Dassault's CEO Discusses Q1 2011 Results - Earnings Call Transcript

Apr.29.11 | About: Dassault Systemes (DASTY)

Dassault Systèmes (OTCPK:DASTY) Q1 2011 Earnings Conference Call April 27, 2011 10:00 AM ET

Executives

François Bordonado – IR

Bernard Charles – CEO

Thibault de Tersant – CFO

Analysts

Jay Vleeschhouwer – Griffin Securities

Michael Briest – UBS

Knut Woller – UniCredit Group

Operator

Thank you for standing by, ladies and gentlemen, and welcome to Dassault Systèmes 2011 first quarter financial results 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 advise you that this conference is being recorded today.

I would now like to hand the conference over to your speaker today, Mr. François Bordonado, Investor Relations. Please go ahead, sir.

François Bordonado

Thank you, Anya. Thank you for joining Bernard Charles, our CEO; and Thibault de Tersant, our CFO, for a review of our 2011 first quarter.

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 two please see the reconciliation tables included in our earnings press release.

Some of the comment we will make on this call will contain forward-looking statement, which could differ materially from actual results. Please refer to our risk factor in today’s press release and in our 2010 Document de reference which we filed with the AMF.

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

Bernard Charles

Thank you, François-Jose. Dassault Systèmes delivered a solid first quarter 2011 as our numbers demonstrate.

At the top line, total revenue of EUR410 million increased 29% in constant currencies. New licenses revenue was up 28% in constant currencies. The revenue dynamic was good in all three geographic regions. At the bottom-line earnings were up 47% demonstrating our operating leverage.

We had several major new Version 6 announcements, and are progressively building a broad base of references, truly enterprise-wide references. On industry diversification, two acquisitions we completed further advance our diversification, broadening our offering to target industries.

With Intercim, we have acquired a company with technology to expand DELMIA’s footprint enabling companies to close the loop between the shop floor and manufacturing engineering. The acquisition strengthens our offering for advanced and regulated industries where, for example, certification is important. With Enginuity we help accelerate product innovation in formula-based industries such as CPG and pharmaceutical where our formulation is at the heart of the product.

We continue to focus on returning an important portion of earnings to shareholders. Our Board of Directors has proposed a 17% increase in our cash dividend.

Now, let me turn to Japan and provide some details here. Our local teams and partners were quite amazing following the earthquake, quickly assuming continuing of operations in order to be positioned to support our customers. This support took many forms. In total we have about 400 employees in Japan and a very strong network of resellers and partners.

Japan is one of the four largest markets in the world for industrial companies. We have a strong position in this country, with long-standing relationships. I visited Japan earlier this month and met with a number of our customers to understand first-hand the situation. In large measure the infrastructure in Japan is intact and most customers’ facilities are up and running.

The issue is the indirect effect from supply chain disruption, resulting in some companies not running at planned levels at their manufacturing facilities in Japan or elsewhere in the world. What is important, however, is that production volume are not impacting product development plans.

While we anticipate seeing a lower level of new business activities over the next two quarters in Japan, we believe it will be largely limited to new license revenue with minimal effects on recurring revenue. The large majority of our revenue in Japan is of a recurring nature. New licenses revenue in Japan represented about 3% to 4% of the total revenue. Following this period, we anticipate continuing to grow our business with companies of all types in this important market.

So having assessed the near-term impact we may see from customers in Japan, we are able to reconfirm our 2011 financial growth objectives. Taking into account our first quarter result, anticipated customer demand in other countries and regions, and recent acquisitions, I believe we are well positioned to achieve our objectives for the full-year 2011.

And, now, let me turn the call to Thibault at this time.

Thibault de Tersant

Thank you, Bernard. My comments today are based upon our non-IFRS financial results. In our press release tables you can find the reconciliation of our non-IFRS to IFRS data.

At the revenue level the differences are very minor in the first quarter, as we had less than 1 million of deferred revenue.

Our financial results for the first quarter of 2011 reflect the significant increase in our direct sales force following the integration of IBM PLM as of April 1st, 2010. The comparisons also reflect the acquisitions of EXALEAD and Geensoft since July 1st of 2010.

Turning to our first quarter of financial performance, non-IFRS revenue was EUR410 million, up 29% in constant currencies. Adjusting for the better evolution of currency, we came in just above the top end of our revenue range.

