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Executives

François Bordonado – VP, IR

Bernard Charles – President and CEO

Thibault de Tersant – Senior EVP and CFO

Analysts

Josep Bori – BNP Paribas

Gerardus Vos – Barclays

Chandramouli Sriraman – Merrill Lynch

François-José Bordonado

Dassault Systemes S.A. (OTCPK:DASTY) Q3 2012 Earnings Call October 25, 2012 3:30 AM ET

François-José Bordonado

Good morning, everyone. I’m François Bordonado, DS Investor Relations. From the company, we have Bernard Charlès, our President and Chief Executive Officer; and Thibault de Tersant, our Senior Executive Vice President and Chief Financial Officer.

I would like to welcome you to Dassault Systèmes’ third quarter 2012 earnings presentation, which is also being webcasted. At the end of the presentation, we’ll take questions from the audience and from participants on the webcast call.

Later today, we will also hold a conference call. Dassault Systèmes financial results are prepared in accordance with IFRS. 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 press release.

Some of the comments we will make during today’s presentation will contain forward-looking statements, which could differ materially from actual results. Please refer to our risk factors in our 2011 Document de reference and in our 2012 half year report.

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

Bernard Charlès

Thank you, François-José. Hello to everyone. Dassault Systèmes is publishing as you have seen the third quarter 2012 results. We are pleased with those results, delivering 16% EPS growth non-IFRS. In third quarter year-to-date, plus 15%. We observed that – in client continue to invest for innovation, global efficiency.

I think the – it’s clear in all the sectors we serve, and we will illustrate some of them in a moment, we continue to advance in providing application suite, what we call industry solution experience on implementing that in the different industries we serve. And I think the coverage of the Dassault Systèmes application set is such that it’s becoming really one strategy to increase the value of the return on investment that our customers can observe and can get from our solutions. I think we demonstrate also today that we are executing on plan on even better with – and continue to improve the operating margin. And last but not least, we are upgrading our 2012 full-year objective and Thibault will explain how and why from that standpoint.

Let’s review the business strategy right now. On the performance for Q2, double-digit growth in revenue with especially a strong dynamic of rental, what we call YLC, not to be confused with the recurring from maintenance and software upgrade. So as you can see the growth is, excluding exchange rate, is at 10%, year to date, 10%, and for Q3 on the top line 16.7%. The new license is also growing double digit at 10%. We have improved the operating margin. It’s at 32.6%, improving it by 6 percentage point, and the EPS is also growing at 16%.

From a region standpoint, what is noticeable is, I will not say a comeback, but an improvement of Americas, plus 13% on the third quarter. There is a softening in Europe, but what is clear is that in the last two years Europe was very, very strong in terms of growth, and a strong growth in Asia, plus 18%.

We’ve improved situation in Japan, we have a lot of new investment and diversification, as well as strong performance from China.

On the revenue by product line, PLM is up 10% on the third quarter, and the CATIA is up 5%, so solid category growth with double-digit new license growth. Large scale implementation now on underway with ENOVIA. We had a lot of pilot with ENOVIA V6 and now we have a large scale implementation and deployment going on.

Strong SIMULIA growth. On the GEOVIA, recently acquired company called Gemcom International last July and renamed to GEOVIA as it is the new brand that will contain all the product portfolio for natural resources, especially mining. It’s in line with our plan.

SOLIDWORKS performance are driven by the recurring revenue and the renewal. And software revenue growth excluding Gemcom on Transcat impact – as you know, the Transcat as a business partner, we have done the spinoff of this structure – Is plus 8% excluding exchange rate.

So a few comments on the critical decisions. AvtoVAZ has made a decision to really adopt our V6 platform. It’s in Russia. It’s a global collaboration with Renault, as you know, and it’s on the, it’s part of the Renault-Nissan alliance, creating this Renault announcement was done before, previous quarter, and we are building a global collaborative platform around the world, connecting all R&D centers and plants together for global collaboration. So the AvtoVAZ decision is a very key decision and I think they want improve their design quality but they also want to improve the – what we call designer use across multiple bigger programs as well as the engineering process and manufacturing process.

So they are adopting the digital markup capabilities across all their engineering centers. We had the 3DEXPERIENCE forum last week in Russia, extremely well attended and there is really an adoption of new technology by many, many sectors, not only transportation mobility but also energy, and I will come back on this soon.

Pegatron, a well-known company in high tech, they have selected the ENOVIA and CATIA platform with V6 to really do the integration between engineering and production and increased our capacity to do production automation.

It’s a big project, global implementation, global operations. They have overall 100,000 employees and it’s a $25 billion revenue company, so it’s a big company in the high tech sector. They are subcontractors to many prestigious brands, I will not name them but known, and I think the fact that we are building the next generation collaborative platform shows that high tech for us is not a marginal additional growth potential but we are redefining the game plan here.

In the high-tech sector, most of the high-tech sector up to now have been using fragmented solution, one application for styling, one application for design, and also application from manufacturing process planning. So very fragmented, not connected, just doing document management. Those companies they got from the composers, reconsidering their approach by doing full integration, connecting all the activities they do in a single consistent digital pipeline.

So it’s for us a significant win from that perspective because it’s replacement, expansion of the footprint and transformation of the way they do business. Of course, the KPIs are speed, the cycle time, quality, global collaboration, new ways to connect different centers together, reduce the production mistakes, we do it right first time and more importantly reuse templates, what we call templates on rules so they can reuse this knowledge across multiple programs. Important showcase and important trend for high tech at large.

Fastil, that’s in the apparel sector, selected the ENOVIA collaborative platform, it’s a $2.3 billion company. They had a lot of disconnected processes on design, sourcing, product classification and product portfolio management. And they are implementing now the ENOVIA collaborative platform and a set of applications to really connect those dots together, establish their – what we call a suite experience platform – and allow best practices to be shared across the different product lines they do.

So it’s global design, expand the creativity, innovation management and connection with the tools that we want – they want to use to do the – what we call emerging fashion trends surveillance so they can really better plan their collection.

Also announced today, this morning, this significant partnership with NIAEP in Russia as I’ve said, the 3DEXPERIENCE forum happened last week, was extremely well attended. This is strong corporation supported by the chairman of the company. And it’s a very novel approach. They have decided, this is nuclear and energy, nuclear technology, what they want to do is to rethink about the way construction, maintenance, refurbishment, life cycle management of those complex systems are done.

