Dassault Systèmes Aktie

Good day, and thank you for standing by. Welcome to Dassault Systèmes Second Quarter and Half Year 2026 Earnings Presentation. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to our first speaker today, Marie Dumas, Investor Relations Director. Please go ahead.

Good morning, and thank you for joining our second quarter 2026 earnings conference call. I'm with Pascal Daloz, Chief Executive Officer and Chairman of Dassault Systèmes; and Rouven Bergmann, Chief Financial Officer. They're both on the line with me to discuss our second quarter 2026 results.

Dassault Systèmes 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 2025 Universal Registration Document. All earnings materials are available on our website, and these prepared remarks will be available shortly after this call.

I would like now to hand over to Pascal Daloz.

Good morning, everyone. Thank you, Marie, and thank you all for joining us today. Before Rouven will walk through our financial results, I really would like to spend a few minutes on what I believe is a bigger story.

This quarter is about much more than the numbers. It's about the execution. It's about the steady progress we are making against the strategy we set at the beginning of the year. As you remember, I said from the start that 2026 will be the foundation year, not because we expect less, but because we are building far much more. Transforming industry does not happen in a single quarter. It happens one customer at a time, one deployment at a time and one innovation at a time. And this is exactly what this quarter reflects. This quarter, our business performed well. We are reaffirming our full year guidance. Revenue grew 4%, subscription revenue grew twice as fast as the overall business and earnings per share increased 8%. I think these results reflect the disciplined execution we had.

But the numbers, as I was saying, are only a part of the story. The more important story is what we are seeing happening with our customers. Across every major industry we serve, companies are accelerating their digital transformation. They are moving to the cloud. They are preparing their data and increasingly, they are investing in industrial AI. The conversation has really changed. Customers are no longer asking whether AI will transform engineering or manufacturing. They are asking how fast they can deploy it. And this is really an important shift. Why so? Because AI needs context. It needs trusted data, needs virtual model of products, factories, operations, and this is exactly what the 3DEXPERIENCE platform was built to provide. This is really why we believe we are uniquely positioned for the next era of the industrial innovation.

Now our strategy remains focused on 3 priorities for this year: first, helping our existing customers transform. More of the world-leading industrial companies are adopting the 3DEXPERIENCE platform on the cloud as their digital foundations. They are connecting engineering, manufacturing and operation in a single platform. And they are preparing to deploy AI for virtual twin at the enterprise scale.

Second, expanding into new industries. We continue to build the momentum in high tech, new space and consumer industry. And with the acquisition of ArisGlobal, we are significantly strengthening our position in life sciences. Each of those industry expands our opportunity. And together, they make our business stronger and more resilient.

Third, we continue to invest on the platform itself. As AI is becoming the new interface to industrial software, our ambition is not simply to add AI feature, it's to build an agentic platform where the virtual companion become the trusted collaborator for engineers, scientists and business leaders. In the first quarter, we introduced the architecture behind those visions. This quarter, we are bringing it to life. We are delivering the first agentic 3DEXPERIENCE platform, powering the new generation of AI native experiences, and I think we believe this is the beginning of a profound shift in how industrial innovation will happen over the next decade.

Now let me show you what this strategy looks like in practice. Our customers, they operate in a very different industry. [ EV ] cars, aircraft, semiconductors, machine, consumer products. But today, you know why, all of them, they are facing the same reality. Complexity is growing faster than ever. Products are becoming smarter, engineering is becoming more collaborative, supply chain are more connected, regulations are more demanding. And now AI is fundamentally changing how product will be imagined, developed and produced.

To take advantage of AI, company needs first to trust the digital foundation they are building. And again, this is exactly what the 3DEXPERIENCE platform provides. It connects data, people and knowledge. And increasingly, it connects also AI at every stage of the life cycle. This is why we are seeing the momentum across every industry we serve.

In Transportation & Mobility, manufacturers are accelerating the vehicle developments while connecting engineering team across increasingly complex global ecosystems. In Aerospace & Defense, the well-established leader are scaling their productions, while at the same time, the growing new space ecosystem is building its next generation of program on 3DEXPERIENCE platform. In High Tech, consumers are managing unprecedented semiconductor complexity by connecting design, engineering, manufacturing and life cycle in one single environment. And across consumer industry, companies are transforming the product creation by connecting design, sourcing, manufacturing and the consumer experience, again, on one single platform.

In Life Sciences, I think the organization are bringing together research, development, manufacturing and patient outcomes through the virtual twins. And now with the acquisition of ArisGlobal, we are taking an important step forward, a unified AI intelligent platform that connect molecules, patients and the real-world outcomes. In Infrastructure & Cities, customers are also using the virtual environment to design, build and operate more resilient and more sustainable infrastructure. And finally, our Mainstream Innovation business continued to demonstrate the breadth of this opportunity. SOLIDWORKS this quarter delivered a broad-based growth across geography with a double-digit unit expansion.

Why I took the time to give you this perspective? Because this is reflecting the strength of the portfolio and our ability to attract the next generation of engineers, designers and innovators. Let me bring this to life with a few examples. All those customers I was speaking about, they are operating in a very complete different industries, but all of them, they are reaching the same conclusion. To compete in the AI era, they need more than the software. They really need the platform.

So Mahindra & Mahindra expanded its deployment of the 3DEXPERIENCE platform on the cloud to modernize the product development across its global engineering organizations, but also to build the digital foundations ready to deploy AI-powered virtual twin at the enterprise scale. Their challenge is very simple. They want to reduce the time to market. And the value we bring to them is obvious. It's connecting all the engineering teams across their ecosystems.

We are also delivering several important competitive wins this quarter. One of them is the world-leading memory semiconductor manufacturers in Korea, selecting the 3DEXPERIENCE platform to create the digital continuity across the entire product life cycle. From engineering with CATIA, the product information with ENOVIA to manufacturing with DELMIA, one platform, one single source of truth from one -- from the concept to production.

In consumer industries, we have an interesting case. I didn't know this company. I discovered it. It's very famous in the U.S., a so-called Polyconcept North America. They are the leader in the personalized goods. And what do they do? They are selecting CENTRIC to connect the product design and the manufacturing and the consumer experience while they are embedding AI in their innovation process to generate automatically the personalization.

So across every industry, we see again the same patterns. Customers are no longer investing simply to improve today's engineering. They are standardizing on 3DEXPERIENCE platform and the cloud because building the digital foundation for tomorrow AI-powered enterprise is becoming a must. And they are standardizing on 3DEXPERIENCE platform and the cloud because they understand the competitive advantage will come from the data, the knowledge and the people. AI is an accelerator, but the platform is a foundation.

This is what brings me to the next chapter. And today, I'm extremely pleased to announce an important milestone in our life science strategy, the acquisition of ArisGlobal. I think you should look at this much more than adding another software company within Dassault Systèmes. It really completes our vision for life sciences. It closed a very important loop between the scientific discovery, the clinical developments and manufacturing and the real-world patient outcomes. And I think this is creating something the industry has never had before, a continuous intelligent platform powered by AI.

So why this matter? Because life sciences face a remarkable paradox. It's the industry investing the most in research and development, but yet fewer than 1 in 10 of drugs entering into the development reach the patients. So the challenge is definitively not the life of science. It's not the life of data. It's coming from the fact that the data remains fragmented, scientific data, clinical data, manufacturing and quality data, safety data, too often, you know why they live in a separate systems and too often, the critical decisions still depend on documents rather than predictive intelligence.

And AI is a game changer in this case because we can only be a powerful tools as soon as the data is there to support it. This is the reason why this entire industry is moving now towards a connected platform that brings together science, operation and AI in one single environment. This has been our strategy for years. You know it, BIOVIA for the discovery, MEDIDATA for the clinical development, DELMIA for manufacturing. And now with ArisGlobal, we had the final missing dimension, the real-world evidence.

Why ArisGlobal is so important? Because this company is a leading enterprise platform for pharmacovigilance, regulatory affairs and safety. And it's deeply embedded in the operation of the world's leading pharmaceutical companies and the health authorities, both. To give you an order of magnitude, nearly half of the top 50 pharma companies rely on them. Their software process approximately 12 million safety cases every year amongst 25 million worldwide. So half of the safety cases are part of their systems. And more importantly, and you will see why this is important, 80% of those safety cases are not public. They are private. So which basically means if you do not get access to it, you will never have the richest source of the real-world evidence to train your systems for AI. So this is the reason why this is a very important asset for the entire Dassault Systèmes strategy.

Now ArisGlobal, they have already demonstrated how AI can create tangible value with their AI capabilities. It's already deployed, delivering productivity gains of more than 30%. They are helping customers to identify safety signal faster to make better informed decisions. And remember, this is not only an automation, it's an intelligent decision support in one of the most highly regulated industries of the world.

So what excites us the most is what happened when ArisGlobal become part of Dassault Systèmes. Because for the first time, life sciences company will be able to connect every stage of the pharmaceutical life cycle on a single intelligent platform against discovery, clinical development, manufacturing, regulatory compliance and real-world safety. Every new pieces of evidence improved every stage that comes before.

For example, the scientific model becomes smarter because you could anticipate some adverse effect. The clinical trials become much more informed because when you test the drug, if you already know, there are adverse effects, you should do this. Manufacturing become more adaptive and patient outcome continuously improve future innovation. So instead of disconnected systems, the customer again have a lot of to gain with the continuous learning loop. And this is what AI needs, not isolated models, but connected knowledge, trusted data and continuous feedback.

Looking ahead, the acquisition is about much more than expanding our footprint in Life Sciences. I think it demonstrates the strategy we are executing across Dassault Systèmes, building an intelligent platform where data continuously become knowledge, where AI continuously improve decisions and where every customer interaction make the platform stronger. And ArisGlobal is an important milestone in that journey. But it's also a preview of where all the industry are heading because whether our customers design aircraft, develop medicines or build factories, the future belongs to the platform that continuously learn, and this is exactly what we are building.

Now let me show you how that vision is coming to life through the new AI native solution we are introducing this quarter. If you remember, last quarter, we introduced our AI architecture. This quarter, we put it at work. The 3DEXPERIENCE platform is becoming an agentic platform, powering the virtual companion and a new generation of AI native solutions. And this is an important distinction. Why so? Because much of today's AI has been added on top of existing software, a kind of chat bot, if you want to layer over the legacy applications.

We took a different approach. We built AI at the core of the platform because industrial AI is fundamentally different. It doesn't just answer to the questions. It has to help engineers to solve their problems, to understand the products, to understand the physics, to understand the scientific model, and it understands the context in which all the decisions are made. This is what makes AI useful in mission-critical industry.

Now at the center of this experience, they are the digital companions. Each is designed for a specific role. You remember, Aura helps the business users to navigate enterprise knowledge and execute business processes. And to give you a concrete example with Aura project management, a business objective can become an executable project plan up to 10x faster. LEO support engineers as they design, optimize and validate the complex products. And again, an example, LEO mechanical engineer can begin with an ID, generate high-performance manufacturable designs while maintaining the full engineering traceability. MARIE assists the scientific with the modeling and simulations and scientific decision making across the research life cycle.

They are not general purpose assistants. They are really domain experts, and each companion understand the language, the objectives and the constraint of the people it work with. So because each one is built on a decade of engineering expertise, scientific knowledge and industry best practice, this is how we are making the difference. So now every quarter, those companions, they are becoming more capable. This quarter alone, we introduced more than 11 new industrial competencies, and every new competencies strengthens every customer using the platform. This is the power of the AI native architecture.

Everything, I just say, is orchestrated by the 3DEXPERIENCE agentic platform. The platform provides the governance, the security, the traceability, the digital continuity required for an enterprise scale AI. And for some of our customers running on our sovereign AI infrastructure at scale, it's also an extremely important topic because it's for them the way to retain the complete control of their intellectual property while they are deploying AI in the most critical environment.

This matters because many AI systems can retrieve information. Some can generate content, some can predict the outcomes, but an industrial AI must do something far more demanding. It must generate results that engineers can trust. Results that scientific can validate, results and manufacturers can certify. And you cannot certify an aircraft engine with an AI that understand only the language. You cannot develop a life-saving therapeutics with an AI that understands text but not biology.

Trust comes from understanding how the physical world behave, and this is why our industry world model are so important. They don't simply learn the pattern from the data. They capture the scientific discipline, the engineering discipline, the industrial knowledge that governs the real world. And at the same time, they are protecting the intellectual property of our customers. This is what makes industrial AI trustable. This is what allows our customers to move from experimentations to enterprise scale deployment.

Now let me bring all of this to life with one example. And I took one -- I'm sure you will be very interested with is BMW. BMW Group is a very good illustration on how industrial AI looks like in practice, not from a CIO view, from a pure engineer view, the one doing the job on a daily basis. BMW is in designing increasingly sophisticated vehicle under constant pressure to innovate faster, to reduce the cycle time and to meet ever more demanding performance requirements.

Take something as familiar than the car door or the central console of the car. Behind what looks very simple, you have components, which have been designed with a lot of constraints: weight, crash performance, stiffness, manufacturability, cost, durability. And the challenge is not to develop only one door or one central console. It's really to find the best design among thousands of possible alternatives. And this is where our application and AI work together.

Firstly, using CATIA, today, engineers, they can generate and analyze around 50 high-quality design variants from a [ electric ] model. But you know why rather than me telling you the story, let's show how BMW engineers are already applying it. Please launch the video.

[Presentation]

As you saw at the application level, CATIA and SIMULIA enable engineers to rapidly explore multiple concepts while preserving the engineering intent and the design quality. This approach gave already a strong accuracy but perform time-consuming analysis, which limits how many design possibility the engineer can be -- could explore.

So the next step is what? A better orchestration across design and simulation can accelerate the design space exploration with our application powered by the generic frontier model over a new CP protocol. Every high fidelity simulation contribute to build what we call a trusted surrogate model of the design space. Using these surrogates, the engineers, they can predict the performance of hundreds of new design alternatives in minutes, not hours or maybe days. And they do it by expanding the design space explored by an order of magnitude.

Watch how this play at BMW.

[Presentation]

As you saw, more variants can be explored, but the level of accuracy drops. So ultimately, what should we do? I think BMW needs to explore the full design space with a high level of accuracy. And this is where our 3DEXPERIENCE agentic platform brings everything together. In the platform, users can interact naturally with LEO, our mechanical engineering virtual companion. And you know why LEO understands engineering objectives, he knows how to orchestrate CATIA and SIMULIA to leverage the industrial model, to explore the best design alternatives and more importantly, keeping every engineering decision fully traceable from the first concept to the final certifications.

So here is LEO orchestrating the entire journey at BMW. Please launch the video.

[Presentation]

So with this integrated approach, the full design space can be inferred with 100% accuracy and the full traceability. So this is really the future of the engineering. Application creates, AI-powered simulations predict and the virtual companion, they do the orchestration. And when it's powered by the agentic 3DEXPERIENCE platform, you know why the engineers, they can explore more possibility, make better decisions and move from concept to certification faster with a great level of confidence. And this is what I'm calling industrial AI in action. It's not a vision. All those capabilities are already delivered value to our customers today.

Now let me summarize before we transition to Rouven. This quarter reflects a continued execution against our strategy. We delivered solid results in line with our objectives. Two, customers are deepening their commitment to the 3DEXPERIENCE platform and is visible through the adoption of the cloud, which continue to accelerate. Third, industrial AI is moving from visions to deployments. And with the acquisition of ArisGlobal, we are taking a major step forward in Life Sciences.

I think now Rouven will lead and go through all the financial performance in detail and explain why ArisGlobal financial opportunity is compelling as a strategic one. Rouven, the floor is yours.

Thank you, Pascal, and good morning, everyone, and thank you for joining us for our Q2 earnings call.

Solid Q2 performance keeps us firmly on track for the full year. As you heard from Pascal, we are not just executing, we are transforming our company, launching new AI product categories, all while improving cash flow and the margins. This is growth and discipline together.

Now looking -- now let me look at the details of the financials for the quarter. Total revenue reached EUR 1.556 billion, up 4%, with subscription growing twice as fast at 8%. Service revenue was up 6%. Our recurring revenue continues to perform well, rising 5% ex FX. And thanks to a very healthy subscription growth, subscriptions now represent 50% of our recurring revenue. This is driven by good dynamics, particularly in our industrial and mainstream innovation business.

Top line leverage and operating discipline translated to a nice uplift of 7% in operating profit and the operating margin of 30%, which is up 90 basis points ex FX. EPS was EUR 0.31, growing at 8%. Year-to-date, that brings us to EUR 3.065 billion in total revenue, growing 3%, underpinned by solid expansion in operating profit of 5%, driving the operating margin improvement to 40 basis points to 13.1%. EPS was EUR 0.61, up a healthy 6% year-to-date. So in summary, revenue and profit are well placed versus our Q2 objectives.

Let me look more closely at our recurring business growth. In the quarter, we added EUR 73 million in annualized contract value when compared to Q1. This brings total ARR to EUR 4.443 billion. And this includes, as you know, all active subscriptions and maintenance contracts as well as the annualized value of multiyear subscriptions. So what drove our ARR growth this quarter? We continue to grow the share of cloud bookings and the contribution from multiyear subscription deals with higher total contract values. This broad-based momentum translated into double-digit subscription growth. In fact, over 70% of the net increase was driven by strong SaaS growth in our core industrial business with CENTRIC and MEDIDATA, all generating sequential growth.

Turning now to our growth drivers. Both 3DEXPERIENCE and cloud were up 14% in the second quarter, driven by strong 3DEXPERIENCE cloud growth of 60%. We saw good traction with clients adopting and expanding on the 3DEXPERIENCE platform as they look to transform their operations to capture AI-powered virtual twin opportunities in the future. In this quarter, clients at Mahindra & Mahindra, Orono, Venus Aerospace and XPeng, just to name a few, highlight our momentum and competitive edge across many industries. All of the above creates a solid foundation for our future AI deployments. Adopting 3DEXPERIENCE and cloud is a critical step to fully embrace the power of our Generation 7 portfolio.

From a geographic standpoint, growth was particularly strong in Asia at 8%, complemented by solid performance in the Americas with 5% growth and flat growth in Europe. The excellent quarter in Asia was driven by India as well as Korea and Japan, with strong momentum in Transportation & Mobility and High Tech, specifically in Korea. While China was down in H1, we expect improvement in H2, driven by industrial opportunities. Americas showed the anticipated growth pickup over Q1, driven by very solid growth in the manufacturing industries as well as Home & Lifestyle and High Tech. Europe had a softer quarter after strong Q1. While the automotive sector was challenging, we saw healthy growth across key segments such as energy, industrial equipment and aerospace and defense.

Moving to our product -- moving to our performance by product lines. Industrial Innovation delivered solid growth of 5% and showing the anticipated uptick over Q1. This growth was led by strong performance in 3DEXPERIENCE and cloud with CATIA, ENOVIA and DELMIA driving the momentum. Overall, key competitive wins across automotive, I mentioned the example of Mahindra, High Tech, Space & Defense demonstrate that our platform adoption continues to gain traction.

Continuing from the strong first quarter, Mainstream Innovation delivered an excellent second quarter, up 8%. SOLIDWORKS continues its broad-based momentum across geos with unit growth up double digits. It underscores our strong value proposition in the mainstream market where shorter sales cycles and time to value are essential. CENTRIC delivered excellent performance in the second quarter, highlighted by several significant competitive wins, including a global leader in retail and a global leader in sports merchandising and licensing, both are U.S. companies. And this reinforces a key point. Q1 was not an outlier. CENTRIC sits at the center of consumer-driven transformation across food and beverage, retail and sports apparel, powered by an integrated platform and AI. Revenue performance was in the high teens growth, which we expect to further normalize in H2.

Now to Life Sciences. And here, as anticipated, Q2 revenue growth was impacted as a result of low booking volumes across 2025 and the Moderna impact, driving MEDIDATA to minus 3%. This was factored into our model for H1. An important point to highlight is the shift in the partner business model in light of the deal we signed with WCT Worldwide Clinical Trials, in Q1, so last quarter. But what it highlights is that we are stabilizing the growth trend for CROs. And overall, it supports our growth in the volume market. The momentum in our mid-market remains healthy. And as discussed last quarter, for 2026, we expect H2 to improve over H1 as we are building the annual run rate momentum to support sustainable recovery.

And as you heard from Pascal, now a few words to ArisGlobal as I'm discussing the life sciences sector. With the acquisition of ArisGlobal, we are entering the next phase to transform the life sciences industry. And let me provide a few additional points that help to better connect the strategic rationale as presented by Pascal with the financial profile and value creation.

This acquisition is a game changer. Today, ArisGlobal is a premier AI-enabled life sciences safety and regulatory platform providing a mission-critical system of record. The market is projected to reach [ $7.5 ] billion by 2030, growing at a double-digit rate, where importantly, software and AI capture a larger share of spend every year, and it represents less than 40% of the TAM today.

ArisGlobal brings an outstanding financial profile, $175 million in estimated 2026 revenue, a highly recurring SaaS model and an operating margin profile, which is consistent with Dassault Systèmes. In doing this transaction, we are establishing the industry's first continuous real-world evidence loop spanning the entire therapeutic life cycle. And by uniting ArisGlobal's compliance data with our molecular design, clinical trial and manufacturing domains, we transform the life sciences industry from fragmented document heavy workflows to unified model-based intelligence platform.

Now coming to the transaction terms. We structured this acquisition with disciplined terms. We will pay $1.8 billion in cash at closing, with up to $200 million in additional consideration tied strictly to AI-related revenue milestones over the next 3 years. We will fund this transaction with balance sheet cash, and we are, at the same point in time, preserving our robust financial flexibility. It's a compelling investment case. ArisGlobal brings an attractive financial profile with good stand-alone revenue growth and margins. And in addition, revenue synergy opportunities are mainly driven by cross-selling to the mid market and leveraging the AI platform to expand our reach to capture the entire drug life cycle. Consequently, we expect the transaction to be both revenue growth and EPS accretive in the first year post close.

We aim to close the transaction by late Q3, early Q4 of 2026, of course, subject to customary closing conditions and regulatory approvals. We look forward to welcoming ArisGlobal's exceptional leadership team and 1,300 global employees to Dassault Systèmes family upon closing. They are committed to joining us and together, pioneering the next chapter of life sciences innovation. Welcome, guys.

Now let me turn back to our Q2 results, specifically to cash flow performance. We generated strong operating cash flow in H1, EUR 1.237 billion, up 8% year-over-year and 11% ex FX. This was driven by strong operating performance and working capital, which was up slightly on higher billing activities.

A brief comment on Q2. Operating cash flow was mainly impacted by 2 factors: first, collections that shifted into July, which have all been secured in the first 2 weeks of Q3. So it's only a temporary effect. And second, we had lower accrued compensation. Free cash flow was up 13% ex FX in H1, driven by strong operating cash flow, which was mainly used for dividend payouts and the repayment of commercial paper. Overall, this first half performance demonstrates the strength of our cash generation. As a result, cash conversion for H1 reached 134%, an improvement versus 123% versus last year. And important to note, we remain on target for our full year 2026 cash conversion.

This consistent transition of -- the consistent transition of our business towards subscription and cloud creates an opportunity for us to continued improvement in cash conversion. To complete the picture. Cash and cash equivalents reached EUR 5.660 billion at June '26, reflecting a half year increase of EUR 1.535 billion. It was EUR 785 million in Q2. This was positively impacted by the issuance, the successful placement of the new EUR 1 billion senior bond, which we did in June, the proceeds of which we will be using to refinance the upcoming maturity of EUR 900 million due in September '26. The net cash position strengthened to EUR 2.3 billion, plus EUR 750 million during the first 6 months. And you can see that this has also put us in a solid cash position to fund the ArisGlobal transaction from our own strong balance sheet.

Now let me turn to our objectives for the 2026. We entered the second half of the year with a solid foundation, and we confirm our full year outlook. Total revenue of EUR 6.296 billion to EUR 6.416 billion, representing 3% to 5% growth ex FX, operating margin in the range of 32.2% to 32.6% and EPS of EUR 1.30 to EUR 1.34, representing 3% to 6% growth ex FX.

Now for Q3, we expect total revenue in the range of EUR 1.497 billion to EUR 1.537 billion, up 3% to 5% ex FX, with software revenue growing 3% to 5% and services up 4% to 8%. We target an operating margin between 31% and 31.1% and EPS of EUR 0.30 to EUR 0.31, and it's growing between 4% to 7% ex FX. These targets are based on FX assumptions that are consistent compared to the beginning of the year, 1.18 for dollar to euro and 170 yen to euro and the tax rate assumption of 17% for Q3.

Finally, to note, we will reflect the impact of the ArisGlobal acquisition following the close of the deal, which, as mentioned, is expected in late Q3, early Q4. However, the financial impact on 2026 should not be significant given the timing of revenue contribution and also the timing of cash payment of this acquisition.

Now in summary, we delivered a solid first half, in line with our objectives, and we confirm full year guidance objectives. Our growth drivers show the strategy is working, subscriptions growing twice as fast as total revenue and 3DEXPERIENCE and cloud are accelerating. We remain squarely focused on execution as we enter H2 with operating discipline to drive solid margins and strong cash conversion. This gives us the foundation to invest in long-term growth, accelerate our AI strategy and create tangible value for clients, employees and shareholders.

Now thank you for listening. And now Pascal and I look forward to take your questions.

The first question comes from the line of Laurent Daure from Kepler Cheuvreux.

I have 2. The first one is if we look for, I would say, the next 3 to 5 years for ArisGlobal, it would be interesting to share your view on the growth potential of this acquisition and where you will focus on? What are the most promising segments that Aris is targeting in terms of sales outlook?

And my second question is on the Transport & Mobility segment. You keep winning deals, but at the same time, the news flow in the space is really depressing. So Pascal, it would be nice if you could share with us your view for the next, I would say, 3, 4 quarters about this Transport & Mobility unit, whether it's going to be a drag to your revenue or not?

Thank you, Laurent, and thank you for putting me on the spot. So let me start with your first question, which is a very important one, obviously. The regulatory and safety market, as I was saying, is anyway growing at double digit. And the proof of what I'm seeing, if you look at the number of adverse events, effects, which have been traced and investigated, in fact, is increasing. I mean, the volume is increasing at double digit every year. So that's the reason why -- at least there is no reason for the company to do as a stand-alone, below than the growth of the market.

Where the levers are coming from? There are 3 levers. You remember in my introduction speech, I say ArisGlobal is covering only half of the top 50 pharma. Dassault Systèmes has a presence in most of them. So there is a way, thanks to the unified intelligent platform, to displace some of the competitors which are already in place. And you know them. Some of them are challengers. Some of them are well established for a long time, and they have a whole architecture, a whole product line. And I think we have definitely an opportunity on this.

The second point, which is more important, is the mid-market. ArisGlobal is extremely well positioned for the large pharma and biotech and med devices. However, the footprint they have established on the market is quite limited for the mid-market. And you remember, ArisGlobal is having 200 customers. We have 4,000 customers. And the difference is coming from the fact that we are addressing extremely well this segment of the market. And this is where I think the go-to-market is already in place. It's -- there is no additional investment we should do, except basically enabling the sales force to do the promotions. So we have a significant lever on this.

And this is an important point because for the regulatory and safety decision process, it's not the cleanups guy or the head of engineering, head of development who are doing the choice. It's usually the public affair or the medical officers. Aris knows how to speak to those guys. Why this is important? Because usually, the selection of the tools happen when you do not have yet your molecule on the market. And this is exactly where the synergy with MEDIDATA is so important because with MEDIDATA, we are already used for several years before the decision should be made. And this is against the lever we can bring.

There are another lever is obviously the product side and mainly the AI side. You remember in my speech, I emphasized the fact that in Aris, record of systems -- system of record, sorry, you have almost half of the worldwide safety cases. And this is extremely important because it's a unique base to do the learning for the AI engine. And if you combine this with the MEDIDATA assets, which is against 20 years -- more than 20 years of clinical data we have collected across many different therapeutic domains at a point whereby now more than 70% of the drug being approved every year rely on our platform, and we have access to this data to train the systems.

So if you combine the 2, it's a unique asset we can leverage to accelerate the AI strategy and to build the world model for the life science industry. So this is really where the growth will come from. But I will let Rouven, quarter after quarter, to guide you on how much you could expect on a quarterly basis. But I'm very confident on the trajectory of the growth as you could feel, I guess.

The second topic related to the Transportation & Mobility. Let me share something with you. We grew 6% this quarter. I repeat, we grew 6%. So you can argue that this industry is suffering. It's the reality. And you can argue that probably we are impacted in Europe. This is also a reality, but we are capturing the market share in the rest of the world. We spoke about Mahindra & Mahindra. Rouven was speaking about XPeng. So all the newcomers, all the one having basically the good momentum, they are our customers. And that's basically what we do. We are, in fact, with them, accelerating our deployment, and they have exactly the same issues than the others. At some point, they need to integrate their suppliers. They need to trace and to do the life cycle. They need to accelerate the simulation using AI capabilities, and this is against where we are relevant.

So I will not basically conclude that the Transportation & Mobility is a best sector for Dassault Systèmes. It's not. We still have a lot of opportunity to expand and not only because you have newcomers or new spaces, but also with the incumbent, they need to transform themselves. You remember me telling you that to develop a car in average in Europe, 52 months, where the best, especially the Chinese, they do it in 18 months. The only way to reduce the cycle is to have the digital continuity across the entire life cycle. So it's not becoming an option. It's a must, including for the large incumbents you are referring to. That's it for the 2 questions.

And the question comes from the line of George Webb from Morgan Stanley.

Pascal and Rouven, congratulations on the deal. I have a couple of questions, please. Firstly, just on the core business performance, you obviously delivered towards the upper end of your guidance for the second quarter. But if you could just talk a little bit about what you see on deal closures in Q2 within that performance? Perhaps China was an area where you saw some of that. I mean outside of China and Asia, the growth was still very strong. So also kind of curious how you think Asia performed versus your initial expectations in Q2?

Secondly, on ArisGlobal, could you just scope out a little bit what the revenue mix is of that business between software and services? And also from your discussions with Nordic Capital, could you talk a bit about what they've been focused on in recent years? It looks like they've probably done a subscription transition or accelerated that. And to what extent is that giving you an additional layer of visibility over ArisGlobal's growth over the coming years?

Yes, I can start, Pascal.

Yes, please.

So on the business mix and the business performance and deal closure activity, we had a good line of sight in the second quarter, and we came in as we have planned. So we didn't see any risk of slippage that would impact our performance for the quarter. Of course, you always have some puts and takes, how we say, but they have to be managed, and we did well.

In Asia, you are right, we had an excellent performance with 8%, thanks to strong growth in Korea, but most notably India, solid performance in Japan and AP South. However, China was down. That was also not a surprise to us. H1, we knew, was a tougher period. We are entering now into H2 where we have a good pipeline to support returning to growth. And in China, sometimes the visibility and predictability can be challenging. But we also have to make sure that when we operate there, we are operating with a strong line of sight and are closing deals on our terms and not trying to be under pressure. And so this flexibility is important, and we apply that. So we are confident about our growth in China for the second half of the year.

And overall, you mentioned Europe, I mentioned that as well with a tough auto sector. But nevertheless, the teams performed well in closing deals in the last 2 weeks of the quarter. So what was expected was done. So we didn't face any volatility from that. But this, I think, was well executed. And now in Q3, we're also expecting Europe to return to growth.

Americas had a very solid performance, improving visibility essentially week-to-week over the quarter. And there are also, I think, good line of sight and good management of pipeline. So well done by the American -- by the team in America as well. So overall, things are under control.

Now to the revenue mix of Nordic -- ArisGlobal and your question regarding what did Nordic do and focus on in the last 2, 3 years. The revenue mix, it's 85% recurring. So a high share of subscription SaaS revenue. So there's only 15%-ish, which is services. So has a high recurring share. And it's clear. The business model transition has been done, and it's implemented. Nordic was, together with the Aris management team, very much focused on driving that recurring business growth, building the AI road map with tangible outcomes in their industry. Today, they are the leaders in AI, in safety and compliance. This is done. They're generating revenue. They're seeing real productivity gains from clients. So these are the 2 things I would highlight. Other than that, I think the company is well run across 3 main locations: U.S. East Coast, mainly Boston area; London; as well as in India, where there's a strong footprint in terms of service and operations.

That's as much as I can say. Pascal, do you have things to add?

No. And maybe one additional comment from a product architecture standpoint, it has been completely rearchitected. So it's really a full cloud and SaaS model with multiple instance. So there is no technical debt, if you want. We have to take care for the future. So this is also an important point to move forward and to accomplish the synergy we want to do.

That's great. Maybe, Pascal, I could ask you one follow-up to that. When you think about the integration of ArisGlobal into Dassault, will you run as a stand-alone business within Life Sciences for the foreseeable future? Or would you look to integrate it into MEDIDATA? Sorry, I lose my voice.

It's okay. So in fact, it's a mix of both. Let me tell you why. And again, we have time to come back to you with the details between the signing, which was yesterday and the closing, as you say, Rouven, will be probably somewhere October time frame. But to make it simple, again, we have a lot of synergy from a commercial standpoint. We have already the go-to-market. It's independent from MEDIDATA, from BIOVIA, from all the brands. So I think it's relatively easy to push Aris product line as part of this go-to-market.

From a development standpoint, you remember the slide I presented, you have 3 stages. You have the system of record. So it's a system of record by itself. And it will basically coexist along to MEDIDATA to BIOVIA and DELMIA. So this is, in a way, a stand-alone approach, except that at some point, we need to have a common development processes, a common maintenance and support systems, right? And then after you have the AI story. And this is really where we probably need to bring the team together in order to have a unified AI platform crossing all the different system of record, and that's what I'm planning to do.

And last but not least, probably an important point for you guys, I am creating an executive position at the Dassault Systèmes Executive Committee level to oversee the entire life science domain. Why so? Because it was done by Rouven and myself for the last few years. And I think we have many things to do now. And it's important to have someone dedicated not only to drive the integrations, but also to drive the development, the positioning to entertain the executive level relationship, and this is something I am currently doing.

Now we're going to take our next question. And the question comes from the line of Michael Briest from UBS.

Just in terms of the Nordic -- sorry, ArisGlobal, I think Nordic Capital have it on their website with revenues of EUR 150 million last year, which is just shy of $170 million. I appreciate it's not a euro business or 100% dollar business. But can you talk about that implied growth rate of sort of mid-single digits? It doesn't seem to accord or is there some definition of revenues, which is different?

And then in terms of the average customer spend, I know not everyone is going to be the same, but it's less than $1 million each if you've got 200 customers. Can you talk about the span there and maybe what the largest customers are because I know MEDIDATA is in the tens of millions. But then the revenue opportunity within those customers that you have today, is that fully maxed out? Or could you get more for them? And then good performance on margins. On head count for the second half, will that start to grow again? Or are you sort of leveraging AI and other efficiency measures to sort of keep that flattish from here on? And how do you think about headcount?

Rouven, will you take it?

Yes, Michael, I take some of the questions. I guess, we'll go back and forth, Pascal, but I'll start. So on your revenue question, Michael, yes, FX, of course, is a factor. The revenue outlook of $175 million that I provided is based on the visibility as of -- at the end of Q2. So we are not giving forecast that go beyond because we don't run the business we do not control it. I can only say what we see today in the books, which is pretty much actualized growth for 2026. And I cannot -- we have analyzed and reviewed there, of course, the schedule and growth over the last 5 years, and it's solid double digit. So we're -- that's what we are planning for, and that's why the business as we integrate it into our financials is revenue growth accretive.

On the revenue opportunities within clients, I think Pascal, you alluded to that, we have the opportunities to expand with our large pharma clients. The AI expansion opportunity is real. We are connecting not only to safety, regulatory but also quality and connecting it to clinical trial.

And I think the question from Michael was, if you do an average, you divide the revenue by the number of [ customers, ] it's [ EUR 1 ] million in average. You're right, Michael, but at the same time, you know there is a distribution. So the questions probably behind your question is, do we already have customers spending EUR 10 million plus, okay? Not yet the case. Do we have, with ArisGlobal -- I mean, on the ArisGlobal scope, do we have customers spending more than EUR 5 million? The answer is yes. So just for you to have this in mind.

