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Executives

François-José Bordonado

Bernard Charles - Chief Executive Officer, President, Director, Member of Scientific Committee, Chairman of Dassault Systemes SolidWorks Corp, Chairman of Dassault Systemes Simulia Corp, Chairman of Dassault Systemes Delmia Corp, Chairman of Dassault Systemes Corp and President of Dassault Systemes Holding Canada Inc

Thibault de Tersant - Chief Financial Officer, Senior Executive Vice President, Director, President of Dassault Systèmes Europe Sas and President of Dassault Systèmes Holdco Sas

Francois-Jose Bordonado

Analysts

John P. King - BofA Merrill Lynch, Research Division

Neil Steer - Redburn Partners LLP, Research Division

Adam Wood - Morgan Stanley, Research Division

Gerardus Vos - Barclays Capital, Research Division

Amit B. Harchandani - Citigroup Inc, Research Division

Dassault Systemes SA (OTCPK:DASTY) Q3 2013 Earnings Call October 24, 2013 3:30 AM ET

François-José Bordonado

Okay. Good morning, everyone. I'm François Bordonado, Dassault Systèmes Investor Relations. From the company, we have Bernard Charlès, our President and Chief Executive Officer; and Thibault de Tersant, our Senior Executive Vice President, Chief Financial Officer. I would like to welcome you to Dassault Systèmes 2013 Third Quarter Earnings Presentation, which is also being webcast.

At the end of the presentation, we will take questions from the audience and from participant on the webcast call. Later today, we will also hold a conference call.

Dassault Systèmes financial results are prepared in accordance with IFRS. In addition, we have provided supplemental non-IFRS financial information. For an understanding of the differences between the 2, please see the reconciliation tables included in our press release. Some of the comments we will make during today's presentation will contain forward-looking statement, which could differ materially from actual result. Please refer to our risk factors in our 2012 Document de référence.

Let me now introduce Bernard Charlès, President and Chief Executive Officer.

Bernard Charles

Good morning, everyone, and of course, we already talked to you 10 days ago, and this is to provide more insight about how the business is going and how we see it going forward. As always, I will share the presentation with Thibault.

So let's start. This is talking about Q3 of 2013. Basically, the Q3 revenue came below -- as you know, below our objective. I would -- I must admit that this is not part of our track record and we were, of course, disappointed with that. And we'll explain to you why, but we'll explain to you also that containing this disappointment, there are some interesting news and good news about the visibility on the revenue side. On the dynamic, despite this, I will say, special quarter, which reflect more volatility. First, in the economical environment, I think overall, we don't see any slowdown from the customer motivation, the market potential and the market size provided the diversification on the 12 industries we serve, but there is a set of parameters, which, I think, all came at headwinds during the quarter. I think customer are committed to -- and we have not seen any situation where we were losing against the competition. In fact, it's the opposite. I think we are gaining market share in a tough economical environment. And so what we saw basically is some transaction slippage, first, in favor of rental, and I think it's important and Thibault will explain again why. It's important to know that the rental side on this shift from paid-up license to rental is a good thing, long term. It is a good thing. Now, you don't recognize the same revenue on the quarter, but I think it creates the snowball and I think it's important on the long-term strategy. We are getting excellent feedback on our cloud approach. It must be understood that in the kind of application software we do -- on Industry Solution Experience we do, there is no cloud solution available on the market today. What is available on the market today are just little toolkits to create data sharing in collaborating environment, but the reality is whether you look at the digital mock-up, the PLM world or the 3DEXPERIENCE world, it's not yet on the cloud and we are introducing this new category of Industry Solution Experience. We started in July, and I will talk to you about the customer feedback to date. And we are adjusting the Q4 to take into account, of course, this slowdown on Q3 and also taking into account a few, also, factors relating to currency while we maintain the new license revenue growth for Q4. That's the highlight for this third quarter of 2013.

So let's go and have a deeper look. The revenue was up 4%, excluding exchange rate, compared to 8% to 9% target. The shortfall has been explained 10 days ago. We just reconfirm what we said and what we wrote with this EUR 24 million gap. EUR 12 million of it -- EUR 12 million out of the EUR 24 million are coming from deal slippage. EUR 6 million are coming from -- EUR 8 million, sorry, from shift on transaction to rental, and EUR 4 million missing on the service side. The solid revenue recurring as a consequence of that, and we are in line on the operating margin while we continue to invest, as Thibault will explain. So that's the bottom line for this quarter. On the year-to-date, you can notice that we are up 6%, excluding exchange rate on the revenue side, and 5% on the EPS growth year-to-date Q3.

Now by region, what can we say? First of all, resilience of Europe, which is not a surprise, but it's a good news and, as you know, it's an important geography but it also show that customer are investing for the long term with innovation. The disappointment is in Asia, especially India and China. Korea was very good, and Japan was okay. America is also disappointing on Q3, almost flat, 1% growth; year-to-date, 5%. We can do much more in America, and there was a few factors here that are really part of the initial explanation we gave you 10 days ago, again, so Q3 at 4%; year-to-date, 6%, lengthening customer decision. I've been spending a lot of time in Asia in the recent 2 weeks, 3 weeks. This is why I bought a coat, traveling too much, but the -- I asked many executives in both China and India about their question, about how do they see the current situation as compared to 2002 and 2008, and I was astonished with the answer because many executives told me that they were more concerned today than they were in 2008, which I was surprised with the comment. At the same time, they said, "We know that if we want to take a stronger position" -- and I'm talking for both India and China, "and in being able to export, not only provide manufacturing capacity but export our products, we need to build on innovation, the right infrastructure of the future." So -- and we need to invest properly. I think for them, the rental model is a good model because it's a way to set up the proper infrastructure while they do not have to put this in -- on the CapEx line upfront. So those are just remarks, but I think we have been having the 3DEXPERIENCE forum 2 weeks ago in India and the dynamic on the number of customers who attended this events were -- was bigger than ever. So those are signs that the market is there.