In total, software revenue increased 31% in constant currencies, with PLM software revenue up 36% and Mainstream 3D software revenue up 16%. In constant currencies, new licenses revenue increased 28% led by a strong performance of our indirect channel, benefiting CATIA and SolidWorks as well as 3DVIA.

Recurring revenue increased 32% in constant currencies. We are seeing a good evolution of maintenance revenue as higher new seat activity translates into increases in maintenance revenue. SIMULIA’s first quarter growth is an important indicator for the year, since its revenues are largely recurring in nature. And here with the results we are very encouraged with SIMULIA software revenue being up double digits in constant currencies. So a good outlook for the year for our simulation business.

As anticipated we had no one-time events for maintenance such as we saw with the recoveries last year, so a good base to use for analysis and modeling.

Our services revenue was up 14% in constant currencies. The services gross margin reflects the fact that we had multiple initial projects underway. Typically with larger customer projects, once awarded a contract you begin with a proof of concept and then ramp up the engagement from there once the proof of concept has been reviewed.

Our operating margin increased to 28.3% from 22.1%, virtually all from operating leverage. Currency and tax reclassifications both had a slight beneficial impact of about 40 basis points each.

Earnings are the highlight of the quarter, up 47% to EUR0.63. These results all come from operations due to higher revenue. Income tax was in line with our expectations and financial income did not contribute to the growth of our earnings.

From a regional perspective, the first quarter was generally as anticipated with the exception of Japan where we did see some impact on the last three weeks in new business activity. In Europe revenues were up 32%, with a good performance in most regions. In the Americas, revenues increased 22%, with an improving dynamic. And in Asia revenue growth was 32%, with a strong quarter in particular in China, India, Korea, and the rest of Asia. Just as a reminder, all these figures are in constant currencies.

Our first quarter performance illustrates the value of our go-to-market strategy with both a focus on direct sales and equally strong indirect sales channel enabling us to expand our market reach geographically, by user types, by industries and by application domains.

We benefited from a strong performance of our Professional Channel leading to a very good quarter for SolidWorks.

Looking at the numbers, Mainstream 3D software revenue increased 16% in constant currencies. SolidWorks seats licensed during the first quarter increased 23% to 12,128 seats and the average selling price increased 2% in constant currencies.

The success of SolidWorks multi-product strategy is quite evident, with sales of it simulation and PDM products as well as 3DVIA representing about 20% of the Professional Channel revenue in the first quarter. Citing just a few of its many wins in the quarter, in our presentation you will see that Seagate in the United States is using both SolidWorks and its PDM solutions to provide a worldwide standardized platform for design. In Singapore, Panasonic is using SolidWorks as well as its PDM and simulation software resulting in higher productivity.

CATIA’s strong performance was led by our PLM Value Solutions Channel. Total CATIA non-IFRS software revenue increased 44%, with CATIA new licenses revenue up 34%, both figures in constant currencies.

Some of the many reasons that SMB customers select CATIA are highlighted in our presentation. Concours Mold in Canada was able to cut its cycle time by 30% by using CATIA to validate designs before production begins. Blu Homes, a construction company based in the US is able to ship pre-fabricated homes more economically. Thanks to CATIA’s integrated analysis capabilities. And Tool and Die Solutions in South Africa is able to reduce material waste through better designs with CATIA.

So, all in all, we had a very good performance by our indirect channels in both the PLM and Mainstream 3D markets.

Turning now to acquisitions, during the first quarter we acquired 100% of Intercim, a company with whom we previously had a minority investment. The acquisition price was $30 million in cash. We will include Intercim in our results commencing in the second quarter as part of Other PLM.

The company has approximately 65 employees and is headquartered in the United States. For 2010 Intercim had revenues of $10 million. In connection with this acquisition our investment generated a gain, which we have excluded from our financial revenue this quarter.

Earlier this morning we announced a second acquisition, Enginuity. The company has approximately 25 employees, with most of them in research and development. Enginuity is based in Connecticut.

Our cash flow from operations during the first quarter was pretty strong at EUR134 million.

In addition to acquisitions, we have been using our cash for share repurchases to offset potential dilution from stock option exercises. During the first quarter we did EUR111 million of share repurchases. As I mentioned on our fourth quarter call, one of our largest stock option plans dating back to 2001 was reaching expiration which it did in March of this year. In connection with this expiration a large number of stock options were exercised.