Now where are the levers? Rouven made a very important statement when he say the TAM is EUR 3.5 billion, of which only a fraction is captured by the technology today. So the vast majority of the spending for the safety cases and quality management, it's still manual. And you have specialized companies doing business process management. And also, you have a lot of large pharma doing it in-house. This is against where AI is coming at stake. And the NavaX products, which are the one Aris has developed, has been already on the market. And we already have some feedback on the market that this is extremely helpful because they have developed agents who are capable to do not the full manual process, but most of it.

So it's a way for customers to reinsource some of the jobs they were subcontracting to services company, and we take obviously a share of it. And there is a way also, as we say, to do more with less. And this is also the second lever we have. And this is really only on the -- if you want, on the scope of ArisGlobal, we could expand the share of wallet. And last but not least, you have all the synergy I was explaining upfront, which is, again, a way to continue to nurture the development and to size the deal up. So pretty confident about this. And again, that's probably one of the value of the combination of the 2 companies.

And then you had the third question on the margin and head count. I'll come back to that. You're right, head count is slightly down year-over-year and also for the first 6 months. We are leveraging, of course, AI. We are not replacing one for one. I repeat what you say, we are doing more with less or the same. Certainly, we are building a very good track record in research and development, but also in customer support and in supporting functions in G&A. And we will continue to do that because this gives us the flexibility to invest into future growth, which we are doing. And I think that's what is expected. So we're confident about the margin outlook.

Yes. And maybe just a follow-up on the midterm targets. I mean the revenue side is pretty challenging, I think we would all agree. But the margin ambition was fairly sort of gradual. Do you feel there's opportunities with AI that maybe you didn't appreciate a year or whenever you did the last CMD that give you greater confidence on that profit progression?

Yes. Yes. Absolutely, we have that opportunity, but also we have the opportunity to reaccelerate the top line. And as you are reaccelerating the top line, we will have a bigger lever on margin expansion because the cost -- or the OpEx growth should be contained. So we are not going to cut, right? We want to invest in growth, and we want to expand with profitable growth. That's the formula.

And now we're going to take our final question for today, and it comes from the line of Balajee Tirupati from Citi.

Two from my side as well, if I may. Firstly, on Life Sciences and MEDIDATA, could you share color on the return to positive ARR growth? And how was the ARR growth adjusting out the Moderna contract? And secondly, with positive ARR growth, should we expect MEDIDATA revenue to return back to positive growth in the second half?

And the second question, if you could please share your view on how do you expect us to see some of your leading customers partnering with AI labs like Mistral? And in that context, how is your own relationship with AI labs evolving when they are also coming out with AI CAD tools?

You take the first one?

Yes, I do. Thank you for your question, Balajee. Some color on the positive ARR momentum related to the Life Sciences and MEDIDATA. Yes, ARR is back to growth for MEDIDATA. So we have positive contribution in net ARR. The momentum is coming from the mid-market, and we also see that the partners activity is increasing. So we do not have that headwind any longer that we had the last 2 years. So this market is stabilizing. It's important. But mid-market is very consistent.

We have also, as you rightfully point out, the headwind of Moderna in the large enterprise, which is now more behind us in -- after H1. There's only a marginal impact in the second half of the year. So the ARR growth for MEDIDATA has turned positive. And in H2, we expect another step-up in terms of ARR contribution for MEDIDATA from a sequential standpoint.

It's not yet at the level, of course, of the subscription ARR for the company because the subscription ARR for the company is growing double digit, as I mentioned in my prepared remarks, while the total ARR is 6%, subscription ARR is in the low teens of growth, which is, by the way, very aligned with our growth in cloud revenue, which is also in the low teens this quarter. So you see that our growth drivers are lining up, and we are driving the momentum shift and the business model shift very consistently. And we are now reaching a point where subscription revenue as a share is starting to exceed the support revenue, and that will support our ARR growth overall.

Okay. Coming back to the second part of your question, are we a competitor or partner with the providers of the frontier model? It's both, right? Why so? Because on one hand, we are vertically integrated, but horizontally open, and you have seen this in the architecture side, which means I do not intend to redevelop LLMs. There is no value because what we are focusing on is really on the world model. So we are, by design, multi-LLMs. And this is important because for sovereignty reasons, Mistral is the solutions -- sovereign solution for Europe, but in China is another one. And you could be sure that in the U.S. and the rest of the world, it will be the same. That's point number one.

Point number two, that was exactly the purpose of my speech for using BMW as an example because BMW was used by Mistral. And if you remember, the case #2, whereby you use a frontier model with an MCP protocol to pilot the applications, there is a value, which basically you can automate certain workflows. But I hope you have understood and it's not missing it is, it's the people doing the job, the real one, not the CIOs, the people who are, on a daily basis, need to produce and design the car, they are saying it's not enough because having the ability to orchestrate the workflow automatically is helping to investigate much more design alternatives, but the accuracy is low. So what does it mean? It means it cost you a fortune to run the [ 4-Tier ] model with the tokens and you are creating an extra value in terms of number of alternatives, which are really fitting the requirements. This is not the way to go.

And again, if you have listened carefully what I said, the last approach is using the 3DEXPERIENCE agentic platform, leveraging LLMs for what they are good at, including Mistral, but using the vertical integration with the [ work ] model, with our companions, with our applications to deliver the best of the both worlds. So believe me, I have enough -- I spent enough time with many of the customers you are referring to. And what I'm telling you is extremely valid. It has been, by the way, validated by the specialists.

And last but not least, everything you do, you have to certify it. And you need to trace it. And this is what means if you want to put AI at scale within an industrial company. So if you do not have an equivalent to the 3DEXPERIENCE platform, you cannot do that. You simply cannot because there is no way that if your system is working like a black box, you will be able to be certified. You need to prove by basically following the steps, which have been defined by the regulations. You need at each step to provide the end result that someone else could understand, recreate the rezoning and basically find the same results. Otherwise, you are not considered for the purpose of the job.

So in summary, the LLMs, they are good to read text, to generate content, whatever the content is a text, an image, a code, but they are not good to generate physics, biology. They are not good to produce physics and biology. And this is where I think we are making a big difference. So it's a little bit of both.

Okay. So thank you, all of you, for your questions. I think what you have heard today is our strategy is progressing on multiple fronts. I think first, we are -- as you say, Rouven, we are executing with discipline. The results are solid. Our customers are expanding the use of 3DEXPERIENCE platform, and the cloud adoption continues to accelerate. And this is giving us confidence not only in the pace, but also on the consistency across geography, across industry and across companies of all the different sites.

I think second, we are advancing our life sciences ambition and strategy. Our vision, which has always been since the beginning, to virtualize the entire life cycle to help to improve the patient outcome is making a step forward with ArisGlobal. Now we are creating this unified AI intelligent platform, connecting molecules, patients and real-world outcomes. This is unique on the market. This is really game changing. And by doing this, we are closing the loop between the discovery, the development and the manufacturing and the evidence.

And third, I think we are turning industrial AI to real value for the customer. I mean, the 3DEXPERIENCE platform is becoming an agentic platform. We deliver it on the market. This agentic platform is powering AI native applications. The companion is category of them. They are on the market, and we continue on a quarterly basis to enrich them with competency, with new skills, and this is how we are building the competitive advantage.

And last but not least, I think we are capturing how the industrial world works, and we make AI knowledgeable, much more accessible with an industrial platform.

So thank you very much. Hope to see you on the road. If not me, it will be Rouven and Marie. And if I do not have a chance to see you in person, enjoy the summer break. Thank you so much.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

Good morning, good afternoon, everyone. Thank you for joining this conference call. Pascal Daloz, our CEO and Chairman; and Rouven Bergmann, our CFO, on the line with us to discuss our first quarter 2026 earnings. During this call, 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 2025 Universal Registration Document. All earnings materials are available on our website. I would like now to hand it over to Pascal Daloz.

Thank you, Marie. Good morning, good afternoon, everyone. Before handing over to Rouven, I really would like to put this quarter in perspective to our trajectory. So if you remember what I said in February, 2026 is the year of execution, not the strategy, not the vision, really the execution, execution to strengthen the foundation for sustainable growth, to accelerate our transition to subscription and to deploy our industrial AI strategy.

Now let me start with where we are. Back in Feb, we set a clear commitment. And I think today, we are delivering on them. Q1 is on track. Revenue is up 3%. No surprises, no deviations. We confirm our full year outlook, 3% to 5% with an acceleration in the second half, and we will come back on this.

But beyond the numbers, what matters is really the trajectory of what we are building. And we are, in fact, delivering this with 3 levers, 3 priorities: one, transforming our existing clients; two, expanding into new frontier, new territory of conquest; and three, scaling our industrial AI offers. And I think we are executing consistently across all those 3. Let me start first with our installed base.

Globally, I think our clients are not slowing down. They are adapting. They are transforming themselves. And in fact, they are not constrained by the demand for most of them, but they are constrained by the complexity. Too many systems, too many regulations, too many unexpected things coming from the geopolitics. And at the end, this is creating much frictions between the design and the execution between the sourcing and the supply. And this is really where we come in.

And if you look at carefully our results, this is where it's visible, it's really on the recurring business. First, with the annual run rate, which is up 6%, and Rouven will come back on this. The cloud is up 8%, which is more than twice to our total growth. And 3DEXPERIENCE, our platform is up 7% despite a high comparison base, if you remember last year because we had this significant deal with Lockheed Martin. This is not, again, for all of our customers. This is not only a shift in terms of tools, it's really a shift of in how companies operate.

The second lever, the second priority is the new frontier. This is really where the growth will come next. Here, there are a few things to say. One, in Life Sciences, I think we can say the environment remains challenging, but our platform approach is starting to deliver some results, and I will come back on this. In the consumer, we see discipline, speed and scale, strong growth in apparel and a growing momentum in food and bev and retail. And I think we are really building strong position for the future.

Third, 3D UNIV+RSES. This is the most important shift. And this is where really AI move from promises to reality, not pilots, not proof of concept, but real use cases in production. And I think this is possible because everything is powered by our industrial AI architecture, which has been designed, imagined to serve the purpose for the industry.

Now if we look at the industry at large, and if we step back a little bit, one thing is clear. I think we are increasingly acting as a critical partner, and it's visible. If you take the mainstream performance, it's broad-based. SOLIDWORKS continue to drive a strong momentum. And in a way, this could be seen as an early indicator of the underlying demand across industries.

Second, in Transportation & Mobility, demand is holding despite the volume pressure. And I think we remain the reference for most programs around the world, and we continue to expand in the Americas. In Aerospace & Defense, after strong comparisons last year, the next wave is ahead and budgets are increasing, especially in the defense space, and we see traction concretely this quarter in Marine & Offshore, where we signed significant deals.

Beyond the core, a few things needs to be noticed also. As I say, in the consumer, growth is strong, driven by Centric with sizable win in apparel, such as Nike and a growing momentum in food and bev and retail with landmark transactions this quarter. Ferrero is one of them, Amazon is another one. In High-Tech, our solutions benefit from the global scale-up of AI and the cloud infrastructure. And in the Life Sciences, as I say, we are transforming a fragmented and a slow environment with our platform approach.

And finally, in infrastructure, the growth is driven by complex energy program, and I think where sovereignty matters. So the common piece across all those industries, I think we are helping clients to move faster to improve quality and to use capital much more efficiently. Now let's zoom on concrete example. Take Eaton. Eaton is a global leader in intelligent power management, and they are at the center of electrification. Their challenge is very simple to scale the execution without adding complexity. And how do they answer to this by unifying everything on 3DEXPERIENCE platform on the cloud. And today, over 20,000 users work on one single systems and the result, faster time to market, optimize costs and the value creation in hundreds of millions.

Another good example is U.K. Fusion Energy. Their ambition is really to deliver the Fusion power plant by 2040. It is definitively one of the most complex engineering challenge in the world. They choose 3DEXPERIENCE as an operating system to connect the ecosystem at large. And as you know, for such object, you have a lot of, a lot of companies involved to ensure the data continuity between the design, the engineering, the construction, the operations and to build the secure infrastructure.

So this, I think, is a good example of what the transformation is about when it's at the frontier of innovation at the same time. Now if we move to the new frontier, there are many things we could say. First of all, in the semiconductor, the race for AI infrastructure is really accelerating. And you know that designing advanced chip is extremely complex. That's why with our multiphysics simulations, company like Annapurna Labs, they can design and validate faster and delivering the next generation of the cloud infrastructure. And you know Annapurna Lab is one of the Amazon company, and they are the one for sure, providing some chips -- high-value chips to AWS.

If I look at in Life Sciences, we are reinventing the CRO business model, shifting from a labor-intensive approach to an AI-driven operating model. And this is extremely important for them because they are -- I mean, it's a must -- so with our AI-powered MEDIDATA platform, company like WCT, Worldwide Clinical Trials, they move from a thousand of fragmented systems to a unified enterprise solutions, and this is giving them the ability to be smarter, to do faster studies, better executions and a real-time insights.

And both really are driving growth and margin improvement. In the consumer, speed is really critical. And with Centric PLM, JM Smuckers accelerate product development while maintaining quality and control. As a result, faster innovations, better products and a model that has scale and scale across the industry.

Now let's move to the third lever, 3D UNIV+RSES. And I think this quarter is also delivering tangible value. First, for the one who had a chance to be with us at MEDIDATA NEXT, last month, we demonstrated how we connect the full life sciences life cycle from the discovery to the clinical to the real-world outcomes. And with our AI virtual twins, whatever it's the virtual twin of the drugs, virtual twin of the plan, virtual twin of the cohort, we can do something which is unique, which is synchronizing the drug development life cycle with the patient journey.

And to accelerate this, we have introduced Dot. Dot is our virtual companion for clinical intelligence. And the results are already tangible, 30% to 40% higher enrollment rates and a clinical data corpus build time, which has been divided by 5. I think it's really a step in change of performance.

Second thing at GTC, it was in March also, we showcased our industrial AI architecture. And why this is important? Because most of our peers, they put AI on the top. We are putting AI at the core. And putting AI at the core means you have to redesign your architecture. And this is done. This has been published, demonstrated and showcases. And what is unique in what we did, in fact, we are leveraging 40 years of science and industrial data. We are connecting design simulations, data and workflows with one unified system, putting the industry world model as a foundation.

And the industry world model is for our software, what basically the LLMs, they are for the others is the foundation understanding the physics, but it's also the foundation capable to produce physics. And this is where we are making a big difference. Now moving to the virtual companions. We are also releasing them this quarter. And you can see on the slide, you have a bunch.

The takeaway is what it's not only 1 companion or 2 because it's how they could become more specialized, more intelligence and more connected. And to do this, we combine the industry know-how on one hand with the domain knowledge and the real-time data. And you can see if you take LEO with the virtual companion for engineering, you could specialize them by discipline. Now this is really the way we are scaling intelligence across the Board.

Now to conclude, we will handle our Capital Market Day on November 17 this year, 2026 in Paris. And we will go obviously deeper into these visions and the road map, and we will also connect this with the financial plan. Thank you. I think, Rouven, over to you for more detail on the financial performance and the outlook.

Thank you, Pascal, and also a warm welcome from my side to you. Good morning, good afternoon. As you heard, Q1 was a solid start. We delivered revenue, margin and EPS well aligned with our objectives, demonstrating our continued focus on execution. Our recurring business continues to perform well as reflected by the consistent annual run rate growth of 6% year-over-year and a net ARR increase of EUR 35 million sequentially.

Good operating discipline translated to strong operating cash flow performance, generating nearly EUR 1 billion in operating cash flow, up 22% at constant currency. The bottom line is we are laying the foundation for acceleration throughout the year and into 2027. Now looking at the details of the financials for this quarter. Total revenue reached EUR 1.510 billion. It's up 3%, excluding currency, software and services revenue all up 3%.

On the revenue mix, upfront license revenue came in slightly better than anticipated, up 9%, driven by a number of significant multiyear deals. Subscription revenue grew 3%, reflecting a tough comparable from the landmark Lockheed Martin deal closed in Q1 of last year. Now turning to our recurring business growth. The annual run rate or ARR provides a consistent view of annualized growth at a rate of 6%, and this is independent of the timing of revenue recognition.

And in the quarter, we added EUR 35 million in annualized value sequentially, bringing the total ARR to EUR 4.371 billion, encompassing all active subscriptions and maintenance contracts, including the annualized value of multiyear subscriptions where IFRS requires upfront revenue allocation.

So what drove the ARR this quarter? It's a growing share of cloud bookings and continued expansion of multiyear subscription deals with higher total contract values. This broad-based momentum translated into double-digit subscription ARR growth.

Now turning to our growth drivers. 3DEXPERIENCE platform is at the core of our growth strategy. In Q1, 3DEXPERIENCE saw 7% growth ex FX and makes up 42% of our Eligible software revenue, which is up 3 points compared to last year.

Also, cloud revenue grew strong at 8% with good momentum in the take-up of 3DEXPERIENCE cloud, which was up 30% year-over-year. And as you heard from Pascal, some of our key wins for Eaton, U.K. Fusion and all of them on the cloud. We are executing on our growth drivers with a rate of growth, which is more than 2x when compared with our total software revenue.

Now looking at the geos. Europe delivered healthy growth of 7% in the quarter, broad-based across regions with strong contribution from Home & Lifestyle and key energy deals. This is a clear illustration of our diversification strategy at work, delivering impactful solutions across an expanding set of end markets.

Asia posted a mixed performance. It was up 3% with a slight revenue decline in China as a primary headwind. But outside of China, the business remains resilient across geographies with Korea, Japan and India all contributing meaningfully in our core industries. Americas was down 1%, reflecting a tough comparable from the Lockheed Martin contract expansion of Q1 last year.

Excluding this effect, Americas grew mid- to high single digits. The underlying performance was strong with double-digit growth in Transportation & Mobility and Industrial Equipment and even stronger momentum in consumer industries.

Now let's move to the performance of product lines. The Industrial Innovation was flat in Q1. It was mainly due to the tough comparable, as mentioned earlier. Adjusted for this, Industrial Innovation was up mid-single digits. The growth replicated across our core manufacturing brands, DELMIA, SIMULIA, ENOVIA and CATIA and driven by good traction in subscription revenue.

Now over to Mainstream Innovation. Here, we had an outstanding quarter, 14% growth year-over-year. Centric delivered particularly strong return to growth this quarter, driven by notable new client wins, including a significant competitive displacement and broad momentum across strategic verticals such as food and beverage, retail and sports apparel.

This is a meaningful inflection point and a testament to the new leadership team and the entire Centric team. Clients are validating the strength and differentiation of our offer as they look to transform their business in a very fast-moving consumer industry with AI at the center. This performance supports our full year outlook of mid- to high teens growth for Centric with Q2 mainstream growth expected to normalize sequentially from this quarter's level.

Also SOLIDWORKS momentum continued with high single-digit growth in revenue and double-digit growth in units. The performance was broad-based across geos, and it underscores our strong value proposition in the mainstream market, where short sales cycles and time to value are essential.

Now to Life Sciences. Q1 was still negative as MEDIDATA's business was mainly impacted by lower revenue contribution from partners. As expected, this reflects a carryover from lower 2025 bookings. While in the quarter, we saw bookings volume and value trending positive versus last year.

Also important to highlight, we signed a strategic multiyear partnership with Worldwide Clinical Trials, a leading CRO, who is standardizing clinical activity on MEDIDATA's cloud platform and leveraging AI across all workflows to speed up and simplify study build and study execution. We see this as a first-of-a-kind deal. For 2026, we expect H2 to improve over H1, with the objective to reach a positive run rate growth entering 2027.

Now turning to cash. We generated a strong EUR 949 million in operating cash flow in the quarter, which was up 17% and 22% ex FX. As anticipated, this was driven by positive working capital dynamics over the quarter as account receivables decreased sequentially, reflecting strong cash collections and a favorable impact from contract liabilities due to higher billing activity.

Free cash flow was up 27% in the quarter, driven by strong operating cash flow. Cash conversion in the first quarter even jumped to 208% versus 167% in Q1 of last year. Seasonally, Q1 is a strong cash collection quarter. At the same time, the progressive transition of our business towards subscription and cloud creates an opportunity for continued improvement in cash conversion.

Now to complete the picture, our overall cash and cash equivalents reached EUR 4.875 billion as of Q1, which reflects an increase of EUR 750 million versus Q1 of '25. Now looking at the investments in the quarter. It's also worth highlighting that we completed an acquisition of a start-up to expand our cyber systems strategy with ALM capabilities, Application Lifecycle Management. Combined with 3DEXPERIENCE, this acquisition offers a unique advantage for companies developing software-defined products.

And we are excited to have a very talented team joining our Cyber Systems CATIA team. To complete the picture, our net cash position remains strong and stood at EUR 2.396 billion as of Q1.

Now over to the financial outlook. Firstly, we are confirming our full year outlook for total revenue of EUR 6.290 billion to EUR 6.410 billion or a range of 3% to 5% growth ex FX, with an operating margin in the range of 32.2% to 32.6% and EPS of EUR 1.30 to EUR 1.34. And this represents 3% to 6% growth ex FX.

For Q2, we expect total revenue in the range of EUR 1.518 billion to EUR 1.568 billion, which is up 2% to 5% ex FX. Software and services revenue are expected to grow in line with total revenue by 2% to 5%. We target an operating margin of 29.5% to 29.9% and an EPS of EUR 0.29 to EUR 0.31, growing in a range of 3% to 7%, excluding currency. And this is all based on our FX assumptions for an average rate as published this morning.

Now to conclude, we had a solid start to the year. We delivered performance at objectives, and we confirm our full year guidance. Our growth drivers demonstrate that our strategy is working, providing the tailwinds for future growth. Our focus is on execution and operating discipline, as you saw in Q1, drove solid margins and strong cash flow conversion and strong cash conversion.

This provides the foundation to invest in our long-term growth and accelerate our AI strategy to deliver tangible values for our clients, our employees and of course, our shareholders. And now Pascal and I, we look forward to take your questions. Thank you.

[Operator Instructions] We will now take our first question from the line of Jay Vleeschhouwer from Griffin Securities.

Pascal, let me start with you. You made an interesting comment with regard to your AI architecture and how you believe you're differentiating from your competitors who have also announced their products and architecture. The question is, how extensive do you think the virtual twin portfolio will become?

In other words, do you think that you will take the extensive list of roles and trigrams you have in the core business, let's keep the Life Sciences business aside for the moment and transplant a parallel set of virtual companions or agents as part of the new AI portfolio. A couple of more questions.

Thank you, Jay, for this question. In fact, I think it's a good question. We still want to keep the portfolio of role and processes we have. And why? Because the virtual companion anyway needs to use an application.

So for this reason, I think they are complementing each other more than if you want, substituting by each other. That's point number one. Point number two, we have the virtual companion and we have the generative experiences. The virtual companion for us is a way to associate to the applications, to the roles, the rezoning. And you will accept if you are scientists, if you are an engineer, if you are a production scheduler, your rezoning is not the same.

And that's the reason why in order to basically optimize and in a way, sometimes lower the barrier of usage of our software, we are training our companions on this domain expertise and industry know-how at the same times. And then after the generative experience, it's a different paradigm. It's how you could automatize a sequence, a process.

And here is really a way for us to balance if you want workforces with AI. And what we are measuring in this time is the unit of work. So in the reality, and I met many, many customers, they want to have the choice. They want to have the choice to use to be, in fact, to use human or to have the interactivity with the portfolio of role and processes.

And for certain time or certain task or certain profile of people, they want to have the ability to either automatize with the generative experience or to, in a way, hire virtual companion, if you want rather than to hire people or basically to also to have to reskill some of their people. So this flexibility, I think it's very interesting things.

Now there are certain roles, nevertheless, Jay, which are a little bit in between because we put in certain roles a lot of industry knowledge and know-how. And what we are doing, we are eliminating this role in order to basically transfer the value added, if you want, in the virtual companions.

That's what we are currently doing. But I think the architecture of the portfolio is very clean, very understandable by the customer, very easy to, in a way, to price without having to destabilize the current pricing system. And it's easy to articulate also the value because they are complementing each other.

Okay. Continuing with you, Pascal, a quarter ago on the call, you mentioned new operating executive for the channel. And the question is, do you expect that the changes in the channel that you alluded to will go into effect this year? Or would it make more sense to do so at the beginning of 2027? And as part of that, our understanding or sense is that CPE is not performing necessarily as well as you would like or as well as CSE. And perhaps you could talk about how you're thinking about improvements there. And then I'll have a question for Rouven.

So you are right. I mean the primary focus of the person who joined the team, his name is, by the way, Pierre Barnabe. He's ready to transform the indirect model. And starting with CPE and why so? Because -- and you know it very well, CPE is still relying on one category of partner, the resellers.

And the reseller model was a good model when we were selling application. Since we have moved to the platform game, those resellers, they have to become, on one hand, system integrators to connect the platform with the rest of the enterprise systems. The more we are moving to the cloud, the more they have to become a hyperscaler in a way because they need to understand the architecture.

They need to understand how to support these operations. They need to understand the SLA concepts. With the -- basically, by broadening the portfolio outside of CATIA, moving to DELMIA, SIMULIA, where you have a lot of specialized domain you need almost to be an engineering services in order to understand the value of the specializations.

And last but not least, for most of what we do, you need also to transform the organization and the profile of the people, which means you also need to become a consulting firm. So if you try to hire and to find one single partner having all the dimension, it's almost impossible. So this is the reason why specifically for CPE, we have to redesign the ecosystems, and we have to diversify the category of partners we have.

And that will be the primary mission for Pierre, which is to define this new operating model to define the protocols to define how they can work together in order to fulfill the complete missions and to be a lever for us. That's, in a way, his mission. For CRE, the topic is a little bit simple, if you want, because I'm not challenging the reseller model. I think the reseller model is still valid because it's a volume approach.

And I think what we are pushing is very well packaged, very well suitable. Everything, even if it's cloud-based, you do not have to basically articulate the value of the architecture. It's really a pure services. There is nevertheless some transformation to be done.

I think they could accelerate the digitalization of the sales. And this is where I think, again, Pierre could help a lot to promote the online approach, not to bypass the partner, but to help them to be much more efficient to decrease, if you want, the cost of sales and also to prepare for AI as well.

So that's really at the high level, the 2 key missions. Now there are some tactical things we want to do this year, especially related to the reward program for the resellers, the incentives. Those are really tactical and it's a way basically to redirect a little bit their focus. But most of what I'm describing, it's something you will see the benefit starting 2027.

Okay. Finally, for you, Rouven, looking backward at your 2025 numbers in your annual report, we can see that your remaining performance obligations or backlog, if you will, declined by about EUR 85 million. Maybe you could talk about the components of that, mostly currency or some other organic mix effects? And would you expect the backlog to resume growth in 2026?

And then finally, for you, Pascal, your favorite question on SOLIDWORKS. It was interesting you mentioned double-digit growth. We had estimated 9% volume growth. So it looks like you must have done around 20,000 units for the quarter, somewhat easy comp, but double-digit growth, nevertheless, if you could comment on that.

Thank you, Jay. On RPO, I can keep it short. The major effect of the decline is FX related, so currency related. But I think what's also important for you to know, the RPO is not really a good proxy of revenue growth because the RPO, it only includes revenue from deals with a duration of more than 12 months.

So all subscriptions that have a shorter remaining duration are not included in this number. And you know that it can fluctuate depending on timing of renewals. So it's not a real good consistent number for you to project the revenue outlook. That's why we have the ARR, which is much more consistent, 6% growth, and this encompasses all active subscription and maintenance contracts in a forward-looking 12 months value.

So I can -- I think I can really take some concern out of this number that you have when you say it's declining. In fact, there's an FX impact, but it's not a proxy to revenue growth.

And on the SOLIDWORKS performance, Jay, on the value side, the growth -- on the revenue side, the growth is high single digits, but the growth...

Double digit.

But the growth in terms of number of units is double digits. So why so? Because you see more and more the subscription in the mix. And that's basically a good sign. I think we -- I didn't check, Rouven, but we should be close to almost half of the new units being subscription-based now or that will be a license based. And obviously, all of them are on the cloud.

[Operator Instructions] We will now proceed to our next question from the line of Derric Marcon of Bernstein.

Two quick questions. The first one is for Rouven and the second one also, sorry for you, Pascal. But on the guidance for 2026, you didn't disclose this time the breakdown between upfront license and subscription revenue growth. Did you change or have you changed your way of thinking compared to 3 months ago or it's remaining in the same ballpark?

And my second question, you talked this morning about an acceleration of the revenue growth in H2 versus H1, and you explained the bridge for that. Would you expect annual recurring revenue growth at constant currency to follow revenue growth? Or do you see here a deviation between the 2?

Okay. Derric, I like the question. Thank you so much for giving the opportunity. On the objectives, it's not much to add because they are consistent, they're not changing. We have given the details at the beginning of the year. We confirm software revenue, total revenue, services and from a revenue standpoint, of course, the margin and EPS.

But everything is consistent from that perspective. And you saw that from quarter-to-quarter, we can have some fluctuations. This quarter, upfront was a bit stronger than subscription. But we expect subscription revenue growth to come back in the second quarter and then resulting in higher recurring growth because we had this tough year-over-year comparison from Q1 '25.

And we also had several multiyear subscriptions that we reported upfront license in the quarter, which drove the upfront license number, as I mentioned. So not a real change here. The outlook is very consistent. But we are -- as you realize, and it gets me to my -- to your second question, it's a good transition. We are more and more focused on ARR. And we -- the advantage of looking at the ARR is that we represent all our business activity that is recurring in a 12-month forward-looking consistent view.

And with this, we can give you really the underlying growth of our business momentum, which is consistent with 6%, it has slightly accelerated in Q1. We are on a trajectory with 3% software revenue growth in Q1. We are now forecasting 2% to 5% for Q2 with around 3.5% midpoint. And then we see an acceleration into H2, which is between 4% to 6% for H2 in terms of software revenue growth. But keep in mind, in the ARR, we already reflect the 12-month forward-looking portion, right?

So all the bookings activity was from cloud transactions in Q1 that are not recognized that are not visible in revenue yet, they will become visible in Q2 and onwards. They are already reflected in our ARR. And as we build and win more deals, the ARR will continue to build.

We have not guided on ARR in 2026 because we are, at this point in time, really looking at the track -- building the track record of ARR and the consistency in our reporting. So I do not want to do this right now to point you to an acceleration in 2026. It's too early to say. But we'll be very focused on ensuring that we execute and reflect the value of our business activities in ARR growth because we know that from a P&L standpoint, it's backwards looking. We have from time to time seasonality.

We have tough comparisons that are all not relevant in ARR because we look at a 12-month forward-looking number, and it's consistent. So that's what you should expect in 2026. In Capital Market Day, of course, I will spend more time on that and prepare then also for 2027 because that's the point in time where we want to guide on the ARR and then also anticipate the acceleration.

Our next question comes from the line of Jason Celino of KeyBanc Capital Markets.

Great. Just one for me. Have you seen any impact from customers either delaying investment due to higher oil prices or due to the conflict in Iran? Any deal delays? I only ask as a few U.S. software companies have mentioned some deal slippage. Curious if you're seeing anything.

Jason, Pascal speaking and Rouven, feel free to add whatever you want. No, we do not. In fact, there are probably a few reasons for that. Remember, most of what we do is really related to the research and development investment cycle, a little bit less related to the operational cycle.

So I think that's probably the reason why at least right now and for the rest of the year, we have not seen impacts neither in the pipeline, neither deal shifting or being basically reopened. That's not what we are seeing today. If the crisis stay the way it is, this could have maybe an impact, but at least not for 2026.

[Operator Instructions] Our next question comes from the line of Frederic Boulan of Bank of America.

Just one on my side. If you can comment on your shareholder return policy, how do you think about M&A right now versus share buybacks considering current level of share price, but also what's going on in terms of private valuations?

Thank you, Frederic. I will take it. Even if I was betting your question will be for Rouven.

But I can take this one, too.

But let me -- so I think it's -- again, it's a very interesting discussion. We spoke about it extensively last time. So my position is very simple. if you remember, for the last 3, 4 years, I was almost complaining every year that the valuation, they were far too high to have the payback on, I mean, some external move we were considering.

Now we are entering in a period where all the software multiple are under pressure, and I think it's really a good timing. We do not see yet this impacting the private equity economy, but it will come. And we know that there are assets we are considering being owned by them. And I think the timing is helping us.

Now coming back to your questions, I think I still will put more favor and more priorities on the external growth. But I'm not basically against to do some share buyback. And if you look at carefully the resolutions for the shareholder assembly, you will notice that I didn't change the absolute number in terms of value for the share buyback, but I have significantly increased the number of shares due to the basically the pressure on the stock. So at least this is giving you an indication of where I am.

We have now come to the end of the question-and-answer session. Thank you all very much for your questions. I'll now turn the conference back to Pascal for his closing comments.

Okay. So thank you very much for your participation. Again, just to remind you a few messages. We delivered Q1. We are on track. We are confident for the second half of the year. And more importantly, I think we are building the momentum, as Rouven explained, and this is visible with the annual run rate, which is giving us a better perspective for '27 and the years to come.

Now the last message is with 3D UNIV+RSES, I think we are also changing the game because many of our customers, what they need is a system they can trust, a system that can understand the business and a system that can improve over time.

And this is exactly what we do. This is exactly what matters. And that's what we will explain to you with more detail during the Capital Market Day in November 17. So thank you so much. Hope to see you on the road or in the coming weeks. And for the one I will not have a chance to see, see you no later than for the Q2 results. Thank you so much.

Good morning, everyone. I'm Marie Dumas from Dassault Systèmes. Thank you for joining this presentation. Pascal Daloz, our CEO and Chairman; and Rouven Bergmann, our CFO, are on the line with me to discuss our First Quarter 2026 Earnings.

During this presentation, results are prepared in accordance with IFRS. The financial figures discussed on this conference 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 2025 Universal Registration Document. All earnings materials are available on our website.

I'd like now to hand over to Pascal Daloz, CEO and Chairman.

Thank you, Marie, and good morning to all of you. It's always a pleasure to be at this time of the year physically in London, and thank you for the one being with us today. I know it was not easy because it's strike day in London. So again, thank you for being here.

Before handing over to Rouven, I really would like to put this quarter into the perspective of our trajectory. So remember, what I say, 2026 is really the year of execution, not vision, not strategy, execution, execution to strengthen the foundation for sustainable growth, but more importantly, to accelerate our transition to subscriptions and to deploy our industrial AI strategy.

Let me start with where we are. So back in February, we set a clear commitment. Today, we are, I think, delivering on them. Q1 is on track. Revenue up 3%. No surprises, no deviation. We confirm our full year outlook, 3% to 5% growth with an acceleration in the second half. But I think beyond the numbers, what matters is really the trajectory we are building.

And the key question is really how we are delivering this. And I think we are doing it through 3 priorities. The first one is transforming our existing clients. The second one is expanding into new frontiers to conquest new domains. And the third one is scaling industrial AI. And I think we're executing them consistently.

Now let's zoom on the first one, the installed base. If you look at it globally, our clients, they are not slowing down. Because I heard you many times saying you have a large installed base, but most of your customers are slowing down. I don't think so, but they are changing. They are transforming. They are adapting themselves. So why I'm saying this is because they are not constrained by the demand, but they are constrained by the complexity, too many systems, too many regulations, too many geopolitics. And at the end, this is creating a lot of friction between design and execution, between sourcing and supply. And this is really where we come in.

And the proof of what I'm saying, if you pay attention and you look at clearly what is underlying the performance, I would encourage you to look at the annual run rate, which is up 6% this quarter. The cloud is up 8%. It's more than twice in total growth and 3DEXPERIENCE is up 7%, despite, if you remember, a high comparison base. But this is not just a shift in terms of tools. It's really a way how these companies are operating today.

The second lever is the new frontier. And the new frontier is really where the growth will come next. Let's zoom first in Life Sciences. The environment remains challenging, but I think our platform approach is starting to deliver results, and I will come back later on this. In the consumer space, we see discipline, speed and scale and strong growth in apparel and growing momentum in food and beverage and retail. And I think we are building a strong position.

And the third lever is obviously 3D UNIV+RSES, which is one of the most important shifts. Because this is where AI move to promises to reality, not anymore pilots of proof-of-concepts, but real use cases in production. And all of this is powered by our AI architecture, which has been designed purposely for the industry.