About the software by, now, categories. First of all, the deal slippage impact all brands. It's not really focused on one of them. On the shift from the rental -- from the purchasing to the rental, it's really more centered on SMB on CATIA and ENOVIA because they are really taking the industry solution now and we sell the industry solution. We still see weakness in the GEOVIA side. The mining sector has been suffering in the past 18 months. I don't think this is really the fundamental reason. The fundamental reason is the fact that those customers are now looking for solutions. We are not ready yet. As you know, the GEOVIA environment provides collection of application for modeling of geophysics, but those solutions are point solutions for the time being. It's really not fully collaborative platform to optimize mine exploitation. This is where we are going. The acquisition is a recent acquisition. It was last year, and we have to still build up the solution roadmap. We know what to do. We know what the customers are looking for, and I think they provided a huge, huge CapEx. I think we will create a value for them, but it takes a little bit of time. Solid SIMULIA performance, as you can notice, under solid growth -- SOLIDWORKS growth was well driven by renewal so -- which is a good sign. It's less than what was our sales plan, but it's still a nice growth at 6% year-to-date, and Q3 was up 6%. And the Q3 software organic growth was -- if you remove all acquisitions and changing parameter was up 2%.

So now let's look at the economical environment and the volatility on the economical environment. From -- what we want to avoid is people to get the perception that the market is not there. The market is there, and I think it's a significant market that we can reach with the 14 -- the 12 industries we focus on. Why? First of all, most of our customers, even midsize customers, are looking to operate on a global basis on big suppliers of many players around world. They want to manage IP, intellectual property, for their business. They want to ensure a regular compliance. See, you cannot sell in a country without complying with their regulatory rules. They want to create unique experience for their customers or consumers, and the diversification of the portfolio, I believe, is really a differentiator here. And of course, efficiency with

[Audio Gap]

automation, modular manufacturing, network of manufacturing flow. So the move we did with Apriso to go and connect the MES to the design of manufacturing environment is a very, very important move, and we believe we have a huge lever here to expand the digital manufacturing through execution. Now, as I said, the CapEx decision are carefully reviewed, and that explain why customers have been going to rental.

A few things which are known but not maybe well-known. It's true that we already announced Airbus many months ago. The reality is the customer now is communicating big way on how the virtual platform of Dassault Systèmes has helped them integrate Airbus in Europe, all sites, but also integrate Airbus across the world. It's an amazing showcase on the platform we have created for the 350. It's the platform that will be replicated on all programs. So the dynamic for those customers, even large customers, is not -- is a dynamic of growth in terms of adoption for versa [ph] program, and I think the company itself seems to be very successful on the way they are getting orders. So they will have to produce these huge backlog of airplanes. By the way, at Boeing, it require -- it calls for production environment supply chain connectivity. So we still see this core market as growth market. And we are not at the asymptote yet, far from being at the asymptote of this market.

And also, another sector that we put a lot of attention is the medical device sector in the life science. There is a lot going on there. We announced last quarter, Smith & Nephew and many of our customers, like Johnson & Johnson mechanic -- medical, IBA is adopting our platform here. And they are adopting it, of course, for performance, efficiency, on-time delivery, but also for regulatory compliance, as well as innovation. We really see that those new markets are looking for Industry Solution Experience. They are not looking to pick applications. They want a solution. So when we go and engage with them, we engage under total solution. And that's, I think, confirming that the -- what we announced to you in February 2012 going Industry Solution Experience was the right direction. I think the new sectors are confirming that, and we have a solution called Licensed to Cure. It's a broad focus from initial design to certification, document management of all the processes that goes through the product development for quality insurance and compliancy, and this is -- has been providing a huge satisfaction to the sector. So the possibilities to grow in this sector is also important.

I took another example here, which is MeadWestvaco. This is about packaging, bottling. Drinktec is an event -- huge event worldwide that happen -- it happens every 4 years. It's a huge event, where all CG, CPG companies are really there. And at the first look, you look at this as a coupon manufacturers. The reason why it took this is because we have created a bar code which has a very, very innovative partnership. This company, which provides industrial equipment, whereby you would think that you would be selling design software, simulation software, production software, has been using our platform from the initial packaging, [indiscernible] the design, the styling from the new brand management with the customers back to the production of the machine. So the total value chain in this sector is changing, and we believe the reason why industrial equipment is becoming the #1 sector for Dassault Systèmes even before transportation and mobility is because this sector is going far beyond equipment. It's connecting marketing to production system to the way designs is done and the way they interact with customers. It's a showcase, and the reason why we believe it's a significant growth factor is because the scope of the solution is much bigger. It is not anymore about replacing one CAD system with another one. It's about creating a full -- a business experience end to end. The 3DEXPERIENCE set of solutions are very critical. This is a showcase that, I think, will be replicated in a big way around the globe.

And also a proof that the diversification is picking up is celio*. It's a brand in the CG, consumer goods, area, and what they want to do is create increased visibility and planning on merchandising, moving from paper center to 3D base, consistent brand experience in-store, so basically making sure that the store under brand management within the store can be done well. Again, here, this is not about CAD. This is really about the full business stream. And scaling up with the number of stores to be opened on a global presence, they need this kind of solution.

More traditional but still important to win and we continue to win in the Formula One with Lotus F1, and it's really about replacing existing systems that were installed years ago and replacing them with the full 3DEXPERIENCE platform, CATIA V6 and ENOVIA applications, improving operation and efficiency. So even for small size -- or smaller-sized teams doing engineering and simulation, we bring value that goes beyond replacing the CAD system.

A few important thing that you need to take into account going forward. The V6 is the architecture that is putting all our brands together to help build the Industry Solution Experience. We think that it's essential for the diversification, and the application portfolio now can be easily combined to really create this industry experience that can be suitable with each business streams of each industries.

More importantly, and I will come on a showcase for that, we have initiated our customer test last July for 3DEXPERIENCE on the cloud. And we are astonished with not only the acceptance but the user traction to use the system on the cloud. We do heavy, highly sophisticated application. How can those heavy sophisticated application work on the cloud was a question mark up to now, and I think we are demonstrating with the showcase I'm going to talk to you in a moment about what is happening there. In July, we announced a completely new user experience for all our brands using the V6 application. Why so? Because when you provide cloud services in the category of software we have, we must provide simplicity in the way you navigate across the application portfolio. We have a very rich application portfolio, thousands of applications. They are extremely powerful, whether it's styling, design, simulation, modeling, production. With this new user interface -- we call IFWE Compass, this wider signage everywhere on -- even in your packages about this Compass that you can see before the erection. This is about a unified way to navigate on the application portfolio, and you will see some remarks. So we announced it in July, and we started immediately the customer test around the globe with our clouds in France nearby the headquarter. The customer feedbacks are just astonishing. Speed, can be installed in a few minutes, they get their e-mail, their log-on, their password, they connect, download the proper application. In less than 20 minutes, they are up and running. In our world, which is not the world of e-mail, it has been taking weeks and months to set up an environment whereby servers are well established, collaborative environment is well established. It takes weeks and months and a lot of service, which are provided by our partners, by the way. So we have single access to our application, unique single log-on forever, using streamlined user interface. It takes between 5 and 20 minutes to be up and running, and that has been astonishing. And I don't think in the most simple CAD package that you have today, even on a PC, you can be up and running in less than 20 minutes. And this is for the entire platform. In my view, for the last several years of Dassault Systèmes, that's going to be a very important aspect for the future. It was announced, and we have put it in action immediately. And we have customers around the world. We have customers in New York, customers in Singapore. We select them very carefully because we want to get the best feedback. So when we publish the 2014 acts on mid of January next year, all the feedbacks are taken into account, so we can provide this cloud environment. You see here some illustration, and I want to run a video that shows you and explain to you this paradigm, this groundbreaking user transformation, which is going on.

