Ladies and gentlemen, thank you for standing by and welcome to the Dassault Systèmes Q3 earnings presentation. At this time, all participants are in a listen-only mode. After the presentation, there will be the opportunity to ask questions by pressing star and one on your telephone keypad. I must also advise you that this conference is being recorded. I would now like to hand the call over to your first speaker today, François-José Bordonado. Thank you. Please go ahead, sir.
Thank you, John. Good morning, everyone. I'm François-José Bordonado, Dassault Systèmes Investor Relations. From the company, we have Bernard Charlès, our Vice Chairman, Chief Executive Officer, and Pascal Daloz, Chief Operations Officer and Chief Financial Officer. I hope you and your families are keeping well and safe in these trying times, and I would like to welcome you to Dassault Systèmes' third quarter 2020 broadcasted presentation meeting. At the end of the presentation, we'll take your question from participants. Later today, we will also hold a conference call. Dassault Systèmes results are prepared in accordance with IFRS. Most of the financial figure on 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 figures, please see the reconciliation tables included in our press release.
Some of the comments we'll 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 2019 document. I would like now to give the floor to Bernard Charlès.
Good morning and good afternoon to all of you, and thank you for joining us. I think we have quite interesting news flows to share with you today. If I qualify the quarter from my side, I would say it's a demonstration of Dassault Systèmes resiliency. I will try to, with Pascal, to tell you why. First, license activities is showing improvement as compared to Q2 of this year. While of course, the anticipation to have back to normal in 2020 is now out of the scope, as you all know for the sectors you follow. The total revenue is up 17%, excluding exchange rate, as you have noticed, and with a negative effect on the dollar aspect. Software revenue, which represent 90% of the total revenue, is well-aligned with what we said on the guidance, up 22%. You know the exchange effect at 17%.
Recurring software revenue is at 83% of total revenue, so it shows also the relative impact of the service. We'll come back to it. It's up 32%, excluding exchange rate, 31% with it. There is a solid renewal on the organic basis because, of course, all of you know the effect, the positive effect, on the new situation as produced with the move with the acquisition of Medidata. The performance of Medidata are very good. The Q3 EPS is at on the high end of the guidance and operating margin above. I believe we are demonstrating that the adoption of our platforms for our own business is creating significant productivity improvements. I will also make a remark later on this topic of Dassault Systèmes platform-based companies to develop, sell, and interact with its own customers and partners. You know what?
A year ago, we announced a big move with the acquisition of Medidata coming together to really demonstrate our significant engagement in the life science and healthcare. Of course, I can tell you that it does echoes very strongly our purpose in the company. I think we are walking the talk, harmonize product nature and life, and you will see some illustration here. Of course, in February, we'll come back on that. Finally, the framework that Pascal presented to you, Pascal Daloz in Q2 with the logic of arbitration of things, I think it allows us to reaffirm our focus on the EPS with the EPS objective at 3.7-3.75, so above the 3.65 of last year.
How can I put my remarks together to tell you how we believe we are really contributing on the innovation side at the center of many of the topics which are revealed by the current health, economic and social crisis. On three aspects, industry, human and experience, let me come on that. The profile of Dassault Systèmes, when we will look back in a few years from now, is probably, 2020 or 2019, going to re-profile the company in a big way. To summarize what we do, collaborative platform innovation based on data and modeling for three sectors of the economy. Objects which are produced through engineering and manufacturing, life science and healthcare, and industries, and cities. This is not an invention. This is what we do every day.
A few observations about those three sectors of the economy and their association with the industry solution we cover. On manufacturing industry, I see an incredible dynamic for innovation. Simply said, first half, the panic call with the crisis was about OpEx reduction. Since summer, we see a preoccupation about the answer to the following question: how do I prepare my portfolio post-crisis? I have a cycle time of three to seven years to deliver new products and solutions. I better start now. That balance is visible in the way we interact with our clients, and sustainability is a very core element of it. On the life science side, a marginal player becoming a mission-critical player. This is the way I would characterize Dassault Systèmes.
To change the innovation process, to connect better with patient, and to really transform those companies to a better digital continuity between research, development, lab, bioreactors, in the case of biologics, and clinical trial. I believe I can take tangible examples on these categories. In some way, it mimics what we did in the last 35 years for the space and aerospace sector, where basically you have to predict things before you actually do things. On infrastructure on city, which is, by the way, up 6%, is really about having this capacity to change the way things are constructed and to plan them better. There are great examples here. Clearly, this will be driven by improved quality of life in cities because people are asking for that. Of course, the impact of this quality of life for health.
