Dassault Systemes Sa Adr

Hello, and welcome to Decimal Systems 2025 Q2 and a half years earning presentation. My name is George. I'll be your coordinator for today's event. Please note that this conference is being recorded, and for the duration of the call, your lines will be the listen-only mode. However, you'll have the opportunity to ask questions toward the end of the presentation, and this will be done by pressing star 1 on your tablet keypad to register your questions. If you require assistance at any point, please press star zero, and you will be connected to an operator. And I kind of call over to your host today, Ms. Beateke Mertinets, to begin today's conference. Please go ahead, ma'am.

Thank you, George. And thank you for joining our second quarter and first half 2025 earnings conference call with Pascal Dalouze, Chief Executive Officer, and Hovind Berkman, Chief Financial Officer. Best system results are prepared in accordance with IFRS. The financial figures discussed on this conference call are on a non-IFRS basis with revenue growth rates on a constant currency basis unless otherwise noted. Some of the comments on this call contain forward-looking statements that could differ materially from actual results. Please refer to today's press release and the risk factors section of our 2024 Universal Registration Document. All earnings materials are available on our website, and these prepared remarks will be available shortly after this call. I would now like to hand over to Pascal Delos.

Pascal Delos Thank you, Beatrix. Good morning for our friend from the U.S., or good afternoon for the others. Always a great moment to be with you at this time of the year to work through our second quarter and first half results. So let's get right into it. We had a solid Q2, well aligned with the revenue growth pickup compared to Q1, driven by strong performance in both subscriptions and 3D experience. Some quick highlights. Total and software revenue grew 6%. Subscription revenue was up 10%, 3D experience grew 20%, and EPS came in at 30 cents. Given this solid performance, I think we are keeping our full year 2025 guidance unchanged, meaning revenue growth between 6% to 8% and EPS growth between 7% to 10% XFX. Before I hand it over to Ruben for the financial deep dive and outlook, I want to quickly call out three big takeaways for the quarter. First, more than ever, our customers are facing more complexity, whether it's scaling up, driving innovations, managing costs, or rebalancing activities from one country to another one due to the tariffs. and our platform is increasingly at the center of how they are navigating change. Second, we are seeing resilience in transportation and mobility, and a strong momentum in fast-growing areas such as space, defense, energy, and AI-driven cloud infrastructure. This kind of diversification makes us stronger and open new doors for the future. Third, AI is already creating a new growth path. This quarter alone, we saw real traction in two areas. The first one, the regulatory compliance. The second one, the software-defined productions. We will come back on these two topics. The point is we are not just talking about AI. We are making a difference, and this is a reality. So let's With that, zoom on what's happening across the different sectors we saw. Starting with manufacturing, the first half of the year confirmed the resilience of transportation and mobility industrial equipment. Mid-single G growth in transportation and mobility was led by France, Germany, and Japan, as well as the expansion with the battery manufacturers, specifically in China and India. We are helping them to scale up their gigafactory We are also seeing those manufacturers rethinking their global strategy with tariffs in play. And that's a space where we are really well positioned, helping them to move faster, to make better decisions across the supply and demand. Speaking about aerospace and defense, we had a strong start too, up 15% year-to-date. with a great momentum coming out of the Paris Airshow happened a few weeks ago. The pressure is on multiple fronts, but to ramp up the production, to move to the next-gen aircrafts, diminishing the CO2 emission, and developing a strong new space model almost everywhere in the world. And we are right there helping them to make it happen. iTech is also growing steadily with a high double digit for the semester, thanks to the work in multiple areas, such as the electromagnetic simulation for consumer electronics, the productivity solution for the semi-manufacturing, and more sustainable infrastructure for the cloud data center. If we zoom on life science, life sciences is still feeling the effect of the market contraction in clinical trials. But we are seeing a big shift. Investment is moving from research and development and clinical into manufacturing and supply, partially due to the global trade pressure. And that's really play our strengths. There is a rising demand for platforms that connect the research and development directly to the manufacturing, what we call connecting the lab to the fab. And our PLM portfolio is growing nicely as a result up to the mid-teens for the first half. In infrastructure, there is a clear trend towards sovereignty infrastructure all over the world. And we are leaning into that opportunity. The energy transition, especially nuclear, is still a top priority for us. But the sovereignty now goes far beyond energy. It includes defense. cybersecurity, and more recently, the AI capabilities for the national data centers. And we are really accelerating our expansion in those segments of the industry. Now, let's look at some key wins for the quarter. And let me give you some concrete examples of what I just described. We recently signed a strategic partnership with Thales Alinea Space, a joint venture between Thales and Leonardo. And they are right at the center of Europe's effort to build sovereign space capability. Why this is an important point? Because we discover with the war