With respect to our cash dividend, our goal is to maintain a pay-out ratio of about 30% of IFRS net income. Given our strong growth in earnings in 2010, the Board of Directors is recommending a 17% increase in the cash dividend to be distributed in June if approved by shareholders.

Turning to our financial objectives for 2011, we are lowering our reported revenue range for the year by EUR10 million to reflect the evolution of currency, but we are reconfirming our growth objectives for revenue, earnings and operating margin. We are confident in our 2011 goals to deliver new license revenue growth of about 15% in constant currencies and a further improvement in our non-IFRS operating margin to about 29% and earnings per share in the range of EUR2.64 to EUR2.75. In constant currencies, this represents a double-digit earnings per share growth goal.

For the second quarter objectives, we have set a non-IFRS total revenue objective of about EUR400 million to EUR410 million, representing growth of about 8% to 10% in constant currencies, an operating margin of about 26% to 27% and a non-IFRS EPS objective of about EUR0.56 to EUR0.61 per share. We are anticipating a stronger impact from Japan’s events on our second and third quarter results. Finally, I would point out that the base of comparisons for both operating margin and EPS are very strong. The year-ago quarter in part benefited from the 2009 efficiency program as well as two quarters of tax reclassifications and some favorable currency tailwinds.

We are updating our currency exchange rate assumptions. For the US dollar, we are now assuming an exchange rate of EUR1.45, up from $1.40 per Euro and for the Japanese Yen, 120 Yen per Euro. For the full year, this calculates out to an average rate of $1.43 dollar per Euro and 118 Yen per Euro.

At these assumption levels they have a negative impact of about 3 points of growth at both the revenue and EPS levels.

Let me now turn the call back to Bernard.

Bernard Charles

Thank you, Thibault. Helping our customers to meet their strategic priorities is driving the adoption of our products. Our software brings significant value to companies at both the top and bottom line. We are focused on their most critical product evolution and business processes, driving innovation, product quality, time-to-market, supply chain collaboration, IP protection and regulatory compliance are just some of the many critical areas where we bring value to companies.

For example, customers are able to increase operational efficiencies through enhanced innovation and accelerated development capabilities. These issues were important in the case of Jaguar Land Rover’s selection of Dassault Systèmes in March. This was a significant competitive win and a full Version 6 win. We were selected after an 18-month careful evaluation. We will be replacing the legacy PDM system from our competitor. In addition, to being a full Version 6 win, there is also a second contract related to systems.

For CLAAS, one of the world’s leading agricultural engineering companies, our software enables global collaboration across CLAAS’ 14 production sites as well as the adoption of common processes. With the Version 6 infrastructure which is all new, we really do provide a breakthrough in collaboration technology with online, real-time collaboration on the same data product model and process model.

The management and protection of intellectual property was an important reason for US headquartered Parker Aerospace’s selection of ENOVIA Version 6 in order to ensure compliance with export control rules.

With EXALEAD companies are able to more effectively harness information intelligence from all sources as we have discussed while at the same time having a clearer and simpler view from a business intelligence perspective. One example of this is what is being done with EXALEAD by the French National Library. They have had a large-scale digitalization effort underway, encompassing more than 1 million works to date. Thanks to EXALEAD they now have a good view into this massive digital asset using EXALEAD’s advanced linguistic and semantics search attributes, benefiting from its high performance, which is critically important given the size of this digital database, as well as the flexibility that EXALEAD brings in designing search-based applications to provide very useful user experiences.

Moving to the consumer goods industry, we have a close partnership with Nestle on marketing campaigns which effectively turn cereal boxes into video games with our life-like 3D-based technology. Nestle is in its third year of a very successful advertising campaign which is now in 53 countries.

My examples also demonstrate our increasing industry diversification. In that regard, let me turn briefly to our two most recent acquisitions which further support our diversification strategy and also broaden our offerings.

With respect to DELMIA, last quarter we discussed dynamic enterprise resource management. Michelin is using DELMIA to visually manage the complete manufacturing global subcontracting chain.

The acquisition of Intercim further expands DELMIA’s offering. Intercim’s technology addresses issues critical to achieving manufacturing operational excellence. In combination with DELMIA, companies can advance their lean manufacturing objectives, ensuring higher quality, faster time to market and full documentation and certification of processes. Intercim’s customers include leading companies in advanced and highly regulated industries.