Of course, there is a lot of incentive in many countries of the world where the incentive, the economical incentive, the stimulus is also oriented toward local job creation. Let's look at proof points, which I think should be interesting to evaluate. Johnson & Johnson, the Janssen is really the pharma side of Johnson & Johnson, has really renewed in big scale a material agreement, which shows that the Dassault Systèmes Medidata platform is really a true next-generation platform for unified clinical development. It's a big deal for this sector because it's almost half of the cost, half of the time. You better have to do it quite well, and it's the direct connection with patient. Clearly, we are so pleased to be working together with Medidata on that side. Something that was not so visible before, BIOVIA.
The modeling and simulation, the power of modeling and simulation, the data science aspect of it, inside a world-class researcher group working on transforming the treatment for oncology on cancer, especially under autoimmune conditions. They are adopting this platform to really break through new research in finding new ways to design and optimize and to create what we call digital continuity with the lab activity, and to improve also, of course, and optimize the full understanding of the biologic process. This is, for us, a remarkable showcase, a real one. We are very pleased to see that because there is no reason why the other players will not adopt this solution. It's quite unique what we offer. Abbott, this is really leveraging the simulation side for really the Medtronic environment and especially the environment for testing lab activities.
It's a good showcase because it shows the connection between what you have heard about the Living Heart Project and the equipment which is used in this environment for virtual testing on creating the proper conditions for efficient test with smart equipment. Another illustration which shows the power of data-centric approach with the 3DEXPERIENCE. No one can debate that the volume that our clients are producing with our platform, the data volume is gigantic every year. Absolutely gigantic. Probably among the largest in the world. People don't know that we are now leveraging those data to address new problems. Not producing the data, but using the data. In the case of the French railway system, they have decided to adopt fully the 3DEXPERIENCE platform on the cloud to manage all data collection from all these stocks in operation to predict, plan maintenance, and improve safety.
That's a concrete example where we don't have necessary, but while Alstom is a great client, we don't have, by the way, as a side note, it was announced before, on a great term with great performance, by the way. We are also now collecting the operational data with the platform, with SNCF, to really improve that process. The potential for data-centric analytics like this, it's about 5,000 users. It's a big installation for us on the cloud. If we continue in construction cities and territories, I remember to be telling you that we are very serious in that sector. We are very serious. We think this sector is still sick, being dependent on drawing systems. We believe we can change it. It will take time because it's an artisanal sector. However, there are proof points that things are happening.
There are six cases here where the platform, the 3DEXPERIENCE on the cloud, is used to create novel architecture with technology insertion, create new type of digitally designed architecture with extremely, what we call ecologic inspired by nature construction, which is going to reveal a lot more in sustainability, large scale printing, modular building, and much more. If you have time, go on the website of those companies, you will see what they do, and you will understand why it's impossible to do it with traditional solutions. We believe that this will not stop. It will continue. As for new mobility, where we have almost 100% of all the players showing that the direction is with 3DEXPERIENCE, we are doing the same with those new startups in construction. More to come. Now, microelectronics and complex systems with STMicro.
We are very pleased to continue the development of the cooperation with them. Please keep in mind what we announced in the past quarters with Ericsson. I think those players are in the agenda for the 5G and for sovereignty in infrastructure. A fact that our platform, the 3DEXPERIENCE platform, can be used to do those kind of complex system is very important. Centric PLM. We continue, despite the huge challenge in retail, we continue to be convinced that this is a good move. This is, of course, at this point in time, a small deal, but a small deal with a gigantic player called JD.com. JD.com is the Amazon in China, basically where they are using the platform to really organize their program and improve the time to market, reduce the cost, and improve, clearly, the collaboration for what they deliver to consumers.
A lot of learning there. Space is important. We are in space, and we continue to expand in space. Boeing Aerospace is an example of that. Basically, it's about the creating the digital twin and the collaborative experience to really integrate those Program Excellence with industry solutions. It's not functionalities. Those industry solutions are called Program Excellence for management, Co-Design to Target, Build to Operate, and Cleared to Operate. You will notice with 3DEXPERIENCE, we are not selling functionalities. We are selling roles, process, and solutions for the industries we serve. Unlike most of the current players, this is why we are telling all our customers, massively de-customize, remove all your legacy code, use native, you will go faster. Patient Experience. I'm so pleased that working with the team at Medidata, this bright team, we are revealing the power of myMedidata.
