of integration.

Bernard Charlès

We think we do. The implicit point that to stress one element and what Thibault said, our Digital Manufacturing Solution has been heavy weighted on highly complex large industries like of course transportation & mobility, auto sector, aerospace and this is where we are for manufacture and engineering. We are the almost, we are the de facto strong out there. For many of now the run final assembly in aerospace sector, we are becoming, having the largest market share, but with the new sectors like CG, CPG, at last on hi-tech, we have discovered that the importance of simultaneous global launch of multiple sites was very critical and is not addressed well up to now and is addressed extremely well with Apriso, but fortunately it’s not addressed well with additional ERP systems. So that’s also another discovery so with the growing diversification that we have been enjoying in the past years, I think a logical step.

Mohammed E. Moawalla – Goldman Sachs International

Great, thank you.

Bernard Charlès

Welcome.

Operator

Your next question comes from Amit Harchandani of Citigroup. Please ask your question.

Amit B. Harchandani – Citigroup Global Markets Ltd.

Hello everyone. Amit Harchandani from Citigroup. Thanks for taking my question. Few quick ones, if I may. Firstly, maybe for Thibault; in terms of the margin impact, you’ve talked about the acquisition being slightly dilutive on a 12-month deal, going forward in order to improve margins, do you think that can be accomplished by driving better sales efficiencies or potentially looking to reduce the proportion of services work that Apriso does, I think is the 35% of it is services, is their scope to know what that, so in order to improve the overall margins, so that’s my first question.

Secondly, maybe in terms of the opportunity, we’ve talked about discrete manufacturing and entering the market in most of the companies mentioned in the press release seem to operate in discrete manufacturing space, but also there is the other element, which is process manufacturing in areas such as energy and oil and gas for example, so can Apriso software also be used in those verticals or is that a potentially something that you would look to acquire or is an opportunity to add into the portfolio?

And finally, in terms of on-premise versus cloud, could you give us a sense of how this market is positioned right, put you now overtime? Thank you.

Bernard Charlès

Thank you very much for your questions. Thibault, you take the first one on the margin and the evolution of the business model, and then maybe Jim will make some additional comments about the coverage of FLEXnet, and I will provide some additional comments of the whole architecture we are targeting.

Thibault de Tersant

Well, certainly we are going to work on margin improvement. I must say that the margin is in fact not such a bad margin today. So I don’t want to say that. It’s not a well managed business as it is today. It’s not the case. It is not the case, but clearly it is not at the average level of Dassault Systèmes yet, and I think there are two levels. The first, very simple level is to sell more. It’s stupid to say, but it is a software business in majority. So it is a leveraged business model and by selling more you…

Bernard Charlès

Change the equation.

Thibault de Tersant

You improve the margin. The second arena and you’re right is, to continue to strengthen the relationship with integrators and take advantage of that to continue to position Apriso services on the high-end of consultancy and architecture and project validation for its customers in integration services project. So we must deliver, but the first one if had to bet is probably going to be more important than the second.

Bernard Charlès

And what was also very good for us to see was that Jim has put with esteem and incredible high quality discipline to focus the Thibault imply the service they do on the very front end, so the roadmap is clear, and then involve system integrator when the roadmap under the reengineering of the operation is done, which I think is great very similar to what we do today in both DELMIA and SIMULIA phase by the way.

Jim would you want to make any comments about the coverage of FlexNet across discrete manufacturing or more?

Jim Henderson

Right, that’s really more of a focus today versus the product to technology limitation and that we assess the marketplace, we had a beginning the regional origins of the company were in complex, discrete kind of manufacture, so that’s really more of where we come from and where we focused. Obviously our access company you have to focus resources where you think your biggest short-term pay back is and that is around complex discrete manufacturing, but there is nothing inherent about the product of the technology that would preclude us from moving into other industry such as oil & gas and process industries.

Bernard Charlès

Absolutely to make the additional remark about on-premise and the cloud, we were very impressed with the quality of the architecture of FlexNet, the solution itself. The flexibility and ease of integration is second to none, and so very well architected piece of work let me say, product solution, and very often the on-premise and the cloud are very different split because the reality is for global launch there is a piece of the work, which is shared, mutually shared and there is a piece of the work, which is we need to run of the operation of the plant of that plant. And when we had discussion with Jim and his team, we used to count the number of users and he’s telling us no, I think now we are going to have a new KPI, the KPI is number of plants where it’s used because you basically don’t use half of FLEXnet for half of a plant. You do deploy for the entire production flow, including quality control and connecting all the elements together.