So they started in some way backward by attacking the topic of maintenance refurbishment, obsolete management life cycle configuration, and then they are moving back, going up the food chain to engineering on construction planning. We have adopted DELMIA, CATIA, ENOVIA, the entire applications catalogues really, to simulate the entire business process. It’s a very, very innovative approach. They want to do in nuclear what we’ve been doing in China with China hydro, which is really to define 100% of the not only the product itself but the process, the way you do the construction sourcing.

It’s a real showcase. They have an incredible ambition. Unlike Korea in nuclear, I think they are going to make a difference. So we see more and more, the adoption of those technology, the 3DEXPERIENCE platform not only to design but to do life cycle management, safety, risk analysis and obsolescence management.

So they have demonstrated in their showcase, construction time reduction, cost reduction, of course, and improved quality and safety, which is of course essential in this area. So this is for NIAEP in Russia and they have, of course, a cooperation with Russato.

Samsung electronics. This is an interesting showcase because we all use more and more devices with our chat touch devices. And as you know and you have touch devices, you want more and more selectivity. And really if you have a big finger, you want to have great selectivity and precise typing capabilities. And Samsung has selected SIMULIA to do this simulation and to really find out what will be the best. It serves for both the display and the keyboard and it serves to increase and find out the quality of the compact between the fingers on the keyboard and the fingers on the screen to improve that selectivity and improve also the feeling and the experience from a user standpoint. Very interesting, it’s highly sophisticated simulation, and they really reduced by a significant number, the mistyping errors looks from 35% to 7% when they measure that.

So it shows that simulation can also be used there for user experience which we think it’s a high potential. When you think about now the importance in consumer decision factors about the experience you get from the product. It’s not only about capabilities but it’s about styling, emotions, feelings. So a great showcase and a good start for us at Samsung. We are at Samsung Avi. This is Samsung Electronics.

We’re introducing SOLIDWORKS 2013, extremely well received by the market. The blogs, the papers are very, very positive, a lot of evolution in the product. Of course, as you know, it’s designed for all professional. We’re increasing our footprint there. So improved design, improved modeling, with faster model creation, improved performance, improved collaboration. We have very, very positive feedbacks and we think that this is, this will continue to help gain market share in a highly competitive sector, whereby we have been able to have a resilient ASP, average sales price as Thibault will comment later.

We have a number of large scaling implementations, with better implementation of customers and we have high level of motivation from the user community. And of course, this is critical because we are preparing the evolution of the generation of SOLIDWORKS to continue to unify our 3DEXPERIENCE platform, which was also stated during the announcement. We explained to our user community that over time, the convergence between SOLIDWORKS and the 3DEXPERIENCE platform will bring benefits, being able to provide upside with application portfolio.

Let’s look at the quick update now on business strategy with the launch of industry solution experience. Our goal is really to harmonize product nature and life. I want to show you the consequence of just that single statement that was made at the beginning of the year when we announced on February 9, 2012, the new horizon called 3DEXPERIENCE.

The move with Gemcom, I think, is a very important move. First of all, I think it was a well-orchestrated fast acquisition, was closed last July. And three months later, we announced five new products. How we did that? Of five expanded products, new capabilities in products? We have asked the team to do the market result within Dassault Systèmes R&D and take the modules they need to improve the products they were delivering to customers. And in less than three months, they were able to take extremely sophisticated technology, visualization collaboration, put them in the product and provide this to the customers.

A lot of customers were extremely pleased with this. This is a fragmented market. Big players, the GDP is 1.8 trillion for this sector, very low level of equipment, IT equipment, but extremely complex – extremely complex domain. Safety is an issue. Environmental impact is an issue. The need to do modeling and simulation is essential. And your mines are not in cities, they are in the middle of nowhere. So they need to connect this collaborative platform. There is a lot we can bring there. And if you look at the software sector, the providers, it’s highly fragmented small players, and we believe we can consolidate this industry.

Minex put, every four years, big show in Las Vegas. All players are there, 60,000 attendees. We had booth there, we had press conference, contact with customers and partners. It was extremely well received. And I think the message was very clear. Dassault Systèmes will contribute to transform the way we can increase safety, reduced environmental impact with modeling on simulation for natural resources. The new launch of GEOVIA was the new brand was done there. And also was well-covered by the industry publications. So we are confident and it’s certainly an exciting sector as I said, huge GDP, a lot of needs. And today, there are a lot of concerns because natural resources is a big issue for long term, there is a lot to optimize there. So we think we can do a lot of synergy and we are on a good start.

A second example is what we are doing now where more and more simulations require not only from product standpoint, but from the human aspect standpoint. Here is a video I want to show you about that.

(Video Presentation)

Simulation, we think is going to grow, as we stated a few years ago when we acquired Abacus at that time was a very fragmented market. The number of disciplines which require now simulation is expanding and we believe that it, as proven with the SIMULIA growth, that this market is still something that will evolve in terms of not only consolidation but in terms of expansion of the portfolio and what you call multi-physic simulation.

Dassault Systèmes is on the top 100 most innovative companies. We were pleased to see that in the new Forbes 2012 magazine study. We are number four within the software programming, 40 in the top 100. I think it’s a good recognition. It’s based on financial data but I think it’s a good recognition about the importance of research and development, the importance of research and development to create new products and the speed of adopting those new products contributing to the product line.

I will use this as a way to just mention one thing. We believe we are at the beginning of a new cycle when it comes to generation of products. As you know, our generation of products is about 10, 12 years. On – with the 3DEXPERIENCE platform, the V6 architecture, we think we are at the beginning of this cycle.

Growing interest with 3DEXPERIENCE, we did an executive survey, very formal executive survey. Monica Menghini is an expert and remember, she’s coming from a consumer goods company, famous, Procter & Gamble. She knows how to really put the processes and disciplines to look at the KPIs, the survey, about what we announced on February 9, 2012. And the survey are very, very impressive.

As you know, we did advertisement in 40 international airports around the world, in business publications, even business channels. Dassault Systèmes is becoming more visible. The 3DEXPERIENCE platform is making it easy for executives to understand that it’s not a collection of point solutions anymore. It’s really a product suite to solve business problems.

So we are moving from engineering-centric sales process to business-driven, business solution driven. And the feedbacks were really amazing. You will see that in our section of the 3ds.com. They are really, they are really very impressive and we see also executive committees now saying, please, come back to us, show us what we can do and how we should transform our business. So we are moving from decision done by technical specialists to decision done by business decision-maker.