Now if we step back and we look at the industry, there are a few things I want to share with you. One thing is clear, I think we are increasingly acting as a critical partner for many, many of our customers. The first comment I want to make is the performance of Mainstream. Mainstream is really broad-based, right? And SOLIDWORKS continue to drive the momentum. And why this is important? Because usually, it's an early indicator of the underlying demand across industries. So this is extremely important to have this momentum still going on.

Now if I zoom in Transportation & Mobility, demand is holding despite the volume pressure. And I think we remain the reference for most of programs around the world. And more importantly, this quarter, we continue to expand in America. In Aerospace & Defense, after a strong comparison last year, you remember, we had this large deal with Lockheed Martin.

The next wave is ahead, and we see budget increasing, and we are starting to see some traction, especially in the defense part of the Marine & Offshore. But beyond the core, there are interesting things going on. I told you in the consumer, growth is really strong, driven by CENTRIC with sizable wins in apparel. I could mention Nike, for example, and growing momentum in Food & Beverage and Retail.

And this quarter, we signed landmark deals. We signed Amazon for the Retails. We signed J.M. Smucker, Ferrero in Italy. So those are really very flagship customers, and this is a good illustration of the momentum we see in this.

In the High-Tech, I think our solutions are benefiting from the global scale-up of AI and cloud infrastructure. I think it's something which is more and more visible in our revenue streams. And in Life Sciences, we are transforming a fragmented and slow environment with the platform approach.

And finally, in Infrastructure, growth is really driven by the complex energy program where I think sovereignty matters. There is one common piece across all the industry. I think we are helping our customers to move faster, to improve quality and to use their capital much more efficiently.

Now let's zoom on some customer example. And let's make it concrete. The first one is Eaton. I don't know if you know Eaton is one of the global leaders in intelligent power management. But more importantly, they are at the center of electrification. And their challenge is very simple, scale execution without adding complexity. And their answer is unifying everything on 3DEXPERIENCE on the cloud. As a result, today, it's over 20,000 users working on one single systems. And the net benefit of this is faster time to market, optimize cost, and value creation in the hundreds of millions.

Another example, and I use it, I take it because we are here in London, is the U.K. Fusion Energy. You know -- all of you, you know them. Because they are the one having the ambitions to deliver the Fusion's power plant by 2040. It's one of the most complex engineering challenges in the world. And in fact, they choose 3DEXPERIENCE as well as an operating system to connect the ecosystem on one hand, to ensure the data continuity across all the different domains, all the different disciplines, and they build a secure infrastructure with this. So I think this is really a very interesting example how the transformation could be at the frontier of the innovations.

Now let's look at the second lever with concrete examples, the new frontier. I spoke about the semiconductor. And you know there is a race for AI infrastructure right now. So designing advanced chips is extremely complex. And I think with our multi-physics simulations, company like Annapurna Labs can design and validate faster, delivering the next generation of cloud infrastructure. In this specific case, Annapurna, it's an Amazon company, and they are the one developing the specific chip for the AWS data center.

In Life Sciences, I think there are an interesting things going on, and I'm sure Rouven will come back on this. We are reinventing the CRO business model. And why so? Because we are shifting them from a labor-intensive approach to an AI-driven operating model. I think with our AI-powered MEDIDATA platform, company like WCT, Worldwide Clinical Trials, one of the largest CROs, they are moving from thousands of fragmented systems, again, to one unified enterprises solutions. And this is important because for them, this has enabled them to do faster studies, better executions and really real-time insights. And this is driving both their top lines, but also their margin improvement.

Now in the consumer, speed is critical. And with Centric PLM, J.M. Smucker, really accelerates the product development while they are maintaining the quality and the control. And the result, again, is faster innovation, better products and a model that can scale across the industry and across all the product lines they have.

Now let me make some comments related to 3D UNIV+RSES, the third lever. I think this quarter, we are delivering tangible value. For the one who had a chance to be at NEXT last month, we demonstrated how we are connecting the full Life Sciences cycle from the discovery to the clinical and to the real-world outcomes. How we do this? We are using virtual twins to synchronize on 1 hand, the drug life cycle, all the different steps the drug needs to follow in order to be discovered, tested, produced, introduced on the market. And we do it also by synchronizing with the patient journey. This is where the drug is applied, where basically you collect the real insight.

We have also introduced Dot. Dot is our virtual companion for clinical intelligence. And the results are very promising. It's between 30 to 40 higher enrollment rates. And as you know, when you do clinical studies, I mean, the ability to enroll the patient is really something extremely critical. And I think this is changing the game. But more importantly, we have witnessed also the ability to create the clinical data corpuses in a much faster. And in fact, we have divided the build times by 5. So it's really a step change in the performance.

Another thing which has been extremely important, we were participating to the GTC, the large basically ecosystem event around AI in San Francisco. And we showcased our industrial AI architecture. And you can see on the slides, you have basically all the different layers.

But the takeaway is what? This has been built on 40 years of science, industrial data, and this is connecting design simulations, data and the workflow with one unified systems. And the key differentiation is, at the core of this system we are putting what we call the industry world model. In the same way a company like Anthropic, they have their foundational model with basically the language model. Dassault Systèmes is building the entire AI strategy, putting the industry world model at the core. And it's not on the top, it's really at the core.

Finally, we are releasing our virtual companions. I spoke about it many times. And you can see you have the list there. They are becoming more specialized, more intelligence and more connected. And why so? Because, in fact, we have this double approach. The combine industry know-how on one hand and the domain expertise, the domain knowledge on the other hand. And we do this also by leveraging the real-time data. This is how those virtual companions are really helping us to scale intelligence across the company.

If you are okay, I really want to make a quick demo just for you to see it. And if you can launch the video, please. So here, what you see on the screen is a clear illustration of the shift underway in engineering and the market opportunity it creates. You still know that there are several millions professionals still working in 2D, even if the 3D is already an industry standard. Now AI help us to make the move from 2D to 3D possible. And how we do this? Because we are lowering the skills barrier to move.

And here is a good illustration. Probably you recognize Manish. Manish is the CEO of SOLIDWORKS and the VP of Research and Development. And he is performing the same design with and without AI. So on the left is the traditional model, extremely powerful, but in fact, reserved for the experts. On the right, Manish generates an editable 3D model and interact it in a natural language with the virtual companions. And the virtual companions is the one proposing the designs, is the one basically knowing how to read the 2D to create the dimension automatically into the systems, creating the structure and configuring the 3D model to be ready for the simulations.

So if you know a little bit this industry, you need to master a lot of skills in order to be -- to do these simple things. So why I use this, example, because it's more than a productivity story. It's about broadening access. It's about expanding the usage from the specialist to everyone and growing at the end, the addressable market.

So remember, with 3D UNIV+RSES, every object you add into the systems, every simulation make it smarter and every workflow make it more valuable. This is really the power of the learning platform.

To conclude, you know I already announced it. We're going to have a Capital Market Day, but now I have the date. It will be November 17 this year in Paris. We will go deeper into these visions. And obviously, we will disclose the road map related to AI and how we are making the link with the financial plan.

I think now it's time for me, Rouven, to hand over to you for more details on the financial performance and the outlook.

Thank you, Pascal. Also, it's a pleasure to welcome you for our first quarter earnings call here in London and everyone on following us online. As Pascal, as you mentioned, Q1 was a solid start to the year. We delivered revenue, margin and EPS well aligned with our objectives and clearly demonstrating continued focus on execution. Our recurring business continues to perform well. It's very much reflected by the consistent annual run rate growth of 6% year-over-year and a net ARR increase of EUR 35 million sequentially.

Also, we saw good operating discipline, which translated to strong operating cash flow performance of nearly EUR 1 billion in the quarter that we generated, which is up 22% at constant currency. The bottom line is, we are laying the foundation for acceleration throughout the year and into 2027.

Now let's take a look at the details of the financials for the quarter. Total revenue reached EUR 1.510 billion. It was up 3% ex FX, with software and services revenue all up 3%.

On revenue mix, upfront license revenue came in slightly better than anticipated, up 9%, driven by a number of significant multiyear deals. Subscription revenue grew 3%, reflecting a tough comparable from the Landmark Lockheed Martin deal, which we closed in Q1 of last year.

Turning to our recurring business growth. The annual run rate or ARR, as you know, provides a consistent view of annualized growth at a rate of 6%, independent of the timing of revenue recognition. And in the quarter, we added EUR 35 million in annualized value sequentially, which brings the total ARR to EUR 4.371 billion, encompassing all active subscriptions and maintenance contracts, also including the annualized value of multiyear subscriptions, where IFRS requires us to record the revenue upfront.

What drove ARR this quarter? A growing share of cloud bookings and continued expansion of multiyear subscription deals with higher total contract values. The broad-based momentum translated into double-digit subscription ARR growth.

Turning to our growth drivers. 3DEXPERIENCE platform is at the core of our growth strategy. In the first quarter, 3DEXPERIENCE saw a 7% ex-FX growth and now makes up 42% of our eligible software revenue, up 3 points compared to last year.

Cloud revenue grew 8% overall with strong momentum in the take-up of 3DEXPERIENCE Cloud, up 30%. And you heard Pascal earlier discuss some of our key wins, Eaton and U.K. Fusion, but there are more. We are executing on our growth drivers with a rate of growth more than 2x when compared with our total software revenue.

Now let's take a look at the geographies. Europe delivered healthy growth of 7% in the quarter. It was broad-based across regions with strong contribution from Home & Lifestyle as well as key deals in the energy sector. This is a clear illustration of our diversification strategy at work, delivering impactful solutions across an expanding set of end markets.

Asia posted mixed performance, up 3% with a slight decline in revenue in China, which was the primary headwind we faced. Outside of China, the business remained resilient across our geos with Korea, Japan and India all contributing meaningfully in core industries. Americas was down 1%, reflecting the tough comparable from the Lockheed Martin contract expansion in Q1 of last year. Excluding this effect, America grew mid- to high single digits. The underlying performance was strong with double-digit growth in Transportation & Mobility as well as Industrial Equipment and even stronger momentum in the consumer industries.

Now let's take a look at the performance of product lines. Industrial Innovation was flat in Q1, mainly due to the tough comparable, as mentioned before. Adjusted for this, Industrial Innovation was up mid-single digits, with the growth replicated across our core manufacturing brands such as DELMIA, SIMULIA, ENOVIA and CATIA, and driven by good traction on subscriptions.

For Mainstream Innovation, as you see, we had an outstanding quarter, up 14%. CENTRIC delivered a particularly strong return to growth this quarter, driven by notable new client wins, including a significant competitive displacement and broad momentum across strategic verticals such as Food & Beverage, Retail and Sports Apparel. This is a meaningful inflection point and a testament to the new leadership and the entire CENTRIC team.

Clients are validating the strength and differentiation of our offer as they look to transform their business in a fast-moving consumer industry with AI at the center. This performance supports our full year outlook of mid- to high teens growth for CENTRIC with Q2 Mainstream growth expected to normalize sequentially from this quarter's level.

Also, SOLIDWORKS momentum continued with high single-digit growth in revenue and double-digit growth in units. The performance was broad-based across geos, and it underscores our strong value proposition in the Mainstream market, where short sales cycles and time to value are essential.

Now to Life Sciences. And as expected, Q1 was still negative as MEDIDATA's business was mainly impacted by lower revenue contribution from partners. This reflects a carryover from lower 2025 bookings, while in the quarter, we saw bookings, volumes and value trending positive versus last year. Also important to highlight, as Pascal mentioned, we signed a strategic multiyear partnership with Worldwide Clinical Trials, a leading CRO, standardizing clinical activity on MEDIDATA platform and leveraging AI across all workflows to speed up and simplify study build and execution. We see this as a first-of-a-kind deal. For 2026, we expect H2 to improve over H1 with the objective to reach positive -- a positive run rate growth entering 2027.

Now turning to cash flow. Clearly, a highlight of the quarter. We generated a strong EUR 949 million in operating cash flow in the quarter, up 17% and 22% excluding the currency impact. As anticipated, this was mainly driven by positive working capital dynamics over the quarter as account receivables decreased sequentially, reflecting strong cash collections and a favorable impact from contract liabilities due to higher billing activity.

Free cash flow was up 27% in the quarter, driven by the strong operating cash flow. Cash conversion in the first quarter jumped to 208% versus 167% in Q1 last year. Seasonally, we know Q1 is a strong cash collection quarter, but at the same time, the progressive transition of our business towards subscription and cloud creates an opportunity for continued improvement in cash conversion. To complete the picture, our overall cash and cash equivalents reached EUR 4.875 billion as of Q1, which is an increase of EUR 750 million versus Q1 '25.

And looking at the investments in the quarter, it's also worth highlighting that we completed an acquisition of a start-up to expand our cyber systems strategy with ALM capabilities, Application Lifecycle Management. Combined with 3DEXPERIENCE, this acquisition offers a unique advantage for companies developing software-defined products. We are excited to have a very talented team joining our cyber systems, CATIA team.

Now to finalize, our net cash position remains strong and stood at EUR 2.396 billion as of the end of Q1.

Now to the outlook. We are confirming our full year outlook for total revenue of EUR 6.290 billion to EUR 6.410 billion or 3% to 5% growth ex-FX, with an operating margin in the range of 32.2% to 32.6% and an EPS of EUR 1.30 to EUR 1.34, representing 3% to 6% growth ex-FX.

For Q2, we expect total revenue in the range of EUR 1.518 billion to EUR 1.568 billion, up 2% to 5% ex-FX. Software and service revenues are expected to grow in line with total revenue by 2% to 5%. We target an operating margin between 29.5% to 29.9%, and EPS of EUR 0.29 to EUR 0.31, growing in a range of 3% to 7%, excluding currency. And this is all based on our FX assumptions for an average rate for the year of dollar to euro of $1.18 and yen to euro of JPY 173.37.

To conclude, we had a solid start to the year. We delivered performance at objectives and confirm our full year guidance. Our growth drivers demonstrate that our strategy is working, providing the tailwinds for future growth. Focus on execution and operating discipline drove solid margin and strong cash conversion. This provides the foundation to invest in our long-term growth and accelerate our AI strategy to deliver tangible value for our clients, employees and of course, to our shareholders.

Now Pascal and I look forward to take your questions.

I think they will give you a mic. And we'll do the online questions later on.

Two for me. First of all, obviously, there's been a slight improvement of growth relative to where we were in kind of Q4. The guidance calls for kind of this gradual acceleration as we move through the year. Can you just help us better understand again the building blocks by the different business segments and in particular, around the pathway for recurring revenue, given that's still at a fairly depressed level?

And in terms of kind of what is sort of driving this and linked to that is obviously, ARR has been fairly steady at 6%. So how should we think about the link of the required run rate in ARR to kind of underpin this revenue growth?

Second question, you talked about sort of kind of AI being more complementary and kind of growing the base. How do you -- should we think about also the further evolution of the model over the medium to long term, particularly as we move to kind of consumption and outcome-based? I know your goal is to move to more subscription-based, but how much volatility could this potentially bring? Or how do you think about pricing some of your product? Because the feedback we hear is budgeting can also be very difficult for customers, right, with this unpredictability. So just curious to get a sense from your perspective. What this means and how does that evolve your model?

Take the first one.

Yes, happy to. Thank you, Mo, for kicking us off in this Q&A session. First to the building blocks of the guidance, it has not changed entering into the year. Let's be clear. Q1 is a solid start to the year, as we said. It's categorized by strong momentum that you see in Mainstream Innovation with strong performance of SOLIDWORKS, which was very broad-based. And as I mentioned in my prepared remarks, it comes from -- it's a time where sales cycles are very short and time to value needs to be delivered quickly. And I think SOLIDWORKS is fitting very good into this mode.

From an enterprise standpoint, we signed large deals, more and more cloud-based. So you don't see them yet in revenue, but they are reflected in ARR. U.K. Fusion is one, but Eaton was also cloud. The big MEDIDATA deal is cloud. It's not in revenue, it's in backlog. So we're really step-by-step really driving the execution towards the new business model.

Nevertheless, we delivered the revenue as expected at 3%. We had a tough comparison coming into the quarter with a landmark deal of Q1 last year, which created a bit of a bump to achieve coming into the year. We did that.

We talked about CENTRIC. CENTRIC is a definitely a contributor to growth when we compare it to 2025, where we had a lot of headwind in the consumer-centric industries. We see a very, very strong start to the year, but I want to be also clear that Q2 will be more in line with our full year model, right? So we are going to see a bit of an effect where Q2 and Q1 will balance off to a good start in H1, but it's not like what it was in Q1.

So MEDIDATA is as expected in our guidance. We have a lower contribution or negative contribution in the first 6 months and we expect to see a breakeven as we enter into H2. The bookings momentum of the first quarter are supporting that thesis. Q2 execution will be important to continue to go this path. But I think WCT is a deal, I said, first of a kind, because here it's -- we are transforming the first CRO from a time and material and study-by-study model into a platform model and AI. And that's very exciting. And it really is a demonstration of the strategy that has been laid out at NEXT.

Now to ARR. What's important to keep in mind with ARR, and it's in line with where we are going, right? ARR is a forward-looking metric. We're looking at the next 12 months run rate of the deals that we are closing. While we know that in revenue recognition according to the standards, we have to recognize revenue upfront, and we cannot present it in a 12-month run rate ratably. It's mainly true for all the multiyear subscription deals that we are signing. So that's also why we have that revenue mix fluctuation with a higher upfront license portion in the first quarter, which is a result of large multiyear subscriptions that or a number of larger multiyear subscriptions that we have signed in the first quarter, which we saw in the upfront license, but not in subscription according to our conventions and policies.

But the ARR shows the normalized trend on a 12-month basis go forward. And that is really the underlying strength and the acceleration that we anticipate. The ARR is consistent 6%, EUR 35 million sequential growth coming out of Q4, adding to the ARR basis, which is much more than what we did in Q1 last year. So we are adding more subscription deals that build the ARR, and we expect the ARR also to grow from there. In fact, subscription ARR was up low teens, while the maintenance ARR was more flattish, right? So we are going to reach this parity of subscription ARR exceeding maintenance ARR probably sooner than what we have modeled, and it will be an inflection point.

Relating to the second part of your question, Mo, it's a very important question. And I could give some examples just to materialize the discussion. I remember a year ago, discussing with the CIO of Ford, and he was p***** off by some software vendors basically forcing their AI usage as part of the subscriptions. And at the end, he was exactly telling me what you say, it's becoming unpredictable for them.

So based on this, what did we do? In fact, remember, the category of new products, new solutions we are developing are not replacing the existing one. So the role and the process portfolio are still there, and they will stay. Why I'm saying this is because if you are a customer, you have a choice to use the role and the process and to put people to use them or you could decide to use virtual companions and generative experiences. So point number one, I'm giving them the choice.

The second thing is, what do we price? With virtual companion, we are pricing the reasoning, right? If you are a mechanical engineer, if you are a scientist, your reasoning is not the same. So that's basically -- and the way to materialize it, we are developing what we call unit of knowledge and unit of know-how, which is basically a token having a certain value. But the more sophisticated is your reasoning, the more we charge.

From a packaging standpoint, obviously, the companion will be delivered with a set of tokens, and we will give the flexibility to consume more token and also to put limits if they are reaching the limits. That's the idea.

The generative experience is very different is when you want to automatize certain things, right? So here, what we are pricing is a unit of work. It's not the unit of knowledge of the know-how. It's really the unit of work. And same thing, we have a currency, which is a token. We put a price. And depending how much processes you want to optimize, we basically package it with a bunch of tokens. And same thing, we are giving some flexibility on top of it.

And the last approach is, you remember, when we do the Virtual Twin as a service, meaning rather than to sell the tools, the virtual companions or to automatize the work, we do the work on behalf of our customers. And in this case, what we are pricing is the outcome. So this is the way it's very robust. I think you heard me in my introduction saying that really our customers, they are moving from experimentation and pilot to now in production and they start to asking the right questions. This one is one of them. And obviously, I think the choice we made 3, 4 years ago are the right one.

Frederic Boulan from Bank of America.

Fred Boulan, Bank of America. Two questions, please. Firstly, on the kind of current macro, can you specify if you're seeing any specific impact on demand, in particular, around the auto industry, where we've seen some restructuring at some of the OEMs, particularly Renault?

And secondly, to follow up on the Gen AI discussion, are you seeing some clients rethinking how they approach software build versus buy approach using some LLM themselves, internalizing processes or emerging competition from Gen AI start-ups? We've seen project perimeters out there emerging. So we would be keen to see if you're seeing any changes in terms of customer behavior on that.

You take the first one.

Yes. I'd be happy to -- thank you. On the macro part, yes, of course, we are not immune to any macro changes. However, I think we flagged it coming into the year that the auto sector could be a weak spot for us in 2026. So to this, there's no incremental update. For sure, European auto sector is going through a tough transformation. We know that this closing creates opportunities for us, but the timing of closing of those deals could -- as a result, vary and be less predictable. We know that from my experience, we have dealt with this. But we have been carefully reflecting that in our outlook. So I don't have any incremental things to flag to you.

Maybe to give you a piece of how have we managed that in Q1, you see the numbers in Europe were very good despite the challenges that we were facing with some European auto, and I can refer to some deals in Europe that we wanted to close, but we didn't. But nevertheless, we ended quite strong in Europe. But those transactions, we continue to work, and they will materialize throughout the year. We are confident about this, but not in Q1, as we know, but that's -- it was compensated with very good performance in consumer-centric industries. And that's the way we need to manage this, that we have a broad portfolio, and we are -- the diversification strategy is paying its dividends.

The auto sector in North America was healthy. We expanded our -- we had a good deal with Ford. In Asia, it's the same we signed with BYD. So it's broad-based. The auto sector continues to play an important role, and we are well set up on a global basis.

Maybe one specific comment on Renault, because you mentioned them or the one you have not seen, the CEO announced its strategic plan a few weeks ago. And as part of it is reducing significantly the engineering capacity. So automatically, the question probably you are asking yourself, does it impact the number of license we have within Renault? The answer is no. Why so? Because again, we are expanding, in fact, the usage of what we do.

The second one is, they need to do more with less people. And this is what is really opening the door for the virtual companion and generative experience I was speaking about. That's really how we are handling this.

Now the second part of your question, also very interesting. What is happening with GenAI? On one hand, the temptation for certain customers to develop themselves certain things and the ability for newcomers to come and to change basically the landscape.

Let's speak about the first one. Point number one, I met a lot of customers, and it was really the starting point of my discussions, what do you want to do with Gen AI? How far you want to go, especially in our space? All of them are telling me, Pascal, the Gen AI story is not a story to disrupt the PLM, the CAD, the simulations market. Why so? Because the level of science, the level of physics, the level of knowledge you should put into the system is such that it's a huge barrier to entry. And we have other things which are much more easy to replace with generative AI. That's point number one.

Point number two, they say most of the AI system right now are based on the text. A large language model is how you basically -- it's written into the name. It's a language model. What we are manipulating is not language, it's biology, it's physics. So there are a lot of limitation of what you can do with the current LLM. Nevertheless, there is some connection we can do. And we see more and more customers willing to develop their Agentic platform. And the way to answer to this is very simple. You have seen in the architecture. We have our own Agentic platform, and we are relying on the protocol called MCP, which is allowing agent-to-agent collaboration.

So the way we are making it possible, we do not get access to agents to our systems. We say, if you want to have an agent, for example, for the customer support, we need to get access to the deep information you have in the PLM systems. It has to go through a layer, which is one of our agents. And to make it happen, we have this protocol in place, which is simplifying the life. That's point number one.

Related to start-ups or newcomers, yes, we have some. I would say, especially in the simulation domain where we see people coming with what they call the surrogate approach, which is a way to approximate basically the physics. But there are a few things you should keep in mind. It has been a long time that the core value of what we do is how we are integrating the different pieces together and specifically for the simulation, how we do the multi-physics. And right now, what you can do, you can maybe approximate some mechanical behavior. You can do the same for the fluid dynamics. But if you have to connect and to bundle the 2 in order to find the right trade-off, this is a very difficult thing to do. That's point number one.

Point number two, at the end, the simulations is more and more guiding the modeling. So you need another level of integration between the modelers, the core CAD capabilities, if you want, and the simulation space. And again, this is also where we are making a big difference because it's native in our case.

So I have met many, many customers, especially in the auto sector, where they are working with some start-ups. And what I was making in my introductory comment, now it's time for them to not anymore do proof-of-concept. They want to deploy it at scale on the real use cases. They come back to us and say, Pascal, could you please help me either to develop an equivalent or to integrate what they do because otherwise, it will be isolated. And it's not industrial. So this is where we are. And that's the reason why I think I'm pretty confident about our way to move forward and also to create a new type of ecosystem, if you want. Because at the end, you remember, we have more applications developed by third-party on top of the platform than we have developed ourselves. So there is no reason not to do the same with the AI as well.

George Webb from Morgan Stanley. A couple of questions. Maybe just continuing on the theme of AI. You've talked about the shift of enterprises now looking to engage to deploy industrial AI at scale in 2026 moving outside of that experimentation phase. I guess the CIOs and decision-makers that many of your customers are excited by what AI can unlock, but they're also grappling with that very high pace of change and trying to work out what the right decision pathway is. And as much as 3DEXPERIENCE might be that right decision pathway. Are you feeling any hesitancy in your customer base to commit to larger 3DEXPERIENCE transformations?

And how can you kind of adjust your sales motion to get customers comfortable with that? And then maybe one on the MEDIDATA side, still obviously running down 3% year-over-year, perhaps reflecting some of those booking trends from last year. You talked to bookings perhaps starting off in 2026 on a better footing. Could you add any color on the magnitude of that better footing? And ultimately, how confident are you that MEDIDATA now is on a sustainably better track going forward?

Reverse order this time, Pascal?

Again, it's a very good question. When we discover this AI and Gen AI story is, in fact, helping the platform. Why? Because if you look at the way most of our customers they do, anyway, they have to unify their systems in order to create the proper data set to train their AI engines. And in our space, creating a high-quality data set costs a lot. And with the platform, it's built in. So for a long time, they were seeing the platform as a way to connect the different domain together and in a way to create the collaboration within the company and within the ecosystem, the supply chain. Now they see also the platform as a foundation basically to be -- at least in our space for the AI strategy. So it's giving a new perspective on the platform we didn't have.

And what we see, in fact, it's a different way to go. And your point is extremely valid. For a long time, we were basically selling the platform as a big transformation programs. Now we can also sell the platform on very specific use cases to say, okay, you want to tackle this quality issue, you want to do it with an AI-based approach, let's use the platform and all everything we do on this scope. And then after, we come 6 months after with another use cases.

And to give a concrete example, this is exactly the way we do at Eaton. Eaton, they say, okay, the time to launch a new program for 5 years to do the big transformation is basically not the right time for us. However, if you could come with a very quick win on very focused use cases and progressively rebuild the foundation, that's the way to deploy. So that's the reason why we are also evolving our go-to-market in order to give this flexibility, if you want. But the takeaway is, it's helping, in fact, the platform story, the platform positioning and the platform game. And it's a way to penetrate the company without having to structure the big projects. That's also something very, very important. And at the end, we do sizable deal. I mean, Eaton is one of them.

Okay. To the second question around Life Sciences, I capture a little bit broader to really give you the picture on MEDIDATA Plus, because we're surveying a sector holistically, not just with clinical trial software, but at the enterprise level. And that is an important part of our strategy and growth driver to really implement a strong enterprise model and be less dependent on volume and volume fluctuation.

WCT is a great example of that in this context, because it shows we are putting an end-to-end platform to operate the business and help them transform and be less dependent in fact, on volume-to-volume or quarter-to-quarter fluctuations on trial starts. So we're putting that strategy into place. This is in this segment, a first deal of this kind that we have transformed.

Overall, the MEDIDATA revenue and Life Sciences revenue was impacted, as you said, in Q1 from lower bookings levels from 2025. So the transition into 2026 was, in fact, difficult. We knew that and anticipated that in our outlook. That will also persist in Q2. But the improved business and booking trends starting 2026 are going to have an impact in the second half of the year. Also, the WCT deal is not reflected in our revenue numbers of Q1. It will be starting in Q2. We will be ramping up throughout the year.

So we are building with this a sustainable model to be more enterprise focused, less dependent on volatility, but focused on strong execution and go-to-market. We also mentioned last time that we changed our go-to-market approach. We also have new leadership in go-to-market, and we are very pleased with the start of the year and the traction that we can already see and the governance and the focus on execution. So that is -- that will show its results in 2026. We're confident about that. And our objective is to reach more of the breakeven point in the second half of the year, Q3, Q4 to improve the numbers and then enter 2027 with a run rate where we see growth versus 2026. That's the trajectory on which -- on what we are on.

From an overall business activity and volume, clinical trial starts are still a bit volatile in the market. So I'm not expecting that there is a boost in '26 from the search in clinical trial starts. That's not what we are modeling. We are looking at this in a way that starts are fairly flat, and we continue to win market share, as we said, and we are expanding our more towards enterprise and AI. That's where the growth is coming from. When volumes starts to improve, that will be another factor, but that's not what we are counting in here.

Maybe Rouven, you can, because you were part of the negotiation of the WCT deal, and you have been at least in front of the customer on their feedbacks on the assessment of what we do. Maybe you can share a few things with the folks.

Yes. Of course, it was very competitive. This company is also expanding and growing very, very fast. They have just completed an acquisition of Katalyst. It's another CRO. So they're growing very fast. I'm sure they are going to expand further organically and inorganically from here without having details, but it's a fast growth company. I don't want to preempt anything on their behalf. That's not my job. But they are really looking for a platform that they can scale and grow their business in the future and transform, really transforming from a service business into an outcome-based business and create an edge in this industry.

And as I said, it was very competitive. And I think we did very well in this context compared to the competition and beat them. And that's why we are confident that this strategy and our AI strategy is really core to transform clinical trial operations, clinical operations, data management. That's what we master, and that's what clinical data studio really opens up a new growth vector. They were very focused on clinical data studio in combination with AI. For them, it's a game changer, including payments because they facilitate lots of payments to investigators and sites. And all of that needs to be automated and planned. So it's a real enterprise transformation.

Yes. And just to add a few things. You remember, we are repeating this all the time. This industry is still document-based. And we are transitioning them to be model-based. It took some time just for the people to understand what we were seeing. And since AI is coming, this is changing the game because the way to unify the system is not anymore through the workflows. That's what Veeva is doing. This is now having a unified model across the different step of the life cycle of the pharma sectors. And this is again where we are extremely relevant, extremely advanced compared to the -- most of the competition. And this WCT is a good example of this because they did the benchmark at least for almost a year, right, serving all the different solutions on the market. And they did it very seriously because it's a significant investment for them. So just keep this in mind.

Congratulations on your results this morning. Two questions from my side. First question on pricing. And I understand Dassault's long practice of retaining their fair share of value. Still, how are you seeing clients approach to price negotiation in wake of AI as some checks would suggest that clients are using this more as a negotiating tool and possibly is it leading to longer negotiation cycle?

And second question on margins. Your headcount is down around 2% year-over-year, while first quarter margin is flat in constant currency basis over the last year. Looking at the rest of the year, your target is to grow margin by 50 to 60 basis points. So should we expect continued contraction in headcount? And also, if you could share color that in which areas these savings are being reinvested in?

Okay. So I will start with the first one. Again, I almost already gave part of the answer on the pricing. The main concern for our customer is to -- in fact, when we do the negotiations to be forced to take AI on top of what they have without controlling basically the investment case, if you want. So the fact that we are giving them this -- I will not say as an option, but as a complementary of what we do, it is extremely important, point number one.

Point number two, we do not disrupt the core value of our current portfolio because you still need the role with AI. If you have a virtual companion, you still need CATIA to create the geometry. You still need SIMULIA to do the simulation and the certification. So why I'm saying this is because at the end, the case for the virtual companion, the case for the generative experiences are much more made on how they want to operate in the future. That's the reason why we have this unit of knowledge and the unit of work. So it's a different conversation compared to what we used to have for the capabilities.

So that's something very important because you're right, one of my biggest concern was, does it jeopardize all the negotiation we have currently because people want to anticipate this discussion. But the fact that we have been able to segregate the core value of all different category of solutions, it's helping a lot, a lot. And we have, for example, a concrete case right now, we are negotiating an extension of installed base within a large automaker in India. And they have standardized on the platform and they say, but we also want to have AI as part of it, fine. But again, it's a different discussion. It's a discussion about how much you want to standardize and to automatize, how much you want to scale using virtual companion rather than to hire people, versus the price for CATIA or the price for ENOVIA. And this is very well accepted insight. This segregation is well accepted.

Now the thing they have in mind is, okay, but we do not want to -- again, to be forced, and we do not want this to be out of control. And this is where I think we need a little bit more practice to package it with a level of confidence that we will not come back 6 months after to them to say, hey, guys, in fact, you need to spend much more compared to what we have anticipated. So that's the reason why in some of the engagement we do right now, we are probably giving more flexibility than what they need because we also need to build our learning curve, right?

And Balajee, coming to your second question on margin, I'm very pleased with the margin for the first quarter. It's a good start. The effect on lower headcount really comes from our strategy to capitalize on some investments we did in 2025 namely, we expanded the growth in people and resources a lot in CENTRIC. And we are in a year where we capitalize on those investments before we are reinvesting in the second half to really build the growth trajectory for 2027 and beyond. So there are some cycles that we are going through.

And the lower headcount entering into 2026 will then have an effect also on quarters to follow in terms of the ability to expand margin while revenue starts to accelerate. So we'll see that effect. OpEx growth is just below 3% with payroll being marginally up, considering now that ACR or your annual compensation increases and inflation already has to be factored in here. So we're offsetting that almost.

Where are we spending, to your question, in cloud, AI infrastructure out scale. This is where a significant portion of the cost increase is. Nevertheless, overall, it's sub-3% level. So it's well managed in line with our current revenue growth. But as revenue starts to pick up, we'll see margin expansion throughout the year. That's what is reflected in our guidance.

Now one additional comment I would like to highlight, when you look at the IFRS statement and you look at the IFRS operating margin, operating income has significantly increased due to lower stock-based compensation. And that in the IFRS statement, of course, we have a negative FX impact that we are more than offsetting. So from an operating standpoint, I think you see good improvements coming into 2026, and it's under control.

Maybe I want to add one thing because you're right, we are slightly decreasing in terms of number of people. And why so? Because there is, I think, a different path for this -- for the software company right now. Either you do the snap way, you cut massively your workforce or you do what we do, which is -- and the reason we do it this way is because you remember, we have engineers. We do not have coders. There is a big difference.

And what we do with AI, we use this as a way to redistribute the people within the company on different roles. And that's the way we do. So by doing so, we, in a way, use the natural attrition, and we are replacing 1 people a month 2, right, for the natural attrition. But more importantly, internally, we are forcing the realignment of the resources according to the needs where we need to invest. That's what we are currently doing.

We will now take questions online. [Operator Instructions] We will now take our first phone question from the line of Laurent Daure of Kepler Cheuvreux.

Two for me as well. The first one is on the Life Science. If you could, for the year, break it down between MEDIDATA and BIOVIA. And also more precisely on MEDIDATA, I hear the catalyst for the second half, but I'm more keen to see what could go wrong that could lead the second half not to improve from the first one. What is the main risk according to you? What do you lack in terms of visibility?

And my second question is if I take the midpoint of the first half and full year guidance, basically 3% for first half and you would need 5% second half. If you could give us the building blocks, how we get better from the first to the second, I hear probably Life Science, but what else?

Okay. Laurent, thank you for your questions. So the first one, the breakdown is pretty simple. MEDIDATA was down minus 3%, BIOVIA was slightly up, but the aggregate is still minus 3%.

On the second question, what could go wrong? Well, we are creating a momentum in an uptick in business activity, which is reflected in bookings. When I see how those bookings translate to revenue in '26 and '27, it's improving versus start of the year. That is the good outcome of, I would say, a good start of the year in Q1 that has its positive effect on 2027, but it's not reflected in the Q1 numbers. So there is clearly a structural improvement that is visible as a result of Q1. But we have Q2, we have a decent pipeline of Q2 opportunities that will then build our transition point from H1 to H2.

And that's what we are now focused on executing, Laurent, which is making sure that we are hitting our targets for the second quarter business, and that will really be the translation point from H1 towards H2. And then we execute the rest of the year. We mentioned that we are -- we have strengthened our go-to-market. I feel we have more, a better distributed and better control from an account standpoint, including our direct business, enterprise business, mid-market as well as partners. We are -- we have made the necessary improvements as it relates to our contracting model to be less dependent on volatility and volume. All of those things will take effect as we execute 2026. We cannot go backwards. We only go forward, right? So we'll see that improvement gradually happening as we move forward. So -- but overall, I think, as I said, Q2 is in line with -- probably around in line with Q1, and then we will see an improvement in H2. That's what we are currently focused on.

