Dassault Systemes Sa Adr

Good morning, everyone. I'm Stacey Pollard. I'm here with the SOCIS stands CEO, Pascal Dalloz, and the CFO, Reuven Bergman. Unfortunately, our head of investor relations, Beatrix Martinez, could not be with us today. She's out for a couple of weeks. So I have the pleasure of being in this room again. It's been a few years since I sat in the chairs beside you guys. So it's very interesting to be a different perspective on this side of the podium. Now let me move on and formally welcome you to Dassault Systèmes' third quarter webcast presentation. At the end of the presentation, we will take questions from participants in the room and online. Later today, we'll also hold a conference call. Dassault Systèmes 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 IFRS and non-IFRS, please see the reconciliation tables included in our press release. Some of the comments we will make during today's presentations will contain forward-looking statements which could differ materially from actual results. Please refer to our risk factors in our 2024 universal registration document published on the 18th of March. I will now hand over to Pascal DeLose.

Thank you, Stacey. Good morning to all of you. It's always a pleasure to be here in London and to have a chance also to interact directly with you. So we're going to review the Dassault Systèmes performance for Q3. Let me give you some, at least my reading of the numbers. I think this quarter is a solid quarter. with a healthy margin, and I think Rouven will come back on this, and with a strong EPS growth, and we continue to grow the recurring revenue part, which is, I think, the important thing, because this is reflecting the strengths and the resilience of our business model. Now, if you look at the numbers, the revenue grew 5%, thanks to a strong demand across our core industries. Our subscriptions business is up 16%, accounting for almost half of the recurrent part of the revenue. If you remember, a few years ago it was only a third, so this is growing extremely well. We hit a 30.1% operating margin, which I think is reflecting our focus on running profitable and efficient business. And finally, the earning per share came at 29 cents and growing at 10%. So behind this number, I think there are certain things I would like to highlight, which are our strengths. The first one is industrial innovations, especially transportation and mobility. We continue to expand our footprint. And despite the ongoing challenges in this sector, We have also a strong momentum behind 3D experience and SOLIDWORKS this quarter. The second thing is I think our focus on accelerating SaaS adoptions is starting to pay off this quarter, as you will see. This is driving the revenue growth and the strong market tractions. And to further support this momentum, we have established a new leadership at Centric to fast-track the adoption of the SaaS business model. Lastly, in the field of artificial intelligence, I think we are shaping the future with a powerful combination between the industry's most comprehensive data sets, the scientific rigor, the advanced modeling and simulations being combined with the real-world evidence. We call it the real-world validations. And AI for us is really not an add-on. It's embedded in the core of the 3DEXPERIENCE platform for a long time. Because you remember, the 3DEXPERIENCE platform, this is really how we are managing the knowledge and the know-how for many of our customers. This quarter, we are coming with a new category of solutions. And you remember the virtual twin as a service, the generative experience and the virtual companions. And we'll say more about this. And they are really transforming the way Our industry, our customers, they are designing, producing and operating the life cycle. Now, for the full year, we are confident enough, at least to reaffirm the earning guidance, and we expect the EPS to grow between 7% to 10%, with a total revenue rising 4% to 6% on an adjusted basis. And it's mainly new to three factors. The first one is the lower growth from Medidata, which is in line with Q3, in fact. The impact of the saturation for Centric and the volatility impacting some of the timing to close. Now, let's dig into some details behind those results. Let's zoom first on the manufacturing sectors. As I was telling you, transportation and mobility has once again proven its resiliencies. And to give you the numbers, this quarter we are growing at 18%. Why so? Because it's usually when it's a difficult time for our customers that they have to take radical decisions. And this quarter we have some. Ford took the decisions to go with us to expand outside of the engineering borders and we have signed a contract with them for the next five years to use the platform across all the different programs. I will tell you more on this probably next quarter. But there is also another very important flagship customer we signed this quarter with Stellantis. And I know some of you were expecting us to move along this way. And I will come back on this. Why those companies are basically adopting YD, the 3D experience platform, is because they are using our solution first to speed up innovation. And speed is becoming really one of the key topics. You remember a few years ago to develop the car, it was almost 48 months. Now we are talking about 16 months. So it's a little bit like fast-moving goods. And to master the complexity, you need a different approach. And this is where I think we are making a difference. Sustainability is also a topic. The electrification is driving the cycle. You know it. And more and more with the SDV, we are creating a personalized experience for the customers. And this is really the combo, if you want, of what we can provide with our solutions. We are also seeing a strong growth in defense. It's growing double-digit this quarter, where programs are becoming more complex and collaborative. And I think our 3D Expense Platform, combined with what we call the Model-Based System Engineering, MBSE, which is now a standard in the industry, is more and more widely adopted. And this is really opening a new opportunity for us Not only in Europe, but also in the rest of the world. Life sciences. The market remains unstable and challenging. I think Ruben will say more about this. We still see the new clinical trial start being contracted. Nevertheless, we landed with some big contracts this quarter. And more importantly, I think we also... being encouraged by some large win-backs. AbbVie is one of them. You remember it was one of the flagship customers of Viva a few years ago. They signed with us a contract for the next five years and I think this is the proof that what we do is extremely critical And I think also this is a proof that what we have built as a foundation is critical for them, also for the AI-based