Introducing a few things, we introduced in the transportation and mobility a full set of solutions called Smart, Safe, Connect. Smart, Safe, Connect. How can you do new type of mobility venture whereby you can address the safety, the connectivity, the smart aspect, the megatronic aspect altogether with one multi-platform 3DEXPERIENCE platform. This is multi-brand, it enables CATIA, SIMULIA, EXALEAD, NETVIBES, INOVIA, 3DSWYM.

But you don’t see the products anymore or the brands. What you see is the full solution to do the job and really addressed the needs. It’s extremely interesting how people are now looking at our solution as a business solution from that standpoint, to create and deliver because the purpose of those companies is to deliver innovation but also increased quality of multi-physic integration, security and safety.

The new system complexity on reduced cost and being able to do not a digital mock-up or the physical piece but do a digital mock-up of the full product behavior is becoming a mission-critical value for those companies and we believe that this will accelerate the adoption of the EXPERIENCE platform from that standpoint.

Here is a quick video that shows you the business value of it. You have seen it, but we have now business numbers, we are looking at the analytics but what customers are telling us in terms of where is the cost on our innovation.

(Video Presentation)

So you have seen this video before, what is becoming relevant now is that we can put numbers, in terms of savings and potential.

And we believe that now many, many of those companies in the transportation and mobilities are going to re-architect their product line. You’re aware of in the past about common platform, what it has been doing, of course, our great customer, Volkswagen Group, 12 prestigious brands, the usability of platforms. But now the reusability of platform will go far beyond – will be reusability of subsystem and megatronic system.

So that’s what we do. We now have the business numbers and you would be astonished to see that companies who are really in a real condition when it comes to their performance in the sector are really adopting those technologies to really change the game plan. So that’s the value of industry business solution.

Another example here is Perfect Shelf. What is the problem here? You want to build a consumer experience for the products you are going to put, let’s say take a CPG company, doing shampoo bottles or whatever. Build the best consumer experience on the shelf with the right packaging, the positioning of the packaging, packaging and labeling. And in order to do the best packaging and labeling which is a huge market, they need to simulate the consumer experience. So today, for example, Perfect Shelf is a solution on Dassault Systèmes where you have 3D VIA, ENOVIA and 3DSWYM, the community platform, together, providing a single-business platform to address those issues. It completely changed the end game and process with customers and also the decision process to ensure quality, compliancy, adaptation and compliancy with different country rules, views, speed to develop those packaging.

You have to know that some of those packaging, we are taking 16 months to be developed in terms of cycle time in the past, 16 months. Almost equivalent to Toyota for – to create a new car – just for packaging. It’s really complex.

In the pharma sector, if you do a mistake on packaging, you cannot sell the product. You have to recall everything just because there is a label which is wrong. So Perfect Shelf in this case, our packaging and labeling process is – are becoming, we think, key business value for the diversification that we are doing.

And as an example, what we have announced with NIAEP today is what we call a solution called optimized plant construction. This is not about the engineering, it’s about how we are going to construct complex systems. Expensive project. You’ll remember the Skanska showcase that we announced a few months ago, expensive project scheduled. Our cost is underlined. It’s multi-discipline, multi-location, a lot of people connected, mobility environment. We can now provide with 3D VIA, DELMIA and ENOVIA, integrated solution to optimize the plant construction.

And so it’s a very different approach. And the – we are transforming our sales process to engage with customers – providing this business value. So what we announced at the beginning of the year, we are walking the talk. We are making those solutions happen and providing them in an integrated way.

Now, I give the floor to Thibault, not like last time, to make some comments about the financial results. Thibault, you have the floor.

Thibault de Tersant

Thank you, Bernard. Good morning. So let’s review, quickly, these Q3 results and the guidance.

In our dynamic, in growing new license revenue in the third quarter, you can see the 10% increase excluding currency impact. I think it has to be looked at in combination with a nice increase of 14% of rental revenues which certainly embed new license activity as well. The maintenance revenue, and recurring as a whole growing by 10%, is showing very stable renewal rates at a very high level, actually, 98% for period.

SOLIDWORKS in Q3 had lesser dynamic growth in new license. I think that’s the right way to say it, at a 2% increase. So it’s certainly a 10-point decrease compared to what they had in first half. And I think that it is showing that the economic backdrop is having an influence on SOLIDWORKS licensing activity.

The price per seat, however, is remaining essentially stable, 1% decrease year-to-date, 2% in Q3. And of course, the impact on new license activity for SOLIDWORKS is slightly more acute in Europe where prices are higher. So it really means that there is no change here in pricing by Geo for SOLIDWORKS.

The maintenance, the subscription renewals for SOLIDWORKS are holding up very well at essentially the same rates. So there is no decrease in the renewal rate and that’s why the revenue for SOLIDWORKS was up by 9% overall.

Services, let’s enjoy one quarter where we cannot be ashamed of ourselves in services. I don’t want to declare success yet but at least, I think, we can see that we have reached now a 8.3% gross margin in services and that’s not the ultimate we want to reach. But it’s a good improvement and if you look at the year-to-date figures, it’s 13 points improvement compared to last year.

Operating income, as you can see, the operating margin was up by 60 basis points compared to last year in Q3. And most of it is coming from operating leverage and for Q3 actually, improvement in the services gross margin was a key factor.

In spite of tax rates up by 2.3 points in the third quarter and two points year-to-date. And if you have questions on that, I would explain the reasons, but I think they are well-understood and they are all coming from France. We had a nice increase in EPS for Q3 to about 16% as you have seen.

It’s another good quarter for cash flow, 15% increase in cash flow from operations at €115 million.

This was driven by of course the net income but also by a good level of DSO. If you look at our DSO for Q3, you will see that it is 64 days which is a significant decrease in our DSO by nine days. And so cash flow was good. You can see also of course that in spite of the Gemcom acquisition, you know Gemcom acquisition was the cash outflow of €280 million, we are still at €1.2 billion in net cash.

So let’s now go to the reason you are here. No, I am a little bit excessive in this comment, I know. But let’s turn to the objectives. And my – I have just one goal with this session on our directives and my goal unlike in many former quarters is to demonstrate to you that I am less prudent than what you think.

So let’s try. There is – we have seen I think going through the SOLIDWORKS results that – and I think that it’s very clear when you read newspapers every day – the economic backdrop is certainly refreshing and in spite of that, what we are doing is we are upgrading our 2012 objectives. What we are targeting now is the 9% to 10% growth for the full year. It’s a one-point operating margin improvement and you know that I was trying not to announce it in order to keep flexibility to do acquisitions. Acquisitions take time to do and so there will be this one point improvement in operating margin. It’s the one point I always said we were able to deliver and that would probably be diluted by acquisitions, so this will happen next year now. But you will, it’s going to be very visible in 2012 and EPS based on that will increase by 13% to 15%.