[Presentation]

Bernard Charles

They have started with, as I said, on the cloud in July and we, every week, add a few new customers here. SHoP is a design architect firm based in New York. We started with them in July, and they decided to use the 3DEXPERIENCE platform to -- for their new programs. And by the way, the programs call for building a house in 1 day in Brooklyn, and the first house will be built this month, modular house, taking into account all the design to construction process and the house has to be built in 1 day. So they started with the platform, and here are some illustration. They said, "Well, the dashboard is the big thing that helps us to manage the program." It's -- I quote them, "It's amazing. I create my first SHoP dashboard in second." There is no precedent in the AEC sector. As you know, planning is different from delivery and design, and now they can integrate everything and they can manage the program on the suppliers on a single, connected platform without having to go and install something at the supplier side, whether a supplier is providing steelwork or other kind of equipment. So it's an amazing showcase, and they were a V5 CATIA customer before. They loaded all the V5 data on the platform on the belief that the response time they are getting for collaboration are better than on their own local computer.

So we believe we have demonstrated with those customers that 3DEXPERIENCE on the cloud can work in an efficient way and with a degree of reliability, which is even higher. Why so? Because in so many cases, people have an -- are having hard time administrating their own IT environment. And we control their entire stack, as you can imagine. Tesla, it's an amazing showcase for us. They are adopting all the software we have, and we have been doing that. That's on premise, and now they are using program management on the cloud. So they both have V6 on premise, and they use program management on the cloud to really connect the 2 together. So they can use certain services on the cloud while they have the design services on premise. Why so? Because it was already there. Would 1 day, they move to -- entirely to the cloud. It's another question, but it's possible. And we demonstrated we can navigate, do verification of assembly, production, manufacturing process directly on the cloud.

DESYS knows our company, and they are using both DELMIA and ENOVIA to really do the set up of the [indiscernible], they use a browser and they just go connect to the cloud and build out, load their data. They were coming from older CAD system. They load the data and organize the system on the cloud directly.

So business highlight, I will let Thibault, this time, make the comment. So the takeaway is the following: Despite the fact that we have created disappointment for Q3, I think the market we serve still is a significant market. The potential of diversification is high. The fact that we are moving more on the -- there is a certain acceleration between buying the license or the rental, I think, is a good orientation toward cloud-based solution. We are building up this experience. The customer feedback, we have about 50 customers today online, is just amazing. I don't want this slowdown in Q3 to create a cloud on the cloud because our cloud is sunny, and I believe that this will create the growth we need to create for the future.

With that, Thibault?

Thibault de Tersant

Good morning. So software revenue was already reviewed by Bernard, but in a nutshell, we had a decline of 10% in new licenses, 2% year-to-date. And the rental and recurring dynamic was quite healthy at 8% for the quarter, 9% year-to-date.

So let's review the different areas. The deal slippage, EUR 12 million, approximately 2.5% of revenue growth, was essentially made of 50 transactions. So it's not just 1 or 2 large transactions which slipped, it's a number of them, and probably more of them were in Asia. What we expect is that a majority of them are going to close in Q4 because we have all indications that they are budgeted and went through additional reviews, but certainly, the projects still exist, and the budget as well.

The shift to rentals, approximately EUR 8 million. Actually, this impact is -- we have measured it in order to be accurate in our Value Solution channel, where we had progressively some increase of rentals because the VARs were able to propose rental terms. And they like them because it offers them some recurring revenue, which is also important for our VARs to manage their business and which were also answering request from customers wanting either to adopt to a certain project in length of time of what they were taking or to not have to go through bank financing in order to finance the acquisition of our licenses. It's today, for third quarter, a significant proportion actually of new licenses in Value Solutions, which were taken under the rental terms. It's approximately 25% of new license transactions, which were under rental terms. So I know some of you feel that this could go even faster and in a manner that we would lose control over our reserves. I think that it's a good trend, but at the same time, the VAS cannot go to 100% all of a sudden because for our businesses, that would not be good. So I think there is a balance that is going to be established in a natural manner with this. The other areas of rentals are -- as always, SIMULIA is essentially a rental business. It is growing. So I'm not taking that into consideration on the shift to rentals, of course, because it has been established like that for a long time. And we have also a few large accounts, renting licenses and adapting actually to their cycles of activity and staffing, thanks to the rental model.

So since I have received many questions on the rental model per se -- sorry if you already know it, but I thought a chart would be useful to explain the beauty of it. It's not a marketing chart for customers, but that's the price for the flexibility it gives. So you can see that when you purchase your license, you start by paying 100 for the license and you pay essentially 20 for the first year of support and then 20 every year. So after 5 years, you have paid 200 in the Dassault Systèmes currency. When you want to rent your license, the model is that after 3 years, you will have paid the same amount, which is 160, as you can see here, which means that you pay 53 every year. And so you see that actually, after Year 3, what you receive under the rental model is more than twice what you would otherwise receive for a license which would have been purchased. And over a 5-year term, you have received 30% more than in a purchase model. That's exactly the price for flexibility.

SOLIDWORKS experienced a decrease of new licenses in the third quarter. So as you know, we like to say that SOLIDWORKS is our best macro backdrop indicator because the sales cycle is relatively short for SOLIDWORKS and, therefore, we can see the evolution of buying trends. And particularly, it's very relevant for the few industries where SOLIDWORKS is strong, which are industrial equipment and medical equipment and mechanical parts in any form. So I think the decline of 6% in new units for SOLIDWORKS certainly validates that the improvement in investment decisions is not there yet and that third quarter, from that respect, was a difficult one. At the same time, the value of SOLIDWORKS is well recognized, and you can see it because we were able to increase, year-to-date, the price percent of SOLIDWORKS by 6%. And I think this, of course, means a lot in terms of the value of the solution.