So the architecture is very good. It fits very well with what we do already. Unlike in some of the acquisition we had to do in the past where there was a lot of engineering to do on the product family to make them consistent and thinking about MatrixOne, for example, where it took us some time to really align the architecture, I think here it’s already consistent.

Amit B. Harchandani – Citigroup Global Markets Ltd.

Great, thank you.

Bernard Charlès

Welcome.

Operator

Your next question comes from Charles Brennan of Credit Suisse. Please ask your question

Charles A. BrennanCredit Suisse Securities Ltd.

Great. Thanks very much. It’s two questions for me actually. Firstly, can we go back to the competitive landscape? We’ve talked around it, but I’m missing some of the specifics. When we think about the $1 billion market opportunity, does that include the in-house legacy systems and how much does that make half of the $1 billion? And then when we start to think about the third-party providers, can you actually name the market share leaders there? We’ve got to clear signs of the landscape.

And the second question is just on financials. Thibault, can you just remind us about your full-year guidance this year? I think last year you gave guidance that included the impact of dilutive acquisitions. Does your guidance this year include the acquisitions or are you expecting margin downgrades on the back of this?

Bernard Charlès

Okay. Thank you. We’ll take the three questions of course. Maybe Jim, I let you provide additional information related to the way you see the competitive landscape, and then Thibault, you come back on the guidance.

Jim Henderson

Sure. Our primary competitors are the automation and hardware players and they have a lot of presence, as we all know, in manufacturing, but they also have some of their limitations that we can take advantage of and have taken advantage of that makes it more difficult for them to compete as the software type company. So we certainly feel comfortable about being able to compete with those individuals. So that would be a list of what we call the automation or hardware players that we compete with, and then, SAP has some product in this area.

They don’t address the market the way we address it and they have a more narrowly defined definition of what we refer to as MES. But, certainly, we would list SAP as one of our competitors. Today we’re very comfortable competing with them as well with the solution that we have today. So that pretty much encapsulates. There are a limited number of small, very niche players that really are becoming less of a factor in the marketplace going forward from a competitive point of view. So, it’s generally the automation players and SAP is who we compete with.

Charles A. BrennanCredit Suisse Securities Ltd.

Perfect. And the in-house systems, do they form part of the $1 billion opportunity or is that incremental to that market opportunity?

Jim Henderson

Bernard, you want me to address that or…?

Bernard Charlès

Yeah. Go ahead, Jim.

Jim Henderson

No, I think that’s outside. Our view of the market is that’s outside the legacy system spend rate. It’s fairly difficult to get an exact number on legacy spend rate, but I believe that $1 billion as I would see it, really is addressing money being spent outside the legacy system.

Bernard Charlès

Yeah, and what we have done in terms of study, we took this $1 billion as a kind of reference to really provide some early inputs. But another way to look at it is to look at the number of manufacturing plants on the planet. And if you [compute this] number of manufacturing plants on the planet, it's a huge number. Now, if you look at this huge number, the wide, the largest chunk of it is very own legacy systems. But the world is evolving toward flexible manufacturing and very adaptive manufacturing. And I think on that standpoint, Apriso reflects that is a start-up company and that’s what Jim thinks about, the team thinks about and I think it’s us to show that we can provide solutions that no one else has been providing.

And, so once again for us, we don’t see it as an add-on. We don’t see it as an extension. We see it as a way to provide manufacturing experience that has not been often done. And if you go on 3ds.com, you look at the videos which are there from customers that have been done with the Apriso executive team. It’s just amazing. It speaks for itself. If you have time, all of you connected here, go and click on the video. You will be astonished to see what it means. The scope is very clear and you will go back with a takeaway that everyone is blue collar, are in the plant, everyone who are wearing glasses in those videos, everyone is using identifier on every operation they do and this is managed by the FLEXnet. So, it’s very interesting to see those videos to understand what can be the opportunity of this market and we probably – they find a real sizing, but the needs are there. Thibault, for the strategic planning of the year?

