Good day, and thank you for standing by. Welcome to the Dassault Systemes 20 21 Q2 Half Year Earnings Presentation. Please be advised that today's conference is being recorded, Tuesday 27 July 2021. I would now like to hand the conference over to your first speaker today, Francois Bordonado, Investor Relations. Please go ahead.
Thank you, Nadia. This is Francois Bordonado speaking, Dassault Systemes, Investor Relations. From the company, we have Bernard Charles, our Vice Chairman Chief Executive Officer and Pascal Daloz, Chief Operations Officer and Chief Financial Officer. I hope that all of you and your family are doing well, and I would like to welcome you to Dassault Systemes' 2nd quarter and half year 2021 Webcast Presentation. At the end of the presentation, we'll take questions from participants.
Later today, We will also hold a conference call. Dassault Systemes' 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 rate in constant currencies unless otherwise noted. For an understanding of the differences between the 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 2020 Document on Restaurant. I will now hand over to Bernard Charles.
Thank you, Francois Jose. Hello, everyone. It's good to have this midyear review with you for the Dassault Systemes 2021 2nd quarter on the full year perspective that as Francois Jose said, I will share with Pascal. Doctor revenue was up 15%. You have seen that in the press release.
I'm sure by now, the license revenue is up 38% excluding exchange rate, and by the way, all this is organic. On recurring revenue, up 10%, excluding exchange rate, which represent, by the way, 79% of revenue. And as a result, the EPS is up 35% would be 45% up for the EPS if we were to exclude the exchange effect. Basically, we believe that those numbers confirms a few things which are important to us, important to our clients and partners. The systematic approach to virtualization is becoming now We do use digitalization because we think it's the next step after simple digitalization of documents.
And of course, the imperative of sustainable development, we'll come back on this. It's indeed reshaping the innovation process, and we have Very interesting data point on that aspect too, as well as the inclusiveness, which basically is about better cost in people within companies on across virtual enterprise. We continue to be making the difference with our clients, basically leveraging Fully the virtual twin experience and everything we do, including doing the virtual twin of Dassault Systemes itself, We believe that it's a game changer for all sectors of the economy and we shared with you with Pascal early last year that our intent is to be a key player in both AB, Health and Infrastructure. And we are, as a result of that, and Pascal will articulate it, raising our 2021 guidance on targeting EPS growth of about 19% to 21%, which would be 23% to 25% if We were to exclude exchange rate. So some highlights, which basically are really two points about our belief.
And our belief and this is a long term perspective, our belief is that The virtual world had extended and improved the real world, and I think there are good stories today as we did first quarter, which are illustrating this very well. The second aspect of it is the platform phenomenon. It's adoption Across the board, it's known in retail. I think it's going to happen in manufacturing, construction in And this is why we think we are extremely well positioned with the 3dEXPERIENCE platform to really connect modeling, simulation and data together to really create what we call the virtual twin of the experience economy. And again here, quite interesting illustrations On that, another factor that is well illustrated with numbers this this quarter is the dynamic of the mainstream.
And the dynamic of the mainstream market, what we call mainstream market is really Inclusiveness of using the platform as a collaborative platform. And I believe that working together Anywhere from any device having a browser based, cloud based solutions is Very differentiating, and it is a differentiating for our system. We have, of course, and that's the value of Being browser based and cloud based as you can see with our offer. The dynamic here is very strong. The China case is quite interesting Q2 2021, 20 more than 220 Cloud wins in 1 quarter for China.
It means we are trusted. We have the right infrastructure, and this adoption shows that we provide a good secure environment. As you know, the world of mainstream for us, mainly represented by SOLIDWORKS is about 1,000,000 plus commercial users. It's about 250,000 clients With an average of 20,000 per year, we believe that this track record will sustain. Another important aspect of mainstream is what about mainstream PLM?
I think the illustration this quarter about the performance of Centric PLM is another asset of This dynamic of adoption of product lifecycle management across the board. Centric PLM is now reaching about 500 Companies, 2,000 highly reputated brands are Trust Incentric Helens On 99% of retention rate, most of the customers About 90% are accepting to be referenced in our industries. And you see here the incredible logo dynamic between 2016 to 2021. And as you may remember, we will be buying the remaining share of Centric PLM this coming August, which means that this is a fully powerful interim brand for Dassault Systemes future. Back to the way we show you the proof points, the reasons to believe, we look at the 3 sectors of The economy and we look at both manufacturing industry, life science and health care and infrastructure and cities.