On services, we had a modest 5% growth in the third quarter. Services revenue were a little bit short of our expectations, as we have already indicated, but the measures we have taken in order to have a healthier service business are also showing. In spite of the shortfall in revenue, we were able to grow and have a gross margin of 14%, which I would not declare complete success about but certainly is a good trend.

Operating income was essentially in margin at 31.6% in the third quarter, slightly better than our estimates. If you remember, third quarter of last year was very good in margin for a variety of reasons. So the comparison was hard for this quarter, but we delivered the margin in spite of the revenue shortfall. And EPS was a little bit shy of our objective as well at EUR 0.88.

The cash flow. I'm going to speak about the cash flow because it deserves an explanation at EUR 75 million in operating cash flow. It's a EUR 40 million decline compared to third quarter of 2012, which was, by the way, a very good quarter. And so -- sorry, but there is a busy chart, now just to give you full clarity on the evolution of this cash flow. So you can see that in terms of net income adjusted for noncash, there is an increase of EUR 16 million compared to third quarter 2012. In trade accounts receivables, we had a decline of EUR 88 million. The DSO is established at 58 days in the third quarter, so I think that's a good achievement. Unearned revenue -- there is a decline in unearned revenue of EUR 83 million, which is actually consistent with the trend in the third quarter because the renewals in recurring are happening, as you know, in fourth and first quarters. And so then there is a decline in unearned, which is natural. And by the way, we did edited computation of the unearned, which is at EUR 478 million on the balance sheet, and here, currencies have a very severe effect on this amount because excluding the currency impact compared to third quarter of 2012, unearned is, in fact, growing by 5%. I have read that there were questions about the decline in unearned. It's growing 5%, and in a normalized manner, it should grow by 7%. So I grant it to you but, of course, the new license strength was not good in third quarter and had an impact, of course, on the new recurring revenue associated with the new licenses. So it's a normal evolution of unearned.

And then we are going to see the 2 areas impacting the operating cash flow. Accrued compensation, we had actually more compensation to give in the third quarter of 2012, which was accrued and to be paid, structural charges related to performance shares and better bonuses based on a better year, and sales compensations. So here, actually, the fact that we don't have this accrued compensation is also related to the fact that we are managing our expenses, thanks to the variable component of our salaries and nothing more than that. So it's not a bad event actually. In the cash flow, accounts payable, nothing to declare. In income taxes payable, because 2012, from an income tax was actually a good year, the down payments were higher at the beginning of 2013. So that's part of it. We were paying more than payments compared to the ones in 2012, which were based on 2011. So we have already paid more taxes. And so we have less to be paid for the remainder of 2013, and the other impact was that we've got a tax credit based on M&A activities last year. So half is coming from more down payments, EUR 20 million, and the other EUR 20 million is coming from tax credits related to 2012. And so you have here the full reconciliation of our operating cash flow. Sorry for being long, but I thought you would want an explanation.

Now the objectives. Q4 is -- compared to the former Q4, of course, we didn't release the Q4 objective per se, but you could assume it because it's the delta between our yearly objective and year-to-date at the end of the third quarter. So we are adjusting it by EUR 10 million to EUR 15 million. Now we expect that we are going to close most of the CPGs of third quarter. So the adjustment is, in fact, higher because it does embed roughly EUR 10 million of deals, which we expect to close and coming from third quarter. So the adjustment is, in reality, EUR 20 million to EUR 25 million in fourth quarter and relatively similar to the one we have experienced in the third quarter. We are also taking into account the emerging countries' currency impact for about EUR 5 million in the fourth quarter. The list is long. I'm sure you know it very well, but I -- so I don't need to lecture you on the Indian rupee and the Australian dollar and the Brazilian real, but in fact, the list is longer than that. So there is an impact coming from there.

We have also announced this morning the spin-off of Inceptra, which is closed. And so we removed the EUR 4 million revenue associated with Inceptra. Inceptra is the very last distribution activity that we were handling. You remember or you don't, but when IBM was managing our direct and indirect sales forces, they had a network of partners and we had decided to, ourselves, be a partner to understand how it was working in a few countries. And so we have already spun off these activities in France, in Germany, in Switzerland, in Netherlands, and we had one remaining in the U.S. called Inceptra. So that program is over. We don't have any more activities. So we can manage our VAR network without being a VAR ourselves, which is, of course, better.

And finally, I decided that we should update the U.S. currency rate because it's been weakening recently. It is a little bit counterintuitive between us but it is weakening. That's a fact. The yen is also weakening. So I'm not changing the yen, but I decided to go to $1.40 per euro for the dollar. So that is a EUR 7 million impact.

So the organic growth for the fourth quarter is unchanged at the bottom of the range compared to what we announced last Monday, and the high end of the range is EUR 20 million higher. So we are targeting a revenue growth of 4% to 7%. The recurring is impacted by the fact that Q4 of 2012 had a couple of exceptional items in the recurring, with fewer slippages from Q3 to Q4 in purchase orders of renewals and some compliance work as well. So that's why the recurring is impacted by 2 points in Q4 compared to what it should normally do, and we are planning to have new licenses revenue growth with this objective at the low end, as well as at the high end. The operating margin is expected to be stable between 34% and 35%, and so the EPS would be EUR 0.97 to EUR 1.02 and this embeds the sudden recent increase in tax rates, corporate tax rates in France, which is somewhat severe, as you know, because it's taking the corporate tax rate to 38% in France for 2013.

So the bridge, I think you already got all the variations. So you have it in the presentation. I'm not going to comment it again. It's consistent with what I just shared with you. You can just note that here, there is the impact of the activity for Q4 in terms of revenue and in terms of EPS. EPS is not a big impact from activity because we are also managing expenses, of course, according to the activity.

And for the year, what it means is that we have a yearly objective of EUR 2,060,000,000 to EUR 2,080,000,000 in revenue after recording the impact from currency of EUR 11 million, EUR 24 million from Q3 activity, EUR 13 million is the midrange for Q4, and Inceptra. And on the EPS side, we are now targeting EUR 3.45 to EUR 3.50 after the difference impacts from currency activity and tax rate that you can see here.