MyMedidata Live is quite interesting because I think the potential is gigantic. MyMedidata Live is about connecting the sponsor during the clinical trial, the patient with the sponsor in real-time conferences so they can share their feeling and so on, and we can better track what's going on during a clinical trial. You can imagine that the ambition in myMedidata over time can be far beyond that. We did a small acquisition, which is a quite interesting one that, Pascal, you want to comment it now? Because I know you were passionate to do this move.
I can say a few words. It's a small acquisition. It's a EUR 2.5 million acquisition. In fact, it's an asset we acquired. MC10 is a company, it's a startup based in Boston, and they were developing sensors, but probably more important, the framework to integrate any kind of sensors you have to use when you do trials. As you may know, we have more and more trials, clinical trials using these options. It's almost 10%. In the future, we consider that almost half of them will have these kind of devices we are using at home to collect temperatures, sleeping, heart breath, all these kind of things. That's what we do. It's the asset we bought, the software asset, the patents, and we hired 10 people. The interesting thing, it's a famous startup, in fact, for the people who know the sectors in Boston.
An opportunity for them, they invest a lot on a market which was probably not mature enough. The team decided to join us because this company was in Chapter 11, so it's kind of auction, if you want. They decided to join us because they see us becoming, as Bernard say, mission-critical for many pharma company, and that's the game plan behind this. That's very important.
Thank you, Pascal. I see that you are convinced about it, and I am, too. By the way, it echoes our equity position in BioSerenity, and it echoes my Medidata life because it's about connecting information during the clinical trial and more. We continue to learn with HomeByMe. It's a side activity, but it's becoming a core activity because in some way, it helps us continue to understand what can we do one day, not in the B2B, but in B2C. There are incredible experiences here. There are references with this incredible lady, Aurélie Sciamma. She organized around HomeByMe, a full training class for people who are agencies doing home decoration to tell them, "You can use that software to really accelerate your business." An amazing class. We didn't know her. We discover her, and she's our best ambassador.
We are learning a lot. She's very successful in what she's doing. There is a video following now, which is not what she did. You can find this on YouTube, by the way, if you key her name. I want to show you another video about Bernardaud. Please run the video.
Porcelain seems fragile due to its finesse and transparency. It's actually incredibly strong. It's dense, very resistant, and its uses are limitless. The raw material has been the same for over 2,000 years, and it is still handcrafted by artisans. However, the constant search for new and more complex shapes, as well as new manufacturing processes, has led us to combine our know-how with new technologies. I am Charles Bernardaud, Director of Development at Bernardaud. I'm deeply attached to this company, which has been in my family for more than 150 years. Over the years, Bernardaud has become a global player in tableware and a symbol of French excellence. Each generation has brought different expertise at every key stage of the company's evolution. With my engineering background, I see porcelain from a more technical standpoint. Pushing the limits of manufacturing techniques to create original pieces is in our DNA.
Optimize our historical know-how with new technologies like 3D modeling. It enables us to make complex shapes that were impossible until now. The Twist collection is a perfect example of that. Today, Bernardaud is a reference in terms of technological innovation. I'm glad to play my part and open up new perspectives while accompanying society's move towards sustainability.
This video, I think it's a good illustration about. I think the takeaway for me is the applicability of our solutions, innovation, and power of design is wide, and we are at the beginning of all what we can do. I want to address a question that directly or indirectly, many of you have been asking, "Is Dassault Systèmes transforming itself quickly enough?" I want to talk about that just a few second here. The first thing, we are not focusing on the business model at first. We are focusing on the solutions we want to deliver to our customers. With the platform called 3DEXPERIENCE Works 2021x, we have demonstrated that for those of our users and clients who connect and buy for EUR 37.50 per user or per month access to this platform, they can discover the world of possibilities in one platform.
They can discover everything we offer in the context of the universe of 3DEXPERIENCE Works, in the universe of education, in the universe of industries, online, being able to order or select what they have to select in terms of roles, process or solutions directly illustrated in the platform. We are using our platform to develop, sell, and make the SaaS roles, process, and solution available. That's what we are doing with one platform that can be cloud on the edge for a client, a sensitive client, cloud in a private environment or open cloud. That's what we are doing, and all R&D on technology are focused on that. It's becoming visible with the 9% back to growth of the mainstream market, seeing the visibility on the interest of the platform with SOLIDWORKS.