Let's review what are the trends there. Clearly, the trends are they are commonality, Market product and services, move from supply chain to value chain, Sustainable innovation, I see those three factors becoming very prominent in those three sectors of the Economy which are connected industries together because high-tech is, for example, everywhere and more to be discussed on that. Let's review on the first health sector. Of course, we are very pleased with the BD data move. The team on the cooperation on the integration of Medidata is going extremely well.
Pascal might comment a few things. We are going To announce that Novavax has used the new world of Medidata Distributed decentralized clinical trial, Three studies involving 45,000 participants were initiated in less than 8 weeks. I think it's a worthy call. And I think that it shows that sponsor based centralized Clinical trial are also moving to decentralized, meaning the patient are not in the hospital infrastructure, they are participating from home. This is thanks to MyMedidata and thanks to Medidata Passion Cloud, which are really the extension of the Medidelta brands that are really proving to be At this point in time, just for information, we have about 400 Related clinical trial in regarding the COVID-nineteen, so it's It's not stopping.
And I hope at the end, this will be able to stop this pandemic, which is Rather complex today in the world, but the buoyant is decentralized, midyear expansion in portfolio, fast adoption platform based on mega studies. Another good illustration is LabCorp Adopting Medidata Sansor Cloud. This is a Quite interesting approach. It's basically IoT for us. SensorCloud is about taking this acquisition of data in a seamless way, collect those data for clinical trials.
I believe that this sector will also evolve quickly with very smart med Tech, personalized medtech, digital biomarker discovery. The first project will be An at home version of the 6 minutes of work test that you can read it read here. And we are very excited to have this infrastructure leveraging MC10 acquisition. You remember this small acquisition we announced a few weeks ago Playing a key role, we see that as a major avenue for fast acquisition IoT based on the platform of personalized data in a very structured and professional way that we call prenatal trial. And another proof points here in another sector of consumer package and production is is a Bottee CRO Group, which is adopting the 3DEXPERIENCE platform.
It's a leading beauty company On world largest beauty franchise, it's well known because they are known for using natural ingredient. And the business value that they are really seeing here is really about transforming their manufacturing processes, reducing inventory cost On the effect, managing irregular products supply, improving the compliancy And of course, all these contributing to competitiveness and solution we sold them, the industry solution is called Perfect Production, which I think is the right naming for this kind of we noticed that in the fast moving consumer goods, the reformulation area is a massive priority for sustainable justification. Another illustration is in the Manufacturing sector is Alstom adopting the 3DEXPERIENCE platform to really integrate worldwide our recent acquisition of Bombardier, for example. And they are adopting a cloud platform for all the PLM for across the group. They have the rollout is happening this year and throughout 2021 and 2022, and we will reach at least 15,000 cloud based 3dexperience platform users.
So basically, they are exploiting 3 industry solutions, the one we call smart, safe and connected, this is for system and cyber system, Global modular architecture, it says what it does, on leading production Which is about optimizing production system. The last two remarks on that sector is In the ITEC, Honor, Expanse Emilia Adoption, well known brand. It's a spin off of Huawei, and they do smartphone, tablets, laptops, whatever, they are accelerating The go to market improving the R and D process, including the value chain, and they are using multi physics simulation for All the product integration, ITEC has been a good dynamic. I think Pascal will make some remarks later on that in this quarter. And related to the evolution of flow management, the example of DELMIA Quintiq or Kiwi Rail is a Good example of how we can improve global service on fleet management and crew planning, And this is an excellent illustration to improve visibility of operations, improve health and safety and sustainability of the system And of course, improve the utilization of the assets, in this case, the Wagon assets, and improve the business agility to provide fast Answer to the demand in a very disrupted world, especially in the context of the pandemic and in the context of supply issues in many, many areas of the world and it improves our profitability.
Before I talk about sustainability, I think we have a small video for you. So, Francois, please launch the video. Consumers believe in a more sustainable future. CPG companies who can deliver it stand to gain a competitive advantage And they can shift sustainability clearly into focus when they leverage scientific capabilities to identify new material properties at a molecular level. On the 3dexperience platform.