So this is really what we see for Q4, EUR 555 million to EUR 575 million. That would be a growth of 4% to 7%, and the yearly growth would be 5% to 6%. These expectations are developed with the assumption that the scenario we have seen in Q3, we would see relatively similar in terms of trend to rentals, 25% of the activity in Value Solutions would be rental, and this is embedded into this assumption.

And now I think with Bernard, we can answer your questions.

Question-and-Answer Session

Unknown Analyst

Bernard, can you first comment on -- Thibault related to the 50 transactions that slipped in the third quarter. How many of them have closed in the fourth quarter so far? And what gives you the confidence that the rebound you expect in terms of that closure should come through in the fourth quarter? So I guess, what I'm trying to get to is what is the incremental risk around execution in the quarter? And as you move into next year, where do you feel you are with regards to, again, the ability of the sales force to manage some of these more tricky or volatile quarter ends? And secondly, if you can just talk about the state of the pipeline. I know at the beginning of the year, the pipeline was not as great as you'd like. It's sort of improved midway through the year, but can you just give us a sense of how the sort of pipeline is looking and how it may build given a lot of the new products you talked about that you're looking to launch?

Bernard Charles

I think -- first of all, thank you for the question. A few -- it was a learning curve, Q3, for us because I think we could have closed those transaction with more attention. So what we discover with this volatility -- volatile environment is that the attention to close a transaction should have been higher. Not to say that people are not doing the right job, but there was a kind of need to be more cautious about any events that could come underway to close before the end of the quarter which leads me to the second aspect of your first part of the question, which is, are we going to close those transaction? I think most of them, yes, and many of them are already closed a few days after the quarter, which is the consequence of my first comment. We have set up a lot of attention with our direct sales force to make sure that they do understand that any small difficulties from customers are good reasons to just wait. And so this level of sensitivity, I think, was not at the right level, but it's a learning for Q4 to secure what we have committed to do. The potential is there and the visibility we have is there in terms of not only number of transaction but the size of what we can close. I'm now talking about your second remark or second question, which is about going forward for 2014, and I think -- so the potential is there. We don't see any weakness in the pipeline. It's our discipline to close it in an environment where there is a certain level of hesitation on the customer's standpoint. So that's what we have to improve, I think. It probably means also that when the business is easier, you don't reveal the weakness in our own organization. And we have already taken some critical decisions in terms of management leadership and on processes to make sure we can take advantage of these difficulties to strengthen the system especially in the direct sales force. On the indirect channel, the visibilities also grew. The mood of the resellers or the partners is a positive mood. I've not -- I've been to many, many executive forum in the last weeks since early September, and I have not met any resellers or partners that were really in kind of panic or concerned even, which we think is a good sign. So there is a lot of parts which are moving in the company, which, probably, also have been a factor. I think I mentioned that last time at the call, 10 days ago, setting up the transfer of knowledge for industry solution, accelerating diversification. When you do diversification, the first orders are not as big as what they are when you do repeatable orders. All those elements are really part of the overall results that we have now, but I'm confident for -- it's too early to speak about the projection for 2014, but I am confident that we can take advantage of the market there, the diversification there and our position in each of the geo to really mitigate all the factors when someone is slowing down, can be compensated with others, which we have, up to now, always done. So there was a lot of headwinds that were all in the same direction this quarter, probably more than any past quarters. So the level of confidence we have is [indiscernible] and customer adoption is high but, of course, we don't want to disappoint the market and we are cautious. That's what Thibault has been explaining just a minute ago.

Unknown Analyst

And just a final question is, you've talked about pushing Canada, the plan, in terms of also doing more M&A. Does that change -- the setback of Q3 change that viewpoint? Should we expect to continue to see a more aggressive M&A path from you in the next 12 months?

Bernard Charles

I think we have a very consistent policy for M&A and we stick to that policy. We have a long-term orientation. We have set up the new horizons, 3DEXPERIENCE on Industry Solution Experiences, for the 12 industries we serve. No, the current past challenges are not going to change anything there, and you might notice and I think people made a comment 10 days ago -- and Thibault, you might want to come back to that. But you might notice that the operating margin -- we still improved the operating margin in the quarter despite the lower revenue. And we always prefer the next moves in advance on all aspects. So our plan will not be changed.

John P. King - BofA Merrill Lynch, Research Division

It's John King from Bank of America. I just wanted to ask question or a couple of questions on the new platform launch, the product launch in mid-January of 2014x. I just wondered to what extent, if it all, you felt that, that had any impact on the decision cycles that you've seen in Q3 and maybe as you look into Q4. And just as a follow-up to that, in terms of the OpEx base that you have at the moment, do you envisage in 2014 having to make any investments in order to support some of the major product releases that you're bringing to the market?