Let me share just one example. Embraer is the world’s fourth largest aerospace company. With strong demand for its executive jets it was seeking to better adapt its manufacturing timeframe in order to be more responsive to the demand environment. Simultaneously, Embraer also wanted to ensure that the quality of the final product was in every way the same or better. To achieve this Embraer is using CATIA and DELMIA for the virtual design and virtual production and manufacturing and in conjunction with this decision has also selected Intercim in order to move all shop-floor data from a paper to an online digital environment.

The benefits are multiple, by bringing together design and product engineering as well as manufacturing engineering so they can work together in a more unified collaborative fashion, product production issues are visible earlier and can be discussed and resolved, product quality is enhanced and manufacturing production efficiency is increased.

Also in connection with our industry diversification, this morning we announced the acquisition of Enginuity, a very interesting company headquartered in Connecticut. Industries using its product include cosmetic, consumer packaged goods and pharmaceutical companies.

The company was founded by Dr. John Sottery. John had worked at Procter and Gamble in the area of product development formulation. About five years or so ago he set up a subsidiary, Enginuity PLM offering end-to-end solution for formula-based industries including life cycle management for formulations. While a small company of 25 employees mostly focused on research and development, its client roster includes world leading formula-based companies including AkzoNobel, Coty Inc., Procter and Gamble, Merck, Revlon and Schering-Plough.

In combination with our internal development, formula-centric companies in the pharmaceutical sector, personal care, cosmetics, food and beverage as well as fragrance industries will be able to use ENOVIA Version 6 to accelerate product innovation and product launches. By focusing on their critical processes, formula-based industries using ENOVIA Version 6 will be better positioned to successfully navigate complex regulatory requirements and more effectively manage and leverage their formula, packaging and consumer intellectual property in a single, global PLM solution.

This morning we announced some evolution in our sales channel and brand leadership. With respect to CATIA, Etienne Droit is now the Chief Executive Officer, bringing his considerable strategic, applications development and sales background. Bruno Latchague has moved to our Value Solutions Channel, formerly called Value Selling Channel. Bruno brings his PLM solutions knowledge which is important in helping our indirect channel partners’ transition to a solutions-approach in their interaction with customers. In fact, we want to make PLM mainstream.

Promoting to Executive Vice President to run the PLM Business Transformations Channel, our direct channel, is Sylvain Laurent who runs the Dassault Systèmes Business Transformation channel previously in Europe and has extensive background in enterprise sales. Ken Clayton is now running the Professional Channel on a worldwide basis, previously having been in charge of the Americas for this channel. And for EXALEAD, Laurent Couillard is now the Chief Executive Officer as planned at the acquisition time.

In summary, we were pleased with the result of the first quarter. We are well positioned to deliver our financial objectives for the full-year 2011. We made good progress in 2010 towards our five year’s financial goals and we anticipate 2011 will move us further along this trajectory. With our recent management announcements I believe we have the organization in place to further support our market expansion objectives.

Thibault and I would be happy to take any questions now.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from Jay Vleeschhouwer from Griffin Securities. Please go ahead.

Jay Vleeschhouwer – Griffin Securities

Thank you. Good morning, Bernard. Good morning, Thibault. Few questions if I may. First, now that you’ve had IBM PLM for year, are there any plans to further expand your direct sales capacity for the BT part of the business, or expand channel capacity for SolidWorks and other brands in order to meet your 2011 growth objectives? Then, a couple of follow-up questions.

Bernard Charles

The first priority integrating very successfully the IBM sales force which we did last year without interruption I think. And all partners and customers confirmed that this was a tremendous success as it is proven with the 2010 results by the way. I think we have demonstrated that these integration has happened, there is a lot of improvement we can do to be able to continue to better increase the productivity of the direct sales, confirm the engagement process for total solution deliveries, so there is a lot of potential basically to improve our PLM direct sales system with the current headcount capacity. So that’s our first priority for this year and maybe the next 18 months. Related to, and of course, what I would notice is that basically all people are very happy and the turnover has been extremely small, in fact almost null.