So this is a short video that illustrates the importance of the role we can play, what we call the handprint role we can play contributing to sustainable innovation for the world in all sectors of the economy we are serving. And we are also applying this discipline for our self, of course, with what we call brands based targets. It was approved, and we published our engagement on that for net zero emission We have a time line which is now set up. SBTI is important because there is a lot of on a lot of statement about sustainability. I think having it being science based is important.
We believe that this has The merit of accelerating also the value of a PLM approach, so people can understand what is happening in their businesses. So we have announced that we will reach the net 0 by 2,040 via carbon removal projects, which is very key. We can debate about the fact that this should it be 2,040 or 2,035, Tony. I think we will report regularly Our progress there, but I think being science based provide a rigor on a professional approach to it and helps our customer find out the way they should approach for their own business. And we believe that the 3DEXPERIENCE platform is a key catalyst and an enabler
for this to happen. So
we think that in this area, we are transforming all our industry solution experiences. So they will include, As we go on, we are going to make available on the market what we call the 2022X around the end of this year, 2022 market. We are integrating in this resolution many things, sustainable design. We have a good illustration with NAPTESCO With Amcor Rigid Plastic here for sustainable design, sustainable production with Amis Kitchen, for example, where they are really transforming using the platform on sustainable experience. Good illustration with NIO electrical vehicle innovator China or aviation aircraft for new type of electrical airplane for a mid range distance.
So a lot of projects, whether in formulation, packaging, industrial equipment, home equipment or production where the illustrations of our handprint can be measured and is tangible. So we believe that we are executing to plan and people are joining Dassault Because they love the purpose of Dassault Systemes to provide this 3 d experience universe, we imagine sustainable innovation capable of Harmonizing Product Nature and Life, and I believe more than ever with the last quarters, We have been illustrating that. And with that, Pascal, you have the floor to provide the necessary numbers.
Thank you, Bernard. Good morning to all of you, and thank you for joining us today. So turning to our financial performance. I think we delivered strong second quarter results, thanks to the broad based growth across region and product lines. Total revenue increased 14% year over year to €1,160,000,000 at the top of our 12% to 14% range.
Software revenue and its components also came in at the high end of our objectives, with an organic software growth reaching 15% and reaching €1,100,000,000 License and other revenue rose 38 percent to €223,000,000 during the quarter. And looking at the first half, we are now back to 2019 levels. I think it's something very important. Subscription and support revenue increased 10% year over year, driven by subscription growth of 18%. And as Bernard says, recurring revenue represented 79% of the software revenue this quarter.
Services revenue was up 5%, finally back to growth Year over year, of course, and show a significant sequential improvement, as you can see. We achieved also Gross margin in the double digits, also substantially better versus last year because you remember last year, we took many, many actions in order to preserve the profitability despite the lack of activity. Finally, the 3d expense And cloud revenue both performed well, growing 26% year over year. From a profitability standpoint, lower than planned expenses, sorry, combined with revenue at the high end of the guidance led to significant outperformance in operating margin and earnings per share. As you can see, our operating margin came in at 30 2.2 percent and EPS grew 35% or 45% in constant currency to $0.22 compared to our guidance of 18% to 23%.
Now let's move to the software revenue by regions. The Americas grew 19% this quarter, benefiting from a strong performance in life sciences And Healthcare, High-tech and Transportation and Mobility, and now the Americas represent 39% of the non IFRS software revenue. Europe increased 13%, led by Southern Europe and totaled 36% of the total software revenue. Asia also rose 13%. Within the regions, we saw continued strength of China from China, which grew 24% and continues also software in Japan.
Zooming now in our product lines, the 2nd quarter performance. Industrial Innovation Software revenue rose 8% to €571,000,000 To be noticed that CATIA, the world leading solution in product design and modeling experiences, delivered sales growth of 9% uncurated by Cascia Cyber Systems. NetVibes in the data intelligence and Innovia in collaborations also benefited from Zooming in Life Sciences, software revenue amounts for €218,000,000 an increase of 22%. We continue to see a strong momentum across Medidata product portfolio, including Medidata Rave, Medidata Patient Cloud and also Medidata Econ AI as well as what we call the attach rate because we have the core modules, but We have also another a lot of solutions surrounding those core modules. Medidata is also establishing itself as a leader in decentralized clinical trial.