So coming back to the second question, if I may, which is the guidance. Q1, you mentioned Q2 and the rest of the year. So Q1 was 3% growth. For Q2, we are focusing on 3.5% to 4%. To be precise, you can model the midpoint between 2% to 5%. That's where we are. This is where we are anchored towards. And then as you go from Q3 and Q4, for H2, we are looking at 4% to 6%. And when you do that math, right, we are landing safely around 4% growth.

What are the building blocks of this? Clearly, within Industrial Innovation and 3DEXPERIENCE, that's a continuous growth driver. We know we had a strong year-over-year comparison in the first quarter, but that will be behind us. We have a more favorable year-over-year comparison in H2 versus H1. We are -- from an industry standpoint, I think Pascal gave a good overview on where we see growth as well as from a geo standpoint. We have a healthy pipeline in the Americas. We are well diversified in Asia. China is a bit more bumpy, but we're working on that. And in Europe, we are mastering the headwind from the auto sector with diversification.

So overall, the pipeline reflects this. It's that diversification, we mentioned that before, we have less of a dependency on auto than we had in 2025, in 2026, which is good. So these are the building blocks, Laurent.

And I forgot one thing, which is SOLIDWORKS. I should not have forgotten that because that's on a strong momentum with very strong partner engagement. And you also saw the demo from 2D to 3D, it's a strong catalyst for SOLIDWORKS.

We will now take our next phone question from the line of Michael Briest of UBS.

Good to see the reacceleration in CENTRIC. I seem to recall last year, though, you were talking about a SaaS transition. I'm assuming that, that's not the way these deals were signed. Can you just give an update on how that business looks between on-premise subscription, perpetual license, SaaS and how you expect it to develop? And then an update, Pascal, maybe on what the Chief Transformation Officer, Chief Operating Officer are sort of doing and the plan for the rest of this year? And then also on Bernard's role as Chief Architect, what sort of involvement does he have in product strategy or R&D?

Michael, thank you. I take the first question. You're right. The focus of CENTRIC is to transform to a SaaS and cloud business. From an architectural product standpoint, we are very much focused on that. In fact, we also signed deals last year and including this year that are not reflected in revenue because they are billed as cloud models are. They're purely ratable. But we had some large on-premise subscription deals in the quarter. That's right. So we'll continue to have to master this mix and the transition from the on-premise to cloud.

From a product standpoint, this is our #1 focus. Our 2030 model for CENTRIC that we have to achieve EUR 1 billion plus in revenue reflects a large share of SaaS subscription, cloud subscription. So this is well aligned within the objectives and is our focus to achieve that. But you're right, in Q1, there was also a good contribution from on-premise deals. It's ongoing.

Okay. The second part of the question is you're right, Pierre Barnabe took the positions within Dassault Systèmes. And the primary focus for him is the indirect channel, specifically CPE. You remember, we have 2 different indirect channels. One is the one historically selling SOLIDWORKS and the one historically selling CATIA, CRE for SOLIDWORKS and CPE for CATIA. And I think this is where we need to re-dynamize.

And why so? Because again, if you look at our ecosystems, there is a big topic going on. Most of them, they know how to sell applications. Not all of them, they know how to sell the platform because selling the platform in a reality, you need to be a kind of system integrators. You need to have these kind of skills. Then after, if you want to sell the cloud, you almost need to be a hyperscaler. If you want to sell the domain specializations, you almost need to be an engineering services company. And if you want to sell the transformation, you need almost to be a consulting company.

Where I want to go? In the past, we have only one model for them, which was the reseller model. And I think this model -- the time is over to have only one model. We need to have a different ecosystem with different category of partners having different roles in order to foster the adoptions of everything we do through this, what we used to call CPE. So this is clearly the main mission for Pierre.

He's coming with a lot of background on this. Basically, he knows extremely well all the IT ecosystem. He has already all the connections, whatever is with the hyperscaler, the consulting firm, the IT services, the engineering services, and he will be the one having the responsibility to build this model and to orchestrate the operating model.

Related to Bernard, I think Bernard is a product guy since day 1. No one will argue one thing that he was very instrumental with V4, V5 and V6. And given where we are, I think it's extremely important for me as a CEO of this company to accelerate the AI road map. And this is where Bernard is focusing right now to accelerate the AI road map, not only with the development team, but also with some early advanced customers because they are the one also driving, if you want, the road map in conjunction with us. He has not only the credibility, he has the leadership, he has the will, he still has the energy to do that. So -- and believe me, he is more happy than he used to. So I think it's really for the benefit of the company.

I think it's time to conclude. Thank you very much for all of you being there. I think we try to reduce a little bit the time for the presentation to give more time for the Q&A. I think you will appreciate.

Now coming back to my closing remarks, I think we delivered Q1. We are on track. But more importantly, I think we are building something fundamental with 3D UNIV+RSES. Our AI starts from physics, simulation, industrial data and really a decade of expertise. And remember, we don't just digitalize the workflow, we capture really the way industry works. And every technology wave is making this promise to simplify. And I think this is more and more important because as I was telling in my introductions, the problem for many of our customers is not the demand, it's the complexity they have to master. And this is really -- and I'm insisting on this, this is really where we make the difference.

So hope to see you in the coming days and weeks on the road for the workshop and for the one I will have a chance to see and probably Rouven and Marie will see most of the people and look forward to the next quarter. Thank you so much.

Good day, and thank you for standing by. Welcome to the Dassault Systemes call. Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to Marie Dumas. Madam, please go ahead.

Good morning, everyone. This past Saturday, Dassault Systemes announced a governance transition. It's a pivotal moment for the company and sets the stage for our next chapter of growth and innovation. First, Bernard Charles has stepped down as Executive Chairman and Board member for personal reasons. Second, the Board has appointed Pascal Daloz as both Chairman and CEO. Pascal will now share his vision for the future of Dassault Systemes.

Thank you, Marie, and good morning, everyone. You know that for the very beginning, Dassault Systemes was built very differently. We think long term, we are a science-based company, and we build trusted relationships. That's why nearly 400,000 company around the world trust us. And our governance has never been an administrative process. It's our compass. It guides us how we think, how we decide, how we act with the convictions that defines us.

Our vision for the future of Dassault Systemes is clear, leading the industrial AI transformation with 3D UNIV+RSES. And it goes far beyond the technological contributions. It represents a long-term commitment to fundamentally readvance how industries innovate, build and operate in this new economy.

We call it the generative economy because it's powered by intelligence, accelerated computing and limitless possibility. And the potential is very huge. But to succeed, we need consistency, alignment and long-term stability. This change shows that we plan for decades, not just for quarters.

We are building on the foundation laid by Bernard Charles over the past 40 years, in fact, 43 years. And you know him as a Co-Founder and CEO. Bernard led our company from a startup to a world leader. He didn't just grow the company. He shaped, I think, an entire software category, transforming industry for a more sustainable world.

Over the past 3 years, as Executive Chairman, he has also strengthened our Board and worked closely with me on research and development, key client relationships, and our long-term directions. I think we honor his legacy as we move forward.

For personal reasons, Bernard asked the Board to release him from his responsibility as Executive Chairman. After Bernard announcement, the Board appointed me as the Chairman and CEO, and I'm very grateful for their trust. My mission is to accelerate 3D UNIV+RSES and make sure Dassault Systemes lead industrial AI around the world.

My top priority is simple: make ambition real for our customers and shareholders. That's why we are rebuilding the company on the map on a really new foundations architected around artificial intelligence by creating a new category of solutions with generative AI built at the core, not added on top of, by aligning every teams, every resources, and every investment behind this strategic shift and by reinventing our business model to capture the full value.

Bernard remains an important part of our journey. As a product and technology leader, he has agreed to continue to work with us. For 20 years, you know that Bernard and I have built a relationship founded on trust, high standards and loyalty. I really value his inspiration and his support and the trust we share.

So let me sum up in 4 points. First, continuity. I think Bernard's legacy is our foundation, and my leadership will build on it seamlessly. Second, confidence. The Board's unanimous decision shows our alignment and focus.

Third, vision. 3D UNIV+RSES is more than the strategy. It's really the future of industrial AI, and we are leading it. And lastly, purpose. Our governance ensure that we turn ambition into reality for Dassault Systemes and our customers.

I now look forward to your questions. Thank you.

[Operator Instructions] We will now take the first question from the line of Mo Moawalla from Goldman Sachs.

Yes. Pascal, a couple from me. First of all, could you shed any light on the specific timing of Bernard's decision? I know that it's been a sort of challenging couple of years for the company.

And secondly, are there -- should we anticipate any other major strategic shifts in the business going forward following kind of Bernard's departure?

And one last one. I know that you separated the role of Chairman and CEO a couple of years ago. Do you expect the Chairman and CEO structure to be more permanent going forward?

Thank you, Mo. So on the timing side, I think it's a personal decision. And you have seen that we basically acted very chicly because the Board -- I mean the governance works extremely well. The succession planning is -- has been reviewed annually by the committee, by our Compensation and Nomination Committee.

And the Board really unanimously votes to reflect the confidence in the succession plan. So in a way, it works. And if you remember, that's what Microsoft and SAP, they did. They executed the founder transitions at the time where they were also repositioning the company. So that's for the timing.

The second question is are we expecting changes and other things? I think, no, you know the strategy of Dassault Systemes. I think we are really focused on the 3D UNIV+RSES. And what we are executing is really 3 things.

To redeploy our product offerings to shift to 3D UNIV+RSES; to align the go-to-market either to accelerate in life sciences and consumer, but at the same time, to transform our distribution partners in order to be suitable to push these 3D UNIV+RSES value prop; and last but not least, also to redesign our business model in a way to monetize those new AI-driven solutions. That's what we are doing, and this is really what we do.

Now regarding the fact that we have the 2 -- the dual role in a way. First of all, it's a choice. It's a strategic choice. It's not a power play, and this has been the recommendation of our Compensation and Nomination Committee. The second one, we should remember that 50% of our directors are fully independent. So we're clearly, we're exceeding the AFEP-MEDEF standards, and we are aligned on the NASDAQ rules.

All the critical committee, whatever it's the Audit, Compensation and Nomination, Scientific are 100% independent, and we also have a Lead Independent Director with Laurence Daures. And if you look at all the other company the Dassault family is really a major shareholders, whatever it's Thales or Dassault Aviation, I mean you have the Chairman and the CEO being combined in all the different cases. So that's what I can say, Mo.

[Operator Instructions] We will now take the next question from the line of Charles Brennan from Jefferies.

Just the first one, I think it's alluded to in Bernard's comments in the statement that he remains fully available as an adviser. And Pascal, I think you mentioned in your prepared remarks. Should we assume that Bernard remains on the payroll as some kind of strategic adviser? And what do you think he can do as an adviser that he couldn't have done as Chairman?

Thank you, Charles. So yes, Bernard will remain actively engaged in product and technology innovations. And in a way, if you remember that's what Bill Gates did as a technology adviser, or Hasso Plattner, if you remember, at SAP. So the goal is Bernard is very well recognized in the industry, having -- been basically been the architect of the different version of the software. He is really not only recognized but is valuated for this.

So I think this is important to keep Bernard engaged with us. And in a way, he will do what he likes. In a way, it's a way for him to have the freedom to continue to push what we are -- what we started a few years ago. The way we will structure the collaboration has been defined, and he will continue to be with us for a time. That's what I can say, Charlie, at this time.

We will now take the next question from the line of Laurent Daure from Kepler Cheuvreux.

I have 3 questions. First, I think Bernard had a very close relationship with a couple of customers. Do you expect him to be still a little bit engaged with clients? Or his role will be only devoted to the AI part?

My second question is you're taking more on your plate. I think there are some few changes at management level. If you could summarize a little bit the add-up that you've made or planning to do to help you on the management side?

And the third question is on the 3D UNIV+RSES. You're underway, but what could be your biggest challenge in terms of AI development in the years to come?

Okay. So for -- we have built this transition for a certain time. So between me and the rest of the executive team, really, we have -- we master all the relationship between all the different customers we have.

Nevertheless, I think we still have -- Bernard still have close relationship with some of them and no need to ask him to step down. He will continue. But keep in mind that we -- anyway, the company is organized and structured in a way to lead those conversations without him being involved.

Now related to the changes from a management standpoint. I already started to do this. And if you remember, I made some announcement during the quarter -- during the earnings. The first one is I look at what was not working last year, specifically Centric and the go-to-market for MEDIDATA. And we took some radical decisions because we changed already the management for Centric, and we rebuild almost half of the management team.

On the MEDIDATA go-to-market, we changed the leader. We have someone coming from AWS. He was the one leading the entire scope and space for AWS. So very well connected to promote large enterprise solutions, very well connected also with the IT. So I think it's a very good complement compared to what we have.

I'm also reinforcing the management team, the executive team with someone coming externally in order to accelerate the transformation of the indirect channels, which is something you heard me many times saying that we need to accelerate because the solution we are bringing to the market require different specialties, different focus, different set of skills and we need to diversify our ecosystem, and he will bring this expertise to us.

And I'm also hiring someone coming from McKinsey in order to lead the global transformation for the company more from, a, let's say, an efficiency and a process standpoint than a pure business standpoint. That's for the management changes.

The last comment related to 3D UNIV+RSES, I think it's our focus, and you know that I'm accelerating the development of the solutions. This year, we will come with something like 60 new companions and 40 new generative experiences.

So this will be a critical mass to serve all the industry we are targeting and we will continue any way to accelerate by using also the capital allocations in order to target some external companies to fulfill some of the -- or at least to accelerate some of the development we are doing. That's for the 3D UNIV+RSES topic.

There are no further questions at this time. I would like to hand back over to the speakers for closing remarks.

Okay. So thank you, all of you, for your participation. And let me close with a simple message. This transition is about continuity and acceleration on one hand, continuity because we remain true to what defined Dassault Systemes for more than 4 decades and accelerations because we are entering indeed in a new phase with 3D UNIV+RSES and we have these clear ambitions to lead industrial AI transformation and to make generative AI a concrete driver for the value creation for our customers and for our shareholders.

I think the direction is clear. The governance is aligned and our commitment is strong. So again, thank you again for your trust and for joining us today. We look forward to continuing this conversation. Rouven and Marie will be on the road in the coming days. So I'm sure you will have an opportunity to discuss more. Thank you so much. Have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to Dassault Systemes 2025 Fourth Quarter and Full Year Earnings Presentation Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to our first speaker today, Marie Dumas. Please go ahead.

Hello, and thank you for joining our fourth quarter and full year 2025 earnings conference call. I'm Marie Dumas from Dassault Systemes, and I'm with Pascal Daloz, Chief Executive Officer; and Rouven Bergmann, Chief Financial Officer. Dassault Systemes' 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 on our 2024 universal registration document. All earnings material are available on our website, and these prepared remarks will be available shortly after this call.

I would like now to hand over to Pascal Daloz.

Thank you, Marie. Good morning or good afternoon, everyone. Thank you again for joining us today to review Dassault Systemes performance for the fourth quarter and the full year of 2025. Let me start with some opening comments. At Dassault Systemes, I think we don't only manage for the quarter. We build platform for at least decades. I think if I have to qualify 2025, 2025 was a year of transition. And 2026 will be the year of execution. So they are foundational years, years when we prepare the next cycle of growth, scale and the long-term value creation.

Now let's start with the facts. 2025 was a disappointing year for you, but also for us. We finished at the low end of our objective with 4% growth ex FX. And I think this performance does not meet the standard we set for ourselves as part of our long-term plan. We own that. Now having said that, I think we are moving the company forward. Well, what moves forward? First, 3DEXPERIENCE and the Cloud. We delivered significant wins this year and we did also a lot of competitive displacements. And in 2026, we will build on this momentum.

Second, MEDIDATA and PLM CENTRIC, they faced challenges in 2025, and they weighted our results. I think we are seeing early signs of recovery at CENTRIC. And for MEDIDATA, we are investing for the long term. Because Life Sciences in a way, undergoing a fundamental transformation, from an efficient document-based processes to an AI-powered Virtual Twin. This is a shift which is structural and these structural changes are taking time. The third element is, in 2025, we have introduced 3D UNIV+RSES. It's a new environment where Virtual Twins and AI converge, connecting the virtual and the real world together in a seamless, dynamic look. In 2026, we want to turn this vision into concrete value.

And finally, we remain disciplined on our costs. Rouven will give some detail about this. Why? Because we want to continue to invest in our future growth. So execution matters, but return as well. As we are entering in 2026, we are scaling our transformation plan along 3 strategic pillars. The first one is the product offerings. We are really reshaping our portfolio, accelerating towards the 3D UNIV+RSES. And really, you should keep in mind that AI is not an extension of what we do, it's a redefinition of the entire portfolio the same way we did almost 15 years ago with 3DEXPERIENCE platform.

Second, the go-to-market. We are strengthening the go-to-market executions with a targeted end-to-end engagement, especially in Life Sciences for the top largest 50 accounts, and consumer industry, more precisely to the formulated products. We are also transforming our partner ecosystem to generate demand, not only to distribute license. Third, as our customers accelerate their adoption to subscription and cloud, we are introducing the annual run rate, ARR, reporting in 2026. Why we do this? Because I think subscription is now representing half of the recurring revenue, and this is giving a better visibility into health and the momentum of our recurring revenue base. In parallel, we are also evolving beyond seat-based pricing towards value-based model for the AI powered solutions.

Now let's step back and look at the market realities. In every industry, we serve manufacturing, life sciences, infrastructure and cities, most of them are under intense pressure. Supply chain volatility, rising regulation, aging infrastructure. And there is an urgent need for breakthrough innovations. These are not only constrained, they are catalysts. And this is where Dassault Systemes step in. So in manufacturing, we see 2 realities. Traditional sector face margin pressure and demand uncertainty. At the same time, defense and high-tech are making bold investments where complexity and collaboration are the new normal. And here is really where the 3DEXPERIENCE platform is becoming the de facto standard, reducing program time lines to under 18 months in transportation and mobilities, delivering 25% to 40% efficiency gains in aerospace and defense, and cutting error by more than 1/3 to half in high-tech through pre-build simulations.

In Life Sciences, the pressure is also intense. Tighter regulation, rising R&D costs and the shift toward precision medicine. So the customer, they need a new operating model. With our lab-to-manufacturing solution, we help them reduce operating costs by over 30%, while we are turning compliance into a competitive advantage. In Infrastructure & Cities, demand for autonomous and resilience system is also accelerating. So the data center demand will double by 2030. The nuclear infrastructure requires safety commissioning in many countries, and city needs resilience by design.

Now across every sector, our customers prove one thing. We don't just talk about AI, I think we deliver it. And value is a great example in transportation and mobility. You know all of them. They are global leaders in automotive technology, from ADAS to electrification systems. Together, we are pushing the boundary with generative experience. Here, AI does not assist, it cocreates by training virtual twins on synthetic data. We generate thousands of design alternatives optimized for performance, cost and compliance. And we do this before one single prototype is built.

In Life Sciences, our partnership with Catalyst shows how the industry can be reinvented. By moving from static document to data-driven virtual wins, Catalyst is really redefining the CRO models, with clinical trial becoming more agile, patient centricity and continuously optimized. In infrastructure, with TECHNICATOME, we are redefining how next-generation nuclear system are designed and operated, using virtual twins to connect the entire ecosystems, ensuring the trustability and the compliance by design.

Now let's move to 3D UNIV+RSES. Remember, last year, we introduced 3D UNIV+RSES. But what does it mean in practice? 3D UNIV+RSES are not application the way you know what Dassault Systemes is doing. They are knowledge factory. This is really how you could see them, where knowledge could be enriched, when the know-how is scaled and where results can be trusted. And AI is the engine. But it's not an LLM story. It's not about large language models. Because the LLMs, they don't know how to build drones. They don't know how to design humanoids. They don't know how to discover cell therapies. And this is precisely what our customers do, and we help them to certify it.

So what we are doing, we are building industry world models, models that understand how the real world works, and also how you built it. And why? Because it's built on physics, it's trained on decades of industrial knowledge, continuously validated by our virtual twins. And the result is explainable, certifiable and trusted. So this is why our partnership with NVIDIA matters. Together, we are combining the virtual twin with the AI factory and an accelerated computing. Launch the video, please.

[Presentation]

Okay. So I hope you had a chance to see the video. I'm not sure because I'm blind here in my conference room. But in case you have not, the video was basically presenting the purpose of the partnership, with, by the way, the voice of Jensen. Jensen was on stage with me last week at the 3DEXPERIENCE World we had in Houston, a very, very successful event. And why this is important? Because we are building the foundation of industrial AI, to enable, in fact, 3 things. In research and innovations, we need to create foundational model who understands the causality, not only just a correlation with a statistical approach. It doesn't work.

Second, for the factory of the future, we need to invent software-defined autonomous factories, continuously optimized through the simulations. And last but not least, for the designer, for the engineers, we need to develop skilled virtual companion, not chat bots, but industry trained experts. So that's what we do. And in 2026, we are turning this into a reality with our new category of solutions. The first one, the virtual companions, they are not assistants. They are experts. They scale the knowledge. They democratize the expertise. They turn complexity into productivity.

The second one, the generative experiences, is really where AI and codes, if you want the best practices. Whatever the best practices, it's coming from the science, the manufacturing, the engineering. And more importantly, we are compliance by default. The third one is the virtual twin as a service. Here, we are not selling any more of the software, the tools. We are selling the end results, which is the Virtual Twins, and it becomes an outcome. So in parallel of this introduction of the new categories, we are also evolving our business model, from seat-based licensing to value-based monetizations. Why? Because we want to use this new generative solution as a way to unlock 3 powerful levers. The first one is expanding the adoption with the virtual companions, mainly using -- mainly building a usage-based business model.

We want to monetize the know-how with the generative experiences. And as I was saying, we want to sell the outcome with the virtual twin as a service. So now I would like to leave you with one message before to hand over to Rouven. Dassault Systemes is really undergoing a profound transformation of its business model. Transitioning digitally towards a subscription-driven future. The shift is powered by not only the acceleration of the cloud platform strategy, but also, and probably above all, by the evolution of our offering with 3D UNIV+RSES, the new category of solution I just mentioned: the virtual companion, the generative experiences and the virtual twin as a service.

This transformation is not incremental. It's a fundamental one. But it's also highlighting one thing: the resiliency of our model. Because we continue to grow at a moderate pace, yes, but with a sustained momentum. And you should remember that in our industry, many of our peers, they struggle in such a transformation. So we are executing, we are innovating, and we are advancing. And I think our guidance for 2026 is reflecting not only the conviction we have, but also the confidence we have.

Now it's time for me to hand over to you, Rouven.

Thank you, Pascal, and also welcome from my side to all of you on this call. Welcome. Have a good afternoon and good morning, depending on where you are. Before reviewing the numbers in more detail, I would also like to share 3 key themes that defined 2025. The first one is our core industrial business was resilient in '25 with strategic client wins. However, we faced the backdrop of tough comps and a complex macro environment in the fourth quarter. We are focused on strengthening our growth model and operational excellence, and we have identified the challenges and we will now execute to deliver.

The second message is centered around the business model evolution. The 3DEXPERIENCE platform continues to drive the transition towards cloud and subscription, with an increasing share in recurring revenue. As AI adoption accelerates, our business model is evolving beyond the traditional seat-based pricing towards usage and value-based models. And to better reflect this shift, we will begin reporting an annual run rate, or ARR, and I will talk about this in more detail later.

And third, as Pascal said, 2026 will be a year of execution where we will strengthen our foundation. Our full year guidance for total revenue growth of 3% to 5% provides us the room to navigate current challenges as well as to prepare the organization for a new era of growth. With this in mind, let's review the financials for the quarter and the full year in a bit more detail.

In Q4, total revenue rose 1% ex FX to EUR 1.682 billion, with software revenue up slightly, plus 0.3%. We navigated a complex macro environment with weakness in France and Germany, mainly in the auto sector, plus headwinds at MEDIDATA and CENTRIC. We have taken the actions to address these issues, which also I will cover shortly. Recurring revenue rose 3% in Q4, with 4% subscription growth, and services was up 11%. Operating profit for the quarter was EUR 622 million, with a healthy operating margin of 37%, up 90 basis points ex FX, thanks to productivity gains across the group, which we had initiated entering in the year. EPS was EUR 0.40, up 9% ex FX.

For the full year '25, we saw total revenue at EUR 6.240 billion, along with software revenue growing at 4%. Recurring revenue grew 6%, and it's making up now 82% of our software revenue. And subscription was up 11%. We delivered good profitability in 2025 with an operating profit of nearly EUR 2 billion and an operating margin of 32%, achieving 40 basis points of improvement versus last year. The EPS was EUR 1.31, and it was up 7%.

Now turning to the growth drivers. The 3DEXPERIENCE platform is at the core of our growth strategy and the foundation to review the power of AI for industry. 3DEXPERIENCE revenue grew 10% for the full year and it's making up almost 41% of eligible software revenue. As expected, the fourth quarter was impacted by a strong year-on-year comparison. On top, we faced a weak auto sector in Europe. However, important to highlight, we signed several strategic 3DEXPERIENCE deals that have the potential to further expand over the course of 2026 and 2027. This will generate future revenue and it helps to build the momentum in ARR, which I will come back to shortly. Cloud revenue at the group level grew 9% in Q4 and 8% for the full year. The 3DEXPERIENCE, Cloud grew a strong 38% and 32%, respectively. This strong growth highlights the value of our platform for clients where transformation is critical, as is the need to leverage AI.

Now looking at the geos and product lines. The Americas rose 3% in Q4, with a good performance in high-tech and transportation and mobility. For the full year, the Americas was up 5%, and it was impacted by the weakness in Life Sciences and Home & Lifestyle. Now for the core industries in the Americas, the growth was 10%. Europe declined minus 5% in Q4, but it was up 2% for the full year. The weakness in the quarter was against a strong comparison base and with softness in France and Germany, which, as mentioned before, was mainly driven by the challenges in the automotive sector that we encountered in Q4. Meanwhile, Southern Europe was resilient and Northern Europe gained momentum with strong performance in High-Tech.

The performance in Asia was robust. It was up 6% in the quarter and 5% for the full year. The growth was driven by Transportation and Mobility and High-Tech, with strong momentum in Korea and India, while Japan delivered solid growth. China had a softer quarter on a backdrop of tough comps.

Now to the product lines. Industrial Innovation was up 1% in Q4 and 6% for the full year. As noted, the quarter was impacted by the lower growth in 3DEXPERIENCE and the particular challenges in Europe. But overall, the full year saw good momentum led by solid traction with our brands SIMULIA and ENOVIA and continued solid growth with CATIA. We are confident on the resilience of our core business, which is led by the cycle of 3DEXPERIENCE adoption while, at the same point, we are preparing for the next wave of growth with AI-based virtual twins and companions.

On Mainstream Innovation, Q4 was up 1% and 2% for the full year. Growth again was driven by the strong momentum of SOLIDWORKS, which was up high single digit in Q4. And as expected, CENTRIC was down double digits in Q4 on a high comparison base. 2 effects played a role here for CENTRIC. First, we had some shifted renewals; and second, we saw an acceleration on move to cloud. We expect a marked recovery this year in 2026 with new management in place and a robust pipeline that's building going forward. For Life Sciences, the growth was lower than expected. Revenue was down minus 4% in Q4 and minus 2% for the full year as we faced continued headwinds for MEDIDATA, which I will cover in more detail shortly.

Outside of this, MEDIDATA signed several strategic account win-backs over the course of the year. This included the likes of Novartis, Merck KGaA, AbbVie and Gilead. It highlights our competitive advantage as we build a strong foundation and expand our footprint within the large pharma enterprise. Now as we look ahead, we believe, and we're convinced, that the time has come to transform the biopharma industry from a document-based approach to a virtual twin based operations. It is our Life Sciences vision for the long term. Therefore, let's take a holistic view on our Life Sciences industry software revenue as it is today.

So this first includes MEDIDATA as well as the 3DEXPERIENCE portfolio adopted by pharma and medtech. And in order to better highlight the growth dynamics, we are differentiating the direct model and the indirect go-to-market model. The direct enterprise business accounts for about 70% of our total Life Sciences revenue. And this business grew 3% in 2025. Within that direct enterprise business, MEDIDATA enterprise grew 1%. However, this growth was impacted by Moderna, one specific client, which was adjusting its run rate to reflect lower study volumes. If we exclude this adjustment on the Moderna renewal, the enterprise business for MEDIDATA was up 6%. Meanwhile, the 3DEXPERIENCE business grew 7% in the enterprise segment.

Now let's take a look at the -- at what we call the indirect business or volume business where we are selling through CROs. This accounts for the remaining 30% of our Life Sciences business as of today. And this one is declining by 5% year-over-year. Our market saw a lower study start volume of minus 7% year-over-year in 2025. Now the revenue was down minus 5% in this segment on a reduction of study starts of minus 7% across the industry. Now importantly, we continue to expand our market share in this segment of Phase II and Phase III trials.

So what actions are we taking to reinvigorate the growth? To address the enterprise, we are setting in motion dedicated account teams to focus on pharma transformation with platform and AI. These teams are formed and in action across all the geos. And for the indirect volume business, the goal is to reduce our exposure to volatility in the volume business. To this end, we are evolving our pricing model and terms and conditions to monetize continued data access. Now in order to leverage AI models, this is necessary. When you want to optimize the design of clinical trials, you need to be able to access the data and the platform.

Now turning to the cash flow and balance sheet items. Let's start with the operating cash flow. We generated EUR 1.630 billion in operating cash flow year-to-date, up 1% compared to last year on a constant currency basis. Indeed, despite a challenging environment marked by FX headwinds and new tax regulations, we saw resilience in cash generation. As previously discussed, we absorbed approximately EUR 40 million in 2025 driven by equally the hike in employer contributions on share-based compensation and the new exceptional tax contributions for large companies in France. Excluding this, operating cash flow grew 3% ex FX. In the first half of 2026, we expect the working capital to be positively impacted by the collection from large subscription deals that we signed last year.

Now to the free cash flow. It was up 2% ex FX. CapEx investments were lower by approximately EUR 30 million due to lower investment and leasehold improvements versus 2024, while investments in cloud and IT infrastructure were stable. Cash conversion remains a top priority. We reached 82% for the full year '25 versus 84% last year. This -- the year before, 2024, this is ahead of our previous estimates, mainly due to higher collections. In 2026, we expect cash conversion rate to improve driven by cash collections and better alignment of billing to revenue.

Now to complete the picture. Cash and cash equivalents totaled EUR 4.125 billion at the end of '25, which compares to EUR 3.953 billion at the end of '24. This increase of EUR 173 million includes a negative full year currency impact of EUR 263 million, which is mainly due to the weakening of the U.S. dollar to euro over the period. The net cash position reached EUR 1.530 billion at the end of Q4 '25. Now any additional information, you will find in the operation -- and the operating cash flow reconciliation in our presentation, which we published earlier today.

Now let's transition to the ARR disclosures. As we previewed with you at our Capital Market Day in June 2025, we are now introducing an annual run rate, as a key -- we are now introducing the annual run rate, ARR, as a key metric to reflect our continued transition towards a subscription and cloud-based business model. We believe that ARR provides a consistent view of the underlying run rate and the health of our recurring revenue base, while eliminating the volatility from revenue recognized. As such, ARR is a snapshot reflecting the 12-month recurring value derived from all the active contracts at period-end. This includes software subscriptions, cloud, SaaS hosting as well as support. And it excludes future commitments.

In the appendix, you will find a detailed definition of the ARR and how the methodology is applied in 3 illustrative examples. Growing at an average of 6% over the last 2 years, the ARR highlights the consistent execution and growing subscription and cloud, driving the growth of our recurring business. It is also more closely tied to invoicing and cash flows from those deals. Now in Q4 2025, ARR reached almost EUR 4.5 billion, with EUR 104 million of net new ARR in the quarter. This highlights the consistent performance in signing new cloud and subscription contracts, while, as mentioned before, the revenue is highly dependent on the timing of revenue recognition. In '26, we are establishing this new metric in our reporting and plan to guide starting in 2027. And during the Capital Market Day, which will be scheduled for November this year, we will outline the steps in the context of our 2029 financial plan. And as we look ahead, it's clear that the trajectory to accelerate growth is linked to the shift in business model.

Now let me discuss very briefly the levels of ARR first -- of ARR growth with you. First, the mix effect, which is driven by the faster growth of subscription versus the maintenance ARR. The second growth lever is the growth in 3DEXPERIENCE and Cloud as AI-powered Virtual Twins and Virtual Companions boost our 3D UNIV+RSES portfolio. Third, within Life Sciences, we expand the footprint, and we create the next-generation clinical trial platform powered by AI. And finally, with CENTRIC, the ARR growth has a long runway ahead.

So now with this, let me turn to the financial objectives for '26. We expect the total revenue and software revenue growth of 3% to 5% ex FX for 2026. Importantly, this guidance marks a tipping point. In 2026, the share of subscription revenue will surpass the maintenance revenue. Hence, we are providing also the ARR to better reflect the growth dynamics, not yet as a guidance, but to show the momentum. The operating margin is expected to achieve a 40 to 80 basis points improvement ex FX, which takes us to the range of 32.2% to 32.6%, as we continue to balance investments and margin expansion, leveraging our operating productivity gains. We see EPS growing at 3% to 6% ex FX or EUR 1.30 to EUR 1.34. This is all based on FX assumptions at an average rate for the full year of dollar to euro at $1.18 and yen to euro of JPY 170. Now turning to Q1. We expect 1% to 5% growth for both total and software revenue, and operating margin is expected in the range of 29.2% to 30.7%, and EPS in the range of EUR 0.28 to EUR 0.31.

Now finally, I would like to share some key assumptions, which is -- which are underlying our guiding framework for 2026. We expect 3DEXPERIENCE and Cloud momentum to remain broadly in line with last year, driven by continued expansion within our installed base and ongoing market share gains. We're also focused on entering into new markets and accelerating the monetization of virtual companions and virtual twins.

From a geographic and industry standpoint, the demand in Americas remains healthy, while Asia continues to show resilience. In Europe, we see a solid pipeline development in Southern and Northern regions, which is partially offset by continued weakness in the automotive sector, which we mainly observed in Germany and France. And this could potentially impact the timing of decision-making within quarters. The defense sector represents potential upside.

Now within our mainstream business, SOLIDWORKS continues to deliver mid to high single-digit growth in both revenues and users. For CENTRIC, we expect a return to low teens growth, supported by execution against a strong pipeline and a higher mix of Cloud revenues. Life Sciences is facing a transition year, with actions underway to position the business to return to growth starting 2027. On margins, we expect continued improvements driven by productivity gains from AI initiatives and operational excellence. These initiatives are focused on increasing the flexibility and reallocating investments towards top line growth.

In conclusion, in '25 and '26, we're laying the foundation for our next phase of growth. I want you to remember 3 things. First, 3DEXPERIENCE platform is at the core of industry transformation, creating a long runway of growth. Second, on AI, we are introducing new categories of solutions, which goes beyond productivity gains. It's about creating new possibilities. And third, we are taking actions to scale our operations with one single goal in mind: to generate sustainable growth.

And now with this, Pascal and I look forward to take your questions.

[Operator Instructions] And now we'll go to the first question, and it comes from the line of Frederic Boulan from Bank of America.

Pascal and Rouven, 2 questions, please. First of all, on M&A. Key message this morning around appetite. Can you share a bit more around your thinking here? Are you thinking bolt-on or is the appetite for larger deals? Any specific gaps in capability that you need to address or want to address?

And then second, more broadly, when we look at the execution problems we've seen in the last 2 years, can you discuss some of the main priorities and changes you're implementing from management or KPI perspective? Anything around compensation criteria for management that you can share with us? I mean, in particular, do you think the -- you kind of focus on non-adjusted EPS is the right criteria to align your long-term strategy with value creation for shareholders?

So related to the M&A, again, we have different scenarios. But I will say between the last transaction, the way we did at the time of MEDIDATA and the bolt-on we used to do, acquiring company doing EUR 10 million to EUR 20 million, there is something in between. And this is the -- in-between we are targeting. That's to answer to the first part of your question.

