Good day and thank you for standing by. Welcome to the Dassault Systèmes 2023 Q2 and first half earnings presentation call and webcast. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to slowly press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, you can please press star 1 and 1 again. Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker, Béatrix Martinez, Vice President, Investor Relations. Please go ahead. Good morning, everyone. This is Béatrix Martinez speaking, Dassault Systèmes, VP, Investor Relations. From the company, we have Bernard Charlès, Chairman and CEO, Pascal Daloz, Deputy CEO and COO, and Rouven Bergmann, CFO. I would like to welcome you to Dassault Systèmes second quarter and half year 2023 webcast presentation. At the end of the presentation, we will take questions from participants. Later today, we will 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 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 2022 Document d'enregistrement universel, published on March seventeenth. I will now hand over to Bernard Charlès. Hello, everyone. This is my 106th quarter. Not bad as a record. Well, we are pleased with this second quarter 2023, with a strong quarter from two perspective. Broad-based, and we see a momentum, maybe strange for some of you, provided the current indicators of the economy, but we do see a momentum, and Rouven and Pascal will talk about it. The total revenue was up 8%. Most importantly, double-digit for the new license, when you add the upfront on the subscription. The operating margin was at 31%. On the head count, remember, we continued to invest last year, at the end of year, and we have again invested, is up 7%, so we are investing for the future. The EPS up 7%. Excluding exchange rate, it's 15%. What can we say? And Pascal will have wonderful illustration about the next comments that I want to share with you. First, the move from things to life are working for us on opening up significant perspective. By the way, I'm sure you have noticed that, at our CMD, Capital Markets Day in June, more to be discussed in years to come, but it's also a foundation for the next five years. The virtual twin discipline, the twin of the real, is creating a new milieu where you can experiment and provide experiences when you connect the virtual twin on the real world. Of course, as everyone is now speaking about AI for text, on semantic and grammar, we are applying for a long time, more than 10 years, AI on science. AI will play a role not only for text on grammar, but it will play a big role for science, too. I'm going to show you two illustrations about that in a moment. We are basically combining modeling, how you represent the world, simulation, how you experiment the world, on AI, how you learn from this new milieu, which is the addition of the replica of reality at a certain level, we call it virtual twin, connecting it to the data you collect, which are what we call real-world evidence, whether you are in manufacturing industries, in energy or life science. That's the core of the future of Dassault Systèmes. There is a second aspect of it, which is really the evolution of the world for a more sustainable industry. The virtual twin is a very key set of capabilities for that on multiple fronts, material transition, process transition. Providing virtual twin as a service is a key for helping to rebuild and redefine the move from value chain to from supply chain to value chain. Of course, it calls for a new workforce, new type of training. All our customers are talking about the workforce of the future at this point in time. It's really an expansion where progressively the virtual world to help to design, imagine, design, create, produce, and operate is connected. Of course, you have seen it already. We are reconfirming our full year 23 objectives, which I'm pleased with the team because we committed for the five years plan. I'm supposed to be in charge of this conclusion of the five years plan, doubling the EPS, reaching EUR 1.20. We said EUR 1.18-EUR 1.20. I hope the team will deliver EUR 1.20. This being said, coming back to the journey, there are a few things which are important. I think I illustrated to you very precisely why virtual twin of human is changing, of life is changing a lot of things in life science. Not only that, bioscience is going to play a very big role in food, nutrition, substitution, as you can imagine, as well as even for manufacturing industries. We are really seeing on a longer term, a true metamorphosis of the entire industry of the world. Let me come back on two illustrations. One, launching this video to show you, please, look at the people, how they live in an environment which is both real and virtual. I was touched, I was moved with this video that you're going to see in the French hospital, Saint-Louis. Please, run the video. One of Saint-Louis Hospital's characteristics is that immunocompromised patients are treated within. It's really our job to prevent healthcare-associated infections. With Dassault Systèmes, thanks to augmented reality, an innovative educational tool, we have been able to reveal the invisible. The dialysis unit at Saint-Louis Hospital is a room where nine patients are treated simultaneously. We wanted to prevent these fragile patients from acquiring an infection during their treatment. We contacted Dassault Systèmes. They scanned the entire ward to generate the digital twin of the dialysis department. Thanks to this innovative technology, we were clearly able to raise awareness among healthcare professionals on cross-transmission risks within hospitals. We have a tablet. It's mobile. The unit, as well as patients, are reproduced in 3D. Dialysis nurses and nursing assistants were astonished by realism represented. They became aware of the existence of potential risk. Here we can see it. It's obvious. We see the difference, and indeed, there's no question about it. It speaks for itself. What we can say today is that overall, we were able to improve patient care within the dialysis unit, and to offer our patients better safety regarding infectious risks. It's always, it's always a special moment when you see these kind of capabilities in the real world, and when you see the face of those people helping to improve the life of others, really taking advantage of those technologies. I think this echoes very well what happened in Boston a few weeks ago, where we had the Science in the Age of Experience, and we had an amazing conference with prestigious scientists, as well as Nobel Prize awarded people, talking about the revolution that this will represent. I think their presence, their presentation, confirmed that it's becoming very important. Big event, 300 plus member of the global scientific communities. Of course, this is key because this powerful network is helping us to qualify on defining the priorities for this sector. Another example, because everyone is talking AI, so we want to make sure that the people understand that we have been doing it for years in multiple sectors. There is one example that you know, that we have talked about already, which is AI for clinical trial. I will not come back on that, but as you know, the third arm in clinical trial is really AI-driven, AI-generated for precision medicine clinical trial. Here is another example, which is, I hope the video is running, Beatrix. Thank you. This is the example of