Dassault Systemes Sa Adr

Good morning, everyone. I'm Beatrix Martinez, Dessa Systems VP Investor Relations. From the company, we have Pascal Dalloz, CEO, and Ruben Berkman, CFO. I would like to welcome you to Dessa Systems' third quarter 2024 presentation. At the end of the presentation, we will take questions from participants, first in the room, and then online. Later today, we will also hold a conference call. The ESO system results are prepared in accordance with IFRS. Most of the financial figures in this conference call are presented on a non-IFRS basis with revenue growth rates in constant currencies unless otherwise noted. For an understanding of the differences between the IFRS and the non-IFRS, 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 2023 document d'enregistrement universel published on March the 18th. And I will now hand over to Pascal Lelouse.

Thank you, Béatrix. hand, good morning to everyone joining us on the call and thank you for the one being with us in the room. Really, it's always a good moment to be with us. As you know, we issue our press release this morning for our third quarter 2024. So let me give you the toll first. So our Q3 results were in line, showing 4% revenue growth driven by an 8% increase in subscriptions, and the year-to-date subscriptions grew by 9%. The EPS increased 8%, reflecting the solid overall performance. And I would like to take and to highlight three key elements for the quarter. The first one is we have seen several hand markets gaining momentum, specifically in life science, where mini-data is back to second-hand growths. At the same time, we had an excellent performance in consumer industries, driven by Centric PLM. And SOLIDWORKS accelerated growth in revenue and seats. And my last comment is importantly, I think the aerospace and defense demonstrate resilience and delivered a solid performance this quarter. The second message is we have seen since last late summer, the automotive customers, specifically in Europe and in U.S., which have been impacted by the contractions in volumes. And this accelerate the need for transformation decisions, while at the same time, it can elongate if you want the decision making in a short term. In contrast, I think in Asia, especially in China, the momentum remain extremely strong. Finally, I think stepping back a little bit, We are well positioned to continue gaining market share with a robust pipeline in the industrial sectors. I think we are confident that the 3DEXTANCE platform with the data centricity will serve as a catalyst for our customer transformation in the age of AI and virtualizing the industrial processes from design to manufacturing will be a prerequisite for many OEMs and suppliers to compete successfully in the next decade. In the light of those factors, we reconfirmed the full-year EPS range from 1.27 to 1.30. And we anticipate revenue growth acceleration in Q4, nevertheless adjusted due to the slowdown in the automotive sector. And this acceleration is driven by the strength of this 3D experience pipeline. Now, let's dive into some key observations across the three main sectors of the economy we serve. First, if I zoom in the manufacturing industry, I will state I was already making the comment, but the key point is really the automotive makers have downgraded their 2024 forecast since last summer, now predicting a 1% to 2% decline in car production instead of previously anticipated growth. And this downgrade primarily impacts us in Europe and to a lesser extent in the US, while we continue to see a very strong growth in China. Simultaneously, several other end markets are showing excellent momentum. Aerospace and defense delivered a good performance this quarter, driven by robust defense contracts and suppliers' contributions. On the diversification front, I think we achieved an exceptional performance in home and lifestyle with Centric PLM. And Ruben will give more detail about this. And we consistently are winning new clients and securing several large deals and strategic deals also. In the high-tech, we also deliver robust growth this quarter, broad-based, but particularly also in Asia. And SOLIDWORKS accelerated its revenue growth to mid single digits while with the seed growth, which is on the high single digits. While at the same time, we are transitioning to subscription and clouds. And now this is representing about a third of the bookings. This diversity of the market we address, I think brings resilience to our business model. And I think looking Q3, There is also a point I really want to highlight is the competitiveness, which remains extremely robust. In Q3, to give you an order of magnitude, we have secured almost 100 significant competitive deals across key markets, China, Korea, France, Germany, and North America, but also in sectors like aerospace, high-tech, industrial equipment, and also transportation and mobility. The key point is a third of those deals has involved, in fact, a competitive displacement, which is, I think, the demonstration of our clients recognizing the value of our solution. And if there is a good thing in certain domain where it's a little bit more difficult than it used to, this is forcing certain customer choices. And I think we are well positioned. Few words related to life sciences. I know it was something you guys put under scrutiny. And Q3 demonstrated, I think, a broad-based improvement for MediLata, driven by a few things. First of all, a market recovery, and it's a second consecutive quarter in growth of the clinical trial staff. But also, we experienced positive engagement with our customers across enterprise and mid-markets, but also with our COO partners. As we previously discussed, we are also benefiting from a new innovation cycle. Last quarter, we launched Medidata Clinical Studio. It was end of June. And this quarter, we are launching a light version of RAVE, which has been designed for the early and the late studies. And as you may know, this phase and this market is extremely fragmented. And I think we have a way probably to get the fragmented market by leveraging the rage across all the different stage. In terms of market share, we continue to strengthen our position and we extend our reach to clinical trials, to manufacturing and PLM. So in conclusion, I think this new innovation cycle is starting to pay off. Zooming in infrastructures and cities, I think we, as you know, you have few dominance players this space but