The second one is the M&A for us is again not a way to bridge the gap for the growth. It's to build the foundations to sustain the growth over time. So if I step back a little bit and I look at the different phases we had from an M&A standpoint, 15 years ago, we were using the external growth as a way to build the product lines. This is how we have created the brands, combining the external growth with our organic development. We will continue to do this, and we have opportunity to complement the domain expertise with some extension.

Then after we did some major move, to be much more industry-focused. This is how we lead the decisions to acquire MEDIDATA and CENTRIC, to build a presence in the diversified industry to rebalance in a way, the portfolio of customers, not to have too much dependency on aerospace, autos and industrial equipments, but to be more diversified in the consumer-related industry as well in the Life Sciences. By the way, both sectors are spending a lot in innovation right now.

Third element is what's next. What's next is 3D UNIV+RSES, right? And 3D UNIV+RSES is about how we are leveraging artificial intelligence in conjunction with industrial data sets. This is what has driven -- what is driving our thinking process. And again, as a capital allocation, I want to use the capital as a way to not only accelerate the organic growth, but also to build and to expand and to create buyer to entry in everything we do. So that's the answer.

The second topic related to the management and KPI. There are certain decisions we have taken. So if I look at what didn't work in 2025, let's start with CENTRIC. You know the story. We basically had to rebuild the management, starting with appointing a new CEO. And now if I look at the management team, almost half of them are new. So clearly, I think it has been done last year.

Now if I look at Life Sciences and MEDIDATA, the point on which where we want to accelerate the changes is on the go-to-market. I think Rouven's explanation about the performance we have in the large enterprises, in conjunction with the situation we need to fix with the volume business linked to the CROs is requesting anyway the different go-to-market. So that's the reason why for the large enterprises, we are combining the 2 go-to market, the traditional one of Dassault Systemes in conjunction with the MEDIDATA one, in order to have one single team, one client executive to take care of the top 50 largest accounts we have.

And the reason is because in everything we have, we have the ability to position our solution at the enterprise-wide, not only at the domain or the department level. That's one thing. The second one, we are also changing the leadership for the sales. And we have a newcomer who's going to take this responsibility starting Q2. He's already with us. He's coming from AWS, and he was in charge of the Life Science sector for the entire AWS worldwide.

Now speaking about the next topic, which is the indirect channels. Because you notice that the growth where we are growing mid-single digits versus the high-single digits, it's basically the indirect part. So I have appointed 2 senior executives in order to help me to accelerate the transformations. One is an operational officer in order to accelerate basically the efficiency, to develop the -- to redesign the ecosystem, because with the new solutions coming, anyway, we need a different kind of ecosystem to continue to expand. And the second one is we need also to invent the frameworks, the new terms and conditions, the new contractual terms, the new commissioning systems. And this is the reason why I also appoint a transformation officer, a guy coming from McKinsey, used to run basically the practice in Europe for the High-Tech and Media sectors. So he is very aware about all the benchmarks and he has this knowledge to put in place. That's a concrete example of what we do from a management standpoint.

Now from a KPI standpoint. I mean, my #1 objective is to, again, accelerate the transition to subscription. That's the reason why Rouven is basically coming with this new KPI, the [ ARR ], because without it, you will have hard time to understand the performance of Dassault Systemes. And the proof of what I'm saying is look at Q4. Q4, you will conclude that we grew only 1%, flattish, on the software side. And if you look at the ARR, it's EUR 105 million plus, amounts of EUR 1.5 billion software revenue, which is 7% growth. So you need to have this KPI as a way to understand the dynamics and the growth trajectory we are building. So that's point number one.

Point #2, I'm sensitive to the cash conversion as well, right? And again, the subscription model is changing the equations. When we used to be mainly licensed, we were upfronting most of the revenue. Now we have to take into account the fact that with the Cloud, we spread the revenue. And then after you have the ramp-up from a user adoption standpoint. So that's also another indicator, which is becoming something important. And we are also incentivizing -- not only the finance, Rouven and his team, on this, but also some of the geo leaders who are running the business. I hope with this, you have a clear understanding of what we do.

The question comes from the line of Nicolas David from ODDO BHF.

I have 2 as well. The first one is, could you help us reconcile the fact that you plan to accelerate the move to subscription going forward? And the fact that in your guidance for this year, in the end, you expect a very robust license sales, actually better than in '25. And oppositely, subscription growth slower than '25 in '26. I understand that you don't expect MEDIDATA to weigh more in '26 than '25. So it would be interesting to understand why you don't expect a better subscription growth and weaker license.

And by the way, about license, I'm also quite impressed by how narrow is the guidance here in the context of this transition. For instance, in Q4, you had a very wide guidance range. So let's -- could you help us understand why this time you were able to guide very narrowly?

And the second question is regarding AI, could you help us understand if you see AI as a factor which is lengthening the time it takes from clients to sign contracts because it includes another variability, another variable or another angle of discussion beyond Cloud, beyond subscription and so on? And is it something which is a good opportunity for you, but in the short term, lengthening the sales cycle?

Okay. So thank you, Nicolas, for your question. I will start, Rouven, and feel free to add whatever you want. So the first part is -- so let me tell you the things. You noticed, by the way, we put the guidance in the appendix. And the reason is the following. Yes, we are accelerating on subscriptions. And then after, we need to guide the market with concrete KPIs we have and basically some early indicators we have in our systems. So what do we have? We have a pipeline. And in the pipeline, many of the opportunities we have are still declared as a license opportunity. And we know that when we are transactioning and when we are contractualizing, this license is usually turn into subscriptions. So that's something you have to keep in mind, right? So now, Rouven and I, we have to build the system on something which is credible. It's not something coming from our hat, if you want. So there is a twist here.

The second one, there is mix effect. Why there is a mix effect? Because if you look at the different geos, we are massively overall -- I mean, the subscription is bigger in Americas than the license right now. This is also true in Europe. But this is not true in Asia. And just because we are anticipating a slowdown in Europe right now given basically the uncertainty we have on the auto sector, automatically, Asia is overweight. So there is also a second twist here. And last but not least, you have the rev rec topic. Because again, when we have some customers contractualizing subscription, multiyear, on-prem versus cloud or versus hybrid, this could have also an impact in which line we recognize the revenue. So that's basically the reason why I think we were communicating on the convictions on the software growth. The split between the 2, you still have some moving parts. Nevertheless, the [ ARR ] is calling for an acceleration of the subscriptions. So I hope I give you reasons for you to reconcilize if you want the guidance with what is happening.

Now on the AI. In fact, it's the opposite, Nicolas. I think AI is helping us to shorten the cycle. Why so? Because it's automatically on the cloud. It's relatively hot in many engagements we have right now. And AI is calling for very short return of our investment. So I think this is, my view, a way we can use as a way to accelerate certain transactions more than to slow down, if you want, the decision process. So that's the reality we are seeing, and this is my experience for the last, let's say, 9 months with the newer solutions we are bringing on the market.

And the next question comes from the line of Jay Vleeschhouwer from Griffin Securities.

Pascal, I'd like to start with some corporate or strategic questions. You noted some changes in management and go-to-market for CENTRIC and Life Sciences specifically. But for the remainder of the business, the bulk of the business that we would call engineering software, are there any other changes that you've considered? What I had in mind, for example, is that you have an unusual structure with regard to the brand CEOs. It's unlike what we see elsewhere in the industry. Perhaps there are more disadvantages than advantages to having that structure that something ought to be considered. And then similarly, with regard to go-to market, is there anything that you're thinking of doing with regard to CPE and/or CRE with regard to the engineering software markets? Then a couple of other strategic questions, please.

Okay. So let's start -- first of all, good morning, Jay. Let's start with the first one. Why do we have brand CEO? It's because if you look at domain by domain, we do not have the same competition. And if I want to keep the focus to stay at basically the best of breed in everything we do, I need to have a leadership with having the clear focus on the domain expertise. And you will basically accept my comments, if you look at the diversity of the domain we are addressing, you do not have one single competitor. None of whatever, it's Siemens, PTC or now maybe the EDA players in the simulation space, none of them they have exactly the same scope of what we are covering, between life sciences, between manufacturing, between engineering, between simulations, between life cycle management. So this is the primary reason why we are keeping this.

It's not creating complexity, as you imply. The reality, it's the best, let's say, coordination mechanism I have with the research and development, right? Because -- and you remember last week, Jensen, when he was on stage, he was joking about the brand, right, about the diversity and the funny name we have. But at the same time, he was recognizing the extremely specialization of them, which has a lot of value in this new AI game. So this is my answer to the first part.

The second one is, yes, we have 2 indirect channels. And I heard many times, why you are not converging them? Let me explain to you why it's [ valid idea ]. There are 2 fundamental reasons. One is because we are not asking them to do the same thing. CRE is about volume. It's about footprint. It's about short cycle of time. It's about cloud. It's about packaged products. So this is what CRE is about, right? And today, we have 400,000 customers. We are more than 45 million users worldwide. The vast majority of them are coming from this machine, which is a volume-based. And why this is important? Because as soon as you have the footprint, you can build on top of this. You can diversify in terms of products. You could accelerate in terms of transformation. You could bring the services on top of this.

And this is the reason why we have a second indirect model, which is so-called CPE, because they are the ones who are building the road map to value up this large installed base we have, especially in the ecosystem of the large OEMs. Because, as you may know, with the direct sales, we are addressing almost 4,000 accounts worldwide. And this is important to capitalize on the ecosystem of Boeing, Ford, JLR, all the big OEMs we have. And the ecosystem is not only the Tier 1 and the Tier 2, it's really all the ecosystems. And this is where CPE is extremely instrumental to do that. So I have no intent to merge this.

The second reason, the business model is different by nature. Because if you are volume-based, it's a high velocity, low-touch, and the cost of sales should be relatively limited. CPE, it's almost the opposite. It's high touch, low volume, but it has to be extremely skilled. So the cost of sales is obviously not the same, and this is the reason why you cannot merge the 2 together. This is the second reason. And last but not least, depending the industry, we have different ways to tackle. If you take the [ car ] industry, clearly, auto, aerospace, CPE is almost an extension of the direct sales. And if you look at a very fragmented industry like industrial equipment, net devices, construction, clearly, CRE is really the engine to tackle this market. Long answer, but I think with this, you have the strategic thinking, Jay.

Okay. Secondly, the NVIDIA partnership is perhaps more comprehensive than any partnership we've seen DS announce previously. It covers a variety of technologies and ambitions. What are the executables as you see it for you, and particularly as it relates to R&D in terms of making sure that this partnership works? And then as well, 4 weeks earlier, NVIDIA was on stage with your counterpart at Siemens. How do you distinguish your relationship from that relationship?

And then finally, on the strategic front, there were some questions earlier about M&A., perhaps we could be a little bit more specific about that. You have, I think, 2 strategic needs or dilemmas perhaps in terms of the completeness of the portfolio. So when we think about, on the one hand, your needs in simulation where the competitive environment has materially changed, and then the other, Infrastructure and Cities, which of those 2 do you think might be more important for you to solve? And then not quite the same question, which do you think might be easier to solve?

Okay, tough questions. But I will start with NVIDIA. So I think there is some differences, by the way, there are some differences compared to what we do with NVIDIA and some of our peers. And by the way, if you look at the keynotes I did last week, I asked this question to Jensen. And he gave some answers.

The first one is from a research and development standpoint, we are building the world model together. And you know the next generation after the large language model will be the model who understands the physics, who understands the world we live in, but also how to create this world. So you need to understand the physics on one hand and the engineering and the manufacturing on the other hand. I think we are, by far, the best partner combining both, by far. So one element we are doing together, we will codevelop the world model to -- for us to be able to build the industrial part on top of it. And for that, we are reusing some of the precompute model NVIDIA has already built. This is one thing.

The second one, there is a difference between the agent and the virtual companions. The agent is really a way to automize the workflow. The companion are the ones to explore the different alternatives and all the different options. So to do that, we need a specific computing infrastructure. And we are again specifying what we are -- what we need to NVIDIA for them to deliver it in order for us to scale. Last but not least, we also have a common go-to-market. You know that NVIDIA, they are not selling direct. At least, they are selling, especially in the industry, they are selling indirect. So nevertheless, they are widely used already in our installed base. So we are also aligning our forces in order to tackle some specific accounts in order to scale.

And my last comment, you notice that NVIDIA is not only a partner, but it's also a customer, because they bought our Virtual Twins for their AI factories. And this is extremely important because, as you may know, it's a gigantic investment that the entire planet is ready to do with a factory which is at the level of complexity which is far beyond now what the nuclear plant is about, and with less maturity on the technology. So you need this virtual world in order to connect all the different pieces together, the computing power with the energy supply, with the supply chain, with basically the buildings and so on. So it's a very complex ecosystem you have to aggregate. And without virtual twin, in fact, most of those projects will be at risk. And that's one of the reasons why NVIDIA is investing on our solutions, in order to build the virtual twin of their AI factory, including the blueprint. And this blueprint will be used by the entire NVIDIA ecosystem to deploy their technology in all the AI factory around the world.

Now M&A., the choice between simulations and cities and construction. At the end, I will consider both, but probably with a different approach. Let me explain to you why. I think AI is also changing the simulation world, because with what we call the virtual twin of the behavior, which are nothing more than an extension of the surrogate model. We have a way to democratize the simulations. It's something, obviously, we started to develop organically, but there are start-ups around the world we could acquire in order to accelerate and to speed up basically the completeness of the portfolio for all the different disciplines.

And this is extremely important, Jay, because we -- as you may know, for a few years, we are combining modeling and simulations together, which is pretty unique because if we use a surrogate, we have basically a generative approach in order to use the simulation and to use the simulation as a way to create the 3D, not the opposite, to create the 3D, and then after, to run the simulations, which is simulations proof, if you want, by design. So this is something we are doing. Again, keep in mind, we will continue to invest and there are probably start-ups, teams around the world who could nicely complement us on that.

Infrastructure and cities, the topic is different. We have the solution, but we do not have the go-to-market. At least we have a certain go-to-market. Now, the way, and you know the way I'm approaching it, I do not want to be the general purpose channel. I want to be specialized by domain. I want to subsegment this market. In a way, I think what is important, I want to have a dedicated team for the complex capital-intensive projects, wherever, it's a nuclear plant, and energy systems, a civil engineering infrastructure, right? But I also want to -- data center or AI factories, right? And you need to verticalize and you need to bring basically not only the software, but the expertise which goes with it.

And for the volume, remember that most of what you have in the buildings, whatever, is the windows, the walls, the roof, has been designed with our software. And most of it, by the way, is coming from SOLIDWORKS. So we also need to have an approach which is how could we capitalize on all the parts, all the contents, all the equipment, which has been designed with our systems and could be repurposed, if you want, in the context of the buildings. And I think with AI, we have a way to change the game. But again, I still need to probably have more people, more expertise on the market in order to accelerate the penetration of this sector, which is extremely fragmented, by the way.

And now we're going to take our final question for today. And it comes from the line of Balajee Tirupati from Citi.

A couple of questions from my side as well. You have mentioned the business evolution from seat-based pricing to value-based pricing model, which obviously is quite important in the age of AI and agents. Could you tell us how compressed this transition could be? And what changes in offering and go-to-market motion you are required to make given the ongoing subscription transition is already underway? And lastly, where are your customers in readiness to accept changes in pricing model without seeking certainty in pricing?

Okay. So I spent time to explain this morning, but I will try to summarize it. First of all, this new category of solution is not an extension of what we do, it's a new category of solutions. Meaning, if you have a virtual companion, the virtual companion will continue to use CATIA, we will continue to use SIMULIA, we will continue to use DELMIA. So why I'm saying this, it's because we have to segregate in a way the value independently of the tools for those companions. And this is the reason why we came with new, what we call, new units of value. Many of my customers, the biggest problem they have is what? Either they struggle to hire people, right? And they will be extremely, extremely happy to have virtual companions, having the highest degree in mechanical engineering, the highest degree in electronic design and the highest degree in basically advanced computing and simulations. So that's what the virtual companion is about first.

The second one, we have many customers, they have a capacity in engineering who needs to be a little bit flexible. Because when they have a lot of projects, they need extra. And when basically they have less projects, they need to adjust. It's a way to give for them the flexibility from a human standpoint. Why I'm saying this, because at the end, we are not forcing the customer to buy the virtual companions, right? They are free to decide if they want to buy it in conjunction with CATIA or if they want to basically stay with what they have. And the fact that the 2 values are completely separated is much more easier to articulate in a way.

So the last 9 months is, in all the engagements we have been in, I think we have been able to prove that the value is real and we have been able to prove that we can price it independently of what we do. Now it's probably a little bit early to conclude that everything is set because we need to have this approach in all the industries we serve, in all the domains we serve, but the framework and the model is in place, in order for our go-to-market people, I mean, the people on the field to make proposal with prices, with terms and conditions.

So would it be fair to understand that your existing tools in CATIA, ENOVIA, et cetera, they would continue to be having the same pricing model? They will not be moving towards more consumption-based pricing?

No. No, because -- let me tell you why, because I think what I want the usage base is basically the companions. And why? Because again, it's a way for me to accelerate the adoption. If you look at my biggest constraint right now, if you take CATIA, for example, there are certain domains where the number of people who have the expertise to use the software is quite limited. And believe me or not, this is one of the biggest obstacles we need to remove. The virtual companion is an answer to this. And I think it's very sad not to mix the 2, which will give me the 2 legs, the one which is the user-based centric approach with a traditional overall process and solutions, and the user-based approach which is much more AI-based. And I think the value is a combination of the 2.

There are no further questions for today. And I would now hand the conference over to Pascal Daloz for any closing remarks.

So again, thank you very much for your participation and for your engagement today. Again, if we step back a little bit, the real question right now in our industry is AI is fundamental and this is changing a lot of things. And the question will be who are winners, who are the losers? I think with what we started to show to you today, we are building the foundations. We are putting the execution in place, and we have a determination to win, not just to compete but really to lead the industrial AI.

So that's the reason why in November this year, we want to have a Capital Market Day. Usually, we do it every 2 years. But I took the decision to have one this year, and not in June, but more in November time frame, to link, in fact, these visions we just crafted last year and how to connect it with the long-term plan we have. I think this is an essential and we will provide a lot of details and information on this. In the meantime, I think Rouven and Investor Relations are looking forward to see you on the road when they will do their roadshow. And as far as I'm concerned, I will see you no later than the next quarter. Thank you so much.

This concludes our conference call. Thank you for participating. You may now all disconnect. Have a nice day.

Good morning, everyone. I'm Marie Dumas. I'm the new Investor Relations Director for Dassault Syst�mes. Some of you might recognize my voice from my previous role at the company, and I'm delighted to reconnect with many of you today.

Joining from Dassault Syst�mes with me are Pascal Daloz, our Chief Executive Officer; and Rouven Bergmann, our Chief Financial Officer.

On behalf of the team, I'd like to welcome you to Dassault Syst�mes Fourth Quarter and Full Year 2025 Earnings Presentation. Following the presentation, we will open the floor for questions. First, from the room, and then from participants joining us online. Later today, we will also host a conference call. Dassault Syst�mes results are prepared in accordance with IFRS. Most of the financial figures 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 presentation will contain forward-looking statements, which could differ materially from actual results. Please refer to our risk factors in our 2024 document d'enregistrement universel published on March 18.

With that, I will now hand over to Pascal Daloz.

Good morning, everyone. Thank you for joining us today to review the Dassault Syst�mes performance for the fourth quarter and the full year 2025. Let's start with an opening comment, which is at Dassault Syst�mes, we do not manage only for the quarter. We build platform that lasts for decades. I think 2025 was a year of transition. 2026 is a year of executions. And I think those 2 years are financial foundations because they are the year when we prepare the next cycle of growth, scale and long-term value creation.

So let's start with the facts. 2025 was a disappointing year for you, but also for us. We finished at the low end of our objective with 4% growth, excluding foreign exchanges. I think this performance does not meet the standard we set to ourselves as part of the long-term plan. And we own that. That said, we moved the company for a while. And I think we made meaningful progress on the priorities that matter the most for the long-term success.

What moves forward? First, the 3DEXPERIENCE and the Cloud. I think we deliver significant wins and competitive displacement. And in 2026, we will build on this momentum, turning headwinds into tailwinds and deepening our leadership in industrial AI. And I think our ambition is clear, it's to remain the partner of choice for all the industries.

Second, MEDIDATA and Centric PLM, they faced challenges in 2025 and weighted our results. I think we are seeing the early sign of the recovery at Centric, and for MEDIDATA, we are investing for the long term. Keep in mind that Life Sciences is undergoing a fundamental transformation from inefficient document-based process to AI-powered Virtual Twins that redefine how pharma innovates, complies and operates. So this shift is really structural, and the structural changes usually take time.

Third, in 2025, we introduced 3D UNIV+RSES, a new environment where virtual twin and AI converge, connecting the virtual and the real in a seamless dynamic loop. In 2026, we turn this vision into concrete value. Finally, we remain disciplined on costs while continuing to invest on our future growth. Execution matters and returns matter as well.

Now as we enter in 2026, we are scaling our transformation plan, ensuring every step we take positions Dassault Syst�mes and our customers for sustainable successes. And our transformation is built around 3 strategic pillars. The first one, the product offering. We are reshaping our portfolio, accelerating towards 3D UNIV+RSES and investing where scale matters. Second, the go-to-market. We are strengthening the go-to-market execution with targeted end-to-end engagement, especially in Life Sciences for the top 50 large accounts and consumer industry for the formulated products.

We are also transforming our partner ecosystem to generate demand, not just distribute licenses. And to support this, we have strengthened the leadership with the Transformation Officer and an Operating Officer focusing on the execution and performance.

Third, the business model, and this is a very important part. As customers accelerated the adoption to subscription and cloud, we are introducing the annual run rate reporting in 2026. I think this will provide a clear visibility into the health and the momentum of our recurring revenue base. In parallel, we are also evolving beyond the seat-based pricing toward a value-based pricing model for AI-powered solutions. Because we don't just deliver the software, I think we are delivering outcomes and we will capture a fair share of the value we are creating. This transformation is not just about growth. It's about building a resilient customer-centric company ready for the generative economy.

Now let's step back a little bit and look at the market realities. Every industry we serve, whether it's manufacturing, life sciences, infrastructure and cities is under an intense pressure. Supply chain volatility, rising regulation, aging infrastructure and an urgent need for breakthrough innovation in all the domains. These are not just constrained. In fact, they are catalysts, and this is exactly where Dassault Syst�mes step in, not only as a vendor but as a strategic partner for many of our customers. We are helping them to turn the complexity into a competitive advantage that last for decades.

In manufacturing, we see 2 realities. The traditional sectors face margin pressure and demand uncertainty. At the same time, defense, high-tech are bold, they are making bold investments where the complexity and the collaboration are the new normal. And this is here where the 3DEXPERIENCE platform is becoming the de facto standard, enabling faster cycle, collaboration at scale and streamlined operations, reducing program time lines to under 18 months in Transportation & Mobilities, delivering between 25% to 40% efficiency gains in Aerospace & Defense, cutting error to 1/3 to almost half in high-tech through prebuilt simulations. That's what we do.

In Life Sciences, the pressure is still intense, tighter regulations, rising R&D costs and a shift towards personalized therapeutics or precision medicines. And the incremental improvement is not longer enough. I mean, the customer, they need a new operating model. With our end-to-end lab to manufacturing solutions, we are already helping them to reduce their operating costs by over 30%, while turning the compliance into a competitive advantage.

Now in Infrastructure & Cities, demands for autonomous and resilient system is accelerating. Data center demand will double by 2030. The nuclear infrastructure requires safe decommissioning in many countries, cities need to be resilient by design, and I think our AI-powered Virtual Twins reduce the project time line by over 25%, while ensuring safety and compliances. This is really how we are and we create new markets while addressing the most critical challenges of our time.

Now across every sector, our customers, they prove one thing. We don't just talk about AI, we deliver it. In Transportation & Mobility, as I was saying, innovation pressure has never been higher. Products are more complex, time lines are shorter. Competition is global. And value is a good example of this. You know Valeo, it's a global leader in the automotive technology from ADAS to electrification systems. And I think together, we are pushing the boundaries of the generative experiences.

Here, AI does not only assist, it co-creates. And how we do this? By training the virtual twin on our synthetic data, we generate thousands of design alternatives optimized for performances, cost, compliances before a single prototype is built. This is really the new way of working, turning complexity into opportunity.

In Life Sciences, our partnership with Catalyst, I think, show how an industry can be reinvented. By moving from static document to data-driven Virtual Twins, Catalyst is really redefining the CRO model. The clinical trial become agile, patient-centric, continuously optimized. And this is not about fixing the old model, it's really about building a new one.

In infrastructure, with Technique at Home, I think we are redefining how the next-generation nuclear systems are designed and operated. The Virtual Twins connect the entire ecosystem, ensuring the traceability, the compliance by designs and more importantly, closing the loop between the virtual and the real world.

So that year, we did also something extremely important. A year ago, if you remember, we introduced 3D UNIV+RSES. But what does it mean in practice? 3D UNIV+RSES are not applications, they are knowledge factories where knowledge is enriched, know how is scaled and the results are trusted. And AI is the engine, not a generic AI, not a surface AI, an AI which is grounded in science, engineering and industry. This is not about large language models. I insist on this because with LLM, you will never be able to build drones. You will never be able to design humanoids. You will never be able to discover cell therapeutics. And this is what our customers do. And this is really what we do for them to help them to certify what they do.

o we are building what we call industry world model, which is the next generation of AI after the large language model. And what is important is those models understand how the real world works and how to build it. That's something extremely important. Why so? Because those model, they are built on physics. They are trained on decades of industrial knowledge with a continuously validated Virtual Twins. It's explainable, it's certifiable and it's trusted. And there is one fundamental reasons because in the physical world, you cannot forgive the mistakes.

This is the reason why our partnership with NVIDIA matters. I think together, we are combining the virtual twin with AI factories and accelerated computing. But maybe long -- more than the long explanations, launch the video, please.

[Presentation]

So I hope you got it, and it's not me telling this. Jensen, the founder and the CEO of NVIDIA. And I think what we do together, we are building the foundation for industrial AI. And as you said, it enables 3 things: First, in research and innovations to develop the models that simulate the casualty, not only the correlation from a statistic standpoint.

Second, the factory of the future, which are software-defined. And why they are software defined? Because autonomous factories continuously optimize through simulation is the reality.

And third, the new way of working, which is how you can have skilled virtual companions, not a simple chatbot, but industry trained experts who could help teams to design, comply and optimize everything you do.

So in 2026, now we turn this into reality with the 3 AI native solutions, the new categories. The first one, we call it the Virtual Companions. They are not assistants, they are experts. They scale the knowledge, they democratize the expertise. They turn the complexity into productivities. The second one, the Generative Experiences, AI that encodes the best practices, science and compliance by default, a faster innovation, lower risk, higher confidence. And third, the virtual twin as a service, we don't sell the software we deliver outcomes. That's why we are evolving our business model from seed-based licensing to value-based monetization for this new category of solutions because together, I think our AI-driven solutions unlock 3 powerful levers of value creation.

The first one is expanding the adoption with the Virtual Companions with usage-based. Keep in mind that right now, the real limitation we face is the number of people being skilled to use our software. Now if we have Virtual Companions being trained by design, they will take the benefit of what we deliver to them. The second one is monetizing the know-how with Generative Experiences.

For 40 years, we have invested in many, many industries, aerospace, auto, now life sciences, high tech. And we have accumulated a lot of industry know-how, how to design things, how to produce them. With this knowledge, we can automatize many things. And what the gain we have in front of us, it's a moon shot. It's 10x. It's not a 20% improvement. It's not 30% improvement. It's really a radical change. Last but not least, we can sell the outcome with the virtual twin as a service. Why so?

Because right now, how does it work? We provide the software. You have a lot of services, which is needed to implement the software on-premise to train the people, to change the processes. Now with AI, we can -- rather than to sell the tool, we can automatically generate the end result, the virtual twin. It's a way to reintegrate part of the value in our software. So that's what we do, and this is how we are turning AI from a promise into a concrete sustainable value. And I think this is just at the beginning.

Now that was the key question a week ago. I mean all of you, you were asking the question, which is AI is revolutionizing everything. But there are 2 kind of companies, the one that compounds and the one who could be commoditized. I think Dassault Syst�mes is built to compound. We are not just participating to the AI revolution. We are really shaping it for the industry. And this November, at our Capital Market Day, we will come back on this, how these visions could -- is translating into the financial impact.

But before that, now it's time for me to hand over to Rouven. Rouven, you have the floor.

Thank you, Pascal. And also a warm welcome from my side to all of you here in the room and joining us online for our Q4 2025 earnings conference call. Before reviewing the numbers, I would like to highlight 3 key themes that define 2025. First, to sustainable growth. Our core industrial business, I want to reemphasize that our core industrial business was resilient in 2025 with strategic client wins.

However, we faced a backdrop of tough comps and complex macro, specifically in the fourth quarter. We are focused on further strengthening our growth model while we are looking at improving our operational excellence. We have identified the challenges, and we will now execute to deliver, as Pascal said.

Second, AI at the core. The collaboration with NVIDIA reinforces our leadership position in industrial world models, and it supports the development of next-gen AI-driven solutions for engineering and manufacturing. And in 2026, our focus shifts from product launches to monetization.

Third, business model evolution. The 3DEXPERIENCE platform continues to drive the transition towards cloud and subscription and our recurring revenue base. And as AI adoption accelerates, the business models are evolving beyond traditional seat-based pricing towards a usage and value-based model. And to better reflect this shift, we will begin to report an annual run rate or ARR, and I will talk about this in more detail later.

So as Pascal said, 2026 will be a year of execution where we will strengthen our foundation and our full year guidance for the total -- so our full year guidance for the total revenue growth of 3% to 5%, which is important to highlight. It provides the room to navigate current challenges and to prepare the organization for the new era of growth.

Now with this in mind, I will transition to the numbers in more detail. In Q4, total revenue rose 1% ex FX to EUR 1,682 million, with software revenues slightly up by 0.3%. We navigated a complex macro dynamics with weaknesses specifically in France and Germany, mainly in the auto sector. Plus, we also faced headwinds at MEDIDATA and Centric in the fourth quarter.

Now we have taken the actions to address these issues, which I will discuss shortly. The recurring revenue rose 3% in Q4, with 4% subscription growth, while services was up 11%. The operating profit for the quarter was EUR 622 million with a healthy operating margin of 37%, it's up 90 basis points ex FX, thanks to the productivity gains that we leveraged across the group, and we had initiated those already entering into the year of 2025. EPS was EUR 0.40, up 9% ex FX.

For full year 2025, we saw total revenue of EUR 6,240 million, along with software revenue growing at 4%. Recurring revenue grew 6%, and it's making -- it's creating an 82% recurring revenue base as a percent of software revenue, while subscription revenue grew 11%. We delivered good profitability in '25 with an operating profit of EUR 1,994 million and an operating margin of 32%, achieving 40 basis points of improvement versus last year with an EPS of EUR 1.31, up 7%.

Now turning to the growth drivers. The 3DEXPERIENCE platform is at the core of our growth strategy and the foundation to review the power of AI for industry. 3DEXPERIENCE revenue grew 10% for the full year, and it's now 40% of software revenue. As expected, the fourth quarter was impacted by a strong comparison base year-over-year. And on top, we faced the weak auto sector in Europe. However, important to highlight, we signed several strategic 3DEXPERIENCE deals that have the potential to expand over the course of '26 and '27. This will generate future revenue and help build the momentum in ARR, which I will come back shortly.

Cloud revenue at the group level grew 9% in Q4 and 8% for the full year with 3DEXPERIENCE Cloud growing 38% and 32%, respectively. This strong growth highlights the value of the platform for clients where the transformation is critical as is the need to leverage AI.

Now looking at our geographies and product lines. The Americas rose 3% in Q4, with a good performance in high-tech and transportation mobility in the Americas. Full year '25 was up 5%, and we faced year headwinds in Life Sciences as well as in Home & Lifestyle. The core industries in the geo were strong and resilient with 10% growth.

Europe declined minus 5% in Q4, but it was up 2% for the full year. The weakness in the quarter was against a strong base comparison, and it was also impacted by softness in France and Germany, and I mentioned that before, mainly driven by the challenges in the automotive sector in these countries. Meanwhile, Southern Europe was resilient and also Northern Europe gained momentum with a good performance in High Tech. Asia was robust. We grew 6% in the quarter. It was 5% for the year.

Growth was driven by Transportation Mobility and High Tech. We had very good momentum in Korea as well as strong growth in India, while Japan delivered solid growth. China had a softer quarter on a backdrop of tough comparables in the quarter.

Now to the product lines. So industrial innovation was up 1% in Q4 and 6% for the full year. As noted, the quarter was impacted by the lower growth in 3DEXPERIENCE and in particular, the challenges we faced in Europe. But overall, for the full year, we saw a very positive momentum, which was led by solid traction in SIMULIA and ENOVIA, and continued solid growth with CATIA. We are confident on the resilience of our core business, which is led by the cycle of 3DEXPERIENCE adoption, while preparing for the next wave of growth with AI-based Virtual Twins and companions.

On the mainstream side, growth was 1% in Q4, 2% for the full year. Growth was again driven by strong momentum of SOLIDWORKS, which was up high single digits in the fourth quarter and in the full year. As expected, Centric was down double digits in the fourth quarter on a high comparison base. Two effects that played a role on Centric.

First, we saw some renewals shifting and also we accelerate the move to cloud as we explained to you previously. And now we expect a marked recovery this year in '26 with a new management in place and a robust pipeline that's building going forward.

Now to Life Sciences. Here, the growth was lower than expected. We were down minus 4% in Q4, while the full year was minus 2%, as we faced continued headwinds for MEDIDATA, which I will cover in more details shortly. Outside of this, MEDIDATA signed several strategic account win backs over the course of the year. This includes the likes of Novartis, Merck, AbbVie and Gilead. It highlights our competitive advantage as we build strong foundation and expand our footprint with the large pharma companies.

Now as we look ahead, we are convinced that the time has come to transform the biopharma industry from a document-based approach to virtual twin-based operations, as Pascal highlighted. This has been our vision for Life Sciences for long term. Therefore, let's take a holistic view of our Life Sciences industry on software revenue that we are generating today.

You see on this slide, this includes MEDIDATA as well as the 3D portfolio adopted by pharma and med tech. And in order to better highlight the growth dynamics, we are differentiating 2 elements, the direct business, the enterprise business as well as the indirect go-to-market model we have where we predominantly sell to our CRO partners.

Now to the direct enterprise business. It accounts for 70% of the total revenue in this industry, and it grew 3% in total in 2025. Now within that, the MEDIDATA Enterprise business grew 1%. However, this growth was impacted by one client, Moderna, that adjusted its run rate to reflect lower study volumes. And excluding that, our MEDIDATA Enterprise business was, in fact, up 6%.

Meanwhile, 3DEXPERIENCE grew 7%. And now to the indirect business. And here, important to understand, this business is mainly focused on the biotech sector on the small -- on the very small pharma companies. So selling -- and here, we are selling through CROs, and this accounts for 30% of the Life Sciences industry, and this is declining by minus 5% year-over-year. Our market saw lower study starts, which were down minus 7% compared to minus 5% revenue decline. So the study starts were lower by minus 7%. Importantly, we continue to expand our market share also here in Phase 2 and Phase 3 by about 1 point in 2025. And now also, we don't want to anticipate this too early. We did see some green shoots in Q4 as its large CROs are starting to increase the number of new studies on our platform.

So what are the actions we are taking to reinvigorate growth? You see them here on the bottom of the slide. First, on the enterprise side. What we are doing is we are setting in motion a dedicated account teams to focus on overall pharma transformation with our platform and leveraging AI. These teams are formed and in action across all the geos.

Now to the indirect business, the goal is to reduce our exposure to volatility in the volume business. And to this end, we are evolving our pricing model and terms and conditions to monetize continued data access, which will be critical in the times of AI because this is the way the models will evolve and will help and support our pharma customers to improve the efficiency of clinical trials.