Bernard Charles

First, I don't think there is an impact. Would there be one impact, it would be a positive one because customers want to be on premise. We are going to stay on premise, related to IP protection, security and many other factors. But frankly, all of them like to -- love to know that what they can get if, 1 day, they get it online, on the cloud is exactly the same set of services. It's a big value for them for the supply chain, for the Tier 2 and Tier 3 suppliers, but also, it's a huge value from the fact that we learn a lot going on the cloud in terms of how to increase the simplicity of our system. And our customers are using our system for extremely complex things. And that's a big, big step on -- they all love the evolution of the user interface. I don't think, even looking at 2014 and '15, that they will be, may I say this way, a competition between the 2. I think it's securing for them. They know we are a player to provide solution on the cloud. Related to -- on the showcase I have -- are real. Those are real project. This is not a trial. And when you look at Tesla, for example, which I think, on many perspective, is really an amazing showcase, they have been using V6 on premise. And have said we want to use program management on the cloud. So they are using a hybrid. At the end when they scale and deploy, will they put it back on premise? Still to be known. For us, it's okay. Both are good. Related to the CapEx, I think we have created -- the scale of what we have done up to now since July is big. So we know it works. We know how to do it, and we know how to provision in a lean way. Frankly speaking, I am astonished with the result. I'll give you a data point. It's very hard to put our -- any kind of PLM system or 3DEXPERIENCE in production, in a reliable way for our customers like it is for the ERPs. It takes years. That's the truth of the customer reality. Having this setup being done in a few hours, it's a new world. They are astonished themselves. What this will have a consequence is, I believe, they are going to ask us to help them for their own private cloud. And I believe they are not going to continue to use tricky IT implementation. They will say, "Give us the proper stack," and they will simplify their own implementation when it is on premise. So the effects are multiple, but all goes in the same direction. And I am astonished with the performance. So I think it's a new world. I think it's as important for us as what we did years ago when we moved from mainframe to UNIX workstations. I think all of you are young. Maybe you don't remember that, but I do. And moving from UNIX workstation to PCs, it was an exciting moment for our company because things were not possible before. And this excitement and -- again, it's a sunny cloud for us because this is new, fresh air. And extract -- you take an iPad, you connect, you go, you redo your project from an airport. You can view things. You can even do that on a mobile. The graphic is high quality. It's just a new world, and we are applying it to the old world. So it's not something different. That's -- now my commitment to Thibault and to the team inside is to be very lean in the way we create the -- we provision because the CapEx story is an interesting story, but in some way, what happen if it takes only a few days to provision when there is a demand? Then you have the revenue in front of the CapEx. What happen if your flexibility and if your stack can seamlessly work on a third-party operator? I don't want to name it again, but you know which one it is for the time being. We announced it 2 years ago, and it's working. Think that same stack real-time and we can allocate it on our own cloud or use elasticity of a third-party operator to do it on their cloud and transfer until a few days later. Would we decide to have the service on our own cloud? It's transparently a provision and the user don't even notice it. So it is really a lot of new know-how that we have accumulated, and I think the infrastructure is there. The architecture is there, and you cannot do that. I think it's going to be fun for us to observe our competitors because you cannot do that just by trying to port. It has to be native, and you have to know every single detail about the stack. And we do control the stack end to end. So that's the point. Maybe, Thibault, you want to add a few things on the CapEx, on that standpoint?

Thibault de Tersant

It's not the end of the world, at least, this is what I can say on the CapEx. It is manageable, and in the current environment, it's also a profitable activity.

Neil Steer - Redburn Partners LLP, Research Division

Neil Steer, Redburn Partners. Just got a -- 2, 3 unrelated questions. Or 2 quick ones. First of all, from your commentary on GEOVIA and Gemcom, it sounds as though the revenues were down in the third quarter year-on-year. If you could quantify that? But you also suggested that you need to get some new products to the market, and that sort of begs the question whether there's been an underestimation as to the technical challenge associated with getting some of those products to the market. The second question has to do with the rental model. Thibault, quite clearly, based upon the data you have on that slide, as we have seen the rental revenues build over the last 5, 6, 7 years, there should have been quite a marked impact on the profitability overall. And the question is, has that been reinvested or where have we seen the favorable impact that should be feeding through from there? And I do understand, one, with build up with the indirect channel and the VAR channel, obviously, an increasing proportion of the business now is becoming, if you like, one step removed from the customer and the people actually making the decisions. Does that change, at all, your visibility of the market and the demand, generally?

Bernard Charles

So I will start with the second part of the first question related to GEOVIA and then, Thibault will take over to give you more detail on the revenue evolution. Would we have to do it again, the Gemcom acquisition? We would do it. So I want you to know that we would do it if we had to do it today. Is it a surprise? No. We know that most of the acquisitions we have done in the past, most of them were CAD solutions. Great application, great technology, selling point solution -- point application, sorry. But this market, by the way, the natural resources market, most of those large customers, they have huge CapEx but they are really underutilized. It's just like 30 years ago in the automotive sector. They are just at the beginning. Is it taking longer for us? Not really. We knew day one, when we did it last year, that it will take time to connect those application to a collaborative platform, and make sure that those companies can connect all their visibility on the sites that they exploit. Today, they are blind. They don't know what is the business going on in each of the sites. They only see the result but they don't know their operations. I'm sorry to speak so crowd statement. A rude statement, maybe it should not perceived that way. But there is a lot we can bring to this industry. I've seen an interesting article, I think it was in the FT yesterday, exactly about that topic. About learning visibility around our natural resources, exploitation and operation should be optimized for safety, efficiency and better planning. That's what we're doing. And there is not many players in town. So we have the technology, we have the team, we have the customer relationship. It's supporting the relationship for the time being. Many of those big companies at the executive level don't even know that we are serving them because it has been acquired as a point solution. But we are creating this collaborative platform. And the platform, we have it, it's called the 3DEXPERIENCE platform. So it's becoming a collection of application on top of what we have which is, we believe, extremely powerful. So we are on plan, and the plan has not changed since we acquired that company. Now it's true that there is a slowdown in the sales of the apps due to the market condition. And -- but this does not change the plan we have, which is collaborative platform for natural resources. We think that there is revenue to be done and the activity is very, very profitable. So I don't see why, with a profitable activity with potential for growth, we should change the plan. And I think we are not changing it on that standpoint.

Thibault de Tersant

Yes, on GEOVIA, it is true that the revenue is down. You know, it's -- the irony is that on one side, these mining companies are under-equipped in software solutions, compared to other companies like in oil and gas, for example, very much. So there is the huge potential with solutions that Bernard presented. At the same time, these companies, when the raw material prices go down, they stop all CapEx investment for some time and then they -- there is a rebound. So I don't doubt that this is a growing market, because it's under-equipped and because the raw material demand in the world will continue to go up. So as soon as there will be a rebound, I think we will see a sharp acceleration in the GEOVIA revenues. So I think we need to just acknowledge that until we have enterprise solutions, it's going to continue to be somewhat cyclical in the revenue. For the rentals. So I understand from your question that, first, there is a negative remark on our margins. I'd like to answer that part first. We...

Bernard Charles

Go next -- to the next question, reinvestment.

Thibault de Tersant

Yes, we are investing in R&D and in sales, I think that's very clear. And we are very reasonable in G&A. But -- it's true. But we have -- I'd like to say before I answer, that we have improved margins by 7 points in 4 years, in spite of doing a few acquisitions. So -- well, although, it's never enough, I think it's not that bad. The rental model -- you need to understand that what I presented here which is, of course, very attractive, is the rental model. Essentially, for our -- also in CATIA, DELMIA, ENOVIA, this package, and when we sell it to a customer hesitating between purchase of a license and rental, this is really the model we apply. So this evolution, we are still at the beginning of it because it is in the Value Solutions channel that we see it. And so we will enjoy the benefits of it in the future. With SIMULIA, it's a different rental model. And it's sole rental, so you cannot really compare. It's just the SIMULIA price. And for the historical customers, we are not truly selling rentals to very large new customers. It's not large and midsized customers in Value Solutions which are taking rentals. The very large ones are doing computations over 8 to 10 years, and maybe they take, for a fraction, some rentals but the majority of what they invest is still in the purchase of licenses. So in terms of visibility, I think the more recurring we have, the more visibility we will have. And the cloud solutions will also help in that regard. So my goal is that my job becomes easier and easier.