Generative Therapeutics Design. What's the problem? You have a target, you are trying to invent new type of molecules, biologics, that could solve. The target is, of course, a disease, that could solve the problem of killing the target or reducing the problem. With AI, with generative therapeutic AI, that's a system, with the BIOVIA brand, which is really a deep science, has really demonstrated that we can generate an incredible number of possible options. The next question is: How do you select them? How you reduce the selection field when you have generated so many of those things? Do we do simulation? When you connect data science, modeling, simulation with AI, you get a new world. I believe that what we're presenting here for Generative Therapeutics is as big as when and as important as when Google demonstrated the unfolding of that they did a few years ago, which has not been very much used, but all this is coming. to create a new milieu for the science that will be useful. Generative AI is used widely on very specific domains at Dassault Systèmes, and we know how to build learning machine on science, on data to make it happen. Remember, we also had a showcase a few months ago, I think, for second quarter, Pascal, with Renault predicting cost of the vehicle based on material cost volatility on market, and it worked very well. This is what I wanted to illustrate. It is an opportunity for us, and we are leveraging it. You are familiar, for those of you who have followed us for numerous years about this, what we call multi-physics, multi-scale, starting from atoms, going to the end product, whether it's a plane, a car, a battery, brain, or a heart, you name it, human cell or whatever. We continue, and we will continue to invest, to do multi-scale, multi-discipline with not only material science, chemistry, but also biology. We are even redefining the math foundation of biology to make sure we have comprehensive models on all those things. That's really core for Dassault Systèmes. In summary, virtual twin is not the shape of a human. Virtual twin is about representing all aspect, revealing the invisible for brain, heart, lungs, cells, and we do those things today. We have tangible program on each of them: skin, as well as the microbiota, which are very, very key for the future, by the way. When you think about the virtualization of this, and you connect it to the real data connection, you create a new world for practitioners. You create a new milieu to invent new type of practices on redefined research. This is what Dassault Systèmes is doing, and I could use the same illustration for object flying, for high tech, for energy grid, for moving vehicles, for robots, and the similarity with this architecture will be very, very alike. This is why I think we have solid foundations for the future, and we will continue to invest to really make this a reality and a value for the world. The purpose is guiding us. It's a generic statement, but I think no one can debate the fact that since February 9th, 2012, we have spent a lot of money to make this happen, and we will continue to do so, I think with the right investment. With that, Pascal, it's your turn. Thank you, Bernard. Good morning, everyone. Always a pleasure to be with you at this time of the year. Before to dig a little bit into the customer example and, you know, the split by product line by geo, let me give you some flavor of what is our perceptions of what is going on. My first comment is we saw the renewed focus on investment in innovation from customer standpoint, this positive shifts in the market was relatively evident in our strong performance, driven by the broad-based momentum in both large enterprises, but also in the mid-market across all the geos. You will see, Rouven will give you a lot of numbers to confirm this. The second takeaway is the convergence between the experience economy and the circular economy is really driving a deep transformation across all the sectors. All the businesses, all the industries continue to evolve, we saw growing demand from our customers to address those critical issues of sustainability, but also environmental responsibility, maintaining a competitive edge through rapid innovation and optimizing operational efficiencies. Let's zoom on some specific cases. The first one is Unilever, you remember, the circularity is more just than a concept for our clients. They recognize the tangible benefits of what we bring on the concrete projects. We are driving forward the sustainability innovation in manufacturing, using AI, as Bernard said, in combination with our virtual twins, to minimize the waste and recycle the raw materials. Remember, two quarters ago, we were speaking about PepsiCo. We are speaking about, you know, the case of Unilever, it's almost the same things. Unilever, they have the bold ambitions to reduce the plastic waste with a target of reducing the virgin plastic by up 50% by 2025. To make it happen and to support these ambitions, they are using the 3DEXPERIENCE platform to drive the material efficiency through an automated, optimized, optimization processes, which are leveraging the real-world evidence, you know, the combination, again, of the AI and the virtual twins. Additionally, with those new plastic bottle design, we are right for the first time. That's for the manufacturing space. If we zoom in, the significant time required and the level of upfront costs and potential risk involved in the clinical development provide barriers, in fact, to innovations in life sciences industry. We aim to help to reduce and break down those barriers across the sectors to enable greater innovations. Last quarter, Novartis has expanding its trust to Medidata. You know, Novartis, we have a long-standing relationship with them, and I think, when they are selecting their partner, they select not only on the value added, but also the trust and their domain expertise. I think this is also something which is unique. If you look at the landscape, we are one of the few having the therapeutic domain expertise. What does it mean? It means we will continue to assist them in achieving, you know, a reduction of 50% of the cycle time. At the same time, we are also standardizing. We help them to standardize their clinical trial on one unified cloud platform to ensure the comprehensive life cycle management. This is key because we are preparing the fact that they will connect the dots to the entire drug life cycle developments. Our commitment to Novartis' success is stronger than ever, and it's evidenced by the expanded partnership with a new five years commitment, and we are dedicating, obviously, to support Novartis in enhancing the patient experience and driving unprecedented clinical outcome. Let's move on infrastructure and cities. The importance of the clean, safe, and sovereign energy has always been mission-critical, and in the recent year, the topic has gained significant attention worldwide, particularly as we transition toward the global carbon-free energy. While we have frequently showcased the success in energy productions, this time, I really want to emphasize how we can drive the innovation in the domain of the grid. Red Eléctrica, the sole operator of the Spanish electricity systems, has adopted the 3DEXPERIENCE platform on the cloud, not only to design, but also to operate the virtual twins of the energy network for the Spanish generation