Now turning to the cash flow and balance sheet items. Let's start with the operating cash flow. We generated EUR 1,630 million in operating cash flow year-to-date, and this was up 1% compared to last year on a constant currency basis. Indeed, despite a challenging environment marked by FX headwinds and new tax regulations, we demonstrated resilience and cash generation. As previously discussed, we absorbed about a EUR 40 million hit in, which was driven equally by the hike in employer contributions on share-based compensation and new exceptional tax for large companies in France. Excluding this, operating cash flow grew 3% ex FX. In the first half of 2026, we expect the working capital to be positively impacted by the collection from large subscription deals we signed in 2025.

Now to free cash flow. It was up 2%, also excluding currency. CapEx investments were lower approximately by EUR 30 million due to lower investments in leasehold improvements versus 2024, while investments in cloud and IT infrastructure were stable. The cash conversion remains a top priority. We reached 82% for 2025 versus 84% in 2024. And this is ahead of our previous estimates, mainly due to better collections. In 2026, we expect cash conversion rate to improve driven by cash collections and better alignment of billing to revenue.

Now to complete the picture. Cash and cash equivalents totaled EUR 4,125 million at the end of 2025, and it compares to EUR 3,953 billion at the end of '24. This increase of EUR 173 million includes a negative full year currency impact of EUR 263 million, mainly to the weakening of the U.S. dollar over the period. The net cash position reached EUR 1,530 million at the end of Q4. Any additional information, you will find in the operating cash flow reconciliation in our presentation that we published this morning.

Now I want to transition to a new topic. Pascal already introduced it the annual recurring revenue run rate, which we are introducing in 2026 for now. And it is already previewed that with you at our Capital Market Day in June last year. It's a key metric to reflect our continued transition towards a subscription and cloud-based business model. We believe that ARR provides a consistent view of the underlying run rate and the health of our recurring revenue base, while it's also eliminating the volatility from revenue recognition.

As such, the ARR is a snapshot, which reflects the 12 months recurring value derived from all active contracts at period end. And it includes software subscriptions, cloud, SaaS hosting as well as support. It excludes future commitments. In the appendix, you will find a detailed definition of ARR on how the methodology is applied, and we also are giving you 3 illustrative examples.

Now if you look at the numbers, growing at an average of 6% over the last 2 years, the ARR highlights the consistent execution in core and subscriptions and cloud and is driving the growth of our recurring business. It is also more closely tied to the invoicing and cash flows from those deals. In Q4 2025, the ARR reached almost EUR 4.5 billion with an increase of around EUR 100 million of net ARR in the quarter. This highlights the consistent performance in signing new cloud and subscription contracts, while revenue is highly dependent on the timing of revenue recognition.

In 2026, we are establishing this new metric in our reporting, and the plan is to guide starting 2027. Now during the Capital Market Day in November, we will outline the steps in the context of our 2029 financial plan. Now as we look ahead, the trajectory to accelerate growth is, of course, linked to the shift in our business model.

Now let me discuss very briefly the levels of ARR growth. First, the mix is driven by faster growth of subscription versus maintenance ARR. I think we see that already clearly in our numbers. It's happening. Second, the growth in 3DEXPERIENCE and cloud as AI-powered Virtual Twins and Virtual Companions boost our 3D UNIV+RSES portfolio. The third, within Life Sciences, we are expanding our footprint, and we are creating and preparing the next generation of growth with new clinical -- with a new clinical trial platform powered by AI. And finally, with Centric, the ARR growth has a long runway.

Now with this, let me turn to our financial objectives for '26. We expect total revenue and software revenue growth of 3% to 5% ex FX for the full year of 2026. Importantly, this guidance marks a tipping point. In 2026, the share of subscription revenue will surpass the maintenance revenue, and that's also why we are providing an ARR to better reflect the growth dynamics, not yet as a guidance, but to show the momentum and the progress.

The operating margin is expected to achieve 40 to 80 basis points improvement ex FX, which takes us to the range of 32.2% to 32.6%. As we continue to balance investments and margin expansion, leveraging our operating productivity gains. We see the EPS growing at 3% to 6% ex FX to EUR 1.30 to EUR 1.34.

Now this is all based on our FX assumption and our full year average rate for the U.S. dollar to euro at 1.18 in yen to euro of 170.

Now quickly to Q1, we expect 1% to 5% growth for both total revenue and software revenue. Operating margin is expected to be in the range of 29.2% and 30.7%, and EPS at EUR 0.28 to EUR 0.31.

Finally, I would like to share some key assumptions underlying this guidance framework for 2026. So first, we expect 3DEXPERIENCE and Cloud momentum to remain broadly in line with last year. It's driven by continued expansion with our -- within our installed base and ongoing market share gains. We are focused on entering new markets and accelerating the monetization of our AI portfolio.

Now from a geographical standpoNow from a geographical standpoint and industry standpoint, the demand in the Americas remains healthy, while Asia continues to show resilience. In Europe, we see solid pipeline development in Southern and Northern regions, which is partially offset by continued expected weakness in the automotive sector, mainly in Germany and France. Potentially, this is impacting the timing of decision-making within quarters. The defense sector represents a potential upside.

Within our mainstream business, SOLIDWORKS continues to deliver mid- to high single-digit growth in both revenues and users. For Centric, we expect a return to low teens growth, supported by execution against a strong pipeline and a higher mix of cloud revenues. Now Life Sciences is facing a transition year with actions underway to position the business for a return to growth from 2027.

On the margins, we expect continued improvement driven by productivity gains from AI initiatives and operational excellence. So these initiatives are focused on increasing our flexibility and reallocating investment towards top line growth.

Now in conclusion, 2025 and 2026, we are laying the foundations for our next phase of growth. I want you to remember 3 things. First, the 3DEXPERIENCE platform is at the core of our industry transformation, and it's creating a long runway of growth.

On AI, we are introducing new categories of solutions, those go beyond productivity gains, it's about creating new possibilities. And we are taking actions to scale our operations with one single goal in mind: to generate sustainable growth.

Now with this, Pascal and I look forward to taking your questions.

We will start taking questions from the room.

This is [indiscernible] from [ ING. ] So I allow myself to start with asking a question maybe with everybody's mind. Your guidance seems quite cautious for 2026, right? So I can understand there are headwinds. There are some things we are in the beginning of the long runway. But what could go wrong? I mean, what do you think will be the major headwinds in the year to come?

Rouven, I start, and then after you will add whatever you want. What's the difference between the 2026 guidance and the 2025 guidance? 2025, we were running quarter-after-quarter after the top line guidance. And you have seen, we have been able to deliver the EPS as initially planned, but we have to adjust in the middle of the year, the top line. So I do not want this for 2026.

Let's be clear. So maybe you will see this as a very conservative guidance, and I accept the point. But from a dynamic standpoint, I really want to build on the good momentum and again, keep the company focused on what matters, which is in this AI stories. I mean, it's time for us to invest massively. It's time for us to take the positions. It's time for us to accelerate the transition to subscriptions, and this is the game plan we are doing. And that's the reason why, to be direct with you, I think we are relatively conservative in our guidance.

Now what could be wrong? I think we have factored many, many things already. And I think you have seen in the -- Rouven's presentations, compared to 2025, there are certain things which are moving in a good direction. Centric is moving and back to growth. It was really a headwind last year.

MEDIDATA, we are cautious, even if we have early signs of improvements, but we did not factor improvement in the guidance. And on the mainstream, you see H1 last year was growing mix single digit. H2 last year is growing high single digit, and we have a better perspective for year '26. And on Industrial Innovation, I think we are taking some cautiousness on the auto sector, especially for Europe, which was, in a way, the bad surprise of Q4 last year. That's what's in it.

I don't know if you want to add a few things, Rouven?

For the top line, that's the situation. I think for -- I think the other point that's really important to highlight is we are creating the room also to make investments to support our growth because it's very critical at this point in time. We are at an inflection point to accelerate growth. We're transitioning the business model. We are focused on accelerating our growth in subscriptions to build the ARR for acceleration. I think that's the upside we have. And that's how we constructed the 2026 outlook for growth acceleration to come.

Derric Marcon, Bernstein. So one remark, Rouven. You told us in June 2025 that you will give us ARR or subscription annual recurring revenue without removing any guidance or projection, but we don't have -- we no longer have the split of your recurring revenue target between subscription and support, something you gave before. So maybe you will continue in that way.

And so first question, can you help us to reconcile the guidance, plus 3% plus 5%, with the ARR growth that you project for 2026? And if you have an acceleration at the end of 2025 on ARR, why we don't see that on the revenue guidance for 2026?

And the second question is about the remaining performance obligation that you gave at the end of the year. Can you help us to reconcile or bridge what is in the RPO next 12 months and ARR, please because the RPO was growing nicely at the end of 2024. We don't see that in the 2025 numbers. So I'm wondering if we will have the same picture at the end of 2025 when we try to extrapolate the RPO numbers for 2026 and reconcile that with the guidance. Sorry, it's pure figure, Pascal.

No problem. And I will start, by the way, and Rouven, feel free to add whatever you. So first of all, on the split between subscription license, if you go to the appendix, we are providing the details. So we did not change the way to guide the market, and we definitively do not want to hide something.

Now as you know, the annual recurring run rate cannot be fully translated into the revenue the following year because you have the revenue recognitions mechanisms. And I will let Rouven to elaborate.

Nevertheless, if you look at the last 2 years, it's a good proxy to approximate the recurring revenue anyway. Now how to bridge with the guidance, which is your questions because you have 6% on one hand and you have 3% to 5%, right? So remember, in the recurring part of the revenue, half is subscription, half is maintenance. The maintenance support is growing at 1%. So which basically means, the rest, the other 50% should, at minimum, grow to 11% to 12%. You do the math. That's point number one.

Point number two, why 3% to 5%? Because if you are at 5%, it means the license are flat. If you are at 3%, it means the license are decreasing by 10%, as simple as that. This is how you will be able to reconciliate the guidance we are providing with the ARR. Maybe, Rouven, you could explain a little bit more some specificity?

Yes. We gave the 3 examples that I think are illustrating the methodology. What you really need to keep in mind, what is really the challenge of Q4 also is a tough comparison of Q4 2024, where we had very high subscription growth in parts also because our on-premise subscription are also including some in-quarter revenue, which when you look at an ARR, it's all allocated over a 12 months period, right? We really only look at the run rate. We don't consider any revenue in point in time. It's really over time.

And now as you straight line all of our bookings into this methodology, you will see the true growth of our business activity outside of the revenue recognition noise, so to say, that's in the numbers. So that, I think, creates a clear metric of year-over-year comparison.

Now over the last 2.5 years, it grew consistently 6%. As Pascal said, you have to understand the underlying, I think, growth drivers and momentum because the subscription is growing 10-plus percent, also keep in mind, we are still facing inside that the MEDIDATA headwind, so the core business of Dassault Syst�mes, 3DEXPERIENCE is growing much, much faster in the subscription revenue, which is important to understand. And as the MEDIDATA business is expected to improve, we will see the upside of that as well in this number.

One other comparison I would like to share with you is the recurring revenue growth was 6% over the last 2 years, and it's very consistent with the ARR. Now we're talking about an ARR of EUR 4.5 billion, growing at 6% with the potential to accelerate because of the mix effect as well as subscription becomes -- is getting to the threshold of 50% plus, and then you have a base effect where that growth is starting really to become meaningful.

Maybe a last point on -- you mentioned the remaining performance obligation. And I think the coverage that we have in our visibility for the next 12-month subscription revenue growth, that is very comparable to 2020 when we enter 2025 as it is in 2026. We are forecasting 8% to 10% subscription revenue growth for which we have good visibility to achieve that.

Now maybe I should add one additional topic, which is an interesting one. If you look at the performance of Q4, 1% growth, flat for the software. If you look at the ARR, it's EUR 105 million incremental, overall EUR 1.5 billion software revenue, which is 7%. So again, I'm insisting on this because we are really transitioning to the subscriptions and to the cloud.

Now if you look at the way many of our peers did it, they were decreasing for many years. We are not. We are slowing down the growth for sure, but we are really transitioning. And that's the reason why this metric is extremely important for you because it's a way to see the momentum we are building. It's a way to see the ramp-up we are creating with those long-term contracts. This is what is behind.

I think there are another question related to -- Derric, you had the last question?

Just on the remaining performance obligation. I think the next 12 months figure for remaining performance obligation last year. So at the end of 2024, if I remember well, was growing in the low 20s, so 23% or 24%. Why we don't see that appearing in the numbers of 2025? And when we will look at the figure at the end of 2025, how can we extrapolate that number and bridge that with your guidance for 2026?

We are not -- Derric, we are not guiding in the remaining performance obligation because we -- the way the revenue recognition is, we're not fully ratable as it relates to that. The remaining performance obligation is a value aggregated for the next 12 months of bookings value, not revenue. So it's always depending on the timing of renewals, right?

In a year where there is upcoming larger renewals, it is less because then it will be back to the growth after the renewal. So there can be time-to-time variances. I think what's important to understand for you is that the visibility we have into subscription growth is the same in '26 as it was entering '25.

At the same time, if I compare the guidance for subscription in 2025 at the beginning of the year and the end results.

I understand. I understand your point. Not -- you don't -- you never have 100% coverage, of course, right? The coverage is typically around 85%, 84% for subscription. So depending on the timing of signing and this can impact at the end of your achievement, and this is what happened.

It's Laurent Daure from Kepler Cheuvreux. I also have three questions. The first is on the 3D UNIV+RSES and your plan for the next 2 or 3 years. I was wondering if you were planning to invest mostly organic adding staff or if you were considering partnership or even M&A, so the way you will build it.

My second question is on Centric. You had a very strong decline in the fourth quarter. What can you give us to make us comfortable, the fact that you will renew with double-digit growth and probably, hopefully in the first part of the year, maybe the pipeline or whatever?

And my last question, even if I don't want to preempt the Capital Market Day, from '26 to '27, what could be on top of maybe MEDIDATA, the additional growth? Is it AI related or any other things?

You start with the first.

I can start with Centric. Yes. So you're right. Q4 was -- we faced the decline. The visibility for the first quarter is already there. What is also important to highlight is not only the SaaS transition, but also the diversification. So we are going really from the apparels, shoes, the traditional business, the apparels, the consumer-centric industries also to food and beverage and retail.

So we are really expanding our scope. And the new leadership team is embracing that as well as the opportunity to expand really enterprise-wide from the front end also to the back end with 3DEXPERIENCE. So we have multiple growth levers on Centric that we are building and that are contributing to the business going forward, and that gives us confidence.

And the last point I would say that when you look at it geographically for Centric, the Centric business has a strong momentum in Europe. Asia is building. And in Americas, we see a strong reinforcement. And that is, I think, another very important element that we really see that business on a global basis diversified, and that has strengthened as we enter in '26.

We continue to invest. You remember, last year, we made the ContentServ acquisition. We are now through the full integration of that. And this really expands the domain and the platform for Centric to expand within the current customer base and brands, which is creating the next -- another potential points of growth.

And maybe above all of this, Laurent, the problem came from the management, the previous management, who did an acceleration of the revenue. And we are -- this is clean. I mean, now it's behind us.

Coming back to 3D UNIV+RSES, I think the way you should look at it, it's not an extension of the current portfolio. I mean it's really a redefinition of our offerings, the same way we did when we came with 3DEXPERIENCE almost now 15 years ago.

So why I'm saying this? It's because it's requesting a new ecosystem. So in a way, you have seen new partnership, and NVIDIA is a good example of this. You need a new computing -- accelerated computing capabilities. At the same time, NVIDIA, they need to -- I mean, computing without knowledge is blind. So we are the one providing the knowledge with our Industry World Model. So the combination is extremely meaningful. And we will continue to partner with basically people having or leading this game.

The real question, I think, is the M&A behind your questions. Yes, if we look at the landscape, I think it's not a bad time to consider M&A. MEDIDATA reimbursement is behind us. The cash flow is relatively significant, even if you are challenging a little bit the cash conversion. But at the end, it's a lot of money every year we are generating. The exchange rate is helping us to consider certain acquisition in the U.S. And the software landscape is under pressure.

So I remember having exactly the same question 2 years ago, and I was telling you, it's not the right time. I think now it's the time. I will not say more, but at least you understand the way we think.

And the last part, which is related to the '26, '27 ARR, what are the growth drivers. I think maybe, Rouven, you just started to mention it in your presentation.

Yes, yes, yes. I think 2026, we have the guidance, Laurent, right? So let's look at '27 and beyond. What are the potential upsides we have and how we can accelerate.

First of all, keep in mind, our large, large client base and the long runway we have to penetrate that client base with 3DEXPERIENCE cloud and our AI portfolio. That's really the strongest engine we have and it's -- and the acceleration potential. Now this, together with the transition to the subscription and cloud, which creates the recurring revenue building on top of that and creating the base effect of the faster-growing subscription growth. That's to me the first thing that is important, and you see we are focused on that to build this to reach this inflection point where we will see the acceleration.

You're right to mention Life Sciences. We are -- you see that we are taking the investments. We have a lot of good things going already. You see the enterprise business is growing when you exclude some special effects. So there is a lot of good things that are happening, and we will continue to double down to strengthen them. And as it relates to the volume business, once we retain that exposure to churn, we will also see the benefits here. The expansion on the 3DEXPERIENCE portfolio for the industry, Pascal highlighted that as a massive opportunity.

Centric, we discussed, I outlined this before is another growth driver that is not -- that is material. So -- and then there is the last point, you mentioned it, which is potential M&A, which is not factored into this model, creating an upside that we have.

So that's the situation as we are transitioning from '26 to '27, and this is what I will focus to explain and outline in the Capital Market Day in November this year, where it's about translating that into an ARR model to give you confidence and understanding of the path ahead.

So we'll take one more question in the room and we'll go online.

Yes. Gregory Ramirez, GR20 Research. I have one question on the Healthcare business for '26. Trying to do the math, it seems to imply something low to mid-single-digit decline. What is the implied impact of the Moderna contract? Does that mean that if the impact for '25 is just on 1 quarter, that will have some -- still some headwinds for the first 3 quarters of '26?

And regarding the enterprise business excluding Moderna, does that mean that it will be growing? So when we exclude the Moderna effect, that means that maybe in Q4 '26, this will drive the growth for '27?

Yes. Maybe first, I want to clarify that we are not expecting decline in the Life Sciences business overall in 2026. We're expecting flat in 2026.

With everything we do.

With everything we do in Life Sciences, from an industry standpoint, we expect to be flat. As it relates to the impact of Moderna, this is a 2025 impact. It was not only related to Q4, but it's really for 2025. But the aggregate of this impact is now behind us. Moderna reduced their contract by more than half to reflect their new business level activity. We're still the prime partner for Moderna.

We have not given that or losing that to anybody else. It's our client. But their business realities have changed, and we have adjusted to that, which was -- it had a big impact on the performance. So now with that behind, as we look at the enterprise business going forward with -- I gave you some names and large enterprise clients that we have signed, where we are expanding our footprint. And beyond that, we will do even more.

By the way, in March, we have MEDIDATA NEXT, where we have many of those clients coming with us on stage to explain what they do with us to expand across our portfolio to transform what clinical development is today. And that will translate, and we're confident about that, that will translate into growth in the enterprise segment going forward. Where we have less control is on the part of the volume business with the CROs.

And this is where we are, to some extent, exposed to funding environment on the biotech sector, which can be volatile, and we know it has not been great over the last 2 years. But also there, we see some green shoots coming. And if that materializes, it will stabilize the business.

Maybe one additional thing. So if you look at the enterprise segment, and Rouven showed the number to you. The structural growth of MEDIDATA, excluding Moderna, it's 6%. And the growth of the rest of what we do is 7%. So we have 2 legs, if you want, which are solid. And we do not see a reason why it will not continue to be the case in 2026, right? The part where we are extremely cautious because we have been burned last year with this.

That's only last year.

We were getting a recovery of the CRO to be back to at least being flat, and we landed at minus 5%. So that's what is not factored in the guidance. We do not take any improvement in the guidance of the CRO business. Despite the fact that some of them, they have published a better result in Q4 compared to Q4 2024.

Thank you. We will now take questions online, please? Operator, could you start the online Q&A?

[Operator Instructions] And it comes from line of Moawalla from Goldman Sachs.

Yes. Great. My first question was just to sort of understand the 2026 outlook a bit better. Can you help us understand at both the low end and the high end of the range kind of the assumptions, particularly around what you're incorporating for some of the larger deals as well as the kind of mega deals, what's in there and what isn't?

And then again, coming back to sort of bridging the kind of ARR to the revenue growth guidance you've given, you sort of mentioned that we're kind of getting close to parity between subscription and maintenance. But obviously, in there is the MEDIDATA and Life Sciences recurring revenue. So could you give us a better feel for what the underlying subscription growth rates in kind of the core or when the business ex MEDIDATA has given? We're doing a transition both in the enterprise business but also SOLIDWORKS and Centric. Just to sort of better understand the moving dynamics of growth.

And then lastly, you sort of touched a bit on more consumption outcome-based revenue as you drive kind of the AI applications or use cases. How does this sort of change the kind of the visibility going forward? Because I think because of conventional business is there's going to be more variability. But when does this become kind of more meaningful to your midterm growth rate? And is that going to be -- and how is that going to be captured?

Okay. Mo, thank you for your questions. I'll start with the first one on how to position the guidance of 3% to 5% revenue growth. As I said, at the beginning of my prepared remarks, I just want to reemphasize this point that this guidance provides us room to navigate. It's derisked. It's derisked for mega deals. We do not include any mega deals into that. Of course, we always have large and chunky deals that are important to happen, but not mega transactions.

I think what we need to do to overperform this guidance is I mentioned that there are certain areas that are introducing upside into what we do. We have not included significant growth in the defense sector, for example, simply because we have not yet seen this sector to contribute incrementally strong to our demand. But there are opportunities, of course, in this market that we are very focused to tackle and to get involved and to take benefit of it.

We are building a very powerful AI portfolio, transforming our industries and building that to expand what we do with our current clients. And Pascal gave the examples and discussed that. This has, of course, a huge potential for us to accelerate the growth in 3DEXPERIENCE and AI.

For now, as you see in the guidance, we have taken a more prudent approach to -- and this was what I shared with you as well, we consider the momentum in 3DEXPERIENCE growth to be consistent with 2025 and 2026. So of course, now as we enter in 2026, we are a significant step further in making these use cases and scaling them and replicating them. So there is, from that perspective, clearly, an opportunity for us to improve and grow and accelerate from there.

Now we have to keep in mind that we have to offset also some potential softness in the auto sector. Now there is 2 sites to look at, 2 ways to look at that. While there is maybe softness in the fourth quarter, but still it represents significant opportunities for us also in 2026 because we have -- I want to remind you, Mo, and everyone here that we have signed significant deals in this sector over the last 2 years that are building the foundation to bring these clients onto 3DEXPERIENCE now with the potential to expand, and we are expanding with them in AI, and we are changing the game with that and creating significant opportunities that we couldn't do years before because we simply weren't in this position to do it.

So that is all in front of us. And now in this context, I think we wanted to position the guidance from 2026 that is consistent with 2025. We ended at 4%. The midpoint of this guidance is at 4% with the potential to do better than that, but also to have the room to make the right choices for the mid- to long term to accelerate growth.

On the low side, what can happen on the low side more? We -- there are macro factors that can always impact us and make things even more difficult and the timing of decisions more difficult. That can be a factor that we need -- we took into account on our guidance to be at the low end of 3%, but that's not what we are targeting.

So going to the ARR. You're asking for a lot of additional information, Mo. And for sure, I will be prepared to disclose some of that at the Capital Markets Day. So please bear with me that I will be a little bit more high level, but I will give you the directions on where the ARR, what are the elements of the ARR and the different growth dynamics inside the AR.

You're right when you call out MEDIDATA as part of the ARR, of course, that has been a headwind on the 6%, very clear on our subscription ARR. I mentioned subscription ARR is growing more than 10%. And now when you exclude MEDIDATA on core industrials, subscription ARR is growing mid- to high teens. It's a strong resilient cost driver for a long time. And we have, as I said, we have some potential to further accelerate that as more and more of our business transitions to cloud and 3DEXPERIENCE.

Now that also -- you know the size of MEDIDATA. MEDIDATA in total is about a EUR 1 billion business. Now we have been -- in the way we've defined the ARR, we have some business in MEDIDATA as it relates to the volume business where we have churn effect, that's not renewable. It's not included in our ARR. So we have not factored in the 100% of Medidata subscription business because not everything is renewable. But nevertheless, it's a very large number inside the subscription ARR that has been facing a lot of headwind. Once we are removing this headwind, and you see we are already doing it for the enterprise part.

Now the CRO part is still what is the challenge. But as we are removing that and increase and essentially generate a net increase in ARR quarter-over-quarter for MEDIDATA, that will then contribute to also increase the subscription ARR from what today is plus 10% to the next level.

And I would say to go from plus 10% to gradually up point by point to reach 15-plus percent in the subscription ARR in aggregate. So -- but again, I will be prepared to outline those components at the Capital Market Day in more detail. Here today for me is to introduce this concept to you, explain the growth drivers. And with that, build the foundation on the levers that we are focusing on for growth acceleration to come.

Now the last part of the question, Mo, is related to the new business model for the new AI solutions. If you look at the story of Dassault Syst�mes, we changed almost everything, except one, the business model because it has always been an equation of the number of users, the number of seats.

Now what's the problem? With the AI, you have virtual users now. We call it virtual companion. Some of our peers, they call it agent. So the model cannot be anymore the same. That's point number one.

Point number two, I think the software are really selling the capabilities. Now we have an ability by combining the capabilities with the knowledge to sell the end result. Whatever the virtual twins of the improvement. So that's the reason why we are coming with new units. And let me explain to you what the units are about.

The first one, we have the unit of works. When a Virtual Companion is working, in a way, it's working like a human. And the same way you have a cost for a human, you should have a cost for the companion. So we are not inventing anything on this one because this is what ChatGPT, Entropy, this is exactly what they do. It's a fraction of the cost of the people.

More importantly, when we have a Virtual Companion, it could be a mechanical engineer. This one could be a mechanical engineer and an electrical engineer. It could be also, in addition, a specialist to do the simulation. So we have what we call the unit of knowledge. And the more knowledge the companion they have, the more we price for this because it's a way to capture the value of what we bring, right?

If you have to hire someone right now, who has graduated from the best mechanical school, graduated from the best IT or computing school, it will be difficult. With a companion, we have an ability to enable this.

Last but not least, what -- there is a third unit, we call it the unit of knowledge. And again, I insist on this for 4 decades, we have accumulated a lot of industry knowledge. We know how to design a car. We know how to produce it. We know how to certify them. We know how to scale the production systems. And this is true in every industry we serve.

Now what can we do with AI? We can automatize those processes. And I can tell you, this is a significant value we are creating. In many cases, it's a 10x. It's really a moonshot. So that's the reason why we need also to have dozen units if you want to price in order to capture this value.

And last but not least, I make this in my comments. But the entire industry is pushing to do Software as a Service. I present, we should do Service as a Software because you have so much money being spent in services just to make the technology enable that there is a chance not to use artificial intelligence to produce automatically the end results.

So -- and that's what's the virtual twin as a Service is about, it's how we can mix the capabilities with basically what used to be human driven, and now it could be a virtual companion in order to deliver the end results. That's the new lever we have in our hands to create additional value. It's tangible, it's concrete, it's not science fiction, it's fiction with science. And it works because it's a way -- I mean, I have enough experiences the last year with many engagement to tell you. We know how to objectivize the value discussion with many of our customers.

Now this will come on top of what we do because, again, I repeat myself, if you have a Virtual Companion, you still need CATIA. The Virtual Companion is the one using CATIA. It's not substituting CATIA. You still need to use CATIA SIMULIA, DELMIA in order to produce the end result. So that's an additional lever we are creating. And if you remember what I say, with the companion, we are accelerating the adoption. It's taking too much time to train the people. It's taking too much time for many of our customers to hire people.

Now we have the way we master in a much better way the cycle of adoption. We have a better way to monetize the knowledge and the know-how we have put in our software because usually, people, they are comparing the capabilities, but they forget that we have put a lot of industry knowledge in our software. And again, we have the way to monetize the end result of what we do. That's the entire purpose.

Now given the visibility, it's a little bit early to speak about this. The only thing I can tell you is just last year, in 6 months because we released those products, the first initial drop was midyear last year. We have been able to build to basically create a EUR 50 million backlog, right? That's what we have been able to do. And this is growing extremely fast. But again, same story, we will come back with more insight at the Capital Market Day in November.

We can take the next question online, please.

And the question comes from the line of Adam Wood from Morgan Stanley.

I've got 2, please. Just first of all, thinking about more traditional kind of metrics of visibility in the business. Could you maybe help us with pipeline coverage as it stands today? And I guess, particularly given the comments around automotive and investor fears around that, have there been any notable shifts in terms of where the pipeline is by industry that might reassure?

And then secondly, I think we've seen in software a lot where there's been deceleration in revenue growth and particularly where companies have a lot of things changing and opportunities. You've obviously mentioned AI, the subscription transition for you.

Can you just help us understand the balance that you're trying to strike between making sure you're reinvesting at the right level in the company to drive that revenue acceleration and maybe protecting margins in the short term? And are you comfortable you're getting that kind of split rate?

Thank you, Adam. I will start with the first part of the question, and Rouven will take the second one. So related to the pipeline, the coverage right now is 2.5x. So if I look at it, we have the pipeline to cover 2.5x the sales plan for the full year, which is good, which is good. The idea is to create 0.5 more during the year because we are creating also the pipeline over the time. So as a starting point, it's a good ratio.

What's the difference compared to last year is the mix. Last year, we were relatively overweight with a lot of opportunity in the auto sector. And if I remember well, the pipeline in the auto sector was around 35%, 37% last year, right, Rouven?

Yes.

This year, we are below 30%, which is, I think, better given what is happening, I mean, the volatility we have, especially in Europe on this topic. Where we see a share, which is increasing is in the aerospace and defense, which is, I think, more than -- close to 17%, 18% for this year. It was a little bit, let's say, last year, it was around 12%, if I remember well. What's the difference? We still have the backlog because as you may know, this industry still have a lot of planes to produce, and they still struggle to deliver the backlog.

And we have a lot of demands coming from the manufacturing part. You remember the large deal we signed with Lockheed Martin a year ago, it was on this topic. But also, we have new segments. Defense is one of them, but also you have the new space. New space is in this industry what the EV was, let's say, 10 years ago for the car industry.

People developing drones, low orbit satellites, the new launcher, I mean, the new space station as well. And they are the one basically equipping themselves very rapidly, and they are raising and growing fast their engineering departments. So this is also something important.

We'll see also more demand in the high-tech sector. It's something I did not mention, but we spoke a lot about NVIDIA as a partner. But NVIDIA is also a customer, right? And for the one we have, I mean, we look at what Jensen said last week on stage. NVIDIA is using our technology. In fact, we have built the virtual twin of their future AI factories.

And if you look at this entire sector, this is where the money flow right now. I mean, every morning, you open the newspaper, you see all the hyperscalers, all nations committing themselves to invest billions to create these AI factories. It's a very complex object. I mean, you cannot imagine the complexity of it. It's much more complex than a nuclear plant.

And by the way, as I comment, do not make the confusion between the data center and the AI factories. The data center is to make an analogy, the warehouse. This is where you store the data. The AI factory, it's a real factory. This is how you transform the data into insight, knowledge, value added. So the complexity and the requirements, it's -- I mean, there is nothing comparable to what we know currently with the data center.

So where I want to go, they need a virtual twin. And that's what we do. We are building the virtual twin of the AI factories of the future. This is a tremendous opportunity where we're expanding a lot. And to come back to the initial questions, that's the reason why the share also in the high-tech sector is increasing significantly in the pipeline, and we are around 15%.

So long story, a short one, good coverage, mix difference. I think the mix is probably more resilient compared to last year, less exposure to the auto sector, much more distributed. The rest, industrial equipment, the consumer goods and packaged goods is almost the same than what we had last year.

Okay. And then to your second question on the investment policy, how is this reflected? And really, we are looking at the different parts of the organization, starting with R&D. And here, the focus is on allocating our resources to accelerate the AI portfolio and also help to prepare the go-to-market with our brands because the R&D and the go-to-market, as you can imagine, as we are now bringing these next-generation applications to our clients, where R&D brands and go-to-market are extremely connected with our industries.

So when I look at the opportunities and where we are investing on the go-to-market side, Pascal mentioned high-tech data centers, that's a growth opportunity, but also related to that, the energy sector, the energy transition, which is a massive opportunity for us. And we have had already in '25 some great wins here. And -- but we know the energy shortage and the pressure on the energy market will further open opportunities for us to virtualize and to improve and help this industry.

Aero and space is a very resilient industry for us, where we are doubling down our focus on the go-to-market as well. And of course, industrial equipment. We have seen very resilient results in SOLIDWORKS, and we expect that momentum to be also in 2026. And last but not least, I mentioned that before, Adam, but just to complete the list here, the auto sector remains a critical industry for us with a lot of opportunities. And we are focusing also our go-to-market on that because we have a large footprint and the opportunity to expand.

Now we talked about the life sciences go-to-market where we are investing with dedicated integrated account teams. We are really reallocating our resources to address that industry more holistically and open up new pockets of growth and budgets that we didn't systematically addressed in the past, which we have an opportunity to do, and we will.

And then the last part, I think Pascal mentioned that also before, we are focusing on scaling the indirect channel, where just through the value network, the suppliers serving the OEMs, we have a lot of opportunity in this market as well, where we are enabling our partners with our new AI solutions to transform these suppliers.

Now on G&A, we have initiated a large transformation project here as well to leverage AI and cloud in our back office to streamline the operation.

We will take one more question online.

And it comes from the line of Michael Briest from UBS.

Just thinking about the CMD in November, are you currently reiterating your 2029 financial ambition? Should we expect that to be updated at that event? Because I'm looking at subscription and you're expecting it to be 55% of software by then, and it was 40% last year, maybe 42% this year. That looks like a steep ramp. And then I appreciate the comments on M&A opportunities. But given the share price, what is your view? Is there any shift in the view on potential buybacks given the valuation of the data?

All right. Thank you, Michael. On the Capital Market Day, regarding the 2029 financial ambition, there's 2 things. First, the introduction of the ARR will allow to have a more focused discussion on the growth levers and our path to accelerate top line growth, which is really around subscription, recurring cloud. And now with AI, we are in a different point than compared to last year where we have very concrete monetization examples on how they will build on top of our existing model.

The second point I would reemphasize is that our financial commitment is on the EPS to -- and that also has a lever of the operational efficiency that we are implementing. That's why we reemphasize that today that we are taking the actions to improve the EPS and margin, which then, of course, will have a stronger effect as the top line comes back. So we will discuss that at the Capital Market Day and how we are going to bridge to reach our financial ambition by 2029 as we outlined last year.

The second part of your question, Michael, is related to the capital allocation. So again, there is no -- I mean, I have nothing against the share buyback. But if you step back a little bit, let's assume I'm spending EUR 0.5 billion to do this. the levers on the EPS will be relatively limited. And the same EUR 0.5 billion invested to acquire new AI start-up will deliver a better level. So that's the reason why right now, I'm really directing the capital much more to the external growth than to the share buyback.

The share buyback for us, you remember our policies is only to offset the dilution coming from the LTI. That's what we do. But again, I have no dogmatic positions. I'm not against. I'm with you on the value creation, but I think we have a better road to create value by investing on the new AI domain than rather than to buy the shares. I think it's time to conclude. Again, thank you, all of you for your engagement today. But I want to leave you with one clear message.

I think Dassault Syst�mes is really undergoing a profound and deep transformation of its business model. It's obvious that we are transitioning decisively to subscription-driven future. And it's not only coming from the acceleration of the cloud platform strategy, but above all of this is the evolution of our offerings. AI is at the core of the platform. This will enable our customers to create, simulate, operate virtual twin at scale to bring the virtual in the real world together and to manage the -- for the entire industry.

And I think this transformation is not incremental. It's really a fundamental transformation. So -- and we do all of this with a certain resilience. Whatever you say we continue to grow, maybe at a moderate pace, yes, I accept this. But we sustained the momentum when if you look at in our industry, many of our peers, they struggle when they did this transition. And they did the transition before the AI came.

So I think I hope you get a better sense of what we do, how we are executing, how we are innovating and how we are advancing to deliver the next phase of growth. I think Rouven and the Investor Relations team are looking forward to seeing you in the coming weeks because they will do road shows and see you no later than next quarter for me. Thank you.