programs. And I will come back on this. In infrastructures and cities, the demands keep growing, in fact, for autonomous and sovereign infrastructure, you remember, especially in the energy space. But we are more and more seeing new use cases or new opportunities emerging. One of them is the nuclear decommissioning. As you know, it's a big topic because you have many reactors around the world aging. And we are using our solution to do a vehicle twin as a service to manage the safety and the efficiency of this process and to manage the end of life of those nuclear reactors. So this space is really, again, a way for us to establish leadership in a domain where we are the challenger because in this space, I think we do not have the same footprint than the others. Now, let me show you some key wins. Stellantis, for you know the company, I mean, and you remember, we had significant footprints with PSA, but the rest of Stellantis was much more in the hands of our competitions. So, they took the decisions to, I mean, to standardize on 3D experience platform on the cloud, which is a thing important, for their system engineering backbone. And this is extremely important because, as you know, the system engineering is the foundation to do the SDV. And all the car players are moving along this way, and they are using our system-to-system approach as a way to standardize across all the domains to unify the bill of materials, but more importantly, again, they are building the foundation for their AI initiatives. Because one way to reduce the cycle of time to develop the car is to be much more generative, And you need an infrastructure to do this. And that's what the 3DX Plank platform is really for. So we are extremely proud to support this transformation. And it's a significant one because it's a ramp-up at the end with more than 20,000 users we need to equip with the systems. Moving to life sciences, I already said a few words. So, AbbVie, you know, it's a global biopharma. It's one of the top ten global pharma. And it's a win-back. And it's a win-back of a win-back. Let's say it this way. Because, again, a few years ago, they took the decisions to open some clinical trials with Viva. And now they are back with us. And there are a few reasons for that. One of them is the time. They were sharing with us that we are ten times faster in the way to run the processes and the clinical operations. It's also a big cost saving, which is an interesting takeaway because you remember one of the arguments which was used was this EDC technique. is becoming a commodity and it's price sensitive and the reality is the price is one thing the savings and the efficiency is another one and it's here you have the proof and the last arguments all the pharma sector a little bit like the auto sectors they are building their ai programs in order to automate in order to use in a better way the data set they have And they have seen through our platform the ability to develop their own program on top of what we do. So those are the reasons, if you want, behind these win-backs. Finally, from a customer standpoint, this is an interesting case also. Correa Hydro and Nuclear Power is the largest energy public company. enterprise in Korea, and they have launched the digital transformations to manage, as I was telling you, the decommissioning of 26 reactors. So the reactor is first generation. They are progressively replacing it with a new generation. And to do this, it's a complex process. They have to decommission this large install base. They showcased this example, this case in Korea's 3D experience forum a few weeks ago, and I was having the chance to participate in this. And frankly speaking, you should really look at it. It's amazing what they have been able to do, because it's a very complex process. Safety is at stake. Compliancy is at stake. It's a very, very sensitive process, because you have to manipulate the reactor when the reactor is still working. At the same time, you need to do it in a very precise manner. And to manage this complexity, to predict the complexity of the process, to prevent the risk, to keep track of everything, because you have to be compliant, they are using the platform and they are using the virtual twin in order to make this. So, why I pick those examples? Because behind all of them, there is a clear pattern. We are not only the partner for them. I think in many cases, we are the game changer for them. We are the one allowing them to accelerate their industrial transformation, whatever it's in the mobility, life sciences, and the energy sector. Now, let's speak about 3D universes. So, you remember, we announced it in February this year, and I was making the statement, 3D universes is not an extension of what we do. It's really a leap forward. And there are a few things I want you to keep in mind. What are our differentiations? The first one is we are building our AI engine on the large and the most structured industry corpuses. And it's the result of 40 years having almost 400,000 customers worldwide in very different sectors. Building the virtual twin of all the objects you can see on the slides. And this is a unique corpus to train our systems. And remember, AI without having high quality data is just only a noise. But if you have the right data, it's becoming a game changer. The second takeaway is the data set is not enough for what we do. You need to build AI on science. And this is extremely important because if you are only relying on patterns matching and recognitions, it's not enough for what we do. You know, the AI needs to be built on physics, biology, material sciences, engineering principles. And why so? Because when life is at stake, when you develop a drug, when you fly on objects, when you are driving an autonomous car, you cannot take risks. The system should not guess, should not hallucinate. You need to understand how the parts fit together, how the materials behave. And this is really what we have been able to build, which is an AI which is rooted in sciences. The third element is we are coming today, I mean today a few weeks ago, on the market with the new category of solutions. So you remember we presented it during the Capital Market Day. And now I'm really pleased to introduce you to our virtual companions. And in fact, it's a family of three for the time being. You have Aura, which is our business strategist, focusing on the outcome and efficiency. You have Leo, for engineering experts. And Leo is really diving deep into design and simulations. And you have Marie, who is our scientific authority, handling probably the most advanced questions on research. The interesting things, if you ask the same questions to all of them, you have different answers. So, more than a long explanation, let's look at the video.

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