smart grid. Operating the virtual twin of their network will ensure a few things. The first one is the highest grid availability, while we are managing various energy sources, but also enable an easy grid connections. We are also supporting them in designing the next generation of reversible hydropower plant for energy storage, which is obviously critical, because when you have a lot of renewable, you need to find a way to store the energy. Producing hydrogens and being able to recreate energy from there is extremely powerful. Last but not least, we are also assisting them in managing the construction program for the power lines, for the substations, and for the storage facility at the same time. With one single platform, with a virtual twin experience, we can not only help them to transform the traditional network into a grid, develop the new breakthrough technology, especially in the storage, in the energy storage, but also operate real-time this network. We are really delighted to support Red Eléctrica effort and further our progress through the sustainable energy. Let's move to the performance of the Q2. There are key trends across the geo and product line I want to highlight. Let's look at by the geos. In Americas, the revenue growth accelerated sequentially to 10%, driven by a strong performance, mainly in aerospace and defense, as well as high-tech, and well supported by life sciences. In Europe, momentum continue with a revenue growth of 9%. The region benefited from a strong strength in Germany and France, mainly driven by Consumer Packaged Goods and Retails, also transportation and mobility. In Asia, the revenue growth was 4%, thanks to the rebound in China, with a growth up high single digits and continued high double-digit growth in India and strength in mainstream innovations. Turning to the product line performance for the second quarter. Industrial innovation software revenue saw 7% growth in Q2. Within that, CATIA delivered a double-digit growth in both upfront license and subscriptions, thanks to a strong cyber system adoptions. You have seen in Bernard's presentation, the cyber system adoption is not only for all the connected objects, but it's also meaningful for the rest of what we do, including life sciences. SIMULIA also performed well this quarter, with the software revenue growing high single digits during the quarter. ENOVIA also deliver a good subscription result during the periods. In life sciences software, the revenue increased 7%, Medidata deliver a high single-digit growth, lower than in the previous quarter, and driven by an industry-wide reduction in study starts when compared to the very high post-COVID levels, as well as on a very strong baseline effects when you compare the second quarter of last year. Rouven will come back to this, and we will give you a lot of details. At the same time, and this is where I want to emphasize. We are experiencing a strong performance in the top pharma companies, including several multi-year renewals, such as Novartis, but not only. I could mention this quarter, also Gilead. Importantly, we plan to return to double-digit growth before the end of the year for Medidata at large. Zooming now in mainstream innovations. Software revenue increased 12%, and this performance has been achieved with a strong double-digit growth, with a broad-based expansion across all the geo for SOLIDWORKS, notably in China, where the software revenue increased by 25%. Remember, it's really a significant rebound because it has to be compared by minus 20-22% in the first quarter. Centric PLM also reported an excellent performance, driven by the Consumer Packaged Goods retails, saw a continued pleasant momentum across all the core business verticals. Zooming more on the Centric PLM, you know, it's a collection of solutions which is used by 12,500 brands today, as a significant footprint in the market. However, the potential opportunity we see is much larger. You know, we are progressively moving from fashions and apparel to new markets, including food and beverage, cosmetics, personal care, home and furniture, consumer electronics, just to name a few of them. We are also moving from brands, which are the core, to retailers. Remember, one of the largest transactions for this quarter is with one of the large retailers in Europe, manufacturers, but also more and more consumer. Finally, we are, from a solution standpoint, we are also expanding from the collection managements to establish a business platform that will serve as a backbone for e-commerce. I think we are well positioned to continue to execute our strategy and become a global leader in the consumer industries, and we believe that Centric PLM has the potential to become a billion-dollar plus business in the coming years. Having said that, it's time for me to hand over to Rouven. Rouven, you have the floor. Thank you, Pascal, and thank you, Bernard. s you can see, Q2 was a strong quarter. We delivered on all our key objectives, encompassing revenue growth, margin, and EPS, driven by broad-based strength across pretty much all geographies and a healthy contribution from picking up large deal activity. As a result, we wrapped up a good first half of the year, which puts us on trajectory to achieve our full year objectives. Before I go to the details of the presentation, the numbers, I want to also quickly recall, and I'm sure you do, that when we introduced our objectives for Q2 back in April, we highlighted three main drivers to accelerate growth in the quarter. The first one was an acceleration in North America. The second was a continued momentum in Europe across key industries. The third was the return to mid-single digit growth in China. In this quarter, all these elements were delivered as expected or with even better results. Now, let's take a look at our Q2 results in more detail. Total revenue and software revenue grew consistently 8%, while services revenue was up 7% at constant currency, in line with our objectives. Upfront license revenue was up 6% year-over-year, ahead of our Q2 objectives, driven by the rebound in China, and very good performance in mainstream innovation with SOLIDWORKS, as well as a healthy contribution from large deal activity across Europe as well as North America. Related to the performance in China, we highlighted during our Q1 call that we saw evidence of increasing activity in March, and in fact, this trend continued, driving 8% growth in China in Q2. We're confident that this progressive trend is further raising the potential for growth in the rest of the year. Recurring revenue rose 9%, with subscription revenue up 13% year-over-year. Together, subscription upfront license revenue growth was up 10%, highlighting the improving momentum for Q2. For the first 6 months, the share of recurring revenue reached 81% of total software revenue. This represents a strong increase of 200 basis points versus last year. While subscription revenue growth for SOLIDWORKS, Centric, CATIA and ENOVIA together was up over 30% and significantly above the average growth rate in the quarter, we experienced a temporary slower growth at Medidata, as highlighted by Pascal earlier. To complement what Pascal mentioned, I'd like to give you three points to explain what is driving the Medidata performance in Q2 and what to expect for the rest of the year. First, we are facing the impact of lower clinical trial starts