in Ukraine that we had dependency in Europe on non-European satellite systems such as Starlink for critical communications. And now Europe is moving fast to fill this gap. And to do this, we have to build our own low-orbit constellations for the defense and the government use. So, TALF and EOSpace is scaling big times. They used to produce a few thousand satellites. Now, they are producing 100 per year. So, to do so, they have chosen the 3D experience to help them to do it, not only for the design, for the simulations and the validations, but also to operate the complex space simulation at speed. I think this is really a strong vote of confidence in us in how we can help Europe or the European player to build its technology independence. Moving in life sciences, as I mentioned earlier, our PLM portfolio is a strong vote for others. And here is another good story coming from Asia Pacific. Neon Codon, Maybe you know this company. They are the leader in cardiovascular diagnostic systems. They selected a few years ago the 3D experiments over Siemens to drive more specifically the product development. They are now expanding into manufacturing with a clear focus on quality by design. That means better traceability, better quality, and a full compliance and everything with only one platform. Now, let's shift to infrastructure. I think for the one following us, you know that we are a challenger in this space, but we are building the leadership on some of the most complex, high-valued systems, the nuclear plants, the rails, infrastructure, and more recently, as I was mentioning, the data centers. This is a big space, a $650 billion U.S. dollar market. growing at 15% annually. But this is not without challenges. The biggest one, as you know, is the AI boom is driving massive infrastructure demands, but the energy cost is such that we cannot afford it the way it is right now. Just to give you an example, to support AI at scale in the U.S., only in the U.S., it will require nearly 100 new nuclear plants and almost none are being built today. So this is the reason why we are coming to these discussions, because with our system approach, we are helping the different stakeholders, hyperscalers, colocation providers, and more and more enterprises to design a more sustainable infrastructure to run it much more efficiently by reducing the emissions, the energy use, and also the water consumption for the cooling system. And I think we are extremely well positioned to lead in this critical growth area. Now let's talk about AI, and specifically the regulatory compliance. This is quickly becoming one of the biggest bottlenecks in highly regulated industry. And with what is happening around the world with the de-globalizations, it's even worse. But for us, if we see the positive side, it's $100 billion opportunity, almost doubling every five years. Do you know, if I'm just taking some concrete example, that for an aircraft certification, it can take three to five years and involve more than 100,000 requirements to be fixed and to be fulfilled, only for one certification authority. It's almost the same in the pharma. If you, the pharma submissions, the drug submissions can be over more than 100,000 pages. And each delay, each day you have a delay, it costs more than $1 million. And I think the industry who has pushed this at the maximum of the extreme is the banking industry. You know, you have these constant updates. And just last year, it's $14 billion in fines just only in the U.S. So with the AI-powered virtual twin, I think we are turning this compliance into strategic advantages by transforming all the massive documents you have, the millions of pages you have to read and to understand and to do the interpretations into a dynamic knowledge and automatically verify the design. So it's really compliant by design. So what used to take months now takes minutes. What used to slow down now is helping you to move faster. And I think the compliance is going from a cost center to a competitive edge, and we are building the solutions to make it possible. You know that we have already launched our first AI roles and our virtual companions, but more will come soon. Now, lastly, let me touch on one recent acquisition. In Q2, we acquired Ascon QV technology. It's a startup in the factory automation based in Germany, the nation of automation. They work with major players such as BMW and others, and their software is now part of the Delmere brand, making our manufacturing offer even stronger. What do they do? you know they serve the factory automation. And it's a large market dominated by hardware players. And in fact, it's almost 90% of the 13 billion markets. The flip side of this, to program those hardware, those PLCs, you need an army of professional services to do it. This is going to change with AI. And we believe the software will drive two-thirds of the value in the coming years. I think with the rise of what we call the software-defined products, we are seeing more and more in the industry the need to have what we call the software-defined production systems, flexible, cost-effective, and fully traceable. And I think we are building that future with our of production system. To close things out, there are a few comments I want to make. First, we are operating in a world of growing complexity, and this is exactly where we had value. We had value for all the industry on these specific things. Whatever the complexity is coming from the geopolitics, from the innovations, from the breakthrough technology which are shinding the games, I mean, we know how to handle this complexity and to make it manageable. Our 3D experience platform really helps our customers to move faster, work smarter with the others, and adapt with confidence. And I think over the time, we are creating deep and long-term value for our customers, and it's, at the end, we are just getting started. So thank you for your participation and your consideration, and now over to you, Ruben, for more on our financial and guidance.