And this trend is becoming significant for this industry, And we are uniquely positioned because not only we have the set of solutions to connect the patients, but we also have all the back end systems in order to connect with the sponsor, which is unique on the market. And that's the reason why, as Bernard said, in many of the new trials, We are winning the market share. And trust me, in many, many cases, we are also displacing Viva. In the mainstream innovations, software revenue rose 27 percent to €262,000,000 And within the mainstream, the SOLIDWORK software revenue rose 25% with the 3DEXPERIENCE WORKS family. The cloud based solutions sales also up sharply during the period.
And finally, Centric PLM delivered an excellent performance, posting near triple digit growth and continue to take market share against the traditional players in this space. And at the same time, we are also expanding outside of the fashion industry in food and beverage, in the high-tech, in all the cosmetics also becoming a significant segment for Centric PLN. Now let's review our key growth strategy, 3DEXPERIENCE and Cloud and how we are progressing relatively to the objective we laid out during the 2020 Capital Market Day. Our 3dEXPERIENCE strategy incorporates 2 axis of growth. With value up, we are increasing the value we bring to our existing customer.
And with value wide, we are extending our value to new customers. As I mentioned, 3DEXPERIENCE sales grew 26% during the quarter and now represent 25% of the total software revenue, an increase of almost 200 basis points relatively to last year. Importantly, the 3DEXPERIENCE drove a number of significant large clients wins during the periods, reflecting into the 55% growth of the license in the beginning of the year. Turning to the cloud. Cloud adoption is another cornerstone of our strategy and afford an opportunity to expand our deep and breadth of our clients.
Our cloud contribution represent 19% of the total software revenue, a 2 point increase relatively compared to last year. And you may recall that last year, based on our end market sector, we set the goal to reach €2,000,000,000 in cloud software revenue by 2025, and this would represent an estimated of onethree of the total software revenue. In terms of cloud strategy, we value the long term. It's one of our specific DNA we have and the strategic relationship we have with our clients. As such, our cloud strategy is set to meet our clients wherever they are in the context of the industry and whether they are the starting point from them.
That's the reason why we are offering 3 different cloud paths: native on the cloud for the new customers, specifically all the start ups like the EB Guides The extended, mixing both on premise and on the cloud solutions, when you want to complement a large installation you have with new capabilities, New solutions, for example, what we do in the simulation and powered by with an on premise software solution, specifically SOLIDWORKS Desktop and CATIA V5 connected to our 3dXtrm platform on the cloud for collaboration and data intelligence. To be noticed, and this is, I think, very important for you, that with the release of 'twenty one x, We are now we have now more roles on the cloud than we have on premise, and we expect these trends to continue and be reinforced in the future. Let's move to the operating margin. So as I said to you from a This standpoint, the lower than planned expenses combined with the revenue at the high end of the guidance led to a significant outperformance in operating margin. Our operating margin came at 32.2% versus the midpoint of our guidance of 29.7%, and it demonstrates an overperformance of almost 250 basis points.
This was driven in part by the combination of the expenses and headcount headwinds we discussed with you last quarter. Our headcount was tabled year over year as hiring was offset by attrition, and that was higher than planned, but in line with 2019 levels. Within research and development, we experienced a mid single digit net gains in terms of new teams' member. We have adjusted our hiring capacity, and we expect to more than offset the attrition in the coming quarter. That's Very important.
All this good performance is obviously translating into an EPS growth of 35% to 45% in constant currency to €1.09 presplit or 0 point 22 dollars was split and compared to our guidance of 18% to 23%. Now let's move to the cash flow and the balance sheet. And turning back to our financial performance and to balance sheet items. The year to date cash flow from operations rose 21% relative to last year to 1,000,000,000 €30,000,000 Keep in mind that last year, it took us 3 months to overachieve the €1,000,000,000 So in 6 months, we have been capable to deliver the billion cash flow. Our deferred revenue, now called the contract liability, rose 17% in constant currency, which is relatively consistent with the operations.
And finally, our net financial debt position at end of June decreased by €768,300,000 to less than €1,200,000,000 debt, putting us on track to reach our deleveraging plan goes probably somewhere early next year, which is almost 6 months, if not 9 months ahead of the schedule. Moving now to the M and A section. A few things to be noticed this quarter. In July, we acquired French startups called Interop, an innovative SaaS The company is leveraging BPN 2.0 standards, which is nothing more than a neutral graphical language to provide business processes solutions. Let me explain the rationale behind this.