observed by global industry data. Second, the impact of COVID mega studies, which phased out during Q2 and Q3 of last year, which creates the baseline impact. The third point is the momentum with top 50 pharma customers. Let's go through this one by one. First, we are seeing a more deliberate investment environment in which CROs are continuing to adjust volumes. Worldwide, in 2Q 2023, according to global industry data, clinical trials start decreased by around 10% year-over-year. While the study start volume was under pressure, our win rates remained strong on average, at around 75%. Second, when we compared to Q2 last year, we had the benefit of the ending mega trial, which was started during the pandemic. Typically, at the end of such complex studies, we are entitled to true up revenue. This creates an unfavorable baseline effect with an impact of approximately three points to the growth rate. We expect a similar effect in Q3 before we are back to double-digit growth. Third, we signed several multi-year renewals with top 50 pharma. This is evidenced by strong total quarter bookings up 17%. On top, we continue to see strong renewal rates, more than 20% above par level over the trailing 12 months period, as well as our revenue retention rate remains above 99.5%. To summarize, the lower subscription revenue growth contribution of Medidata is temporary, and we are confident that growth will rebound towards the end of the year and further into 2024. Looking at our strategic growth drivers of 3DEXPERIENCE and Cloud. 3DEXPERIENCE revenue in the first six months grew 5% at constant currencies. This reflects a share of 31% of 3DEXPERIENCE addressable software revenue, which is flat year-over-year, relative to a very strong comparison base last year. As we highlighted before, our 3DEXPERIENCE deal roadmap is strengthening in the second half, so we expect to see a share of increase in two edge. Cloud revenue in the first six months rose 14%, now representing 24% of software revenue, which is an increase of 2 points. While metadata growth contribution was lower this quarter for the reasons mentioned, growth in 3DEXPERIENCE Cloud remains at a healthy clip. We are well positioned to continue to capitalize on our leading position in key industries, capturing above market growth in 3DEXPERIENCE and Cloud. Now, let's review how we performed relative to the objectives we set for the second quarter. Unlike in previous quarters, we had a currency headwind of 50 basis points, resulting in a negative FX impact of EUR 7 million. During this period, adjusted for currency, total revenue was EUR 5 million, higher than the midpoint of our target range, due to the overperformance in software revenue by EUR 4 million and services by EUR 1 million. We reported an operating margin of 31%, 50 basis points above the high end of the range, at 80 basis points higher than the midpoint. This better revenue, the better revenue performance and lower OpEx growth together contributed 110 basis points improvement, versus the midpoint, which was partially offset by a negative currency impact of 30 basis points. As you can see, it's clear from these numbers that we delivered on our profitability targets while continued to invest. We added over 300 net new employees during the quarter and 650 for the first six months. Due to our disciplined investment approach, we are well on track to manage our OpEx growth in 2023, offsetting the carryover effect resulting from strong hiring last year. This gives us the visibility to continue our focused investment in the second half of the year to address our long-term opportunities. Turning to the earnings per share. Very briefly, we reported $0.28 as reported, and at the high end of our range of $0.27-$0.28, and we also offset a slightly negative currency impact of $0.004, given the better performance. Turning on to the cash flow and balance sheet items. Cash and cash equivalents totaled $3.345 billion, compared to $2.769 billion at the end of 2022. This reflects an increase of $576 million. At the end of the quarter, our net financial position totaled EUR 352 million, an increase of EUR 579 million, versus the net financial debt of EUR 227 million at the end of last year. Let's look at what is driving our cash position at the end of the second quarter. We generated EUR 1.026 billion in operating cash flow year to date. This was slightly lower by 2% or EUR 22 million when compared to the first six months of last year. There are two main insights here to share with you on what's driving this performance. First one, we continue to see good momentum in our working capital. The net change in operating working capital is up by 5%, driven mainly by strong collections, evidenced by sequentially improving DSOs. This is partially offset by a slightly unfavorable change in the non-operating working capital due to higher tax payments. Second, the net income adjusted for non-cash items is lower versus last year because of two facts. First, you know, as discussed, we decided to invest at higher levels in 2022 to accelerate top line growth, and as a result, we are absorbing the expense carryover effect now in 2023. Same time, the progressive revenue growth acceleration is taking off. The second fact is that the remaining gap is a result of an increase in social charges for share-based compensation due to the higher share price versus last year. For more details, I refer you to the reconciliation table in our appendix. Now, to sum up, operating cash flow was mainly used for CapEx of EUR 67 million, repayment of lease liabilities of EUR 42 million, and the cash dividend paid in Q2 of EUR 276 million. Lastly, of note, we had a negative FX impact of EUR 56 million year-to-date, 2023. Let's turn to our fiscal year 2023 objectives. We are maintaining our guidance. The key takeaway is, as we heard from Bernard already, we are on a good trajectory to achieve our long-term financial objectives of EUR 1.20 EPS. Total revenue growth between 8%-9% of constant currency remains unchanged. In absolute terms, we are offsetting the FX impact of -EUR 7 million to the year by raising the performance to maintain the range as is of EUR 5.94 billion-EUR 5.99 billion. This assumes that we expect progressive growth acceleration throughout the remainder of the year, driven by an increasing contribution from large deal activity in the 2nd half and mid- to high single-digit growth in China, continuing the good Q2 trend. We reaffirm the operating margin range of 32.3%-32.6%. Before moving to the Q3 objectives, I would like to emphasize that this unchanged full-year revenue guidance assumes that we maintain growth rates at constant currency for software revenue of 8%-9%, service revenue of 5%-7%. We continue to expect recurring revenue growth in the range of 10-11%, with strong subscription revenue increasing in the range of 17-18%. Following the good trend of Q2 and upfront license revenue, we remain confident for the full year in the range of 2-5%. Now, let's turn to the Q3 objectives. We're targeting total revenue growth of 8-10% at constant currency, with recurring revenue increasing by 10%, driven by strong subscription growth of 17-19%. We are forecasting upfront license revenue growth of 6-10%. This reflects an acceleration in subscription revenue growth in Q3 versus Q2, and this is driven by an increasing share of large, 3DEXPERIENCE subscription deals, continued