Related to the indirect channel, we continue to expand the capacity of the indirect channel, and our number one priority is really expand the capacity toward new industries, to accelerate diversification. This is the case for the Professional Channel, because we are expanding the 3D for professional setup solutions. We announced at the beginning of the year the fact that we will be launching this year SolidWorks Live Buildings and this is underway. But also for the value solution we are seeking to really sign with new partners, serving new sectors like CPG, apparel, pharma sector, medical device, and sectors that we have not been necessarily focusing in the past. So yes, expansion of capacity for the two indirect channel – and by the way the performance were exceptionally good this year – at the first quarter as well as last year, and yes for the improvement at equal capacity in terms of productivity for direct customers.

Jay Vleeschhouwer – Griffin Securities

Okay. For Thibault, could you comment on the profitability of the brands other than CATIA and SolidWorks, both of which, of course, are very highly profitable? And I’d like to ask about ENOVIA in particularly, I think it’s generally understood that the non-CAD parts of PLM has lower margins historically than the CAD parts of the business, mostly because of the services components. So could you perhaps talk about your expectations for the evolution of profitability in the ENOVIA business?

Thibault de Tersant

Yes, Jay, certainly. What we do like we do for any other brand is we are focused on continuing to improve margins. And so we have actually gone a long way already with ENOVIA. If you remember, maybe I should not remind everyone of that, but if you remember when we did the MatrixOne acquisition, it was a company which was delivering results which were very much in the red area. And so the improvement in margin has been good. Of course, we are not yet, because it’s a less mature product at the level of CATIA or SolidWorks, but we are certainly in black territory now with ENOVIA and continuing to ramp up in profitability.

Jay Vleeschhouwer – Griffin Securities

Okay. And just to finish up with two customer related questions; first with respect to existing customers who are moving to V6 especially in automotives, but only in automotives, is it the case that customers are generally paying higher ASPs or spending more with VS for the same installation, or are there customers obtaining V6 – are migrating to V6 in effect for the same amount of end-user spending as before? Then my final question.

Bernard Charles

Well, I think clearly the value of – if they basically use the same scope of function it’s relatively good continuity in terms of the way the deal is done. But clearly when the customers are going V6, this is not the driver.

The driver is really to massively simplify the product development environment, remove legacy application that they want to remove, increase the quality of integration, and that’s what makes the business case very, very compelling business case for customers going to V6 in addition to the fact that they can go basically with online – truly online infrastructure. So that’s the key differentiator for Version 6, which I think is – we think is unique on the market.

And we are careful to not push customer up to Version 6 without having to really look at the value simplification for their PCO, and obviously then they will spend more reverse, which in fact that this is what they do if we’re generally speaking with Version 6 as it is – as you can notice on the ASP evolution in some way.

Jay Vleeschhouwer – Griffin Securities

Okay. And so that leads to my final question. And I’d like to ask about your customer concentration which is to say the – the data about your largest customers from your 2010 annual report. I know it’s almost May 2011, but there is interesting historical data from the annual that I’d like to ask about based on your percentages. So according to the annual, the spending from your number one customer in 2010 was less than it was four, five years ago. The top 10 and top 20 customers again according to your percentages of revenue do appear to have grown in actual revenues, particularly in 2010 of course with the IBM acquisition. But perhaps you could talk about the evolution of those commitments from your largest customers, again including your top one, five, and 10 customers in terms of their real scope or commitment in organic terms.

Bernard Charles

I think the first – this question is not related to the previous one, because those customer you’re talking about are not yet on Version 6, just as a preliminary comment. Thibault any comments on that?

Thibault de Tersant

Well, as you pointed out, the acquisition of the IBM sales force came essentially with large accounts, because we had formerly taken over the indirect sales from IBM. So this transaction was mainly about large accounts. So it’s not surprising that our top 10 customers grew in total revenues in 2010 based on this event of the acquisition.

I think that overall what we observe is that the transactions we do with them are more and more transactions involving multiple brands. And if there is something that is encouraging for PLM, it is the fact that with large accounts today, the average number of brands per transaction has now exceeded three. So I think this is a very clear trend and we continue to improve the penetration of ENOVIA, SIMULIA and DELMIA inside large accounts as well.

Jay Vleeschhouwer – Griffin Securities

Okay, thank you very much.

Operator

Your next question comes from Michael Briest from UBS. Please go ahead.

Michael Briest – UBS

Good afternoon, Bernard and Thibault. I think this morning we were talking about the 650 odd customers on V6 today. Can you give a picture of them as broken down between new customers who have come to and existing customers that have upgraded?

Bernard Charles

Thibault any comments on that.