So the upgrade is very simple. We are upgrading by the currency for Q3 €15 million. €5million of activity compared to the midpoint. In fact, the Q3 was exactly – what we did was exactly aligned with the high end of our guidance. Just to show that we are not beating our guidance by an order of magnitude. It was just aligned.

And so we are upgrading Q4 by €5 million and I will come back to it. And EPS is really the same thing. And so it’s now a 13% to 15% increase at €3.30 to €3.35. So the real question I think is this Q4 guidance. In Q4, when you look at our total revenue, we are targeting a 6% to 8% growth in total revenue. But at the high end of the guidance, at the 8% side, the €560 million which is the high end of the guidance, we are targeting a 10% increase in software revenue, exactly like Q3. And inside the 10%, there is a 10% increase in new license and a 10% increase in recurring, exactly like Q3.

So, why is it only 6% to 8% increase in revenue? It’s because there will be a decrease in services revenue and this is associated with the fact that as you all remember, we did the spin-off of Transcat which, whose revenue is mostly recognized as service and also because we are working on the gross margin of services rather than a lot of the revenue expansion at the top line level.

So what you need to keep in mind is that in Q4, in terms of software revenue, we are targeting exactly what we did in Q3. And at the same time, I think it is a prudent forecast, I’m not trying to become wild. We have measured our pipeline. We have measured the opportunities we have in front of us. And yes, there is a slowdown of the economy and it’s particularly visible in Europe. But in this context, it is something that we believe we can achieve.

So based on that, we have developed this guidance which for the full year I believe is a good one and is also providing an increase in operating margin in Q4 as you can see.

With that, I believe that we are now going to go to the Q&A session with Bernard.

Question-and-Answer Session

Unidentified Analyst

Bernard, can you talk a little bit about what perhaps distinguish between what you’re seeing at that kind of lower in the SMB level with SOLIDWORKS in terms of the weakening versus the dynamics at the more enterprise level, particularly if you can give us some color around... So the Enovia softness that you saw this quarter, is this a temporary thing? I know Enovia is volatile quarter-to-quarter.

And as you think about, sort of customers who are budgeting plans for next year, how that dynamic will evolve? Should we expect kind of first half next year to still be represented by the dynamic we saw in Q3 and through the second half of this year?

Secondly, just on SOLIDWORKS, with the new product launching, was there any kind of hesitation effect in the third quarter or could we see that in the fourth quarter, and so should we continue to expect more volatility on the SOLIDWORKS side?

Bernard Charlès

Okay. So on Q4 – let me give you SOLIDWORKS first, the – it’s difficult to identify what are all the parameters resulting in the softening that we see. The wins are excellent quality. The pipeline visibility is good. The signing has been softening. So in the funnel, that’s the key parameter, this – how you move from yes I want it, yes I need it, to okay, I place the order.

The expansion of the SOLIDWORKS portfolio with electrical and Merdi Analogies has maybe diluted a little bit in our channel. The attention of selling SOLIDWORKS basic because resellers are – we are ranking up – ramping up resellers to learn how to sell the add-ons. They are well-received, customer likes them, but the reseller network needs to be able to represent them well. So my interpretation today and the SOLIDWORKS team is saying, okay, there is a kind of elapsed time between the training and the ramp up of add-ons versus the way we see on the top line. So I think this was a factor.

We need to continue to recruit new resellers and one, we are going to do that. On deliver of product satisfaction, customer satisfaction, it’s very high, and the level of satisfaction for what is coming also. So I think that to sustain the dynamic we have seen with SOLIDWORKS going forward, we need to continue to increase the capacity into direct of the channel, into direction in short, and quality full time equivalent resources focused to cover the coverage, on the coverage in application set.

We have the good application set now. I think we have expanded it. We have good partners with SOLIDWORKS. So I think it’s up to us to execute well. I don’t see any other special factors. Quality to competitive landscape, pricing pressure. As Thibault noticed, we continue to justify the price and value, on the value we bring. We don’t think it’s a factor of, an inhibitor today, and we need to continue to provide that value, and I think 2013 is a good answer for that, the SOLIDWORKS 2000 something. So that’s for SOLIDWORKS coverage. When we are there, we win, but we need to do better coverage on the expanded portfolio.

On ENOVIA side, we are really today in a phase where we are doing large implementation of ENOVIA, the V6. We have done a lot of ENOVIA V6 implementation but more as a standalone in the past. When I say standalone, the PLM backbone used in pharma sector, we, if you remember, Abbott, if you remember Pfizer, you remember the kind of – now we are deploying it with the entire platforms of applications which means CATIA V6, DELMIA V6, SIMULIA V6.

So the full suite implementation is taking more attention and creating more challenges for us with our partners to do the staging of the implementation well. As you know, we have a fully upgrade, we have upgrade programs going on, we have power programs are going on for a full 3DEXPERIENCE platform. But it’s a different process from the process we have been used to do, which was to implement by sections of application, say you deploy first CATIA, you then deploy let’s say the DELMIA for...

So I think that’s something that we need to put a lot of attention on and I believe that the importance of system integrator for Dassault Systèmes, which comes from two direction, our current partners, they are system integrators. You look at Tata as a partner, or you look at many, many big partners around the world, they are – Infosys is also a partner – we need to make sure we provide more capacity for our customers to deploy their solutions internally.

So that’s why we are expanding our relationship with IBM Global Services, with even Accenture, Infosys, that bigger player than the one we were used to resell application. It’s a consequence of the industry solution approach. I think it’s a good consequence, it’s higher value. But we have to put the capacity in place to do it.

Related to first half, last part of the question. It’s – I think it’s difficult to say. I think it’s too early to say it. We don’t – I don’t think we have all the data for that. I think that the implementations are going well. All the implementations we are doing are going well. And my impression is I don’t see the similar effect to end of the year versus beginning of the year. Those are big project when they are engaged. It’s multi-year programs. And to which extent will they level the – what have been the cyclical aspect – we don’t know yet. But clearly, the adoption of industry solution experience is there. And we will concentrate on doing that, so too early to make some specific remarks about first (inaudible).

Unidentified Analyst

Great. Thanks. I think last quarter you gave PLM sales that were based on V6 as 19%. I’m wondering if there’s a big effect to Q3. And then in terms of SOLIDWORKS, last year, I think in Q4, there was some slippage of activations into the first quarter of 2012. So it meant that the bookings and the billings is slightly different. Is there any risk of that coming through?