This is just the beginning, because we also see that now the platform-based SOLIDWORKS clients are discovering the value of integrated analysis. It's the beginning, because then we have DELMIAWorks, then we have supply chain, and we want to leverage that. The effect of that is this is the reason why most of the startups in new sectors of each of the industries we serve are adopting directly the platform. You have Exotec in Europe, Canoo in U.S., QAV Technology, Toyo Tires, InnoSet, Digital Orthopaedics, Dassault Consulting, you name them. Look at what they do. I mentioned last time, Plenty, in vertical farming in Seattle. They started with a few users, now it's hundreds of users. I think it shows that the innovation platform can bring on the cloud something absolutely unique that comes beyond what we have been doing in traditional manufacturing.
Deepcell is another example, where they are really using the platform as a collaborative multi-dimensional platform using ENOVIAworks with SOLIDWORKS. By the way, ENOVIAworks is becoming visible now for SOLIDWORKS customers. It's quite interesting. We have even now the platform being used by AutoCAD users who are using the 3DEXPERIENCE platform to manage their AutoCAD data. Of course, the upcoming events are also very interesting with the scientific community, with NEXT Global coming soon, and with different virtual events. I think they are well received. We are on a good start. We also did the Science in the Age of Experience, which was extremely well attended with very influential people to show that science can help to change the world. Finally, I will comment the last remark before I give the floor to Pascal to illustrate how this is being translated in numbers.
We continue to focus on the footprint and hand print. This mean that the lever that our solution have to improve the world from a sustainability standpoint. You will hear, we'll come back in February on a further illustration with that. Pascal, back to you.
Thank you, Bernard. Good morning to all of you, and thank you for joining us today. I hope you and your family are well. I would like to begin my comments with a quick overview on our financial performance. Let's start. The revenue came at EUR 1.03 billion, growing 17%, improving when compared to the first half of the year, because on the year-to-date, the revenue was growing at 15%. An operating margin of 28.2%, which is 170 basis points higher than the objectives, and EUR 0.80 for the EPS, which is a growth of 3%, and if you exclude the currency effect, 8%. Zooming on the different constituents of the revenue, the software revenue came right in the middle of the guidance at 22%. If you remember, we gave an objective between 20% and 23%, excluding the currency effect.
From an organic standpoint, the revenue is flat in Q3 compared to -4% for the first semester. The takeaway, and I will give more flavor afterwards, but the 3DEXPERIENCE has been the cornerstone because we have seen the growth of the 3DEXPERIENCE revenue increasing by 6% and now representing 28% of the software revenue. The good news, I will say, for this quarter is coming from license and other software revenue, decreasing by 11%, but you have to keep in mind that for the first half of the year, we are decreasing almost by 30%. It's well in line with the Q3 objective at, you remember, we gave -8% to -18%, so clearly we are much more close to the -8% than -18%.
It's definitely an improvement, but as Bernard stated clearly at the beginning of the call, we are not anticipating the return to normal in 2020. Moving to the subscription and support revenue, growing at 32%, excluding currency effects. The subscription has been driven by good performance of Medidata with a double-digit growth and a solid renewals almost in every geo and every branch. That's probably also an important message because we are not seeing churn, we are not seeing difficulties with our customers on this front. The organic growth for the subscription is 4%, which is well in line with what we have seen since the beginning of the year. The miss, because we have one miss this quarter, you know it's coming from the services. But I want to give you some analysis on this.
The miss is, we are decreasing by 15%, excluding the currency. There are three reasons for that. The first two, you know it, and there is a third one I want to spend time to discuss. The first one is really we still have almost 10% of the project being frozen, so it's not new and it definitely due to the lockdown. Until the site will reopen, we still have people not being able to go on site, and automatically, the customers, they want to freeze the project. The second topic, since the beginning of the year, we have seen the new signing decreasing, and especially for the brand services. For the majority of the services we do, usually it's a long-term contract we have, but for the brand services, usually it's project almost for a quarter. This is where we have seen the book-to-bill ratio decreasing.