Thibault de Tersant

Well, I don’t have the precise figure in mind to be honest, Michael. But what I am sure of is that more than half of them are new customers.

Michael Briest – UBS

Okay. And then in terms of new industry license sales, I think in Q4, you gave a fairly dramatic statistic, it was half of licenses or something coming from the newer industries, can you give a picture that for Q1?

Thibault de Tersant

No, I don’t have the precise break down of new license by industry yet, but the diversification continued in first quarter. So the trend we had seen in 2010 is continuing and the diversification is gaining in momentum. So in terms of new sales, even if I don’t have the precise figure in front of me or in mind – poor mind, I know that the percentage of diversified industries continued to grow.

Michael Briest – UBS

And in terms of the guidance, if you look at the 9% to 11% constant currency, obviously you’ve got an extra quarter of IBM PLM in there. I mean if we take that out, it’s only implying about 7% growth. You’ve done better than that in Q1, why aren’t we seeing a bigger acceleration in the business?

Bernard Charles

Because we are cautious.

Michael Briest – UBS

Cautious because of what you see or cautious because you are cautious people?

Bernard Charles

We are cautious people. And the reality of the economical situation is that there is a lot of unknown factor. So I think your question is very similar to the one we have every year at the beginning where we provide guidance, we need to really integrate factors. And I think the all the factors we have integrated shows that the visibility, while good on the pipeline they are multiple factors that really should really drive us to take a cautious visibility for the full year.

Michael Briest – UBS

Okay. And then just finally, in terms of the cash flow, you indicated that you plan to sterilize the option issuance. If I look into the accounts, there’s about really EUR13 million of options which are in the money coming through over the next three years. Should we expect that over that period you will continue to sterilize the dilution effects?

Bernard Charles

Yes, the policy is to at least not create any dilution.

Michael Briest – UBS

Okay, thanks very much.

Bernard Charles

Yes.

Operator

Your next question comes from Knut Woller from UniCredit Group. Please go ahead.

Knut Woller – UniCredit Group

Yes, hi, thanks for taking my questions. I think when I just look at the EUR20 million you expect as a negative impact from Japan for this year, is it fair to assume that this is round about 30% of the total license volume that should be expected in Japan in – that you would have expected in Japan in a normal environment?

And then just getting an idea about growth rates, if we now exclude Q1, which still benefited from IBM PLM, then the assumption is that for the remainder of the year, the growth rates for CATIA software and likely also for mainstream 3D are somewhere in the mid-to-higher single digits. Is that fair? Thank you very much.

Bernard Charles

Yes. Well, first of all, you are exactly on the point and exactly right to know we are – I mean the – our consciousness with the Japan is equivalent to 30% – 30% of the total yearly new licenses. We believe that most of the impact will be in second and third quarters by the way. But you are correct on a full-year basis.

The growth rate for the next three quarters, well what we are expecting is to deliver double-digit new license growth for the next three quarters and to continue to progressively ramp up our growth rates for recurring. As you know, after a year of recession, when we – when you have such a large base of recurring like the one we have, it takes time for the recurring to go back again to its normal natural growth driven by new license sales. So we will continue to progressively ramp up recurring growth rates progressively starting at a level of about in average 6% right now.

Knut Woller – UniCredit Group

Thank you very much. Just a quick follow up, maybe, just to avoid any misunderstanding from my side. Did I get that correctly that you expect double-digit license growth in each remaining quarter of 2011 and how would that then square to the 15% growth rate at constant currency? I think it would then imply a higher than 15% license growth rate for the full year if I get it right.

Bernard Charles

When we give the figures, we try to round them a little bit, so we are exposed to doing little bit better than 15% for the full year as you point out. The 10% is not for each quarter by the way, it’s an average for the three quarters.

Knut Woller – UniCredit Group

Okay, thank you very much.

Operator

(Operator Instructions). We seem to have no further questions at this time. So I will hand the conference back to our speakers for closing remarks. Please go ahead.

Bernard Charles

Yes, thank you very much for all of you for participating this afternoon to this phone call. Our thanks to many of you who attended or were connected this morning to our analyst session. And, of course, we remain at your disposal to really address any further question. And look forward at least talk to you for the second quarter. Have a good day and thanks again for your interest in Dassault Systèmes.

Operator

Thank you very much. Ladies and gentlemen that does concludes our conference for today. Thank you for participating. You may now disconnect.

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