momentum in adopting subscription-based pricing of the SOLIDWORKS customer base, and continued strong growth from Centric PLM. As mentioned, and for the reasons outlined before, Medidata is expected to contribute mid to high single digits in Q3 before returning to double-digit growth in Q4. For services revenue, we are predicting a normalized 2%-5% growth. In terms of profitability, we are forecasting operating margin of 30.2%-30.5% and diluted EPS of $0.26-$0.27. For additional information and to review what we've discussed, please take a look at our earnings presentation. In conclusion, we've had a good first half of the year with a strong second quarter results. The growth is broad-based, and the momentum is improving across all major geographies, driven by strength in industrial and mainstream innovation. We're on track to achieve our objectives for the year, which reflects an acceleration of growth in 2H. These results demonstrate that our platform strategy is well aligned with the priorities of our clients, we are focused on execution to deliver our sustainable growth throughout the year. As such, we remain confident to achieve and advance towards our EPS objective of EUR 1.20 for the year. Now with this, Bernard, Pascal, and I are happy to take your questions. Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, to ask a question, please press star one and one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. This will take a few moments. We are now going to proceed with our first question. The question come from the line of Michael Briest from UBS. Please ask your question. Your line is open. Good morning. Thank you. Just on the Medidata performance, can you talk about the mix of the business that you have between pharma and biotech and the CROs? Clearly the CRO change was quite dramatic. On Centric PLM, just looking at my notes, I think in 2020, the business had EUR 76 million in revenues. When you're talking about EUR 1 billion, can we assume this is an area that you're actively looking for acquisitions in? Thank you. Cool. Thank you, Michael, for the question. On Medidata, the mix, between biotech and pharma to CROs is about 60/40, and it has, the CROs have picked up in terms of their growth over the years. It used to be 30/70, it's now more 40/60. That's due to the very strong volume increase that we have experienced since 2019. I think we are now in a period where this is going more back to the 30/70 we had before, potentially. Michael, related to Centric PLM, you're right. I mean, this year we do expect to be close to EUR 200 million, which to a certain extent, yeah, software. I'm seeing Rouven telling me it's higher than this. Anyway, my point is the next step is really half a billion, and then after it's EUR 1 billion. To go to the half a billion, I think with what we have done until now, everything is set. As I was explaining, the diversification from a sub-segment industry standpoint, moving from apparel and fashions to retails, to consumer electronics, to personal care, right? The fact also that we are expanding from the brands to the retailers and to the manufacturers as well, is really opening a coverage expansions in order to nurture the growth. At the same time, we are evolving the concept of the collection management to the business platform, because at the end, Centric PLM is a business platform for all the customers in the consumer industries. More and more, they are using this business platform as a way to enable, if you want, the online sales. You notice we did some very small acquisitions to enhance the portfolio. One was related to the pricing, how we can integrate the pricing as part of the strategy in order, not only when you do the collections and you operate, if you want the portfolio for the online sales, to be able to modelize the performance of the business plan. Also to be able to do some real-time price adjustment, which is extremely important in the fast-moving goods, because as you know, you have a lot of elasticity on price. We are also expanding on the planning side, right? It's a complex chain, it's a complex value network. Having the ability to optimize the planning for all the different stakeholders is becoming something extremely important. Why we do this? You remember, with Centric is a subscription-based model for the vast majority of what we do, and each time we are renewing, we have exactly the same strategies as we have with Medidata. It's not to renew at parity, of course, it's to expand the share of wallet. That's how, by we are complementing, if you want, by having additional modules to give reasons for the customer to expand with us and to consider Centric PLM a little bit more than the collection management systems. That's, I think, the foundations to go to the half a billion. I think it's probably too early to speak about how we will do the other half, and I will come back at the appropriate time on this. Okay, thank you. Thank you for your question. We are now going to proceed with our next question. The questions come from the line of Laurent Daure from Kepler Cheuvreux. Please ask your question. Your line is open. Yes. Thank you. Good morning. We still have two questions. Good morning. The first is back to Medidata. I understand your comments for the coming quarters, but I was also interested in your views when today you discussed with your main clients the plans in terms of number of trials they have, maybe two or three years from now. Don't you think that there is a risk of really softness, not just for a few quarters, but on the longer term? Any granularity on this would be more than welcome. My second question is more for Rouven. On the margin side, when I look at your Q3, you need a much stronger margin in the fourth quarter. I understand that wages are moderating and the headcount growth is also moderating, but do you also have other drivers to give us more comfort into your full year objectives? Thank you so much. I take the first one, Rouven? Yeah. And complement- Okay. to complement whatever you want. Laurent, again, if you look at the trend for the clinical trial, the average growth is between 6%-8% for decades. Yeah. Right? This is the normalized growth. When COVID happened, we had an extra. These numbers almost improved by 50%, right? Exceeding 10%. 12 was the number. I think on the long run, you are not making a mistake to assume that the underlying growth will stay what we have seen in the last decade. We have evidence of this, and you could crosscheck with many, many studies. That's one piece. The second piece, as Rouven was saying, our winning rate is extremely high for at least the phase II and the phase III, where, as you know, this is the bulk of the market. It's exceeding 75%, and we continue to improve the winning rate. Last but not least, it's something also extremely important. I was making this comment when I was commenting, you know, the... why certain customers are selecting us. It's because we are bringing not only the solution, the technical solutions, but also the therapeutic domain expertise. We could claim we have a significant presence in the oncology, but if I sub-segment all the clinical trial in different domains, there are still areas where we could expand significantly. Right. One of them is probably related to, for example, the Alzheimer's. As you may know, you have a lot of new molecules coming on the market. It's a promising