With this, you almost explain what's happened in Q2. The real differences compared to Q2 is because Bernard and I, we took the decisions to support the multi-year project timelines we have related to the 3DEXPERIENCE deployments. Why so? We want to preserve the 2021 and after software revenue. This is very, very important. We have the ability to do it because as you have seen, thanks to the good cost control, we know how to absorb the fluctuation of the services revenue. Maybe you can see on both sides, you can blame us or you can see the positive side. I think, I encourage you to see the positive side, because by doing so, we are maximizing our chance to deliver the expectation for 2021.
Moving to the regional software review, let me share perspective on the impact of the pandemic in Q3 compared to Q2. Let's start first with Asia. Asia growth is +10% this quarter, from 3% in Q2. Clearly it's an improvement. We saw a significant recovery in China, AP NIC, and Korea, with a double-digit growth for this quarter. However, it has been partially offset by the softness in Japan and a real difficult environment in India, where the vast majority of the company are still in the lockdown. Zooming in on China, because China is an interesting case. You remember we started the first quarter being -10%. Q2, we were flat compared to last year. Q3, we are delivering 12% growth.
Clearly we could expect, and it's probably the only region of the world where we could expect in Q4 to be almost back to normal. We had a significant win also in China, specifically in high-tech, also transportation and mobility, and also aerospace. Turning now to Europe. It's a much better performance in Q3, plus 10% compared to 4% in Q2. We saw a very strong improvement from an organic standpoint, compared to Q2, in France, the north of Europe, and also to a certain extent, the south part of Europe. Same almost than in Asia, we still have some softness in Germany due to the exposure to the auto sectors. If I look at Europe, we have a very good dynamic with 3DEXPERIENCE platform. That's really something which is very important to notice, especially in the high-tech.
STMicroelectronics is one of them, also in industry suffering like transportation and mobility and aerospace and defense. The life science deals with Medidata were also among the largest transactions of the quarter we did in Europe. Moving to Americas. Americas is growing at 46%, relatively consistent with the first half of the year, + 45%. With obviously a strong contribution from Medidata, similar to what we have seen in Q2. Also Americas has most deal in the top 20. However, from an organic standpoint, we saw some softness, we could consider that Americas has been almost in the situation where Europe was in Q2. LATAM is still suffering. LATAM, as you may know, the countries, for most of them, they are still in the lockdown. Moving to a view of our software review by product lines.
Let's start with industrial innovation software review, moving from -4% year-to-date to -2%, with some good news. As you can see, ENOVIA growth is +4%, to be compared with -7% year-to-date. ENOVIA license revenue growth was at the double-digit this quarter, which is very consistent with the good dynamic of the 3DEXPERIENCE platform. CATIA also is improving from -4% to -1%. I would say CATIA, we also see a good traction from CATIA 3DEXPERIENCE and also CATIA System, with a high single-digit growth. It has been partially offset by some pressure on CATIA V5. Moving to the mainstream innovation software revenue, Bernard stated clearly, so +9% compared to +2% year-to-date.
We saw the improvement across almost all the geos, which is also a good sign. It has been relatively well reflected by the performance of SOLIDWORKS. You can see +10% to be compared +2% to +3% since the beginning of the year. This strong and solid growth has been driven by a strong recurring revenue. You remember it was one of the concern of questions from say you had, if we would have been able to maintain the renewal with SOLIDWORKS. That's clearly a proof point. We saw also the situation improving significantly on the license performance from Q2. Zooming in on a comparison of our revenue and operating margin results, let me share several takeaways. First, on the revenue side, we came roughly EUR 40 million below the mid-range of our estimate.
You can see that EUR 40 million is coming from a higher than expected currency headwind. EUR 23 million coming from the lower services revenue. The rest accounts for the software, which is relatively well aligned, minus three compared to the mid-range. On the operating margin, what could we say? We made up with our core operations, improving by 160 basis points compared to our expectations. Clearly, it's a significant performance. Also from the recent acquisitions, where we saw a +40 basis points compared to our expectations. We still have 10 basis points negative impacts from the currency effects. As a result, we are reporting an operating margin of 28.2% to be compared with the 26.2%, which was the mid-range of our guidance.
On an organic basis, our operating margin was stable year-over-year, and at the same time, as clearly stated, we are maintaining our investment for our customers. That's very important to understand this. This good performance on the operating margin is reflected into the EPS, with an EPS at the high end of the guidance, EUR 0.80, +3%, +8% excluding the currency effects. Our operating cash flow for the first nine months was EUR 1 billion. In fact, EUR 1.3 billion, almost at the same level than a year ago, which is a good performance. Contract liability reach EUR 1.4 billion, up about 5% in constant currency and perimeters, and DSO remains stable on the constant perimeters. Our cash continue to grow, now at EUR 2.5 billion at the end of September, from EUR 1.45 billion at the end of December last year.