Adam Wood - Morgan Stanley, Research Division

Adam Wood from Morgan Stanley. Just looking a little bit more broadly around V6 adoption. The ENOVIA business has been probably slower than you would hope this year. And that's been one of the products that you've seen customers take, kind of, started a V6 deployment. Could you maybe give us a little update on where you see that process? Is that stalled a little bit as customers may be a little more reluctant to move because of the environment? And how do you see that going forward? Secondly, just on the kind of Q4 again and on the execution issues. First of all, having moved to solutions, do you think, while positive, mid- and long-term that has maybe caused some disruption in the sales force short-term, as they changed a little bit the way they're going to customers and selling? And is the optimism on Q4 based on kind of similar close rate to Q3, but a much bigger pipe because of the slipped deals. And then finally, just following up on that rental question. When we've seen on premise software companies go to cloud, traditionally, that kind of model, instead of the 53-point something that you highlighted has tended maybe more to be in the 40s versus the 100 of licenses. As you go from rentals to cloud, would you expect to be able to keep hold of a number of above 50 versus the licenses at 100?

Bernard Charles

I think, related to the V6, the topic was more related to the size of the transactions. With this volatile environment, it was -- this was really the point. Not really the number. In fact, we have seen nice progression on the Value channel. It took time for them to know how to sell the ENOVIA product family. They were very centered on the design of our prediction tools and simulation. So we see a nice evolution there. So more of the size. On the second aspect, related to basically, is the solution approach having an impact on product-centric sales approach? I don't think so. What is clear is that for new sectors, let's take CG, CG retail or even in energy, the by-default approach is solution. I cannot say the same yet for the more traditional sectors that we cover, namely: aerospace, transportation and mobility, whereby, we still have a dialogue with engineers, people in manufacturing, and there is still a tendency to select a product portfolio more than an industry solution. This is evolving. I think that the Dassault case is a good showcase from that standpoint, as well as the largest, Formula One, and other. But it's starting from the smaller player than from the big player. Usually, they do their shopping by pointing out on leasing on the huge portfolio. I'll take this, this, this and how many of these, as opposed to taking the solution. So I think the industry solution approach is unstoppable. It's going to take time because, also, we need to have our sales force being able to sell them in a proper way. But because it simplified. At the end of the day, simplification is going to be key. So that's for the second part. I hope I have answered your question. The third element, on the cloud aspect, there are multiple advantages I see, very significant factors. We have created a new simplification in the way we can demonstrate what we can bring as a value to our customer. Because we -- in some way, we don't depend on them to have the showcase being available to the users. We don't depend on the IT installation, administration. We can showcase quickly, in a few hours, and then, of course, when it comes to the purchase decision process -- on the implementation decision process, they have to decide, "Do I put it -- will I put it on premise or will I put it -- use the cloud?" So I think for our sector, this, as I said is as profound as what happened in the last 30 years of our platform transition between mainframe, workstations, PCs and now, cloud and mobility. And our solutions are consistent across the board. I don't see a downside aspect of it. I only see the possibility to do -- to leverage in a big way. Now at which speed are we going to be able to leverage that? It's still unknown, but what I noticed, July, we started on the number of users -- who are happy users on the cloud, is really an exponential curve. And that's -- from a user acceptance and companies -- revealing to companies what is possible, that's, for us, the new game. And once again, to set up a PLM environment for a customer today, it's complex. As complex as an enterprise system. Having it on the cloud, you can start quickly. Try, get the advantage of it and decide what you do at the and. So I really am sorry that it's happening, this move is happening at a time where we have a bad quarter. I'm totally upset about that. Because I have to -- I cannot smile and transfer to you the excitement we have. I hope I'm doing it today because in the company, it's an amazing excitement. People are frustrated to have missed a quarter, but they are so excited to see that it's a new world. And of course, you can't go in front of an investor and tell them, "Life is beautiful. We missed the number, but everything will go fine." So we have to balance, but I have -- Thibault say -- told me best recommendation is stay yourself, because this is a big play for us. And he will do his own job of putting the belt and suspenders and everything that needs to be put by the company. That's the way the 2 of us are working. But cloud is happening for our sector. And that's great.

Thibault de Tersant

On the pricing aspect of your question, Adam, just 2 quick observations. Obviously, it seems to work, the rental model, so I don't see a reason why we could not just translate it into pricing schemes for cloud. And even more importantly on cloud, what we are doing does not exist on the market.

Francois-Jose Bordonado

We'll take 1 question from the webcast, please.

Operator

We've got a question from the audio line from James Goodman from Barclays.

Gerardus Vos - Barclays Capital, Research Division

It's Gerardus, actually from Barclays. Two, if I may. Just going back on the rental model, clearly, the customer is willing to pay for some flexibility. So could you give us some indication about what kind of a transition you're seeing in, kind of, seats? So what I'm trying to get out of it is, if you have shelf where you don't pay for it, so therefore, over those kind of 5-year, theoretically, you could run with a lower seat level than under a licensing model. And then secondly, on the pricing of SOLIDWORKS, it seems to be very strong in the third quarter. The pricing for your products are already at the higher end if you compare it to the kind of competition. What gives you the ability to kind of continue to push this up, and do you think these kind of rates are sustainable going into 2014, the rates of increase?

Thibault de Tersant

Yes. So under rental, yes, it is true, there is flexibility that is offered by the rental model. And our large customers are using this flexibility to have rentals matching the number of users they have, especially when they do programs and there are ups and downs. And it's part of the deal. The new event, for us, is more the rentals in the Value Solution channel, and this started, essentially, 18 months ago or 2 years ago. And what I can say is that so far, all the renewals of this rentals in the Value Solution channel have happened. So -- so far, it has not been used to do just short-term projects or manage that kind of flexibility. It has been used as a manner to start deploying our solution with less upfront cash, and also probably, a manner to invoice OEMs for suppliers, which is a little bit more practical for them. So I have not seen, in this very area, the use of that flexibility. However, of course, it does exist, and this may happen. SOLIDWORKS, we, I think, are showing the value of the solution and the robustness of it by being able to increase the price per seat. Our plan is not to continue to increase it forever. We have done adjustments in 2013 -- at the beginning of 2013, and these adjustments is the ones -- are the ones that you see today, in the average selling price of SOLIDWORKS. But the plan is not to continue to increase the price for the base product. The plan is to increase the portfolio for SOLIDWORKS.