Thibault de Tersant

So last year it is true that we issued a guidance and in the guidance we said that we’re deliberately lowering the margin such that when we do acquisitions, we don’t have to change the margin target. Now it proves to be difficult in execution, because you have to know exactly when you are going to sign and close acquisitions and of course the impact on margin depends highly on the timing of those. So, I decided for 2013 as to – not to try to be a prophet on exactly when we can sign and close acquisitions. And even Apriso we signed today, but the time of closing can still change, because obviously the timing, as you know, to get the governmental approval can vary.

So, today the guidance you have which by the way I think the advantage of this is going to be confirmed, the guidance you have does not take into account acquisitions, doesn’t as the top line level, it doesn’t at the margin level and it doesn’t at the EPS level. So, when we close Apriso, we took the guidance for the revenue to be made for the remainder of the year, there will be a slight margin dilution and a slight EPS accretion.

Charles A. BrennanCredit Suisse Securities Ltd.

Perfect, thanks, that’s very clear.

Bernard Charlès

So the right timing, probably for that will be second quarter results in July, because almost it will be almost synchronized till, we will come back to you when we announce our second quarter results. One last question maybe they’re still one.

Operator

Your next question comes from Jay Vleeschhouwer of Griffin Securities. Please ask your question.

Jay Vleeschhouwer – Griffin Securities, Inc.

Thanks, good morning, the question is in light of this acquisition, could you comment on how you’re thinking may have evolved regarding the addressable market or the market opportunities of DELMIA itself, there was an expanded period of time as you will recall where DELMIA for that matter its closest competitor belonging to Siemens had relatively modest revenues relatively modest growth, but how do you, you’re now seeing perhaps signs of an inflection point so that you’re thinking and expectations for DELMIA may have improved as for long-term and a follow-up to Jim.

Bernard Charlès

First of all DELMIA has been doing very well in the last two years. We are very pleased with the double-digit growth there and we have always evaluated the market size based on what we offer, which was basically, what we call, manufacturing and engineering; so i.e.; the design and simulation and testing of the front end before you go, start up production.

Last year, we did the industry move. That’s been a very good move for the Aerospace sector. I think many of them now applaud the fact that they can have digital continuity from the design of the manufacturing process and tools to the operation of their manufacturing plants and assembly line. Look at Boeing, and many years of references we have, Embraer included also. And we said why we should do the same for all the other sectors we cover, and as we are growing and diversifying in consumer packaged goods, look at the reference that Apriso has, like amazing reference in like L’Oreal and many others, Saint. Gobain and many other prestigious global groups with so many manufacturing sites. We said, well, we can do the front end, but we can also now do the operations.

I think the synergy are really, really complementary. I don’t see any conflict. I see only expansion. And more importantly for us, provide a digital continuity from product experience to product make and the world of manufacturing is changing, automation, new type of things, old-style manufacturing being replaced by new style manufacturing with extreme agility on adaptation. And most of the current legacy MRP-based systems are so inflexible that it’s a problem. And that’s why we think that something we ought to offer to our customers, and I think they really welcome that. So we’re going to play in this sector and win together.

Jay Vleeschhouwer – Griffin Securities, Inc.

Okay. The follow-up then for Jim; your website indicates that Apriso has been around for about 20 years or so, and as well that you have about 200 customers, unless that number’s been updated from what we see on the website. The question is, could you talk about how many of those customers have come to Apriso over the last several years during this period of 15% or so compound growth? Has it been, and in fact, a significant acceleration in the addition of customers over this last period, and is that correlated in some way to your having added sales or partner capacity?

Jim Henderson

The overwhelming majority of those customers have been added in the last five years to eight years. And, so the Company went through a transitional period about eight years ago, and since then we’ve been accelerating a number of new customers we add every year. So, I don’t know the exact percentage off the top of my head, but the overwhelmingly large percentage of that customer base has been added over the last five years to six years, and so, from that standpoint. And thank you.

Bernard Charlès

Okay. So I think that was the last question. So I think with that Francois-Jose, we should close this call. Of course, we welcome any additional question you might have, you know who to contact.

Once again thank you very much for participating to this call. We’re very excited with this the perspective of really doing becoming a game changer of manufacturing operation and we’ll give you and share with you more on the guidance around end of July when we announce, our second quarter Dassault Systèmes results. Thank you very much and talk to you soon.

Operator

That does conclude the conference, thank you for participating. You may all disconnect.

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