market in the coming years, and those clinical trial are extremely complex because not only you have to measure from a biology standpoint, from a medical standpoint, what it means, but also you have to assess the behavior of the people. This mix is a complex things to do. Again, just as an illustration, how we could continue to expand. If you do the sum, the combinations between the market growth plus the winning market share and the expansion to subsegment the market, I think we have enough to continue to maintain the rhythms and to continue to expand that, what you have experienced in the last five years since Medidata came to with us. Okay. Laurent, I take the second question because I have nothing to add to the first. On the margin, we had very good margin performance in the second quarter, thanks to the measures we have taken and the disciplined approach to our investments. We have very good visibility into the second half of the year as it relates to OpEx. I remember in Q1, on the OpEx growth of around 13% year-over-year, Q2 is 8%. It's right in Q4. In our plan, we have, we've set the majority of, you know, we are essentially consumed the expense carryover by the end of Q3 to see the full benefit in Q4. I would say we are, in fact, a little bit ahead of the plan. We have good visibility. Given the strong performance in Q2, we were able to risk adjust for the second half. We might not have reflected everything of this in the Q3 guidance, right? To give us just some room, we have good visibility for the year on the margin. I hope that gives you the comfort that you're looking for. That's very clear. Thank you so much. We are now going to proceed with our next question. The questions come from the line of James Goodman from Barclays. Please ask your question. Good morning. Thanks very much. Apologies, but to add one more just around the Medidata situation, just maybe zooming out a little bit. Just wondered if you could. You've talked a bit about the win rates, but just from a competitive situation, clearly there's been quite a lot of noise in the market over the course of this year. You know, one of your competitors is growing quite fast in R&D, and I wondered if you could talk about it from a product perspective. A lot of top 50 deals, but is that primarily EDC, or how successful is the business being at cross-selling, you know, other main modules like CTMS into that base? Has the competitive situation had any impact at all? You know, there's been some management change in that business over the course of this year as well. Second question, just around the SOLIDWORKS strength. I think you've got some price rises due to come through in July. Just wondered if there's any one-off impact that you can discern this quarter from any sort of form of customer behavior ahead of that, or sort of early price rises that might have come in already. Thank you. Okay. I will start with the first part, Rouven, and maybe you can take the SOLIDWORKS question. Sure. Related to the competitive landscape, I think there are two way to address your topic. The first one is, the environment, to a certain extent, is forcing certain customer also to consolidate their choice. At the COVID time, we saw a lot of startups coming, promising sometime the moon, and having hard time to deliver. It was extremely obvious, for example, in what we call the decentralized clinical trial, right? When you have to do the trial from home. Why I'm saying this? Because we are rescuing right now, some of those large studies using startup solutions, and some of them are in bankrupt or close to. Where I want to go with this, I think the platform concept is becoming more and more understandable by this industry. Because for a long time they were putting, I think, more emphasis on the best-of-breed approach. Now they start to see the benefits of having the platform to connect the dots. To a certain extent, if I want to make an analogy, what's happened in our manufacturing space, I don't know, 10 years ago, 15 years ago, or maybe 20, when the market moved from the traditional PDM approach to the platform-based approach, is happening also in this industry. Moving from what we call the EDC approach, electronic data record, to a platform-based approach, which is much more data centered, AI based, modeling and simulation enabled. This is making a big difference because all the modules, you know, whatever we call, we speak about eCOA, RTSM, CTMS, all these collection of very specialized modules will be redefined in a completely different manner. Many of the functionality will be managed at the platform level and not anymore at the application level. This is happening. This is changing a lot of the way the landscape is structured and defined, and I think we are leading this transformation by far. Proof of what I'm saying, obviously, the platform concept is extremely meaningful for the top 50 large firms, because, you know, this industry is heavily concentrated. The bookings for this segment is almost growing 2x, and 2x faster than the current performance of Medidata, right? The traction is there, and as you may know, this is where one of our competitors, probably the one you have in mind, they are focusing right now. To a certain extent, if you look at the different elements, what is happening from reconfigurations of the system standpoint, plus the market trend we are really experiencing right now, I think we are in a very good position. The exposure we have on the, on the, on the small biotech does exist, but mainly through the CROs, right? This is what we call the study by studies business. As you may know, what does it mean? It means they are not contractualizing with us on a global enterprise in order to, you know, to have a capacity to run different studies. We are contracting one by one. The way to do it is usually through the CROs, and that's the reason why, what Rouven was saying, this is where we are seeing the volume decreasing, but at the same time, our market share increasing. From an efficiency standpoint, when the volume are dropping, if you are big CROs, you need to improve your efficacy and your efficiency, and we have a lot of technology to make this happening. It's extremely visible with, again, the large contract we have with the largest CRO, whatever it's PPD or IQVIA, just or Syneos, just to name a few of them. That's for the competitive landscape. Maybe, Rouven, you can take the question related to SOLIDWORKS. Yes, happy to James, on SOLIDWORKS. I think for you, the main key takeaway is that on a year-to-date basis, we are back to 7% growth. Q1. Q2, as we said, is 12%. On the license, Q2 was very strong, with 15%, while we were actually down 14% in Q1. Q2 and Q1, you see the trend reversing. If we look at the contribution from China, Pascal mentioned that it's really a catch-up from the low level of consumption in Q4 and 2022, where the investment cycles are now geared towards innovation, to retool and expand, you know, accelerate the innovation cycles and scale. We see that clearly in China. The price increase in China was very, very marginal, so there is no such thing than anticipation. In North America, the sequential growth in SOLIDWORKS is flat. We have a similar performance, so do not expect there to be any anticipation. I think we are already on a normalized trend. We expect now the 7%- 8% as the run rate go forward, as we have seen in previous