And then finally, just in terms of Gemcom, I guess the Q4, you’re going to have three months there rather than one. So within that 10%, license and the recurring growth, how much would come from the Gemcom acquisition?

Bernard Charlès

Thibault?

Thibault de Tersant

Yes, Michael. So the SOLIDWORKS activation, in fact there is always a lag because what we recognize in revenue for SOLIDWORKS are not simply the shipment. We have the shipment, less the two last weeks, which is the delay necessary in order to activate the licenses in average. And so the slippage is always there and this magnitude of the slippage depends on the percentage of shipments you do in the last two weeks of the quarter, right? So the reason why we highlighted the slippage in Q4 of last year was because the two last weeks of Q4 last year were extremely good.

So I think that the SOLIDWORKS team is going to be careful to try to accelerate shipments and sales in this fourth quarter and not have the same hockey stick at the end of the quarter, but that’s relatively hard to predict.

On Version 6, so Version 6 was – essentially it’s similar to first quarter in percentage of new license revenue – between 15% and 16%, a little bit less than second quarter but still at a good level.

And Gemcom, so the contribution of Gemcom on recurring, is that your question?

Unidentified Analyst

License and recurring.

Thibault de Tersant

License and recurring. So the net between Gemcom and Transcat, the weight is essentially on new license, 3%. So you – that’s the weight of Gemcom and Transcat, and on recurring it’s at 2%.

Bernard Charlès

One thing that I would add to – is you may have noticed that we have announced a few months ago what we call V5-6, this has been extremely – first of all, what it is? It is the insertion in the V5 product line of V6-enabled technology in such a way that customer can select project in which they are going to adapt V6 versus where they stay with V5. It has two – it was extremely welcome.

Why? Because certain large OEM have made the decision to go full swing the expense, but from V6. They don’t want to be dependent on the Tier 1 to migrate. So the two advantages is introduction in new project on the V6 product line or (inaudible) of V6 and V5 for programs.

This is an action on in operation, for example, for the new airplane program. And this is probably also why the comment that we did on V6 per se is what it is. At the same time, the YLC, I mean the adoption of an expansion of the V5-6 platform is going on. So we think it’s increasing the footprint for first upgrade.

François-José Bordonado

We’ll take now one question from the webcast, (inaudible)?

Operator

Thank you. Operator, we will now take our first phone line question from Josep Bori of BNP Paribas.

Josep Bori – BNP Paribas

Hi, good morning. Thank you very much for taking my question. If I may, I’ll ask two. The first one is just a follow-up on the comment you made in your prepared remarks about the – looking at the license growth is 10% in the perspective of the 14% rentals growth. I believe last quarter, you made for us a sort of a back of the envelope adjustment to say what the license growth would have been if everything had been done on a perpetual basis. So if you could tell that today, it will be very helpful.

And secondly, question on ENOVIA. Obviously the 3% growth is a tad disappointing. I mean, do you have any additional color that explains what can drive that beyond what you said in your statement, that the sale cycles are lengthening?

And finally on that, given the V6 contribution you just said it’s quite solid still at 15% to 16%, does that mean that CATIA and SIMULIA V6 are beginning to be taken up? Thank you.

Bernard Charlès

Thank you for your question. Thibault, do you want to take the first part?

Thibault de Tersant

Yes. Yes, of course. Hello, Josep. So the license growth, there is some license growth that is embedded into the increase in rental of 14%. And I estimate it to be about two points more license growth in Q3, to be clear.

Josep Bori – BNP Paribas

Okay.

Bernard Charlès

On the second aspect, on ENOVIA evolution, I think we should not confuse the win versus the deployment and revenue recognition. The win rate of ENOVIA is excellent. The win rate of – but this does not mean we recognize the revenue when we win. We recognize the revenue when we deploy, especially for companies who are using the YLC model, the annual licensing model.

And as I mentioned previously, today our focus is to deploy the previously engaged wins so we can really have installation in operation. So I think the win rate on ENOVIA is good. The visibility is good. Our focus is make it and deploy it, so we can get the users online and get the revenue for what has been sold in the contract. And that will be the priority for 2013. So, no confusion between revenue recognition and win rate. We have significant prisms, and we think that from a pure win of customers, we are gaining market share.

And the third same aspect was, Thibault, on the dynamic of CATIA apps, DELMIA apps, SIMULIA apps, and V6.

Thibault de Tersant

That’s right. And certainly we are also improving in terms of wins for CATIA and DELMIA. There’s still seasonality in the revenue recognition but we see the beginning of these wins with CATIA Version 6 and DELMIA Version 6. It’s certainly assessing that we are like we said, exactly at the beginning of the new product cycle for CATIA, DELMIA and SIMULIA Version 6 right now. So, not very visible yet in terms of revenue terms, but the wins that, they are not commented in his presentation at all, Version 6 wins with the portion of Version 6 applications in there.

On the ENOVIA question, I’d like to come back one thing because, yes, we are not very – we are not fully satisfied with the 3% increase in ENOVIA. In Q3 we believe that yes, there is a little bit of improvement here, a little bit of lengthening coming from the economic environment. Yes, we continue to see a good level of wins with ENOVIA Version 6. There is no question about that, and these wins are great quality wins in terms of the deepness of what customers want to do with it and the breadth of the processes they want to support with it. It’s quite impressive, actually.

I think there is another reason I’d like to try to explain which is the fact that in a quarter like Q3, we also had good results with Version 5, as you can guess. And what happens when you have good results with version 5 and Bernard explained you know, Version 5-6 in order to prepare for a Version 6 migration focused on this. When they increase their installation with Version 5, of course they have the ENOVIA infrastructure already there. So in those cases, most of the revenue we are getting is revenue in applications, because ENOVIA Version 5 is already there. So they are buying more applications.

So we see this increase, this continued increase in Version 5, and this increase happens without attraction on ENOVIA Version 5. And we see, I mean many wins in ENOVIA Version 6, and of course the deployment of these wins based on the – everything customers want to do is variable – still variable from a quarter to another.

But if you ask me the question, do we believe that ENOVIA is going to be hurt for multiple quarters to come? We don’t see that because of the wins we have already done. I am – absolutely, I don’t believe that we are going to continue to suffer bad growth rates. But I want to explain all this dynamic with V5, this quarter being good, and not guiding a lot of ENOVIA revenue for obvious reasons and the deployments of Version 6, which are done. But they’re large and they are introducing a little bit of variability in revenue recognition from a quarter to another.