we continue to gain references specifically in the energy sector which demonstrate our ability to disrupt the market with our data centric experience platform and support our customer with their build and run processes now let me spotlight some key wings we have this quarter the first one and i take this one on purpose it's byd All of you, you know BYD. And we are expanding our partnership with them. And we, specifically this quarter, I mean, we are focusing on the mod themes for battery and new energy vehicle development. Why I was taking this as a reference, it's because Europe is under pressure, but we are gaining a lot of momentum in Asia in the auto sector. And BYD, as you know, is probably one of the key references. And this deal again demonstrates our ability to continue to expand in a domain where, believe me, this deal was highly competitive because it was already remaining to focusing on the battery development and simulation and certifications. And you could imagine all the traditional players who were competing against us. The second example, customer case I have selected is Merck. Why Merck is because we are expanding our partnership focusing on patient centricity. And for the one who are following us, you know that Merck is usually used as a reference by Viva. So this is again a way to demonstrate to you that with the new solution we are bringing on the market, we are progressively displacing what the clinical trial is about, integrating more and more this patient centricity, which is the core of what we do. So here, what we do, we are broadening our partnership to support key studies in various therapeutic areas, including a phase three on the infectious disease studies. But also, as you may know, we are completing the footprint we already have at Merck on the oncology studies. The net of this partnership is adding 1,400 new patients across 400 sites, adding to the 10,000 we are already participating and supporting in the decentralized clinical trial. The last one I picked, it's an interesting one. The company is called SNAP. and it's a leading natural gas transport operator in Europe, in Italy. And they are managing a 38,000 pipeline network. I picked this one because they have selected, SNAM has selected the 3D Express platform to digitally transform the management and the optimization of the gas network. And why this is an interesting one, it's because this wind back is very similar to the one I presented a few quarter ago with Red Electrica, if you remember the Spanish electricity distribution network this was it was a win back so it was against a displacement of bentley which was widely used inside this company so what do they do with the with our solutions in fact nam is relying on the our solutions to do a few things first to create the virtual twins of the existing and the future assets giving them the ability to optimize the asset operations, but also to improve the safety and to improve also and to reduce the emissions, which is something very important for this industry. But it's also another way for them to extend, if you want, the ecosystem of assets and operators to ensure that they will be able to have a predictable supply of energy throughout Italy and internationally. which is also extremely important because the domain is fluctuating a lot. And having this ability to predict and to ensure that the network will be able to support the capacity requesting is extremely important right now. So I think this case is a good expression against our ability to combine the real-world data, the ones which are coming from the operation, with the model-based approach. And I think this is a game changer. Progressively, we are finding our way in this space. The last comment I want to make is really related to AI. I know it's a big topic for you, but there are a few things I want you to keep in mind. The first one is, remember, we have the largest and the most diversified install base in the market, which means that we possess, if you want, directly the largest corpus of data industrial data, but as well as business data and science data. So in a way to use this as a strategic asset to maximize the potential AI, what do we do? We combine the AI with the MOTSIM approach in order to, if you want to transform those sets of data into knowledge and expertise and ultimately creating the generative experiences. And as you can see, on this framework. What I did, I took all the different steps of Dassault system for the last 40 years. And I showcase, because those applications are live today, how we are leveraging AI for different purpose. One is to put the knowledge and the know-how in the hand of the non-experts. This is, for example, what we do with what we call the generative assembly. To connect design and engineering and manufacturing, is for example what we do in the generative shop floor where automatically the system is capable to generate the shop floor the processes the manufacturing will follow to master the system of systems which is really what you can see in the generative infrastructure for example but also to achieve more and more the mass personalization at scale And here I took an interesting case for you, which is how from the video and images, we are capable in life sciences to recreate the 3D model of the organs, not only the brain or the heart, but any kind. So this is really transformative. And I think if you look at what we do, I'm claiming that there is no one single competitor capable to do this. Now, before handling over to Robert, we'll give you a the details on the numbers, there are a few things I want to remind to you. The first one is really our 3DEXPERIENCE platform is a powerful differentiator. And remember, we are unifying. It's unified. It's cloud-native. It's data-centric. And it's pretty unique on the market. And why I'm saying this is because in all the sectors where the pressure is extremely high, I think more and more we are making a difference. Second, this differentiation resonate with our customers and we have been able to demonstrate significant win back and wins. And I think without compromising on the value of our solutions, which probably something will come back on this. And the third is I think the 3D experience pipelines for the rest of the year is high, healthy, and I think it's support with confidence The accelerations in terms of growth, we are targeting for Q4 with the midpoints at 8%. Now, Reuven, the floor is yours.

Thank you, Pascal.