years. That's great. Thank you both for the detail. Thanks, James. We are now going to proceed with our next question. The questions come from the line of Nicolas David from ODDO BHF. Please ask your question. Yes. Good morning, Bernard, Pascal, and Rouven. Thank you for taking my question. I have two. The first one is regarding China. How should we see H2 after the very strong Q2? I mean, do you think that Q2 benefited from a catch-up after several quarters very low, or is it a normal performance and we can expect in the new world and expect growth to continue like that in H2? You didn't mention in China specific case of industrial innovation, larger contract. Where do you stand there? My second question is regarding 3DEXPERIENCE. Could you help us reconcile the difference of growth you have from 3DEXPERIENCE and industrial innovation, which is still pretty strong, while 3DEXPERIENCE are growing less? Does it have an impact all in all, on your revenue growth, because of a shortfall of revenue, given that 3DEXPERIENCE tend to be? ... higher term of pricing and cross-selling. Nicola would be helpful. Thank you. Good morning, Nicola. I will start by thinking. As you say, China, there are two trends. One was the catch up on the mainstream market. That's what we were expecting to happen. You have seen the result in Q2. If I look at the pipeline for H2, it's normalized, right? The second one is the SOE, the state-owned company, where you remember in the first half of the year, first, many of them, they were waiting for the elections to happen before to engage, commercially speaking. Two, the geopolitics has, to a certain extent, slowed down a little bit, the process, because for many of them right now, when they are buying a piece of software, they should almost justify why they are not buying a Chinese software, or what they want to do. Why I'm saying this? Because in Q2, you have the benefit of the rebound of the mainstream, but you do not have yet the full contribution of the large SOE transaction we have in our pipelines. They are expected to be closed in H2. Whatever it's in the aerospace or transportation and mobility and industrial equipment, this is where we have the largest one, and also in construction. To answer to your question, we are relatively confident that you will see something similar happening for Q3, and I still expect to have certain accelerations happening probably between Q3 and Q4. Right now, I'm betting much more on Q4 than Q3. That's where we are. Related to the 3DEXPERIENCE platform, it's almost the same story. Again, you have seen certain... The last transaction was missing in Q1. They are coming back in Q2, and you will see the benefit of them in Q3 and Q4, and all of them are 3DEXPERIENCE related. The contribution in the mix will improve, and you will see that at the end of the year, we will be aligned with what we were expecting for this year. We are relatively dependent on those large transactions, which is normal. As you may know, usually they are backloaded, and that's the reason why, you know, from a quarter to another one, we are giving this indicator. The reality at the end, the most important is to be aligned on the trajectory on a yearly basis, because it's a multi-year plan, right. If you want to add a few things, Rouven, feel free. If not. No, no.[crosstalk] No? Just regarding SOLIDWORKS in China, when you mentioned, Pascal, H2 should be normalized, it's normalized at the same level as Q2 or normalized at a more normal, or more lower level or? No, no, it will be the one it used to be. I mean, I do not expect to do a 20% plus growth in mainstream in China every quarter. Overall, total software for mainstream. On a license standpoint, yes. Right. Okay. Which at the end is a diversity growth. That's what we are targeting. That's true. It's a good sign, you remember, because the mainstream market is usually the early indicator for the investment cycle. Rouven and I, we were relatively careful. If you remember at the beginning of the year, when we came with the guidance, some of you were pushing us to be more aggressive on China, and we said, "No, no, this is not what we are seeing in the pipeline." To a certain extent now, I think it's almost the opposite. You have a lot of, you know, comments related to potentially a slowdown in China, and to a certain extent, we have a better visibility for the second half of the year than we had for the first half of the year. Remember, the first priority for the Chinese economy was to relaunch the consumption. Now, they are investing to relaunch the innovation cycle, and it's extremely visible on our side in all the different sectors we are touching. We are now going to proceed with our next question. The question comes from the line of Toby from JP Morgan. Please ask your question. Yes. Hi. Hi, good morning, and thanks for the questions. A couple from me. Just firstly on the, on the guidance for Q3, just the subscription growth 17%-19%, in the quarter, you've indicated Medidata to be probably sort of mid-single to high single digit in Q3. So recovery on the subscription won't be from the Medidata side. So just mechanically, where does that re-acceleration come from on the subscription part of the business? Is there any, upfront revenue recognition from SOLIDWORKS in there? Secondly, just on the Medidata outlook into the second half. You mentioned the return to double digit by the end of the year, and Q3 could be that mid to high single digit. I guess the question here is: You know, what would drive the mid to high in Q3 versus the high single digit done in Q2? What have you assumed for the development of clinical trial starts through the second half of the year? Thank you. Okay, Toby, I take a run at your questions. Pascal, please, add. The first one on the guidance, yes, 17%-19%. 13% in Q2 and 13% year-to-date. The key drivers of the acceleration is, as Pascal mentioned before, we have significant 3DEXPERIENCE opportunities in our deal roadmap in Q3 in key industries, and they are well advanced, and they're expansion with existing clients. They are going on an accelerated path to adopt 3DEXPERIENCE platform. The second part I mentioned in my prepared remarks, which is really an important message for you to take from this call, is that the SOLIDWORKS customer base is increasingly adopting the subscription-based pricing. The subscription growth for SOLIDWORKS has been up 50% year to date, and the number becomes meaningful. Then, we mentioned and talked about the strong growth of Centric. Centric is a subscription business. You know, we transitioned that entirely to be subscription, and that's growing extremely nice. As Pascal mentioned, we had this large deal in Q2, and we have a good pipeline in 2H. Yes, Medidata will be back to double-digit growth in Q4, and because of two reasons. Number one is, we will be through the baseline effect that I explained in Q2, which will recur in Q3, as a result of the wrap up of the large mega trials, of 2020... That wrapped up in 2022, where we had the benefit of the truing up revenue at the end of this. Which is kind of a one-time revenue event that we recognized in 2022, that creates an unfavorable comparison of about three points to the growth rate in 2023. We will have that behind us in Q4, and we will also compare, I think to have a more favorable comparison in Q4, rather than Q2 and Q3 overall, also because of volume. We