This translated to a 561 million improvement in our net financial position year-to-date. Clearly, we are also well aligned with our deleveraging roadmap we shared with you at the beginning of the year. Now moving to our outlook, there are three takeaways I would like to share with you. First, we are reconfirming our 2020 EPS of EUR 3.70 - EUR 3.75, aligning well with our financial framework shared in April. It's mainly thanks to the resiliency of our recurring revenue and our savings program. Two, if you look at the EPS, in September, our currency was a negative factor by EUR 0.03, which we contained with an equal improvement from our operations. Then we are adjusting our revenue growth for the full year by one percentage point, moving from 12%-13% to 11%-12%.
This equates to first, EUR -15 million coming from higher currency headwinds. EUR -16 million reflecting the low utilization rate of the services activity and the investment we are doing for the strategic partners. EUR -16 million coming from the software side as we see a slower recovery in the marketplace. You remember when we defined the framework, all of us, we made the assumption that we will be back to normal or close to normal in Q4, and that's clearly not the case. With the second wave, and we still have many countries being still in a lockdown. Taking into account, again, we are adjusting by one percentage point. On the reported basis, this translates to a revenue of EUR 4.444 billion -EUR 4.465 billion, which is a growth of 11%-12%, as I said.
The way to split it between the different lines, the license revenue is now expected to be between -20% to -19%, which is an adjustment compared to the previous guidance, which was -18% to -16%. The recurrent revenue is unchanged, +26%, +27% for the full year. The services revenue has been also adjusted to -9% to -8%. On the operating margin for the full year, we are targeting a 29.8% to 30% EBIT margin, which is half a point, percentage point, better than what was our initial objectives. It's mainly due to the savings plans we have put in place. Again, I insist on this, we are at the same time maintaining the investment on the research and development and the investment to support the strategic customers. This is translated into the EPS, which is unchanged, as I said.
Moving to Q4, we are targeting a revenue of EUR 1,195 million-EUR 1.22 billion, which is a growth of +2%, +4%, excluding the currency effects. With a license performance expected to be almost in line with Q3. You remember in Q3, we did -11%. This quarter for the new license is almost three times bigger than Q3. That's the reason why I narrow the range a little bit, just to be safe. The range I'm proposing is between -15% to -12%. The recurrent revenue is unchanged. Again, keep in mind that last year, we had Medidata in our book for a part of the quarter, the Q4. That's the reason why the percentage points could be perceived as not the same that we used to do, but it's almost the same.
Services, in line with Q3, taking into account the investment we do. The operating margin will improve by a point to a 1.6 to target 34.6%-35.2%. We are targeting an EPS of EUR 1.15 -EUR 1.20, which is an EPS being flat to -4%. To wrap up, let me say that we look forward to speaking with many of you at our virtual Capital Markets Day, scheduled next month on November 17th, we will begin sharp at 2:00 P.M. Paris time. Hope to see all of you at that time. Now Bernard and I would like to take and answer your questions.
Thank you, ladies and gentlemen. We will now begin the question and answer session. And as a reminder, if you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. Once again, star and one if you wish to ask a question. And we do have questions that came through, sir. Your first question comes from the line of Julian Serafini. Your line is now open. Please go ahead.
Hi, thank you for taking my questions. I'd like to ask two questions. The first one on the guidance, specifically, you had mentioned that you don't anticipate licensed revenue returning to normal in 4Q. Can you share your thoughts on 2021 and how that may evolve? Do you have any line of sight on that? The second question also, I think might fit best, again, was on Medidata and on the billing specifically. I recall when the Medidata acquisition was done, there was some talk about potentially moving to longer billings durations. Can you comment on if that is something that is being implemented or if that has not happened yet?
Bernard, you want me to take it?
Yeah, you can take it.
Okay
We have a habit, which is to speak about the next year in February.
I know.
No, but-
Thank you for the question.
against for next year, we are nevertheless, crafting a scenario where we will progressively be back. That's the underlying assumptions. I clearly stated we are right now taking all the decision we can take, for the moment, in order to preserve as much as we can the growth for next year. That's probably the most important messages for this quarter. It's clearly visible in the services. You have seen it. We do expect some top-line growth on the new license for next year. We will discuss this much more next year, at the right time.