Hello, and welcome to the Dassault Systèmes Third Quarter 2025 Presentation. [Operator Instructions]

I will now hand over to your host, Stacy Pollard, to begin today's conference. Please, madam, go ahead.

Hi. This is Stacy Pollard with Dassault Systèmes. Thank you for joining our third quarter 2025 earnings conference call with Pascal Daloz, our Chief Executive Officer; and Rouven Bergmann, our Chief Financial Officer.

Before we begin, some quick notes. Dassault Systèmes' results are prepared in accordance with IFRS. The financial figures discussed on this conference call are in 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 also be available shortly after this call. Now, due to technical delay that we've lost some time and due to the technical issues, Rouven is going to summarize more quickly than we originally planned in order to save time to address your questions. So both Rouven and Pascal are here, and Pascal will now take over. And Rouven will take over.

Thank you, Stacy, and I apologize again also for the technical delay, but we promise you we will make up for it to make sure we have enough time for your questions. So as Stacy was just saying, I'm going to give you a brief overview on the quarter, but also I want to spend some time on the guidance before we then open up for Q&A.

So let me start, first of all, and thank you again for joining us on today's webcasted call here, and good morning to you in the United States. So I want to start with 3 key messages. The first one is top line growth and margin expansion are our top priority. The second message is the 3DEXPERIENCE platform is driving our business model shift to subscription and recurring revenue growth. And this engine is working with 16% growth in subscription this quarter. And third message is, we are mission-critical to our clients. And in fact, in 2025, we are winning significant contracts with many of the top industrial companies in the world. And this is laying the foundation to long-term value creation with cloud and 3D UNIV+RSES. It is these powerful long-term partnerships that give us confidence in our long-term targets.

Now a few more comments. Our financial results for the quarter were solid with 5% revenue growth and an expanding operating margin, up 100 basis points and 10% EPS year-over-year growth. Industrial Innovation is driving the growth, which was up 9% in the quarter and 8% year-to-date, while MEDIDATA and CENTRIC were softer than expected. As discussed previously, the repositioning of MEDIDATA is ongoing, the change of the model to reduce the dependency on clinical trial activity will take time as we are doubling down on the enterprise and PLM opportunity in Life Sciences. And for CENTRIC, we are accelerating the SaaS transition. And to this effect, we also have promoted a new leadership team.

Now looking at the full year, we adjust our revenue outlook to 4% to 6% growth ex FX, in line with our current trajectory of 5% top line growth year-to-date. At the same time, we maintain our EPS growth target of 7% to 10% ex FX growth, thanks to the strengthening of the operating margin driven by efficiencies we are generating in the business.

Now with this in mind, a few more details on the quarterly results. Q3 and year-to-date total revenue and software revenue were both up 5%. Recurring revenue was strong, up 9% in the quarter, and it highlights a very solid acceleration when compared to 7% year-to-date for recurring. Subscription revenue growth was 16%, and it was driven by new deals signed in the quarter and the increasing visibility from large contracts that are ramping. As a result, subscription revenue now represents almost half of the recurring revenue base, which is up 3 points from last year. And starting in 2026, subscription will surpass maintenance revenue in absolute terms.

3DEXPERIENCE revenue was the growth engine behind that, which was up 16% in the third quarter. The signings at Ford and Apple contributed to the strength in subscription growth. Upfront license revenue declined 13% as our clients continue to adopt the subscription model at an increasing rate. The best proof of this is that recurring revenue now accounts for 84% of our software revenue year-to-date. The operating margin improved 100 basis points year-over-year for the quarter, driving strong EPS growth of 10%, thanks to productivity gains and cost discipline. In fact, the expense growth was up 3.1% in the quarter, and we continue to rebalance resources to support our growth strategy.

So I'll stop here on the overview, and I will now turn to the financial objectives. So the net-net is that our year-to-date revenue was up 5%. And for the full year, we now adjust our outlook to reflect this trajectory. And so we expect a growth of 4% to 6% ex FX for both the total revenue and software revenue with a 6% to 8% growth previously. When you look at this adjustment in absolute terms for the full year, this reflects an adjustment of about EUR 140 million to the midpoint. And of that, there's an impact from Q3 of EUR 30 million and an FX impact of about EUR 20 million.

Now the remaining delta can be explained by 3 factors: First, the lower growth from MEDIDATA in line with Q3. I guess we'll discuss that. MEDIDATA growth was minus 3% and Life Sciences growth was minus 3% in the quarter. I'll just add that because we were not having the time to go through all the details. The second part is that the impact of the SaaS acceleration of CENTRIC. And the third element is an increasing macro volatility with the potential to impact the timing to close large transactions. So here, we are reflecting the potential of delay in decision-making on some of our large contracts with the potential to impact our Q4 closing. And please also remember, we had a high comparison base in Q4 last year.

Now looking forward, the change of model for MEDIDATA is ongoing, and we are confident in the accelerated SaaS transition for CENTRIC, given its strong positioning in a very large market and clients are endorsing. For Industrial Innovation, we have built a strong foundation in 2025 with signing significant contracts. And also, we expect in 2026 to expand on these partnerships to continue to transform our customers with virtual companions and generative experience. And to add to this, SOLIDWORKS momentum was strong in Q3 and also year-to-date.

Now looking at the recurring revenue outlook. It remains stable at 7% to 8%, and it underscored what I said at the beginning, we're implementing a sustainable recurring growth model with an increasing visibility. Above all, we have the strengthening of our operating model highlighted by margin improvement. And as such, we are maintaining our EPS growth expectations for 7% to 10% ex FX or EUR 1.31 to EUR 1.35. To achieve this, we expect Q4 OpEx to continue the trend of Q3, delivering margin expansion of 100 basis points, driven by ongoing productivity initiatives.

Now briefly to Q4. As you can see, the revenue range of 1% to 8% is fairly large. And this predicates the potential uncertainty and timing of large deal closing, mainly for the upfront license business, where subscription growth of 8% to 12% is solid, also comparing to a high base last year. Operating margin is expected in the range of 37.2% to 38% and EPS growth of 7% to 17% ex FX to reach EUR 0.41 to EUR 0.45 EPS for the quarter, reflecting the ongoing operating leverage.

Now as I reflect on our performance so far this year, I want to highlight that our operating model is resilient, and we apply strict financial discipline to support our long-term growth. We are occupying a leading market position, which makes us mission-critical today and tomorrow for our clients. Profitable growth and improving cash conversion is a top priority with a clear objective to show improving results starting in 2026.

AI and cloud are our 2 main growth drivers, and we are confident that we will deliver on their ambitious growth targets. We are committed to invest right for innovation, customers and shareholder value.

And with this, we are turning to the Q&A.

[Operator Instructions] Our first question comes from the line of Jay Vleeschhouwer at Griffin.

A few things, of course, as always. Rouven, you mentioned in passing some productivity initiatives. Could you elaborate on that? Are there any operational adjustments that you're making with respect to any or all of go-to-market, perhaps affecting CSE or CPE, product packaging. In other words, anything having to do with the portfolio, perhaps even any levels of management. So anything in detail of that kind of that you can talk about in response to some of the growth inhibitions you spoke about would be very helpful.

Okay. Thank you, Jay. I can start. Thank you for the question. The productivity initiatives are ongoing for quite some time. We are focused on putting the right people at the right place to support our growth initiatives. Now with AI and 3D UNIV+RSES, it's a huge -- we are creating new categories of applications for our clients. And this requires to make sure we have the right skills as well as the right people to support these ambitious road maps in R&D, for example, and this is very well managed by our R&D organization.

As it relates to the go-to-market, there are several points to take. I think you heard us talk about the indirect business, which is a key focus on rejuvenating and recalibrating our partners. I think you see already good evidence of this in our SOLIDWORKS numbers for the role partners. There's good momentum that we are creating. We are working actively on the process partners to have the changes that we are planning to also drive impact, which is not yet so visible, but we are working on that on the process partners.

As it relates to, for example, to our Life Sciences business, we are -- here, the objective is to evolve our go-to-market and offering to the enterprise -- to embrace the enterprise to be enterprise-wide to expand from the focus of clinical development across the whole value chain of Life Sciences and the entire patient journey. Therefore, we are recalibrating our go-to-market and our offering. This is in process, and this is what we are expecting. We are seeing results right now already. But of course, this is to be expected to turn in 2026 also into growth for Life Sciences overall, which we don't see yet.

We are also looking at our service business. Service used to be a time and material business. Today, it becomes an outcome-based business. When we talk about virtual twin as a service as an offering, which is really delivering outcomes to our clients. It requires a repackaging of our software and services to be combined to deliver real outcomes for clients. This is in full execution, this transformation.

So just to mention a few on the business side. You heard us talk about CENTRIC as well. For CENTRIC, we are focusing on really transitioning this business to become SaaS and cloud first. This decision has been made. Now we're executing along those lines. From a cost structural standpoint, really here, the focus has been for us to capitalize on past and existing investments and to ensure that we can grow revenue faster than expenses, which then automatically translate into EBIT expansion, and you see that in Q3, and we are committed to do that in Q4 and going forward. That's to give you a few examples.

Okay. You mentioned some large signings, which I assume you are alluding there to Industrial Innovation large signings. And so the question there is, are you seeing the customary programmatic adoption that DS has seen for decades in aero and auto behind those signings or something perhaps more structural or transformational in terms of the adoption that those signings are based on?

In other words, are you seeing a mix in terms of why customers are doing the signings? Is it just the conventional new aircraft program from Boeing or whomever versus something broader and on a more ongoing basis that would not only affect CSC, but eventually move out into CPE, Tier 2 and Tier 3.

So Jay, Pascal speaking. It's a very good question, in fact. You're right, for a long time, the deployment of our solution was extremely linked to the programs, whatever it's an aircraft or not. With AI, I think we are seeing a different trend, which is much more how we could accelerate the transformation, leveraging the platform, which is ready for AI across the entire chain. So obviously, including the large OEM you are [indiscernible] but also the suppliers.

This morning, I was mentioning the Ford case. As you may know, we signed a 5-year contract with Ford to deploy the platform across all the programs. So it's not only the EV, but also the traditional one. And this is also including the supply chain. So it's exactly your point, which is this has a drag effect automatically on the supply. Because at the end, this AI store is something you cannot segregate if you want between different companies. You have to look at the extended enterprise if you want to unlock the value. So this is opening this. This is definitively accelerating the trend for the adoption.

Okay. A couple of last things, if I may. Could you comment, Pascal, Rouven, on the rationale behind the new renaming within the SOLIDWORKS business? In other words, you're returning to your roots of SOLIDWORKS branding. Maybe talk about why you did that, what go-to-market effects that might entail? And more broadly, the company has been adhering to a solution selling concept for years, but perhaps do you reconsider that or evolve that in some way as you've done just now with SOLIDWORKS?

So I will take it, but if you want, Rouven, feel free to add whatever you want. So yes, SOLIDWORKS is an umbrella for the mainstream market, right? And that's the reason why we are creating the Works family. Whatever, it's DELMIAWorks or SIMULIAWorks. But at the end, SOLIDWORKS is really the umbrella because the large community we are serving are the SOLIDWORKS users. Now we do not want to be solution or industry oriented with SOLIDWORKS. We have to be industry aware, which is very different. When you are industry oriented, basically, you package your solutions to fit precisely for market segments. And this is what we do for most of our product line.

But we do not intend to do this for SOLIDWORKS. SOLIDWORKS nevertheless has to be industry aware, which means there are certain features which are extremely relevant for one industry. There are certain model foundations with artificial intelligence, which will be extremely relevant for certain industries, and we want SOLIDWORKS to take the benefit of it. So this is the way to approach it. This is a way to package it.

And last but not least, and I know, Jay, you are a SOLIDWORKS lover for a long time. And my motto is red is red, meaning we need to keep the ease of use of SOLIDWORKS across the board because this has been for a long time, a key differentiation for SOLIDWORKS. And AI, in a way, is giving another way to ease even further the usage of the solutions because this is basically managing the complexity of sometimes very advanced workflow like what you can do in simulations. So those are what we are currently doing with SOLIDWORKS. And by the way, you should celebrate the anniversary of SOLIDWORKS because this year is the 30 years anniversary of SOLIDWORKS. And I think over the last 30 years, we have built an amazing community.

Okay. 3D UNIV+RSES are still very early, obviously, but you did give a very specific outlook for it at the meeting in Paris in June. Between now and then, that is to say, 2029, what kind of additional or new metrics do you think you will be providing us to help us understand the progression towards that very large goal that you set for several years from now? Are you going to give specific revenue milestones or any other kinds of metrics like that to substantiate your ambition for 3D UNIV+RSES.

There are 2 ways to answer to your question, Jay. One, Rouven, during the Capital Market Day made basically an explicit commitment to say over the time -- over the period of the plan, EUR 0.5 billion will come from there, which is the combination of the AI and also the acceleration of the cloud, right? So at the end, in a way, we will give you maybe not on a quarterly basis, but on a yearly basis where we are. And the second thing is probably more important is the attach rate because remember, the way we have structured the portfolio is the following. We have roles, processes and solutions, and we are with AI creating a new category of solutions.

We do not want to replace what we do. We want to complement and extend. So in front of the world, you have the virtual companions. And this quarter, we released 3. That was part of my presentation this morning, right? And they are concrete examples and they are available on the market. And basically, we expect to have some revenue coming in 2026 from there. In front of the processes, we have the generative experiences. And right now, we are focusing on the use cases, which are really the one creating a real breakthrough. So we do not have -- we are not looking for small improvements in the processes, if you want. We really want to create a moonshot. So it's at least 5x, if not 10x improvement of the way to work currently.

And for this, it will be a token-based approach, a usage-based approach, which will facilitate the adoptions. And then we -- in front of the solutions, you have what we call the virtual twin as a service is really rather than to sell the tools, we are selling the output of what we are creating with it. And it's a combination between the technology we have with the services capabilities we have, either from us or from the ecosystem in order to better serve our partners. So if you mix all those 3, we have new categories, new business model complementing what we do, leveraging what we do. And I think we have a clear road map.

So on a yearly basis, clearly, we can give you some data point on the projections of the revenue stream. And we have a concrete road map for '26 and '27. So almost every quarter, we will come back with the new capabilities, the new category of solution we are introducing on the market just for you to understand the attach rate between the roles, between the process and between the solutions with all the new categories I've just mentioned.

Our next question comes from the line of Nicolas David of ODDO.

I have two actually. The first, coming back on CENTRIC, I would like to understand what really triggered this decision to move or to accelerate the move to SaaS as it was pretty clear from the beginning of the year that you would be facing super tough comps in H2. But at the beginning of the year, if I'm not wrong, you seem to be betting again on strong upfront revenue coming from renewals. And even at the time of Q2 earnings, it seems that you were still believing that you would have some upfront revenue. So it seems that the decision was made pretty recently. And this decision linked to the fact that you acquired the remaining shares of the company, which freed you from any constraint to do that or something like that?

And my second question is regarding the acceleration of the move to subscription and beyond CENTRIC this time. Is this time a move on which we have a greater control? Or does it remain in the hand of customers mainly as they still have a choice and the fact that you still don't have total control on that may explain the lower-than-expected license in Q3 and the very broad guidance range in Q4. And at certain point of time, do you intend to get a better control of the phasing of the move to subscription? Or do you still think that letting the client choose is still the best solution?

Thank you, David, for your question. I will start and Rouven , feel free to add whatever you want. So CENTRIC, there are 2 reasons behind the decision to accelerate the transitions or the acceleration to the SaaS business model. One is the one you just said, which is we acquired the remaining piece. So obviously, when valuation is at stake, I think it's not -- it's probably better to do it just after because this will have an impact on the revenue stream, and it's right now in our full control. So this is basically much more the technical reason, let's say.

The fundamental reason is much more simple than this. I had a chance to meet with many of CENTRIC customers, and many of them are requesting to move to SaaS from a product standpoint, but also from a business model standpoint. And the reason is because the market they serve is still doing a lot of merger and acquisitions. So it's really an easier way to connect the systems together. It's much more fast in terms of adoptions. And many of the CENTRIC customers are also SAP customer. And many of them are moving to SAP ABAP currently. So they want to do this move in one single shot, if you want, to have the complete SaaS architecture being the foundation for their information systems. So those are the 2 fundamental reasons why we are accelerating for CENTRIC.

Coming back to the subscription, there are 2 ways to answer to your questions. One is, for sure, we will continue to offer the upfront license model along the side with the subscriptions. And there are fundamental reasons for this. One is because there are certain industries which are CapEx based, and we need to respect this and the upfront system is much more convenient for them. There are certain industries like the defense. They do not want you to operate the software for them. It does not mean at the end, the license will not be cloudified, if you want, but we will definitely not be the one operating the system for them.

And you have certain countries like China where the subscription and the SaaS will not be widely adopted for a certain fraction of the market for obvious reasons. So if you do the sum of this, the upfront license is a little bit less than EUR 1 billion over the year, for 1 year. It will progressively reduce to EUR 0.5 billion. But I do not expect this will be below this.

Now why I'm saying this is because for all the others, obviously, we are pushing the subscriptions, especially for the large contracts. And there is one simple reason for this. Most of the large contracts have a cloud component right now because usually, it's a minimum of 5 years commitments. And the reality is the system we are developing is extremely sticky. So you do not make this investment only for 5 years. You do it for a minimum of 10 years. So clearly, for them, they need to integrate the cloud architecture in what they do. So the cloud business model is coming with it. And that's an easy way for us to push along this way.

Then after you have the indirect channel. And this is maybe where it's a little bit tricky. Let me explain to you why. Because for the partners, there is a big difference from a cash flow standpoint between the upfront subscriptions. And the danger is what? It would have been easy for me to put a lot of incentive for them to move to subscriptions. If I do that without having a tight control, the risk I'm taking is for them to repurpose the large support and maintenance revenue stream we have, thanks to the large installed base into subscriptions without expanding the scope of what we do. And the entire purpose of the SaaS business model for us is to expand. So that's the reason why I do it basically sequentially, and we do it with some specific offer.

Now if we step back, I think -- if I link the previous conversation I had with Jay about how the platform is used now with the cloud and how the supply chain is also endorsing the platform in order to unlock the AI capabilities, it goes with it. For SOLIDWORKS, I think the subscription is right now exceeding 35% of the total of the mix. We are gaining in the mix almost 5 points every year. But we see this accelerating. So in, let's say, I guess, in ahead of 2026, probably we will be at 50% already.

The net of this, and this is what Rouven was saying, at the end, if you look at the recurring revenue, the subscription is already being at almost half of it, if not surpassing that, it will be more than 50 in '26. So this is a triggering event because, as you could imagine, now the growth will be extremely visible in the recurrent part. When it was only 1/3, obviously, it was diluted by the rest. So this is how we have, let's say, a better control in a way how we are pushing the subscription over the time, David. Long answer, but I think you have the framework of all the levers we are using in order to make it [indiscernible].

Our next question comes from the line of Jason Celino of KeyBanc.

I think one of the components of your Q4 guide is leaving room for the possibility for longer sales cycles. I wanted to ask about the sales cycles that you saw in Q3, particularly on the Industrial Innovation side. Like did you see or are you seeing longer sales cycles? Or is this just a component for Q4 to leave some cushion?

Yes. Thank you, Jason, for the question. Yes, the answer is yes. Yes, we are seeing that. We have -- we always said coming into H2, we have a pipeline that is more weighted H2 versus H1. And we -- in fact, we're confident to be on line to meet our annual guidance. And really besides what we discussed on lower-than-expected MEDIDATA and also the situation on CENTRIC we just discussed, there is also an impact of decision cycles on large contracts that we need to take into account. I think we have -- we had a good quarter in Q3 with 9% growth in Industrial Innovation. But we also have, of course, more potential of deals that are moved into Q4 or are still in our pipeline to be closed, I would say.

Now that's a reality. But I think what's important for you to know is none of those deals we are losing to competition. We are building those and closing them at the right time with the right economics and in the right model, as Pascal said, because we want those contracts to be not onetime. We want those contracts to be recurring like a springboard for value creation and transformation. And this is why we are taking a very focused and specific approach on closing those transactions.

Okay. Okay. And then on MEDIDATA, it sounds like you're expecting similar trends in Q4 and your enterprise motion is not able to compensate for the declining volumes. But what gives you confidence that clinical trial volumes in Q4 won't decline further?

Well, I think the trend right now that we are seeing is going is a declining trend. It's fairly, I think, clear picture that we see in 2025. In our 2025 number, it's an outlook of being in line with Q3. For Q4, this is baked in. The real question will be what's going to be in 2026, the starting point. But as it relates to the clinical trial volume, I don't foresee for Q4 similar than Q3. I think this is -- we have that level of visibility at this point. But what was for us more difficult to assess after the first 6 months is are we able to see that swing back to growth? Is volume stabilizing because it was under pressure in the first 6 months. But still if there is a balancing effect throughout the year, it definitely would have stabilized our ability to deliver the full year. But looking into the first month of Q3, giving us a picture for Q4 because this is the ongoing assumption, that's why we are assuming Q4 in line with Q3 trend for the volume part.

May I ask -- may I add something. Jason, one thing, which is I want just to be sure we are clear on this. In fact, we are offsetting the decrease of MEDIDATA with the PLM activities, except it's not reported in the line of Life Sciences. It's the Industrial Innovation. Because if you do the math, minus 3% for MEDIDATA, believe me, we do much more than EUR 10 million with the PLM on the rest of what we do. So overall, we are growing in the Life Sciences.

So I will not [indiscernible] you to jump to the wrong conclusions. Nevertheless, we echo what you say, Rouven, we have not yet balanced the effect of the termination of the studies and not being able to compensate with the new starts. So the volume is still at stake, but the enterprise-wide is growing more than double digits, and it's offsetting largely this, except it's not reported in the same lines. So when you do your comparison with our peers, it's an important thing you should take into account.

Our next question comes from the line of Michael Briest at UBS.

A couple from me as well. Just firstly, it hasn't come up in a while, but what does the M&A pipeline look like? And given some of the operational challenges and organizational changes you're making, do you have the willingness to take on large-scale M&A at the moment? And also, if M&A is not really on the agenda, what about buybacks to capitalize on the weak share price?

Well, I'll take it, Rouven, if you want. So no, no, no, I think we have a pipeline for M&A. And again, the management change you are talking about are extremely, as a way, well prepared. If you are referring to CENTRIC, Fabrice is with the company for the last 20 years. He's already -- he was CEO and President for more than 5 years. So clearly, the team is prepared for this. So now the topic is much more for us, it has to be relevant for what we want to do. And all the acquisitions we are considering right now should be projected in the concept of -- in the framework of the 3D UNIV+RSES we are binding.

So you need to have a cloud and an AI component in it to justify the fact that we basically will invest a significant check. Otherwise, we will continue to do some natural extension of what we do. The recent acquisition of Contentserv, for example, is a good example of how we could expand CENTRIC. And we have this also [indiscernible] of pipelines across many domains we do. So no, it's still on the agenda, Michael. But as usual, to do the big move from a transformation standpoint, it has to fit with the strategy of Dassault Systemes and where we want to go. That's always been the guideline, and we will continue to do along this.

Okay. And then just on OUTSCALE and cloud. I mean, I think you have a proposition in France for sovereign cloud. There's a lot of sort of interest in that topic currently. And there's AI Gigafactories being developed with EU support. So can you talk about your ambitions in cloud and maybe whether you would look to use the hyperscalers more or less and the CapEx consequences of that?

Okay. So 3DS OUTSCALE is 2 things for us. One is to address the sovereign cloud, which in a market, now it's becoming a real market given what is happening around the world. By the way, it's not only true for France, it's true for many countries around the world. So the fact that we comply with some specific French standard does not mean we are not complying with others. Just keep this in mind. But it's not one or the other. We should do both. So we should continue to develop OUTSCALE accordingly to ramp up with the hyperscaler. And since day 1, we had this strategy. I mean, AWS is the other part of what we do, and we are relying on them on many things we do. And the fundamental reason is very simple.

When we are addressing either industry or geo where we do not have a critical mass, it's much better to start with AWS because for the one who knows the business model of data center is very simple. The day you open it, it has to be fully loaded. If it's not fully loaded, you will never have your payback. So the way to do it with the hyperscaler is we are using the hyperscaler to create, if you want, the footprint and the base. And when the base is enough, we open the data center in order to have the full benefit of it and keep the margin for us. That's the strategy.

This is very simple. And the more we expand with the cloud in a way, the more we're going to use also indirectly the hyperscaler in conjunction with 3DS OUTSCALE. From a CapEx standpoint, I think we did a good job until now to keep it in the norm. And just because we have this flexibility, we will not be catched by this. This is basically directly your question.

We take our last question from the line of Derric Marcon at Bernstein.

Two questions, if I may. The first one is on the guidance for new license or upfront license revenue. So revised downwards today. Can you help us to bridge previous guidance versus today guidance? And would decline be the norm for the coming years instead of the kind of stability you were presenting before? And I'm also referring here to Pascal comment about dividing by 2 this EUR 1 billion revenue line. Is it for the next 3, 4 years? Or was it a comment with a more long-term horizon?

And the second question is on the large deal you signed in Q3 for the [indiscernible]. I'm just trying to understand if it's a multiyear hybrid contract as we saw with other carmakers. And if it's the case, why we haven't seen the benefit of that in the upfront license revenue line, the famous 15% to 20% revenue booked upfront with this kind of contract.

Thank you, Derric. And let me clarify to the first question on the upfront license. And I guess all the three questions you're asking are very connected. So I will try to connect the dots for you here to clarify this. Again, when you look at year-to-date in Q3, the growth is in recurring subscription of 16%. And you reflect on what Pascal said before when we talked about the topic of CapEx versus OpEx and whether we give customers the choice.

The reality is the large contracts we are signing, they all have cloud. And with that, we have a model that allows us to create a more ratable revenue line than what the traditional multiyear subscription with upfront license was before the case. And now you consider that, that all of the flexible hybrids that are more ratable because of the cloud component are reflected in our subscription revenue. And that's, of course, is a catalyst for the subscription revenue growth. And as more and more of the large contracts are in the subscription line in a recurring way, year-to-year recurring, of course, it has an impact on the upfront license part, which is less. And you see that. And that's -- now the difficulty in terms of the guidance is it's very hard to assess coming into a quarter, coming into a year how much of this is going to be recurring versus upfront. And this is why we are -- we want to give you a narrower range on the subscription part because there is a strong contribution from deals that we have signed that are ramping and that adding to the subscription growth.

And by definition, the upfront license is always a point in time, and there can be variability. And that's what you see reflected in the Q4 guide with a larger range on the upfront license part. That's simply what's behind this. And I think I've answered also the third question because for the large deals that we have signed that are cloud and subscription base, you see them reflected in subscription. That's the model going forward. Does it answer your question, Derric?

Yes. And for the, let's say, medium-term view, long-term view, the license revenue decline that we should expect is the flattish aspiration still valid or it's today no longer the case?

Upfront license.

Yes, just for license, the EUR 1 billion.

Yes, yes. No, it's not going to stay flat. We just said it's going to approach EUR 0.5 billion over time, cannot be flat if it's EUR 1 billion today. So it will decline over time. But it will be -- the growth will be reflected over proportionately in the subscription part on a recurring basis. And with CENTRIC, that's another element of it. It's going to add to this model and because as you rightfully said before, multiyear contracts that we signed with CENTRIC, the real revenue growth was in the upfront license part, which is as you are changing the model, will become recurrent. That's what we're focused on, and that's our priority.

This was our last question. So I hand the conference back to the speakers for any closing comments.

So I want to take the time to thank all of you for the time you spend with us and thankfully, a few questions you raised. More than ever, I'm convinced we are doing the right things. And if you look at the market conquest and the dynamic with the large customers we are winning over the last 12 months, we are building the foundation for the growth for the coming years. The fact that we are willing to accelerate the transition to the cloud and to the subscription, I think it's the right thing to do. And you should see it positively rather than to challenge us on this way because I think at the end, we are doing the right things.

Now Rouven and I will be on the road in the coming weeks, and I hope we'll have a chance to see some of you, if not all of you in the coming days. And I hope we will follow up these discussions. So see you no later than early next year. And for the one, I will have a chance -- Rouven and I will have a chance to see in the coming weeks. Okay, it's all [indiscernible], Rouven.

Thank you so much.

Bye-bye. Thank you.

Good morning, everyone. I'm Stacy Pollard. I'm here with Dassault Systèmes' CEO, Pascal Daloz; and the CFO, Rouven Bergmann. 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 Daloz.

Thank you, Stacy. 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 healthy margin, and I think Rouven will come back on this. And we -- 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 strength 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 1/3. 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 earnings per share came at EUR 0.29 and growing at 10%.

So behind this number, I think there are certain things I would like to highlight and which are our strengths. The first one is Industrial Innovations, especially Transportation & Mobility, we continue to expand our footprint. And despite the ongoing challenges in this sector, we have also a strong momentum behind 3DEXPERIENCE and SOLIDWORKS this quarter. The second thing is, I think our focus on accelerating SaaS adoption is starting to pay off this quarter, you will see. This is driving the revenue growth and the strong market traction. 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 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 new category of solutions. And you remember the Virtual Twin as a Service, the generative experience and the virtual companions, and we will 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 earnings guidance, and we expect the EPS to grow between 7% to 10%, with the total revenue rising 4% to 6% on an adjusted basis, and it's mainly due to 3 factors. The first one is the lower growth from MEDIDATA, which is in line with Q3, in fact, the impact of the SaaS acceleration 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 & Mobility has once again proven its resiliency. And to give you the numbers, this quarter, we are growing at 18%, one-eight. 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 5 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 widely the 3DEXPERIENCE platform, is because they are using our solution first to speed up innovation. And speed is becoming really one of the key topic. 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 3DEXPERIENCE 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 Rouven will say more about this. We still see the new clinical trial start being contracted. Nevertheless, we landed with some big contract this quarter. And more importantly, I think we're also being encouraged by some large win backs. AbbVie is one of them. And you remember, it was one of the flagship customer of Viva a few years ago. They signed with us a contract for the next 5 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 foundations is critical for them also for the AI-based programs, and I will come back on this.

In Infrastructure & 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 opportunity 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 virtual 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 a significant footprint with PSA, but the rest of Stellantis was much more in the hands of our competition. So what do -- they took the decisions to -- I mean, to standardize on 3DEXPERIENCE platform on the cloud, which is, I think, 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 approach, system-to-system approach as a way to standardize across all the domains to unify the bill of materials, but more importantly, against, 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 3DEXPERIENCE platform is ready 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 say a few words. So AbbVie, it's a global biopharma. It's one of the top 10 global pharma. And it's a win back. And it's a win back of a win back, let's say 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 10x 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 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 argument, 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. Korea Hydro & Nuclear Power is the largest energy public enterprise in Korea, and they have launched the digital transformation to manage, I was telling you, the decommissioning of 26 reactors. So the reactors 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 installed base. They showcased this example, this case in Koreans 3DEXPERIENCE forum a few weeks ago, and I was having the chance to participate to 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 UNIV+RSES. So you remember, we announced it in Feb this year, and I was making this statement, 3D UNIV+RSES 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 400,000, almost 400,000 customers worldwide in a very different sectors, building the virtual twin of all the objects you can see on the slides. And this is a unique purpose to train our systems. So -- and remember, AI without having high-quality data is just only a noise. But if you have the right data, it's becoming 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. The AI needs to be built on physics, biology, material sciences, engineering principles. And why so? Because when life are at stake, whatever it's -- when you develop a drug, when you fly in objects, when you have driving an autonomous car, you cannot take risk. The system should not guess, should not hallucinate. You need to understand how the parts fit together, how the materials behaves. 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 3 for the time being. You have AURORA which is our business strategies, focusing on the outcome and efficiency. You have Léo for engineering experts, and Léo is really diving deep into design and simulations. And you have MARii is our scientific authorities handling the -- probably the most advanced questions on research.

The interesting things, if you ask the same questions to all of them, you have different answer. So more than a long explanation, let's look at the video.

[Presentation]

So as you can see, it's not just about AI. It's about having an AI, which is behaving like your team because you need -- when you do engineering activities, you need to assemble different domain expertise at the same time. And if you try to converge too rapidly to the solutions, at the end, you are letting some open opportunities untapped. And this is basically what we are doing with the virtual companions, which are a way to complement and to enrich the roles we have developed. Now this is also an interesting thing because you can use AI as a way to take smarter decisions and faster. And here is, again, a concrete example. It's AURORA. And AURORA is widely used by many industries for currently to deal with the tariff, with the trade policies, the supply chain issues. because this is changing so much that you need almost every day to reactualize your what if scenario.

So AURORA, in this case, is not only anticipating but reacting. She anticipates the turnaround, the uncertainty. She try to manage with data-driven insights, the consequences. And this is important because for many industries, the margin is at stake. So to keep it you ahead, the system, if you want, is helping you to collaborate, is bringing you the right expertise, is telling you what are the different avenue you have in front of you in order to fix the problems at the right times.

Now let's speak about SOLIDWORKS. This is an interesting -- this is a very important year for us. It's a milestone because we are celebrating the 30 years anniversary of SOLIDWORKS. And why this is important? Because if we step back, after 30 years, I think no one will debate that SOLIDWORKS is the undisputed leader in the 3D CAD. And I put some numbers on the slide just to give you the proof, 8 million users. It's by far the largest design community around the world, 1.5 million commercial license, which is truly addressing the large company, but also the start-ups and all the shakers. It's almost 300,000 clients worldwide and again, covering the large spectrums of all different industry we serve. So it's a lot of legacy of innovations that we are keep pushing from a product development forward.

And I think now with SOLIDWORKS, we are also introducing the artificial intelligence to build the next phase to make it faster, smarter, easier to use, in fact. And the topic for us is not only to automate tasks, but more importantly, to give more time for the creativity. And we have some features we are introducing and some functionalities. The first one is obviously the generative design. Second one is what we call assistive features. which is an intelligent and pattern of recognition when you do, for example, an assembly. And all those kind of things are really helping the users to work smarter, but not harder.

Behind this, I think if there is one message I want you to keep in mind is this AI approach is a way to do the docking bridge with the 3DEXPERIENCE platform. As you know, this topic is at stake for several years. And I think now I believe we have find the routes to connect the SOLIDWORKS' large installed base we have with the 3DEXPERIENCE platform. It's a way if you want to turn the SOLIDWORKS users into the lifelong experience partner. So I think -- and Rouven will come back on this, but you will see the performance of SOLIDWORKS this quarter is really extremely good. It's growing at double digits.

Now to conclude, I think why everything I share with you matters. There are a few things. I'm sorry, I should not anticipate your presentation Rouven. The first one is 3D UNIV+RSES is giving a few and large advantages. The first one is, you remember, we are helping our customer not only to manage the full life cycle of their products but more and more to manage the life cycle of the intellectual property. And you should remember what I'm telling you. In this AI periods, the most important is assets is intellectual property because everything you built is leveraging the intellectual property. And if you do not have a way to manage it safely to take it as a real asset to manage your life cycle the same way you manage the life cycle of the products, you take the risk to be out of the game. And this is what we are bringing to our -- to mix the different knowledge coming from different sources, but at the end, still tracking will belong to what to.

The second thing is, in many domains, we are turning compliance into a competitive advantage. If you take aerospace, if you take health care, if you take energy, those are extremely heavily regulated industry. And one of the answer to the tariff war is to put more regulations. That's the way to protect, if you want certain markets. The flip side of this, if you are an industrial company, you have to manage with this complexity. And AI is a fantastic tool to read millions of documents to extract 1,000 rules and us, what do we do with those rules? We do design -- we do compliance by design, if you want. The system is checking automatically that everything you do, every design you do, every decision you do are compliance by design.

The third element, I think generative AI is really a game changer as soon as you can trust it. And your AI in many industry we serve needs to be certifiable. If you cannot certify the output of what you have produced with AI is useless. And the way to do it, if you remember, we are training our AI on very comprehensive data sets, which is pretty unique. And those are very high quality of data sets. And it's validated by the science, which is even more important. And we are deploying those artificial intelligence capabilities into a secure and sovereign environment, which is what we do with 3DS OUTSCALE. So this combination is pretty unique on the market. It's very differentiate -- it's a huge differentiations compared to many of our peers. And this is, in my view, a game changer in many, many customer engagements we have right now.