So first of all, you know our platform is not only a technology to power our roles and solutions for design, manufacturing, engineering. But it's also, when you use a platform without the rules, a powerful business platform, enabling the virtual twin of the enterprise and transforming document based processes into experiences. Interop's technology will complement the Dassault Systemes approach to empowering clients with effortless migrations from documents to experiences. And together, Dassault will enhance the 3d x Trans platform and the 3DS outscales because we will combine this technology with both to give the ability to leverage when it's fully integrated with 3dX Plan platform or as a standalone services with 3ds Outscale. Turning to Centric PLM.
Bernard say a few words about it, but we plan to complete our acquisition of Centric early this fall without a significant incremental cash payment. So you may remember that we initiated a equity stake in Centric in July 2018, and we are more than happy to finalize our And continue to execute against Centric PLM substantial opportunity in consumer industry. And we are very pleased of What we did, not only in terms of integration, but the ability to diversify Centric PLM far ahead of the traditional fashion industry. And the momentum you have seen recently is really the demonstration that this strategy is working. So Chris and teams, you did a great job.
Turning now to our 2021 financial objective. We expect the current business environment and profitability trends to persist in the second half. As a result, We are raising our fiscal year 2021 revenue growth objective range to 4,745,000,000,000 to £4,790,000,000 incorporating, obviously, the 2nd quarter outperformance and greater visibility, adding approximately €10,000,000 in software revenue coming from Medidata specifically. Our new objective represents an increase of 10% to 11% revenue growth versus to 9% to 10% previously. We expect operating margin in the range of 32.7 percent to 33.1% versus 31.6 to 31.7% previously.
I want to remind you all that because of the pandemic, we implemented a cost saving plan in the Q2 last year, and we expect the expense and headcount tailwinds we have experienced to dissipate in the coming quarter as we resume travel, increase sales and marketing spending and also accelerate the net gains in hirings. We have raised finally our non IFRS diluted EPS objective range to $0.99 to $0.91 On a split adjusted basis, are 23% to 25% from 17% to 18% in constant currency. This is capturing the earnings upside from the Q2, increased visibility we have specifically coming from Medidata and the lower than expected expenses. You will find more detail about the full year objective as well for our Q3 guidance in the earnings press release and in the presentation deck. Now I think it's time to conclude before to take the questions.
And I have a few message I want to remind. So first of all, we are encouraged by the demands, and we are seeing across our product lines and regions. We believe many of these trends are underpinned by secular drivers, as Bernard said. Highlight today including virtualization, sustainability, inclusive environments. So those trends are really driving the demands and the transformation in many With our 3dexplan platform, we began to preparing for this trend over a decade ago.
And as such, we are uniquely positioned to help our clients to address these new imperatives well into the future. And finally, we succeed when our clients are succeeding. And we I really want to take an opportunity we want to take an opportunity to thank All of our clients for their ongoing partnership and our employees also for the hard work they did and their dedications on our success. Lastly, we expect to resume in person meetings with the investment community this fall, and I hope to see you again on the road. So I think Bernard and I are now ready to take an answer to your question.
And yes, we are ready for questions.
Thank you. First question comes from the line of Adam Wood from Morgan Stanley. Please ask your question.
Hi, good morning, Bernard. Good morning, Pascal. Congratulations on another very strong quarter. Good morning. Hi.
I've got 2, please. The first one just on the margins. Obviously, It's great to see margin upside in the quarter, but I think we all know you want to invest for the future. Could you just talk a little bit about how relaxed you are about being able to make up The attrition in the second half of the year and if there are any implications for next year's margins given how strong the margin improvement is going to be this year. And then secondly, maybe a bigger picture question.
I think when we've discussed in the past around the pace of growth at Dassault, One of the restrictions has been clients' ability to take a certain amount of change in the business and reluctance to change that they're only willing to take so much risk on in any one year. As you look back over the last 12 months, do you think there's been some change there that companies now are being are willing to be more aggressive and want to transform more quickly? And how does the focus on sustainability drive into that? Does that kind of accelerate that desire to change? Thank you.
Thank you, Adam. Pascal, you want to take the first question?
Okay.
So you are right, Adam. The headcount has been a topic. Even if we did much better compared to Q1 because We hired almost 800 more a little bit more than 800% in Q2 compared to 400% in Q1. However, the attrition was almost offsetting this number. So coming back to the second half, I have slightly increased the capacity in terms of hiring in order to reach between 900 to 1000 per quarter.