Bernard Charles

And along those lines -- and that's a very important point that Thibault mentioned, we have plastic, electrical on these kind of application solutions. It's not really industry solutions, it's application solutions. And on top of that, as you know, we provided indication to the market early this year, that new products of the SOLIDWORKS family will take advantage of the 3DEXPERIENCE platform online. And as a matter fact, since we introduced the customer test on -- with 3DEXPERIENCE last July, we also did introduce this collaborative platform online, I mean cloud, for a certain number of SOLIDWORKS customers. We have a new product called Mechanical Conceptual, which is an add-on to SOLIDWORKS, but should not be perceived as an add-on, it's much more than that. Because it's a way for a SOLIDWORKS customer to use the cloud solution for collaboration, and connect with its own supply chain. So this is also an interesting evolution of how PC-based apps are becoming 3DEXPERIENCE-powered on the cloud for an expanded scope of usage. Michael?

Unknown Analyst

Actually that's been an answer to my question. With -- for SOLIDWORKS, I mean, if you're seeing subscription demand from the Value channel for core PLM, your competitors are launching cloud-based solutions at the low end of the market. It strikes me as though it will be a natural product to either offer on subscription or cloud-based, and you mentioned Mechanical Conceptual. So what are the plans for launching cloud for SOLIDWORKS? And then, Thibault, just a couple of quick ones for you. Just V6, the percentages of licenses -- to go to Adam's question? And then in terms of deferred, it was up 5%, as you said, constant currency. I guess, the Apriso acquisition added a little bit? And Gemcom, without the deferred income write-down from last year, would've anniversary-ed at a higher level. Could you sort of give us an organic number for deferred growth?

Bernard Charles

So on the first part of your question, Michael, you understood it well, we are expanding the SOLIDWORKS. What we call a user-centric, PC-based, workstation activity, so they can use this 3DEXPERIENCE platform. And the plan is to have everything simultaneous. In fact, the customer test going on now are going on for all application brands, for SOLIDWORKS, DELMIA, because they are all based on 3DEXPERIENCE platform. And we are doing this customer fast-track we've used with them. So in January, when we made it available for the PLM world or the 3DEXPERIENCE world, it's going to be also available for SOLIDWORKS. As a matter of fact, SOLIDWORKS as well -- these are in the end of January, and we will be revealing -- and we already -- announced that this is what is going to happen.

Thibault de Tersant

So the percentage of Version 6 in new licenses was 16%, will be better. And I'm not sure what is your question on organic growth, is it Q4 or is it...

Unknown Analyst

For Q3, if you can take out [indiscernible] the would [indiscernible]?

Thibault de Tersant

For Q3, all acquisitions -- all weighed 1.5% of revenues.

Unknown Analyst

But on the balance sheet, deferred income, the write-down [ph]?

Thibault de Tersant

Okay. So on the balance sheet, it's very small because on the balance sheet, we are in IFRS, and so we effect the write-down of deferred revenues, as you know, when we do the acquisition. So we start from fresh revenue acquisitions. So the deferred revenue is adjust -- the deferred revenue coming from the new licenses sold by Apriso during third quarter, which is roughly EUR 3 million in new licenses. So the deferred is 20% of that. So it's just a small figure.

Francois-Jose Bordonado

We have our last question from the webcast. Please go on.

Operator

We've got a question from the audio line from Amit Harchandani from Citi.

Amit B. Harchandani - Citigroup Inc, Research Division

Amit Harchandani from Citigroup. I had a question around the structural profitability of an industry solution versus a point solution. You mentioned that outside your traditional industry, industry solutions are seeing an uptick, and given that it's being sold as a package, my sense was, in terms of the costs involved in closing the deal, it could potentially be slightly lower. So would it be a fair comment to think that, over time, industry solutions will structurally have better profitability than point solutions?

Bernard Charles

That's the intent of the industry solution, and it's really to have a better articulation between what is really the value we bring, and what is investment you put in front of that value that we can create. That's why I believe it's working very well for the new industries, and also because the profile and the people with whom we are interacting are different when you are in the AB [ph] industry sector. The decision-makers are in charge of the program, in charge of engineering, in charge of manufacturing. When you are in those other sectors, these kind of profile are not necessarily there, and it's more the business value. But I think it's useful for every sector. Now the engagement for an industry solution does not mean that you deploy everything at the same time. So what we have done to avoid a kind of "take it all or don't start" is, the industry solution is the roadmap for value creation and then, there is a roadmap for implementation that we adapt to each customer situation. But the envelope of our multiyear is well-defined and, therefore, it facilitates the deployment on the business value creation framework of the customer. And frankly, they're like this. It's a way for them to go to their investment committee and explain why. If you look at an apparel company, they have not time today to identify why they will put those tools in operation. And if you have a good business case and a business model, it helps them. So I have seen that in the last Experience Forum -- I was there yesterday in Russia, we had an Experience Forum there were half of the customers were from new industries. And we -- it was overbooked. In fact, the room was too small. Because they want to know now. We are becoming visible. They want to know, and they want to know how they can use that for their own businesses to open store, develop collections. So this is a new world where the business value has to be associated with the investment case. And frankly speaking, in our sector, for years, it has been more the acquisition of highly sophisticated application to do a job. So that's industry solution approach as a business. And you all understood that this 3DEXPERIENCE platform is a business platform. It's not a technical platform only anymore. You can manage costs, supply chain allocation of cost, you can track it. It's becoming a business experience platform as opposed to technical platform only. You want to add something, Thibault?

Thibault de Tersant

I think I will just add the fact that, with industry solutions, we also believe that we are going to enrich the content of each transaction that will be done and therefore, improve the sales productivity, which would have a positive impact on our own operating margin. But of course, for that to be fully realized, we need the sales force to be completely trained in the industry solutions, and they need to be well understood.

Francois-Jose Bordonado

Bernard?

Bernard Charles

Okay. With that, thank you very much for participating to this presentation this morning, locally here in London or on the phone. And of course, we are always there to address any further question. Thank you, and talk to you soon. Have a good day.

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