So it’s not purely the economic backdrop. We are not trying to take excuse from it. There is probably a little bit of an influence from it, but there is also this cyclicality of a new revenue line, which is ENOVIA Version 6, which is building up and we’re – because we are – we have been focusing on very large customers with it, there is still a little bit of variability from a quarter to another.

François-José Bordonado

We’ll take another question from the webcast.

Operator

Okay. Our next question comes from Gerardus Vos from Barclays.

Gerardus Vos – Barclays

Hi. Thanks for taking my question. Two if I may. First of all, on the marketing campaign, I believe you spent €13 million in the second quarter. And I was wondering if you could provide a number what you spent in the third quarter and if you’re still on track to do the €26 million for the full year? And secondly, regarding the kind of comments you made about perhaps some weakening because of the macro. Could you provide us with some kind of clarity? Where do you see it? What kind of verticals in particularly are a bit weaker than perhaps a quarter ago? Thank you.

Bernard Charlès

Thank you very much for your two questions. Thibault, you want to comment with the...

Thibault de Tersant

Yes of course. Yes, Gerardus. In fact in Q3, we didn’t spend a lot in advertising. It’s between €1 million and €2 million. We are still committed to spend the €22 million for the full year and so there will be more spending in Q4. Actually, between €7 million and €8 million will be spent in Q4 and most of the campaign will actually be run in October and November.

Gerardus Vos – Barclays

Thanks.

Thibault de Tersant

In terms of verticals, it’s not so clear. I can say that there is a little bit of softening in automotive and I think that if you read the press, you can see some of the reasons for that. But maybe a little bit of softening also in industrial equipment. But we also see new verticals going very well, like energy. We also see construction going very well and consumer packaged goods. These three verticals are the three stars actually in terms of new industry growth in third quarter.

Gerardus Vos – Barclays

Okay. Thank you very much.

François-José Bordonado

We’ll take one question from the room, Adam.

Unidentified Analyst

Thank you. I just wanted to come back on the macro. So there seems to be a few moving parts because on the one hand, we’ve got SOLIDWORKS weaker which is normally flagged as a leading indicator to what happens to the group going forward, and ENOVIA was a little bit light as well and you flagged Europe being a little bit disappointing.

On the other hand, Europe has been very strong as you said for a couple of years and you’ve raised your fourth quarter guidance which is yes, there’s confidence. Could you maybe just go into a little bit more detail on that and also you’ve talked about being actually quite aggressive for you on the fourth quarter? Where does the conservatism come from then if you’ve got those sort of headwinds against you on the macro? Is it that the close rates you’re assuming on the fourth quarter are a lot lower because the pipe has grown with third quarter maybe being a little bit weaker than you expected and therefore the pipe’s got better? Or is it genuinely that you don’t expect, this is a kind of one-off, and you expect things to improve as we go through the fourth quarter?

And then secondly just on the industry solutions, I assume that there’s some sales force retraining that’s needed on that side of things. Could you maybe give a feel for how you’ve pushed that through the group in terms of the solutions that are available, the sales force training that’s happened. And then maybe give a feel for how that has accelerated business into customers. Did that accelerate the sales cycles or the size of deals or the pricing that you’re able to get on the products. Is it just the benefit from being able to sell in that way rather product-specific? Thank you.

Bernard Charlès

Thank you, Adam. Thibault, macroeconomic?

Thibault de Tersant

Yes. So Adam, I think it’s very clear that the economic environment is not going in the right direction and that varies the slowdown and the slowdown has been quite obvious. If you look at the macro indicators before looking at our own results, in a few sectors and in a few countries and I don’t need to explain Southern Europe and all the issues there.

In our case, it is true that SOLIDWORKS is quite often an advanced indicator – you know short-sale cycles, relatively small customers who are the first ones to suffer when there is a slowdown.

So, how to relate that to Q4 guidance? First of all, maybe I did not communicate well. I am not transforming myself into an aggressive person, right? So, I’m not saying fourth quarter is aggressive. I’m simply saying I’m trying to do the best guidance that I really believe we can reach, but without huge questions, right, like we did for Q3. In that same spirit when we look at our pipe, this is truly what we believe we can do and we can do in the current environment that we just described.

So I don’t know what else to say. Yes, there is an environment which is slightly more difficult. At the same time, we see many positive dynamics in our customer base. And the level of discussions with customers is very good. We see many projects that continue to be worked out and we also know the reasons for these customers to continue to invest in these troubled times, where they need more badly than in any other times to continue to innovate and go right to the point of what is going to please their own customers and be more efficient globally. So, because of these dynamics, we are confident in our Q4 guidance.

And on SOLIDWORKS side as Bernard explained, we don’t want to say SOLIDWORKS is going to follow exactly the fate of the economic environment. And our answer to that question is called more applications, richer product sets with quicker ROI for customers, how to leverage the huge SOLIDWORKS installed base, and how to put more focus on that and maybe a little bit less on new wins which are more difficult to do when the environment is more difficult. And this, we are prepared, because now the SOLIDWORKS product portfolio is broader and that’s also the reason why we are not declaring that SOLIDWORKS isn’t going to be a grower in the next quarters. We are working hard to re-ignite SOLIDWORKS growth going forward.

Bernard Charlès

It’s true that Thibault is a little bit embarrassed to have to upgrade every quarter, the full-year objective on – I can understand that because he wants still you to believe him and you should. I’m still happy to provide better guidance every quarter, that each of us have to do our job and I think we do it together extremely well. So that’s the point here, simply said.

But I think the fundamental is we have high quality wins. That’s a fact on every front. And then to take your last question, Adam, on the industry solution. The industry solution, it’s really a great avenue for us going forward. It fits very well with the portfolio of V6, the products with the full spectrum. This is what customers are looking for. They are really looking at – for simplification. It cost them a fortune in their IT budget to connect the dots. They spend a lot of money there. They want to reduce, not only in the IT budget but in the way to administrate data in their companies.

And because the volume of data we creative every day with our – that our customer create every day and every year with our software is so huge, it’s bigger than ERP volume. You think about it. It’s several terabyte for – per airplane tail number, per tail number. Think about of volume of data for one car program, for one nuclear plant installation, for one hydro plant, huge volume. So they welcome the integration of application set.

Now, you cannot adapt this just over the quarter, but I think the trend toward the industry solution connected with the V6 platform is a strong trend – to simplify, increase the value, and reduce their operating cost – not on, of our application only, but on the whole operating cost. We are signing contracts with customers now where we commit with them in the number of application they are going to remove, the number of application, legacy application they will remove from their systems, to simplify.