And I do expect to contain the attrition to roughly €500,000,000 per quarter. That's the goal. Related to the margin for next year, probably a little bit early to discuss it, but I thank you for the questions, nevertheless, because I do not want you to draw the conclusion that we are capable to maintain the 33 Percent margin, we will expand this year for the coming years. So for next year, I do expect to be much more in the range of 31.8% to 32% is slightly below compared to this year because your point, we need to reinvest especially to strengthen the sales team and also to give more capacity in research and development in certain areas.
The second Adam, thank you for the second question related to our client Taking new risk in terms of transforming themselves, thanks to platform on the digitalization and virtualization. I think eyes are opening. Eyes are opening about the fact that sustainability has significant impact. Number 1, the need to better understand which materials to use, Which fabrics to use? Which new process should be put in place?
Which new formulation for the formulated product? Can I do smarter products so they are better optimized throughout their life cycle? The last point is about the bill across the lifecycle, The echo build across the life cycle. I think the situation has never been as
Good
to help understand what PLM is a part because it stands for Product Life Cycle Management. Up to now, The PLM has been adopted to create a digital reference of what you do and how you do it. I think going forward, PLM will be used to do the virtual eco bill of the full cycle. Regulators are accelerating this trend. Now conducting those transformation are very complex, Adam, And I think we are the catalyst and the enabler for this to happen.
It's going to take time. However, I believe that many of the decisions which we reflected on through my presentation, Pascal's presentation, are truly driven from that perspective. So it's there to last, and we will see The implication for 2022, but we are comfortable of the dynamic, the new dynamic it can create. The last remark is Clearly, in our mind, in my mind, the supply chain is moving to value chain. And this is deep.
This is not about optimizing just a 1 on 1 1 to 1 relationship. It's about optimizing the total. No one does that well today. We believe we can do it with the platform. So good drivers.
We will come back every quarter to illustrate why what we call our untrained to help be the catalyst and the enabler for that Yes, happening. But I think the showcase, the orientation we gave today are confirming exactly the positive trend toward Your question, Adam. Very helpful. Thank you.
Thank you. And your next question comes from the line of Stacy Tippoillard from JPMorgan. Please ask your question.
Thank you. Thanks for taking my questions. A few for me. First of all, on mainstream, what percentage of new customers are purchasing cloud now? And really, I guess, I should Same question for new purchases in the industrial sector too, perhaps it's a different dynamic there.
But so the cloud question. Number 2, On 3dExperience, 25 percent of software revenues now, what would you expect that to be in, say, for years? And then third question, as you delever, at what point could we see larger, more transformative M and A?
Thank you, Stacy. Pascal, on the cloud?
Yes. As you may know, SOLIDWORKS is almost gaining 50 between 50,000 to 1,000 new customers every year. And right now, if I do the math, it's probably around 10% Starting with the cloud. China, only in 1 quarter, 220 new customers. So with this, I think you have a good order of magnitude, and this is accelerating.
For the industrial sector, I don't know if we should take the same approach because the question is not too much about the footprint, Much more about the transformation. I think what could be noticed is we see more and more large incumbents Companies moving to the cloud. You have seen Alstom is a good example of this. They're using it as a way to decommission the legacy system, to standardize, to facilitate the integrations and, as Bernard said, also to redefine the what we used to call the Value change, much more along to the value network because the cloud is giving this flexibility to do it. So You could expect to see more and more large company moving with the cloud architecture and solutions.
And I think With all the different set of solutions we have, whatever it's cloud you can share with others or a dedicated cloud Sovereign, Carl. I think we have the full range of different solutions in order to answer to all the different needs coming from
We experienced dynamic adoption across the board. Clearly, to Pascal's point, the cloud portfolio is now overpassing the on premise portfolio. Number 2, the cloud portfolio is the future for mainstream. It's the current situation for Centric PLN. It's the current situation for Medidata Using those platform based approach, mainstream is also.
Pascal mentioned the trend with 3 d experience So there is no doubt in our mind That it simplifies everything. On the mechanics to address your question about 3 gs experience adoption is as customers adopt a wider portfolio on the new generation, 3 d experience is a condition, even on Going from that standpoint, we need to do well on what we are focusing now is making sure that the 3DEXPERIENCE platform can integrate customer legacy data on legacy tools, which are not necessarily our own software to help them go to a platform approach. So those two factors are really strong factors. In a certain horizons, we experience it's just a platform for every aspect of every solutions of Dassault Systemes on the longer term. So at some point in time, It will be reaching the prerequisite of platform infrastructure for MSC
And the
last question, Bharat. Yes. Yes.