The last but not least, I think we are coming on the market with a new category of solutions. You have seen this morning the virtual companions, AURORA, Léo and MARii, but you will see more and more the generative experience, the virtual twin as a services. We have a road map for this -- for '26, '27, and this will accelerate the contribution of AI in our revenue streams.

So with this, I think it's time for me to hand over to you, Rouven to give more flavor on the numbers and probably the outlook for the rest of the year. The floor is yours.

Thank you, Pascal, and also welcome from my side to our call today. Thank you for joining us online and here in the room in London. Let me start with 3 key messages. First, top line growth and margin expansion are our top priority. Second message, the 3DEXPERIENCE platform is driving our business model shift to subscription and recurring revenue growth. This engine is working well with 16% growth of subscription this quarter. The third message is we are mission-critical, as you saw in the examples to our clients. In fact, in 2025, we are winning significant contracts with many of the top industrial companies across the world, and this is laying the foundation to long-term value creation with cloud and AI. It is these powerful long-term partnerships that give us confidence in our long-term targets.

Now before I dive into the specifics of the quarter, a few more things to summarize briefly for you. Our financial results for the quarter were solid with 5% revenue growth and an expanding operating margin, which is up 100 basis points and 10% growth in EPS. Industrial innovation is driving the growth of 9% in the quarter and 8% year-to-date, while MEDIDATA and Centric were softer than expected. As discussed previously, the repositioning of MEDIDATA is ongoing. The change of the model to reduce the dependency on clinical trial activity will take time as we are doubling down on the enterprise and the PLM opportunity in Life Sciences. And for Centric, we're accelerating the SaaS transition. And to this effect, we have promoted a new leadership team, as you heard from Pascal.

Now looking at the full year, we adjust our revenue outlook to 4% to 6% ex-FX, in line with our current trajectory of 5% top line growth year-to-date. At the same time, we maintain our EPS growth target of 7% to 10% ex-FX. This is thanks to the strengthening of the operating margin driven by additional efficiencies we are generating in the business.

With this in mind, let me take you through the details. In Q3 and year-to-date, total revenue software were both up 5% ex-FX. Recurring revenue was strong, up 9% in the quarter, and it highlights a very solid acceleration when compared with 7% year-to-date. Subscription revenue growth was 16%, and it was driven by new deals signed in the quarter and the increasing visibility from large contracts that are ramping. As a result, subscription revenue now represents almost half of the recurring revenue base. It's up 3 points from last year. And starting in 2026, subscription revenue will surpass maintenance revenue in absolute terms. 3DEXPERIENCE was the growth engine behind that, up 16% in Q3, and the signings of Ford and Apple contributed to the strength in subscription growth.

Upfront license revenue declined 13% as our clients continue to adopt the subscription model at an increasing rate. The best proof of this is that recurring revenue now accounts for 84% of the total software revenue year-to-date. The operating margin improved 100 basis points for the quarter and is driving strong EPS growth of 10%, thanks to the productivity gains and cost discipline. In fact, OpEx was up 3.1% in the quarter, and we continue to rebalance resources to support our growth strategy.

Now turning to the growth drivers. In Q3, we saw very good 3DEXPERIENCE revenue, and it's now representing 40% of software revenue year-to-date. The growth was broad-based, up 16%. Cloud revenue was 8% in Q3, 7% year-to-date. 3DEXPERIENCE cloud revenue grew 36% in the quarter and 29% year-to-date. The key wins for 3DEXPERIENCE cloud, such as Ford, [indiscernible], Dallara Automobili and Stellantis demonstrate the value of the platform for our clients where transformation is critical as is the need to leverage AI.

Now let me review the Q3 actuals versus our objectives briefly. Total revenue came in at EUR 1.461 billion in the quarter, mainly affected by currency headwinds. Excluding currency, growth was 5% at the low end. Operating margin was 30.1% and above the objective to 60 basis points from performance and a negative currency effect of 20 basis points. EPS was EUR 0.29, driven by better operating performance against a small currency headwind.

Now looking at the geographies and product lines. The Americas rose 7% in Q3 with good performance in Transportation & Mobility, High Tech and Aerospace & Defense during the quarter. Europe was a bit softer at 4% in Q3 with double-digit growth in Southern Europe, solid performance in France and also Germany. This was supported by subscription momentum, especially in Aerospace & Defense. Asia was up 4%. India had an outstanding quarter. Korea was up double digit. Here again, strong performance of Transportation & Mobility as well as Aerospace & Defense. China experienced softness in Q3, but also on a tough comparison base when looking at last year's number.

Now let me review the performance of our product lines. As mentioned previously, Industrial Innovation delivered excellent results in 2025 across key domains led by CATIA, ENOVIA and DELMIA as well as SIMULIA, highlighting the value of the 3DEXPERIENCE platform is delivering to our clients. So it's broad-based across domains. We are mission-critical to the transformation of our clients with superior capabilities to generate virtual twins. Life Sciences growth was lower than expected. It was down minus 3% in the third quarter with MEDIDATA impacted by continued study start declines, but importantly, continuing to gain market share. Overall, from an industry standpoint, the volume business continues to face pressure.

When we entered 2025, we had assumed that volumes would stabilize, helping to support our forecasted growth in the second half. Conversely, we observed a decline in high single digits in Phase III studies and mid-single-digit decline across Phase I and Phase II since the beginning of this year. While we are expanding our market share, the impact of the decline in study starts is not yet compensated by the growth from the expansion with our enterprise and mid-market clients who proved resilient. As you heard from Pascal, we had a major MEDIDATA platform win back, the top 25 pharma, AbbVie, after a brief period with a competitor, AbbVie decided to return to MEDIDATA for all clinical trials, leveraging AI everywhere. This validates the trust clients place in us and the value of the MEDIDATA platform.

Additionally, in Q3, we expanded partnerships with Sanofi. You see the press release this morning and also expanding our business with IQVIA, including Patient Cloud. Looking at Life Sciences outside of MEDIDATA is the opportunity to win with PLM is our clear priority. For the first 9 months, growth is up double digit, highlighting the strong potential of our portfolio to address the challenges of this industry.

Now moving to mainstream innovation. Growth in this segment was mainly driven by SOLIDWORKS, as you heard. The shift to subscription is well underway at SOLIDWORKS. Centric growth was slower than expected in the quarter due to some shifted renewals, and we saw an acceleration in the share of clients adopting the SaaS model.

Now turning to cash and the balance sheet IFRS items. Cash and cash equivalents totaled EUR 3.910 billion as of Q3 compared to EUR 3.953 billion at the end of 2024. This decrease of EUR 43 million on a euro basis was driven by a negative currency impact of EUR 269 million. At the end of the quarter, our net cash position totaled EUR 1.321 billion, a decrease of EUR 138 million versus a net cash position of EUR 1.459 billion at the end of last year. Now let's take a look at what drove our cash position at the end of the third quarter year-to-date.

We generated EUR 1.334 billion in operating cash flow for the first 9 months versus EUR 1.348 billion last year. The cash conversion from non-IFRS operating income was 97% for the first 9 months. Cash conversion is a top priority, and we expect the conversion to improve going forward. And starting Q1 2026, we expect working capital to support cash conversion reaching the 2024 levels with the potential to improve further. As discussed previously, 2025 operating cash flow is impacted by significant contracts that we signed in the quarter as well as higher payments related to tax and social charges as well as negative FX.

For the full year, we now expect operating cash conversion -- for the full year 2025, we now expect operating cash conversion to be in the range of 78% to 80%. To sum up, operating cash flow year-to-date was mainly used for the -- for investments, EUR 581 million, of which EUR 240 million was for acquisitions, EUR 216 million for the purchase of the Centric noncontrolling interest with the remainder of CapEx of EUR 123 million to support our cloud growth. We paid EUR 343 million in dividends and made a net repurchase of treasury shares of EUR 186 million. For any additional information, you will find the operating cash flow reconciliation in our presentation that we published this morning.

Now let's transition to our financial objectives for 2025. Net-net, our year-to-date revenue is up 5%. For the full year, we now adjust our revenue outlook to reflect this trajectory and expect growth of 4% to 6% ex-FX for both the total revenue and software revenue versus 6% to 8% previously. In absolute terms, we are adjusting the full year revenue outlook by approximately EUR 140 million to the midpoint. This reflects an impact of EUR 30 million from Q3 and an FX impact of about EUR 20 million. The remaining delta can be explained by 3 factors: a, the lower growth from MEDIDATA in line with the Q3 performance; b, the impact of the SaaS acceleration at Centric; and last but not least, we also factor in an increasing macro volatility with the potential to impact the timing to close large transactions. Please also remember that we had a high comparison base in Q4 of 2024.

Now looking forward, the change of model for Centric is on -- sorry, the change of model for MEDIDATA is ongoing. And we are confident as well into the accelerated SaaS transition of Centric given its strong positioning in a very large market and clients are endorsing it. For Industrial Innovation, we have built a very strong foundation in 2025, where we signed significant contracts, and we expect in 2026 to expand on these partnerships, transforming with virtual twins and generative experiences. And last but not least, the SOLIDWORKS momentum is strong.

Recurring revenue outlook remains stable. It's at 7% to 8% growth. And underscoring what I said at the beginning, we are implementing a sustainable recurring growth model with increasing visibility. Above all, I mentioned the strength of our operating model, highlighted by the margin improvement. As such, we are maintaining our EPS growth expectation of 7% to 10% growth or EUR 1.31 to EUR 1.35. To achieve this, we expect Q4 OpEx to continue to trend in the same range of Q3, delivering margin expansion of about 100 basis points, which is driven by ongoing productivity initiatives, having the right people at the right place to make it simple. So this is all based on FX assumptions for an average rate for the year of euro to dollar at $1.13 and euro to yen at JPY 166.7.

Now briefly on Q4. As you can see, the revenue range of 1% to 8% is fairly large. This is predicated on potential uncertainties in the timing of deal closing, mainly for the upfront license business, while subscription growth of 8% to 12% is solid on a high comparison base. Operating margin is expected in the range of 37.2% to 38% and EPS growth of 7% to 17% ex-FX to hit EUR 0.41 to EUR 0.45 EPS for the quarter, reflecting the ongoing operating leverage.

Now as I reflect on the performance so far this year, I want to highlight that our operating model is resilient, and we apply strict financial discipline to support our long-term growth. We occupy a unique leading market position in which that makes us mission-critical today and tomorrow for our clients. Profitable growth and improving cash conversion, as mentioned, is a top priority with clear objectives to show results starting 2026. AI and cloud are 2 main growth drivers. We are confident we will deliver on their ambitious growth targets. We are committed to continue to invest right for innovation, for clients and for shareholder value.

Now Pascal and I look forward to take your questions.

[Operator Instructions]

We pause for a brief moment and take questions from participants in the room first.

It's Adam Wood from Morgan Stanley. Maybe just to start off, you finished off even identifying that it is a reasonably large range for the fourth quarter in terms of revenue growth. Could you maybe just talk a little bit about what is in there at the bottom and top end of those ranges in terms of pipeline conversion assumptions on big deal closings? I mean, at the bottom end, are we assuming that none of the big deals close? Just to give us a little bit of a feeling for what's in there and how conservative that bottom end is? And then maybe just secondly, Pascal, you talked about the huge breadth of customer data that you have that you can train models on and use for AI. First of all, could you just talk about how challenged that is where customers are still on-premise? And then how much does that force them and accelerate the shift to cloud with the impact that has on the revenue transition?

Thank you, Adam. I'll take the first question. The -- can you hear me well? Just working with microphone. Yes, there's a wide range on license. The recurring subscription part is fairly consistent compared to our performance year-to-date. I think that's important to note. On the range, the low end of the range is derisked with large transactions. We have a long list of large deals that we have all validated extremely detailed to see where they can fall and the size of those transactions in different scenarios. What I said, given that increasing macro volatility and the timing that -- and the impact on timing of closing this could create, we were prudent to reflect at the low end, a more conservative and prudent perspective of large deal contribution. So the midrange -- the midpoint requires some of those large deals, but we have the potential to do better because our pipeline is strong, but it's depending on the timing of closing of those large deals and the size of those large deals.

Coming back to your question about the transition from the on-prem to the cloud and how it is linked with AI. Definitively, AI is accelerating the trend, right? And there are a few reasons for that. One is because no need to wait to have transition everything before to start AI. And the way we do it, we do what we call supplemental. So when you have a large installed base or large deployments of the 3DEXPERIENCE platform on-prem, we come with an instance on the cloud in order to basically enable all this AI new category of services we are developing. And this is really accelerating the trend. And you have seen in the number, it's 36% growth this quarter, the cloud related to 3DEXPERIENCE platform. It's 30% since the beginning of the year. And it's extremely correlated also with the subscriptions acceleration with 16% this quarter. So in a way, this is helping the transition. And if you remember a few years ago, we were convinced the collaboration will be the catalyst for the people to move to the cloud. I think AI is the way to go.

Rouven, Pascal. Mo from GS. Firstly, just it's encouraging to see on the industrial business, there is pretty good momentum, particularly with Stellantis, Ford. As you look kind of into next year, as we think of some of the headwinds and the tailwinds, how should we think about the kind of growth across the different sort of segments of the business? Because obviously, in mainstream Centric has a transition still to navigate. On the Life Science side, it sounds like kind of visibility is still reasonably low, but the industrial business is ramping. So how should we think about the sort of puts and takes for growth next year?

And then secondly, as we think about the Life Science business, have you sort of -- clearly, it's sort of behind plan. How do you think about the kind of strategic sort of view of this business over the medium term? You're willing to kind of write it out? Or is it something that perhaps maybe you need to kind of change the scope of to try to extract more of the growth areas that are probably better positioned?

Do you take the first one, Rouven? I'll take the second one.

Okay. In terms of the building blocks more, when we look at the trend of 2025, Industrial Innovation up 8% year-to-date, 9% for the quarter, very much supported by the strong growth in 3DEXPERIENCE adoption. That's a very healthy and sustainable trend. That was always our objective to convert that growth into recurring revenue and subscription growth. As I mentioned that in year-to-date, there is -- and in Q3, there is always good contribution from new deals that we are signing, but also contribution from deals that we have signed in previous quarters that are ramping and are contributing to growth in the current quarter. With many of the significant deals we signed in 2025, this will be the case in 2026. So from an industrial standpoint, manufacturing industries, including for SOLIDWORKS because in SOLIDWORKS momentum is also favoring. I think we are fairly confident in our ability to continue to transform these huge industries. And in a way, many of the deals that we signed are a starting point for what's expected in 2026 and beyond.

So without giving you guidance for 2026, but I think from that perspective, the 2025 trends are healthy and stable and sustainable. Related to MEDIDATA, the growth profile, yes, is very much affected by the volume business as we are changing the model to become more enterprise and more sticky by really looking at an enterprise solution to transform life sciences with the objective to generate evidence and outcomes faster for patients. And that's not just in the clinical trial, it's in research, in biology, but also in manufacturing and quality management and the whole life cycle of real-world evidence and trials and patients.

So the opportunity is large, and we are making the changes to be in a better position in 2026 now. Now for 2026, I think we want to be cautious on the growth contribution from that part. We're not expecting a decline in 2026 from Life Sciences. I think we are in a better position in 2026 than 2025. That's our starting point. And for Centric, the situation is difficult in 2025, but it will improve in 2026. The SaaS acceleration is imminent. It's already happening as we are speaking, because customers are transitioning faster to the SaaS and cloud solutions than to the on-premise. And we expect around mid-teens growth for this business next year. And if you add all of that, I think we are -- we should enter 2026 with confidence. Of course, the macro standpoint is going to weigh, and we have to assess that. But the building blocks are in place and are shaping. That's the message to you.

The second part of your question, Mo, is if we do -- if we consider Life Sciences still being strategic for Dassault Systèmes, right? Ultimately, this is the question you ask. And the answer is yes. And there are a few reasons for this. One, if you look at who are the industry spending the most in research and development, Life Sciences and High-Tech are the 2. In the previous century, it was the auto and aerospace. In this century, they are the 2 spending the most. And if you remember, the core market we serve is really the innovation space, and we are obviously serving the one spending the most in innovation. So from market attractiveness, there is no doubt.

The second reason is because we did not diversify in the life sciences only for the purpose to expand or to diversify the market. It was also a way for us to learn new scientific -- at least to develop new scientific foundation. Let me tell you why. If we want to address the sustainability challenge, we need to understand how life is generating life, right? This is -- it seems maybe a little bit far from the day-to-day numbers. But from a scientific standpoint, this is extremely important for us to crack how life is designing things. And my bet is the next generation of generative design will -- from a scientific standpoint, will come from this space. So this is the second reason why this is so important to continue to invest and to crack this sector in a good way.

Now the question, what are we doing to change the game? Rouven already answered partially to these questions. The first one is we need to minimize the dependency on the volume of clinical trial. That's obvious because right now, the model is extremely sensitive to this. So when the market is booming, we are getting the full benefit of it. You have seen it during the COVID time and just after the acquisition of MEDIDATA. But when the market is shrinking, basically, you are penalized. And I know every quarter, I'm repeating this, the worst of the worst is, in fact, we are gaining market share. But you have hard time to figure out because you see the number decreasing. In a way, we are reinforcing our position into this space. So the way to do it, there are 2 different axes. One is to be more sticky and less dependent on the number of clinical trials, which is the enterprise approach, which is nothing more than the PLM approach we are applying to the sector. And we see a lot of traction downstream.

All the topics which are related to the manufacturing, to the supply chain management, how to accelerate the transfer from the lab to the production system are extremely critical. Why -- the reason why we signed with Sanofi, the extension was they have 12 molecules in their pipelines. They need to basically put on the market in the next 3 years. They want to speed up the ramp-up for the production and to gain almost a year compared to what they used to. And the way to do that is very simple. You do most of the ramp-up production when the molecule is still at the lab level in terms of development. So you do what we do in other industries, except we do it specifically for the life sciences.

So this is one axis to be enterprise-wide and to focus on the downstream and basically climb up, if you want, the value chain. The second one is MEDIDATA is a medical platform. The 3DEXPERIENCE platform is an enterprise platform, but MEDIDATA is a medical platform. And if you look at what kind of information we have into the systems, those are the medical insights for right now only the clinical trial and the intent is to expand the usage of this medical platform when the patient, they are under treatment. So this is what we call the patient centricity because there is no reason we cannot follow the patient when the patient is taking the drugs. And we can follow this, we can follow the adverse effect, we can follow -- we can make prescriptions, how to do -- to take the drugs, when it is the appropriate time, right? There are many, many services we could imagine around this way. And this is the strategy we are building around myMedidata. Those are the 2 axes we are using as a way to, if you want, be more sticky and less dependent on the volume of things.

Now this is requesting to change the offer, right? And this is what we are doing. In the way we report the number, there is a little bit something which is hidden. In fact, you do not see the traction of the rest of what we do in Life Sciences because in the Life Sciences and Healthcare line, we are only reporting basically MEDIDATA and BIOVIA. But we are selling more and more DELMIA, ENOVIA, SIMULIA and also CATIA and SOLIDWORKS in the med device, and this is reported into the Industrial Innovations. So if you combine all those things, the picture is, in fact, better.

I'll repeat my question. The first question is on MEDIDATA. How are you seeing the dynamics in the U.S. evolving? It would appear that some of the overhangs, regulatory overhangs have been reducing of late. And separately, we have also seen some of the CROs in IQVIA, ICON reporting decent booking numbers of late. So where are you seeing incremental growth headwinds for MEDIDATA coming from? And as we go in 2026, are you seeing a better visibility or some improvement in the decline in starts that we have seen in 2025?

Yes, Balajee, thank you. I think the IQVIA and ICON outlooks were mixed, to be fair. So I don't think that anyone is saying we are yet through the decline in clinical trial activity. For sure, when we just look at clinical trial starts, Balajee, and the public available number that where all pharma companies are reporting their clinical trials that are starting, the numbers are down. And as I mentioned before, for Phase III, they are down significantly, and this is where the lion's share of value is concentrated for a software vendor as well, also for CROs because this is where there's the largest operation and there's -- most of the people are involved, and it is where the lion's share of the value is created. This is what's affecting us. And we have yet, to Pascal's point, to show that we can rebalance that headwind that we are facing from the volume decline with growth by creating a more sticky offering, connecting the dots across the life sciences enterprise to have that growth outweighing the decline just from the volume in terms of number of trials started.

This is the challenge that we are facing. This is what we're seeing right now in our numbers reflected of minus 3%. At the same time, when I look just at the segment level from enterprise and mid-market, both parts are growing. But also for those 2 parts, they have less clinical trials in their portfolio than what they were doing in 2019, even before COVID. So we are already rebalancing, right, with our offering and improving our -- increasing our footprint with more value that we are creating for clients for which we are -- that we are able to monetize. But when you then include the pure volume part, still it overweighs and it reduces the growth in this quarter to minus 3%.

I think regarding the U.S. regulation, right now, biotech funding is still not great, right? And that's also a reason why there's less trials started in the U.S. and in Europe. But we see an increasing trial activity, for example, in Asia, specifically in China. And that's a market opportunity that we are also addressing, but it's a different market with different economics. And now looking into 2026, it's difficult to predict what trial starts will be in 2026. I think what we should assume at this point is that our mix in 2026 is improving versus 2025 to be in a better position to offset that volatility. And offerings like clinical data studio are an enterprise offering. They are not clinical trial related. And this offering is going very, very well, and we are leading with this offer in the industry.

One important part of the AbbVie announcement is the AI everywhere part. So when you are making decisions today as a company to go -- to think 5 years out, AI is at the center. And our AI strategy is resonating very well. And this is a catalyst for 2026. So I'm a bit -- you hear, I'm a bit more optimistic than what we're seeing in 2025, but it's too early to declare victory.

Thanks for very comprehensive answer. If I can have a follow-up question. So following up on the AI debate that we have right now, and I appreciate it is a bit different for vertical software companies. But are you seeing your clients taking a pause in decision-making also on account of trying to understand what -- where the debate moves of software versus foundation model and also as your own 3D UNIV+RSES offering matures. So are customers also weighing decision and taking a pause in decision-making?

So it's a very good question. In fact, for many of our large customers, they started the AI initiative 2 years ago, in fact, by doing a lot of by themselves or sometimes partnering with start-ups. After 2 years, they are coming to the conclusion, it's promising, but you need to integrate this foundational model in the way you operate the company. And we are at this point. Let me give you an anecdote. I was with Ford a few weeks ago. And the CIO was telling me he stopped almost all the AI initiatives because now he wants to rationalize. But he want to rationalize in the productive way. He say, obviously, it's a lever for us. We have investigated many use cases. Now we need to focus on the one being more promising. And usually, the way to do this is very simple. You look at the moonshot, the one really changing the game. If you focus AI on the things which are making some improvement in what you do, you will never have your payback because AI is costly.

However, if you focus on things you cannot do or you can do with a very different level of efficiency, the payback is there. And we are really at this stage. So for us, I will say it's driving against the adoption of the platform as the data lake. They are building more and more on the foundation because there is no need to redo the job. We have already done it. And more importantly, it's already integrating in everything they do. Because at the end, if you want to design the car, you still need CATIA. The fact that CATIA is driven by an AI engine is one thing, but you still need CATIA to produce the model, to produce the geometry, to produce basically the instruction for the shop floor. This is really where we are game changer. And this is extremely difficult to do without having our foundation, in fact.

So to come back to your questions, I think, yes, there is a pause in a way people are doing less experiment -- but now they are taking the decision to focus on the core use cases, which are really productive and making the moonshot, I call it the moonshot, I mean, having a significant lever on the efficiency or opening new avenue. For example, this is what we are seeing in the material science. There are certain things you cannot do if you do not have an AI engine to do that. We are at this crossroad, but we are much more benefiting from this than something else.

It's Charlie Brennan here from Jefferies. Apologies, 3 questions for me. Firstly, I'm struggling to match the narrative on to the actual numbers. You're attributing the weakness in the quarter to MEDIDATA and Centric, but MEDIDATA is a recurring revenue business and recurring revenues actually beat expectations. Centric is partially a license business, but it doesn't feel big enough to account for the size of the license decline. Is there anything else going on there, maybe a change in revenue allocation between the 2 lines? Or what else went wrong in the quarter to justify the shape of the numbers?

Secondly, I'm hearing accelerating subscription as one of the themes coming across -- is that just Centric? Or is it more broad than that? And traditionally, it's tough to accelerate growth when you're moving to subscription. Do we need to think about a phase in '26 and '27 with accelerating license declines? And do we have to think about that in the shape of growth going forward?

And then thirdly, I should probably sneak one in on cash flow. 84% conversion in 2026 is a surprisingly precise guide given the recent track record on cash flow. Are you confident that, that takes account of all of the working capital terms on deals that you're going to sign in 2026? Or is there scope for payment terms on deals in '26 to disrupt that 84% cash conversion?

Okay. Thanks, Charlie, for the questions. Let's start -- go through this one by one. On the quarter, there's nothing else than what I outlined. I don't know where the disconnect is, but maybe I just reiterate it in simple form. Yes, MEDIDATA is a recurring business, but it also has a volume aspect of clinical trials that are starting and ending in a way they are not recurring, right? I think we were always clear about that. There's a subscription part where we contract over a period of time. And then there are studies that are starting and ending, and there is volatility to that.

[indiscernible]

Of course. But when studies are ending, they stop recognizing revenue. So there's a lot of studies ending. There's new studies are starting. If you're down minus 3% in a quarter on EUR 250 million, you can do the math in terms of how many this is, but there's a number of trials. We are running thousands of trials, Charlie. So in a market, as Pascal said, where the volume is stable, right, where we can gain growth through market share expansions, it's a solid generator of growth. And this has been the model of MEDIDATA for a long time. Now today, the volume part or the consumption business, you might say, represents about 30% of the overall business. And that business is down high single digits. And that's impacting the quarter, high single digit to low double digit for that volume business. Now it's offset by the increase in subscription contracts from deals that we are expanding and winning in the market. So that's to the MEDIDATA part. There is no magic to that other than this.

On the subscription acceleration, as I said in my remarks, it's twofold. It's deals that we are signing in the quarter and ramps that are contributing to the growth from deals that we have signed in previous quarters. We are transitioning our installed base to cloud. But in many cases, it's not a 100% transition. In the case that Pascal mentioned in his -- in the presentation, the company, Stellantis, that's 100% for that part, right? It's not contributing to subscription this quarter. It will contribute over the period of time. But we have other deals where we have on-prem and cloud hybrid deals where there is a portion in the license subscription and a portion in the cloud subscription. And that has a higher impact on the in-quarter revenue in the subscription line. But it's still recurring and it's building over time.

And this high structure of deals helps us to get away from the subscription license where the upfront portion is most significant and helps us to spread revenue more equally over time to create a more recurring base. And of course, when you look at our subscription on a quarter-to-quarter basis, it's -- I know where you're coming from, it's not sequentially up every quarter because of the on-premise part of subscription, which we well understand that depending on the start time of renewal or renewal dates, there is a fluctuation from quarter-to-quarter on our subscription business. You can go back years and you can see that. So rounding up the point, there is a contribution from deal signing in the quarter that are hybrid, where we have on-premise and cloud portion, where the cloud is over time and on-premise has more of a point-in-time impact. And then we are seeing ramping deals from deals that we have signed before.

So also here, there's no impact from -- for the Centric part -- for the multiyear deals of Centric that we have recognized over the last quarters and last year specifically and before, that revenue is part of upfront license because it's a license subscription where you upfront revenue and it impacts the license part. So that's not driving the subscription business, Charlie. But going forward, as we are transitioning this business more to an ARR model to a SaaS model, it will support the subscription growth. And that's the whole point of what we are doing.

From a cash flow perspective, Well, I think 2024 is an outlier in terms of several effects that we are facing related to tax impacts, social charges that are higher compared to 2024. That is all going to be in our base in 2025 compared to 2026. So we don't have those onetime effects any longer. At least they are not foreseeable at this point in time. And as it relates to the ramping deals that I talked about on the subscription line, they will generate significant higher cash in 2026 than in 2025. I have that level of visibility. Now that's the baseline for the assumption to be back at the 2024 levels. Now is there a possible variability? Yes. But the baseline assumption is the 2024 performance.

Maybe one additional comment I should make. Charlie, there is no trick. I think my commitment is very simple. I want to continue to gain market share in all the industry we serve. And I think quarter after quarter, I can -- I hope I'm proving to you that this is what we do, including in sector where it's extremely competitive. And the second thing is we are accelerating the transition to subscription and to the cloud. That's what we do. So my view, we are doing the right things. It's the appropriate time. Against, we were pushing this for a few years ago, but the market was not ready in our space for the cloud. Now it is, they are. And if you remember, the subscription used to be 1/3 of the recurring revenue 3, 4 years ago. Now it's 50%. And we are on a path in the next 3 years to be almost 2/3 of the recurrent part of the revenue. So I think we are walking the talk. That's what the commitment to do. This is what we are doing. We are redirecting the deal. And I think at the end, the numbers are reflecting this extremely, I mean, transparently, Charlie.

We have an online question coming from the line of Laurent Daure at Kepler Cheuvreux.

Yes. I have 3 quick questions. The first, if you could elaborate a little bit giving us an update on your pipeline of large deals by maybe verticals and your discussions with those clients, the long sales cycle, is it just the macro? Or is there anything else on the discussion you have with them? My second question is if you could give us a bit more color on the change in management at Centric and also on the 15% growth you're expecting for next year, the visibility you have on that, given that you will continue to move subscription? And my final question is, when you refer to a couple of years to rebalance the Life Science business, do you see a risk that maybe for 2 or 3 years that this business end up being kind of flattish?

Okay. So Laurent, I will take it, and Rouven, feel free to add whatever you want at the end. So the pipeline coverage is 2x, which is good. For Q4, usually, this is where we are. So -- and it's relatively balanced between the large deals and, let's say, the midsized deals, which is also important because when you have too much on the large deals, this is sometimes difficult to manage. In terms of industry contribution, it is relatively consistent with Q3. So you still have a fraction which is transportation and mobility centric. We have a large part also coming from aerospace and defense. And we also have a good visibility on industrial equipment. So that's for the core industry. And again, we -- the pipeline coverage is definitively not the topic. What we observe, and we have been explicit about this, sometimes 1 or 2 big transactions can shift from one quarter to another one, independently of us. And that's what Rouven is mentioning when he says the volatile geopolitic is basically putting some volatility on the time to close. But it's only a question of time to close. It's not a question related to the pipeline.

Coming back to the Centric management change. In fact, it's very simple. You know Chris is turning 70. Chris, the founder of Centric, turning 70. For a few years, he was preparing Fabrice Canonge to be -- to take the positions. So we say it's the right time. We completed the acquisition of the remaining piece of Centric. So from basically a timing standpoint, it was appropriate to make the changes right now. And as part of the new setup, the new leadership, we have put this transition to the cloud as one of the objectives for the team and the EUR 1 billion threshold, which is the size of this business we want to achieve in the coming years, also one of the objectives for this new team.

The last thing is related to Centric performance for next year.

Life Sciences, the next 2 to 3 years. What is our expectations, the rebalancing of Life Science.

The rebalancing is already happening again. So except -- and this is what I was telling you, we are reporting in a line which is not making it visible for you. So probably something we need to change for you to have a visibility to understand how the momentum is going in order to basically balance between the volume-based business versus the enterprise-based business in Life Sciences. Now if we step back a little bit, I think the booking growth is good for Centric -- for MEDIDATA. So the topic is not the booking, it has to accelerate, obviously. But it's against this termination of studies and not having a new one starting again, which is the topic. I do expect we are reaching the bottom, frankly speaking. I told you this last year, I remember. And again, it was not -- it was based on facts because we were tracking all the pipelines. The way we do this, we look at how many Phase I, how many Phase IIs. We make some assumption about the move from one to another one. And this is how we are computing, if you want, the potential new studies starting every year.

Now there is a big change, and you highlight it. We see Asia contributing to the trend, especially China, right, which was not the case in the past. And we were relatively dependent, as you say, on the U.S. dynamic for the creation or at least the most promising molecules coming on the market for the Phase III. Now we see basically this being much more balanced between the different continents. And this is also giving hope for me because we see -- and if you track it, we are seeing a lot of investment in the biotech in China, but also in Korea as well, Japan as well. So I do believe if we combine the 2 together, we will be in a much better situation.

And Centric because that was also the question. Again, we have this massive renewal last year. That's the reason why we have the base effect this year. And if you combine this with the fact that we want to accelerate, I want to accelerate the transition to the cloud and the SaaS business model, this is creating the gap. But this basically, in 2026, we will be in a much better situation because we will not have the base coming from the big renewal. Anyway, the trend and the acceleration of the cloud is already happening. So that's the confidence I can share with you.

Our next question comes from Frederic Boulan at Bank of America.

I've got 2 and a short clarification. Firstly, around AI, if you can spend a minute on your commercial model of the offering you've presented, any kind of attach rate you foresee on a midterm view? Second, coming back on the free cash flow side and your 84% conversion from next year. Any specific moving parts or action plans you want to call out to underpin your confidence in free cash flow acceleration? And then short clarification on MEDIDATA, can you confirm the comment you made on expect similar growth or similar revenue decline? Is this a comment about Q4 versus Q3 level of minus 3%?

So Rouven, I take the first one. For the cash flow. So the way it works for the AI new category of solutions is very simple. You remember the portfolio is structured around role, processes and solutions. So in front of the role, we have the virtual companions and the virtual companions are there to advance the role and to extend the roles. The generative experiences are there to basically automate the processes. And the solutions ultimately is what we want to do with the virtual twin as a service. So keep this in mind for the purpose of the clarity. Now how do we price each of them? The virtual companion is priced on a fraction of the cost of the people we are either augmenting it or basically substituting sometimes. That's how we price. For the generative processes, the generative experiences, it's a usage-based model. So it's a token base like many companies do. And why so? Because I really want to ease the adoption and to accelerate the adoption with this consumption model. And it's something we master relatively well because it's almost the same approach we have for simulation for a long time, right?

And for the virtual twin as a services, it's an outcome-based model because at the end, you are not selling any more the tools, you are selling basically the end result of what the tool is producing. So it will be an outcome-based model. Now from an attach rate standpoint, it's still a little bit early because we came on the market with this. But we could expect that for many roles you have in the market being used right now, you will have an extension with the virtual companions for sure. You could expect that for processes, which are the most complex one, the generative experiences will be a way to accelerate significantly the time to market and the efficiency. This is true for the design. This is true for the manufacturing. This is also true for the compliance, as I was highlighting it. And virtual twin as a service, it's something we do specifically in the new industry because they are not equipped. Usually, they do not have all the skills, and we are gaining a lot of time by doing so.

One example of what I'm saying -- in the Life Sciences, when we are speaking about the manufacturing systems and the production systems, more and more, we go straight with the virtual twin as a service, which is an easy way for us to deploy our solutions and to reduce the time for the adoption. That's how we are basically pricing and how we are planning. And you remember what Rouven say, say the contribution of those new category of solutions, we are expecting EUR 0.5 billion in the coming plan, which is ending in 2029.

Okay. Thank you, Frederic. I'll go through the cash flow question. Regarding the 84%, what are the kind of puts and takes and level of visibility and action items that we have underway. I think first, important to mention is we have a certain level of visibility from large contracts that we have signed where there are clear payment terms that are going to drive cash in 2026, early 2026. So that gives us a clear perspective on the puts and takes between '25 and '26, which I call the timing effect that we had. So that's one part. We also have some other nonrecurring payments in 2025 that will not recur in 2026. We also have visibility to this. Now above that, -- when I look at our DSO and the impact of the DSO in context what we just discussed on Centric. Centric has been a big driver of the increase in DSO or has contributed to the increase in DSO, I should better say.

And now as we are moving to a recurring model, we will see the benefit of that also in terms of better aligning revenue and cash. So the conversion from that perspective should also will benefit from this change that we have decided. And then the last point is we are applying strict discipline on cash management, and that will have an impact also in 2026, and I already see that happening in 2025.

The last point regarding the MEDIDATA comment, yes, this was related to Q4. So the trend of Q3 to be expected similar in Q4 2025.

So this is concluding this morning's session. So thank you very much for the one being there with us in London and for the people being connected. Look forward to seeing you on the road, either Rouven or myself, we will do some roadshow in the coming weeks. And see you no later than early next year. Thank you very much.