So I think it’s very well aligned with Thibault’s statement about we believe we are for the industry, not only for us, in a new cycle of simplification and efficiency and that’s what we want to leverage on overall multiple years. And we believe that the new cycle has to be orchestrated well and I think we are in a good position to do it.

François-José Bordonado

We’ve got one more question from the room and one last from the webcast a bit later. Chandra?

Bernard Charlès

Yes, go ahead.

Chandramouli Sriraman – Merrill Lynch

Thanks. This is Chandra here from Merrill Lynch. A couple of questions, taking focus off from here and now. Some of your customers had some difficulty upgrading from V4 to V5. I know it’s early days but how is this upgrade from V5 to V6 is going on? Is it better? Is it easier than what you anticipated? My question is basically, should the upgrade cycle be shorter this time or do you expect it to be similar?

The next one is should we expect a couple of more small spin-offs from the first utilization like the Transcat? One, as you focus more on your products and what do you think is going to be the medium term gross margins of the services division?

Bernard Charlès

Thank you very much. Related to the, for your question related to the long term cycle time, V4, V5, V6. If you look at the industry comparison, the V4 to V5 transition was extremely successful, extremely successful. So what have been the factors at that time and I will of course come to the question that basically you want to better understand, which is really the V5 to V6. Between V4 and V5, it was not a software migration. Between V5 and V6, it is not a software migration. Let me try to just simply explain it.

Our V4 customers who are basically using the V4 product family – which by the way was introduced in 1993, we’ll be supporting it until 2020 or 2025, okay, and they pay annually – was about 3D usage for complex design. Going to V5, it was about digital mockup, designing context, how do I do a BMW digital car, same thing for digital platform and it was like in UFC, the big, big wins from the transformation we have done. So the transition has been business process, moving from 3D design, digital mockup, and then expanding to PLM.

What is the transition between V5 and V6? The transition between V5 and V6 is not about software replacement. Frankly speaking, if it’s the case, we continue to sell V5. So great margin, extremely competitive and each time we sell V5, we are not disappointed. We smile. We are very happy. I’m willing to sell V5 until 2020. And we will sell – we will ship our V5 maybe until 2030 or 2035 because it’s extremely competitive.

So the point is not there. The point going from V5 to V6 is because we opened a new footprint in terms of total integration online and collaboration. As you know, the major difference between V5 and V6 is in V6 apps, when you look at the compass. The collaborative platform is mandatory, which is not the case for the V5 product family, where you have application stacks, sitting close to each other, good data pipeline, but not common platform. We have a common platform inside, but it’s not mandatory.

And so it’s a very exciting transformation because the value that customer perceive going to V6 is significant. So we don’t plan to discount. As a matter of fact, we can already say that the transaction for – and the value for each V6 transaction – is much higher than it is for the equivalent V5.

So we are planning this business transformation because we think that’s how we bring value to customers. And there is no urgency, and I know you will ask the question next quarter, next year, in 2014. Be aware that we are going to sell V5 until 2020, and we’ll continue to support it because it is successful. And the reason to V6 is to footprint collaboration online, on cloud. That’s in short. More to say, but the total value we want to deliver to customer, that’s what we want to increase. They understood it. I think customer understood it. They got it.

You will be astonished to see some companies were – and I don’t want to mention them because some of them are in trouble in terms of their business – how fast they want to go on V6. Because they know they are going to save a lot of money. We’re talking of companies where we can demonstrate to them, they can save in R&D €200 million a year. €200 million a year.

So no names, but I tell you, this business transformation is not a software update. It is a business transformation. It’s going to take time but at Dassault Systèmes, we don’t like to do the software updates. This is not a value for the world. The value maybe to try to get a little bit of revenue from software update but that’s not a long lasting business model.

That’s what Dassault Systèmes is about. Transforming the industry. I’m getting the value from what we transform.

Thibault de Tersant

On your second question, Chandra, the spin off. The only activities we are spinning off are these business partner activities we had formed or acquired in order to get knowledge on how to distribute our software to SMB customers. And we did it when IBM was in charge of the distribution to SMB customers in order to have our feet in the field.

Of course, now that we manage this network of ours, it’s less relevant for us to also be part of the network we manage, and that’s the reason why we did these spin-offs. The last one was Transcat and we just have one last activity actually today, in our portfolio to spin off, and that will be the end. We have no intention to spin off other activity. And it’s unrelated to the services margin question.

For services, margin question is frankly a question of both quality of our pricing and risk assessment methods in order to price well our service engagements with customers and a question of strategy on how fast do we grow the system integrators network and rely upon it. So I think we’ll start to rest on the service question when the gross margin will be at 15%. And I’m not saying we are not going to try to improve it further but we’ll start to feel a little bit more at rest. Right now we are not yet at rest on the services topic.

François-José Bordonado

One last question from the room. I think you had a question and a very last one from the webcast.

Unidentified Analyst

Good morning. I’m (inaudible) from Citigroup and thanks for taking my questions. Just moving from Europe maybe, if we look at the high growth countries, you grew 20%. Could you maybe just remind us what proportion of your revenue is now coming from high growth countries? You talked about China growing quite fast. Besides China, which are the other economies that are key for you, some numbers from them?

And then in terms of your products, what’s the uptake for the various products in high growth market? Thank you.

Bernard Charlès

I’m sure Thibault will add a few things here, but just to make sure I frame the first part of the answer. Simply said Asia 29, plus 28, 29; Americas, 28, 29; the rest, Europe.

Now, the fast-growing countries are a little bit everywhere, because you have China and India in Asia, but you have the power of Japan, Korea, big countries for us, where we have the largest market share of the world in the local market share. And then in Americas, you have North America and South America, and part of the BRICs is also there. And then in Europe, you have part of the BRICs which is also in Europe. So there is a cost checking of those region and we don’t communicate and do the split from the pure, what is so called BRICs or whatever you want to call them. So let me make a few comments on certain countries, maybe to try to give you some indication.

In China, there is no doubt that the industry wants to build engineering capacity, not only manufacturing. Look at aircraft programs, satellites, where we are, but also the auto sector, many new brands are consolidating in China. And they’re adopting next generation solutions. That’s the trend in China: it’s in mobility, transportation, space and defense, and in energy. You’ve seen our announcement with China Hydro, big thing; and construction, with the Shanghai Engineering Institute, which is a big institute. When they will do the IPO, it will be one of the world’s largest engineering firm. So we are in multiple sectors in China, we’re the leaders. And they are discovering how to adopt those technology for their business.