Yes. So you
asked another question, which was the last one related to M and A, right? So obviously, we will not answer to these questions during the call. Nevertheless, You are raising a good point because with the ability to deleverage the company and being almost in a position to have no anymore debt somewhere early next year. This has given us the Freedom not only to do the bolt on acquisitions, no, the what we do with reinforcing our Capabilities are continuing to infuse innovations with start ups, but also to consider a significant And I think it's going to be a good topic for the Capital Market Day next year.
I will ask it again. Welcome,
Next question, please. And your next question comes from the line of Michael Briess from UBS. Please, Your question.
Yes. Thank you. Good morning. Very strong performance in metadata, so 22% in the first half. I think previously you were looking for 14% growth in the year.
And Pascal, I think you said the €10,000,000 increase for H2 relates to Medidata. I mean, that's about 3 points of full year growth. So what are you actually expecting from Medidata this year? And then somewhat related, just if I take out the cloud revenues from recurring software, I get about 6% growth. Do you think that's a rate that you can improve upon in 2022 and beyond as The rest of the business, if you like, gets back to a healthier shape.
And then Bernard, just on the infrastructure and cities Market, Stacy was asking about M and A, but we haven't seen a lot of progress there. Can you give us an update? And then maybe around Altium, I think that talks with Autodesk finished recently. How important is that relationship with them around the sort of 3 d experience side? I think you were looking to advance that 6 or 12 months ago.
Thanks.
Thank you, Michael. Pascal, Medidata. Okay.
I will start with the first one. So to your right, Medidata did an outstanding performance H1. But remember, H2 last year was much better compared to H1 last year. If you remember, the revenue increased almost from 13% to more than 18%. So I do expect to continue to have a good performance, but the base will, to a certain extent, lower the growth of Medidata in H2.
So that's the reason why if you if I come back to the previous guidance, I gave to You know the 15% range, and now I'm much more targeting 16% plus. That's what we are talking about. Related to the cloud, Again, the core the key things for us It's not only it's really not to measure too much a contribution from a revenue standpoint, even if I set the targets. Is much more related to the footprint. In the footprint, we have different KPI to measure it.
One is, obviously, the number of users. And the second one is the volume of data we have in our cloud because at the end, this is what it's about. Cloud is, on one hand, the inclusiveness, the ability to connect as much as people as you can and on the other hand is the ability to leverage The data to artificial intelligence, analytics, and that's the real things we are tracking. And what I can say On those two items, it's a triple digit growth we are seeing. So if this is going the way we want, to answer to your questions, Michael, Automatically, the revenue will come, and the extra growth coming on top of Medidata will be there.
What I can say is we are betting a lot on the new 3DEXPERIENCEWORKS family to trigger this growth Because we have reasons to believe that the market adoption is extremely good. We are seeing some proof point in region of the world. Bernard mentioned China, but we have others. And as I was saying also to Stacy, We see also large transactions moving to the cloud. What's not the case, probably 1.5 years ago.
So this is also will contribute to accelerate the percentage. So if you compare to last year, it's 2 points in additions in terms of mix coming from the cloud. And I do expect these trends to continue to be to reinforce and maybe to slightly accelerate over the next 2 to 3 years.
Related to Infrastructure and City, thank you, Michael, for This topic, as you know, it's the 3rd big topic for the System, in addition to the world of the making and the world of the help, projects are very real. They are transformational. They are all on Proud both for city and construction. It's related to not only the engineering and design, but related to the construction test itself. So the dynamic is a good dynamic.
We are I think this sector is looking for platform based, cloud based Everywhere around the world, China is a good driver for us. And Europe with not only the Bouygues Showcase, but now the Bouygues Showcase is expanding with older project partners because This sector is a very project, it should be known, but better to say it's project driven. It's not only company driven, it's consortium driven. And we now notice that, thanks to our friends from Bouygues, There are multiple new consortium being set up to offer remodeling of certain Cities or infrastructure for energy distribution in cities, we call the hydrogen or electrical Plugs that needs to be installed, and we have many projects on that, that are connecting the territory management, Recall, so the experience Citi and the project management, which is related to the use of the platform to construct what needs to be constructed. So I believe we are here to create this game changer approach like what we did with digital mock up 30 years ago in the It takes time, but I don't I think it will last.