have seen that the lower volume growth already starting at the end of last year, while now, as we had some you know, renewals with bigger CROs that were lower, for the reasons Pascal explained, where we see this trend now becoming a little bit more material. We are starting to normalize that. Of course, the good performance in the enterprise, top pharma 50 companies, the bookings, they will translate into revenue in following quarters. That's the summary of the subscription performance and the explanation for Medidata. That's great. Thank you. Thanks, Toby. We are now going to proceed with our next question. The question comes from the line of Frederic Boulan from Bank of America. Please ask your question. Hi, good morning, everybody. Thanks for taking the question. First of all, on industrial innovation, we had a nice acceleration this quarter on a, on the 22 that was pretty strong. We discussed some of the impacts on China, but is there anything more specific or additional you want to point out in terms of driver of that, and to what degree you think this is sustainable? Second question around free cash flow. We had a second quarter that was impacted by about EUR 150 negative working cap. You flagged this impact on cash taxes, but can you discuss more broadly working cap, how you see that developing through the rest of the year and how we think about this for cash flow for this year? If I can, just a quick clarification on your commentary around growth. I think in mainstream innovation, you mentioned you expect 7%-8% as growth rate go forward. Is this a commentary for SOLIDWORKS in particular or for the whole segment? I think you did 12% Q3, so just wanted to clarify that. Thank you. Okay, I take the first one. Again, the best way to answer to your question is to look at by industry sub-segment. I think the trend is still extremely positive in aerospace across the board, Europe, U.S., Asia. Not only for the larger OEM, but also for the supply chain at large. As you may know, almost the industry standardized on 3DEXPERIENCE platform, and this is triggering, to a certain extent, the expansion toward the, you know, the simulations, the manufacturing and the cyber system design, which are really the expansion we are bringing with the new set of solutions. That's one thing. The Transportation and Mobility sector is also steady for us. I mean, same thing, it's happening across the board. driven by the electrifications of the car, but also the new mobility experience. We see more and more innovations coming. You know, you have this market trend, which is what we call the software-defined vehicles. Probably it's a topic on which we will come back to give you our perspectives on how we position ourselves on this. It's a major trend touching this industry at large, and we are benefiting from this. The next segment is Industrial Equipment. Industrial Equipment, the vast majority is coming from the mainstream, but we have a significant footprint with CATIA and platform and ENOVIA, specifically, and also SIMULIA for the very complex equipments. This market is also a good one, where I think we have a good winning rate, and we are expanding our footprints. Overall, if you look at it's echoing my commentary as an introduction, we saw a rebound in the investments, in the innovation cycle. It's happening in the industry. Again, when we are telling you the manufacturing industry, there is a convergence of the experience economy on one hand, and the circularity on the other hand, it's really, really redefining the entire portfolio for those companies. You know, the disruptions coming from the supply chain and the materials are still there, but now there are also an opportunity, if you want to rebuild in a different way. You cannot imagine, for example, in our space and defense, how many time we spent to discuss about the new materials. Institute certain existing materials, but each time you introduce a new material, this is changing everything. This is changing the design, this is changing the way you produce, the way you maintain, and this is impacting at large, the cycle. That's, to a certain extent, the reason why you have seen this good trend in the manufacturing innovation aboard, driven specifically by the manufacturing industry, but not only. It's touching almost all the different product line we have, starting with CATIA, which is the largest one. Beatrix, we conclude here? We have, I think, the cash flow question was. The cash flow. Cash flow. Okay. Yeah. On the cash flow, you wanted some assurance and explanation for Q2. I would encourage you to look at year-to-date, you know, because we always have some seasonality in the number. When you look at the working capital, on a year-to-date basis, the operating working capital, in fact, is improving by EUR 49 million year-over-year. We've explained this in detail, you know, in the documents that we've provided you today. I want to highlight one or two things that are standing out in this. One, which is when you look at the decrease in trade accounts receivables and contract assets. This decrease was very strong in Q1, because of strong collections in Q1 and the extreme high level of activity in Q4. You know, remember, Q1 this year was a softer quarter. As such, you know, you would expect the collections from Q1 also be slightly lower than what our growth rate, our growth trajectory certainly is. There is a seasonality impact here between Q1 and Q2, where the decrease in trade receivables in Q2 is lower than what we had in Q2 of last year. The balance of Q1 and Q2 is still favorable, very much so, of EUR 151 million. Now you combine this with the contract liability. The increase in contract liability, which is down year-over-year. Last year, we had a really strong impact in the increase of contract liabilities at the time when we increased, when we did the pricing change for SOLIDWORKS. There are lots of SOLIDWORKS customers bought multi-year subscription and multi-year deals. That elevated very much the contract liabilities, the deferred revenue. We didn't have that buying in advance in Q2 this time because it was more of a catch-up and less so multi-year. That explains the difference in the big difference in the contract liabilities, but the net of it is positive, keep that in mind. I think the unfavorability in the non-operating is very marginal, minus EUR 13 million, you know, this is a little bit of noise. This will balance out. It's really due to the higher tax payments because of, you know, our growth, right? We are simply, it's the activity that's reflected in that. For the rest of the year, DSOs are improving. I think we have improved DSOs, even though, you know, you could argue the difficult macro environment, but, you know, we are, we're doing a good job in driving collections, and I see this trend to continue. For the full year, we are expecting our operating cash flow to grow in line, you know, with our operating performance. Thank you. I think with that, thank you very much for participating this morning, and for your question. We will host another conference call at 3:00 P.M. Paris time. For our friends who are maybe on the West Coast, it will be more convenient for them. Enjoy your day and have a nice summer break for those of you who are taking a summer break. Talk to you soon. Thank you very much. Have a good day. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you.