In India, in India we are only with big names. You look at Tata, we do a lot with Tata, not only Tata Motors but in mining, in apparel and in many sectors with Tata, with (inaudible). So in India it’s also with the big names, Suzuki Maruti, Ashok Leyland, and many other big names. When you look at the state of the industry in India, they are trying to build – they want to build 100 million jobs over 20 years in manufacturing in India, that’s the government plan. But there is a lot of infrastructure issues, quality to supply chain, transportation infrastructure and so on which is slowing down, but they are getting there. You know, when you look at the Pune auto hub, look at the Shanghai auto hub, look at the Delhi high tech hub, and look at the Bangalore defense – we were there for this CPM two weeks ago – there’s a lot of dynamic there, but it takes time then for them to do the set up. But for us, I see that as a very sustainable long-term growth.

So China, yes. To be brief, Russia, new dynamic in Russia in power, mainly in power and also in new sectors, mainly related to what they want to do. They have a big market for automobile and they don’t want probably to buy only from outside. They want also to refer (inaudible) their own production and their own engineering.

So, on the long run all those for us are very significant, resilient long-term factors. The question is – and we see that in the numbers. So the deployment is there, but clearly today, what we have seen – so those are elements of observation.

Last but not least, don’t underestimate the effect of a Bigatron transformation. Those are huge groups. They do high tech. Why they were doing high tech, because it was low-cost labor. But tomorrow, it’s going to be high automation, very high automation because we have around it. So the win at Bigatron for us is not a replacement of – by the way we replaced all the computers which were installed there 15 years ago. And you know that, our past point solution, because they want collaborative platform and because they want to add this new type of the automation.

But going to this level, it’s not a software replacement. It’s then a transformation of their own companies and we believe that the disadvantage of small expansion in the quarter adds a significant of advantage of long-term sustainable growth in those groups. So a win at Bigatron is not so big at the beginning, but it’s a big company. It’s like winning Volkswagen 15 years ago, look at the size of this group today.

So that’s what is I think – it fits very well with Dassault Systèmes DNA – sustained growth and sustained capacity to improve the, to, next on the footprint. We don’t want to have a price war. We want to have value creation and value will come from the connecting the dot, the 3DEXPERIENCE platform. That’s in short – the reason why we spend time here on that is because it’s not software update. It’s a new transformation as deep as what we did between drawing to 3D, 3D to Digital Mock-Up, Digital Mock-Up to PLM, and now going from PLM to 3DEXPERIENCE platform. And you will see showcase where customers are using our solutions for things they have never done in the past, never done in the past, 3DEXPERIENCE.

So it will take some time but that’s the value of what we do and what we bring to the market.

François-José Bordonado

We take the last question from the webcast (inaudible) Derrick?

Unidentified Analyst

Yes, good morning. Thank you for taking my question. Two quick ones, the first one, if I calculated correctly, the firing in Q3 at, from Transcat, it was likely above 200 add-ins, additional staff. Is it a catch up compared to H1 or do you expect this pace for equipment in Q3 to continue in Q4?

And my second question was on SOLIDWORKS, relative to the SOLIDWORKS churn rate. So you say it was quite seating in Q3, was it stable compared to Q1 and Q2 and how does it compare to 2009 level? Thank you.

Bernard Charlès

I don’t know where this 200 is coming from. It might be coming from a comment that I did to a French newspaper this morning. So let me just make a quick comment here. I was explaining and this was a French message to a French newspaper, would the government not have increased the tax, I would have probably hired 200 more engineers for the same expense.

I don’t think you need to go there but I had to send a message which was clear that we are going to make decisions to why or wherever it’s the most productive and the most efficient. So I don’t need to make more comments here. We view – I was expecting the red carpet in St. Pancras yesterday because of final Easter. Not seen it yet, but I think we have a few challenges in our country which are independent from the business per se but we also need to contribute to the social understanding of what needs to be done to develop the business.

So, please when you read the general newspaper, don’t change your business model, and come back to us to ask the question if we are sending a message which is related to general policy versus the NC business of Dassault Systèmes.

Thibault de Tersant

Actually, we had head count increase by 400, but a lot of it is coming from the acquisition of Gemcom.

Unidentified Analyst

But we have to retreat the Transcat was also in there in Q2, no? Am I wrong?

Thibault de Tersant

In Q2, no. I don’t think – in Q2, we had not closed the acquisition. We closed it early July. It was closed on July 11th. So the increase in head count is coming from Gemcom first and, of course, a little bit of increase in head count in the rest of the group.

Unidentified Analyst

And you don’t retreat the Transcat number? So it’s a plus Gemcom, and I thought it was a minus from Transcat, the minus 200 from Transcat that the calculation is not correct. Is that right?

Thibault de Tersant

Yes, to be clear, I believe that the total movement is plus 430 people for Gemcom if you really want to have precise figures, minus 200 for Transcat and an increase in staffing inside DS in third quarter which was 110, I think.

Unidentified Analyst

Okay, thank you very much.

Bernard Charlès

Solicitating my memory. I cannot be far. Is that clear?

Unidentified Analyst

Yes, sorry, thank you. And on the churn rate for SOLIDWORKS, Q1, Q2, Q3?

Bernard Charlès

Can you repeat it, please?

Unidentified Analyst

You said that the churn rate of SOLIDWORKS was steady in Q3, but I would like just to compare it to Q1 and Q2, and how does it compare to 2009? The maintenance contract churn rate.

Thibault de Tersant

Sorry.

Unidentified Analyst

Churn rate.

Thibault de Tersant

Churn rate.

Unidentified Analyst

Year-to-date...

Thibault de Tersant

We...

Unidentified Analyst

2009.

Thibault de Tersant

We hear your poorly, I mean.

Bernard Charlès

Generated at SOLIDWORKS year-to-date and how it compares to 2009.

Thibault de Tersant

Thank you, Adam.

Unidentified Analyst

In new licenses, you mean?

Bernard Charlès

On the recurring.

Thibault de Tersant

On the recurring. On the recurring, the renewal rate is much higher than in 2009. It is 10 points higher.

Unidentified Analyst

Thank you.

Bernard Charlès

Did we answer your question?

Unidentified Analyst

Thank you.

Bernard Charlès

With that, Thibault, I think so.

François-José Bordonado

With that, thank you very much for your participation, your interesting question and let’s keep in contact and thanks a lot. Have a good day.

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