So we'll come back regularly to tell you to share with you new wins in this area. And by the way, I am convinced that the size of installations can be at least equivalent to very large manufacturing clients in terms of both revenue and number of users. And what we're communicating in Wig is already a proof point of that And all being subscription based, cloud based, which is our priority right now. So that's all what I can say. Related to Altium, Of course, we when back 2 years ago, we decided that we should have a multiple approach.
We have a great partnership with Cadence, with Synapses. We have a partnership with So the Japanese player, our customers likes it. And as you know, for everything related to wiring, packaging, This is going to be made in the platform. And when it comes to chips and ports, We will use 3rd party integration. Those 3rd party integrations are Going very well.
I must say that the situation we have come with the recent news flow accelerated our strategy to have multiple options, which was already the case, But I think it has strengthened the relationship with the other players for the satisfaction of our clients. That's all what I can say At the current time.
Thank you. We'll take the last question.
And your last question comes from the line of Nicolas David from ODDO BHF. Please go ahead. Your line is open.
Yes. Hi. Good morning, Bernard, good morning, Pascal. And the question actually, just one is, could you please provide Some color regarding the yet again very strong growth of solid works in Q2. Is it again mainly due to the 3 d experience works Trusted, you already mentioned or more this time kind of the back catalog playing.
And any color regarding the average Size increase and also the trends for H2 would be helpful. And my second question is regarding industrial innovation. Sorry about that, but this is maybe the only area where it was still slightly below 2019 level in Q2. My question is which sectors and brand are still below 2019 level? And should we expect to catch up In this area, do you think that there is some brands and sectors which have taken a hit that will be difficult to recover soon?
Thank you.
Thank you, Nicolas. Just a remark on the SOLIDWORKS growth. It's now visible for the market Pascal provide data, but it's now recognized by the market that the 3dall SOLIDWORKS portfolio In the next less than 2 years, we'll be based on the Swedish Lion platform. That's including so all including the desktop collaborative process will be cloud based, platform based environment connecting to the desktop. So that's the trend.
It has significant consequences because it means that there is a higher rigidity, higher consistency because the next generation SOLIDWORKS is based on natively on the 3 gs external platform. All the roles and processes, which are part of the Dassault Systemes wide gigantic catalogs, will be compatible on that point. That's the context in the next 18 to 24 months, since 2023. And with that, Pascal, I'll let you comment about the dynamic between desktop and 3DEXPERIENCEWORKS.
Okay. So this quarter and Since the beginning of the year, Nicolas. I will say twothree of the growth is coming from the volume. So the ability I mean, the desktop solutions, it's partially a catch up Because last year, you remember, was soft. And also, The growth drivers for SOLIDWORKS is still there.
I mean, you still have a significant number of people migrating from 2 d to 3 d every year, And we are capturing, you remember, almost half of them. So the rest is coming from the Works family, which is some incremental growth. And last but not least, which is probably the most important, and you are right to ask the Wage deal size, we have we are seeing some increase, and it's coming from the mix. We see more and more SOLIDWORKS users buying additional simulation seats, expanding into the PDM And ARIA are connecting with manufacturing capabilities. So this is also what is reflected into this excellent Performance of SOLIDWORKS.
Coming back to Industrial Innovations. I would say there are a few things. So because at the end, the question is not what is going well, but what could be better. So what could be better? I think DELMIA could have been better for the first half of the year.
I do expect, given the pipeline we have, that DELMIA will be will have a much better performance. So DELMIA is around the mid single digit. This should probably be much more double digit growth. So that's what I'm expecting in H2 as a recovery. Because aside of this, Innovia is growing at 10%.
NetVibes, more than 50% for this quarter. Emilia is also growing at double digits. So clearly, all the components are extremely good. From an industry standpoint, I think there are a few where we are not seeing yet The strong momentum in this sector, but I will mention at least 2. The first one is the marine and offshore markets.
We grew significantly the last 2 years, and the first half has been relatively soft. And the second one is the industrial equipment. We have seen a lot of tractions coming from the mainstream markets. However, for the large equipment, we are not yet back to where we used to be in 'nineteen. So still have some Progress we can make on this front, and I hope the investment cycle will be back also in this
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