On the framework at the market.
During the Capital Markets Day, we will come back to the long-term objective we have. Not giving specific detail for 2021, but obviously you will be able to understand the dynamics of the trajectory of Dassault Systèmes. The second question, Julian, was related to Medidata, but I missed probably the question.
No, it's fine. On the billings direction, because Medidata, I think the billings duration was three months, right, typically before you acquired the company. There was talk about potentially stretching that out to maybe annual contracts and annual billings. Has that been done or is that still something under consideration for Medidata?
No. As you have seen, there are two parameters. You are right, they do long-term contract, and the average time is exceeding three years. In vast majority of the cases, we are talking about five years. Sometimes we have contracts exceeding seven years, but the vast majority are between three to five. From a billing standpoint, we are still on a quarterly basis. However, you notice that we did well on the margin as well as the cash flow. You are right, I did not mention this. The cash flow for Medidata improved a lot over the last year, and we are now exceeding EUR 100 million. The contribution of Medidata to the current cash flow is almost in net exceeding EUR 90 million for the nine months.
It's a significant improvement, as you can imagine, because we put much more discipline in the billing systems and also we have slightly adjusted the conditions for some customers and some CROs as well.
Okay, thank you.
Thank you. The next question comes from the line of Stacy Pollard. Your line is now open. Please go ahead.
Hi, thank you. I have two questions, please. Sort of following up on the 2021, I'm afraid, maybe thinking about the services level, how long do you think this will be at the lower level and over what time period do you think that could recover? It's not specific to next year, just how you see that mapping out over the next few years, potentially. Second question, would you mind talking about the competitive environment? Do you think there's any chance that you're losing some market share this year? I guess Siemens Digital seems to be supposedly reporting high single-digit growth in software orders, maybe low single-digit on revs. Do you think that's a product area or industry differential? What do you think is happening there?
Thank you, Stacy. Pascal?
I take the first question and then I will take the second one. The services against the investment we are doing to support strategic partner, it's something we are planning to do in Q3 and we will continue to do it in Q4. We do not expect to do it in 2021. It's point 1. Point 2, as soon as you have the new license growth being back, the services related to the brands order book will automatically grow. The fact that we have some dynamic with SOLIDWORKS, the fact that we have a good dynamic with 3DEXPERIENCE on the new license is also an early indicator on the fact that we do expect the services start to grow against next year.
Last but not least, I hope many sites will be reopened next year and we will have the ability to send our people to do the services on-prem as requested by some of our customers.
Stacy, thank you for also asking for the second part of the question, the competitive landscape on namely you mentioned Siemens. Look, we are like you, surprised, and I am like you, surprised with certain statements or kind of news flow with regard to that, for a very simple reason. If I look at and take every segment one by one, aerospace, Transportation & Mobility, and I take them all industrial equipment. For the category of software we do, for the offers you know that we have, we gain market share and we replace Siemens. We don't lose. I cannot find customers where the situation would be the opposite of what I just said. I don't think there is, or at least it's not related to the scope of the things we do. Now, it might be coupled with hardware on machines that they sell, most probably.
Clearly, I can look at the customer base we have. Not only we are gaining new customers, whether they are large or small, and I can take a long list of them. I can take in aerospace, the big players, all of them are now moving their military programs that some of them were on other platforms, on our platform, all of them. We have announced, you remember a few months ago, Lockheed. You know what's going on with Boeing, and it applied to everything. You know what's going on with Airbus. I can take a long list of those with even new program, including China. It is not relevant. In the automotive sector, Transportation & Mobility, the same thing. I don't look at revenue from my side. Pascal do it so well. I look at customers. Who are the one I win?
For each customers, how do we expand our footprints in modeling, simulation, and collaboration? Sorry to take maybe too much time to answer, but that's the reality. If I look at now startups, the new players, it's the same. If it's not 100%, it's 95% of the new startups in new smart mobilities, 95 are using today or adopting the 3DEXPERIENCE platform. If I go to industrial equipment, especially because in that sector, SOLIDWORKS and 3DEXPERIENCE is the main player. For the competitor you mentioned, clearly, there is no topic there. There was a discussion about electronics. We want Siemens, we refer to Nokia, we refer to STMicroelectronics. Those were previous, some of them were Siemens, they are not anymore. Of course, I don't want to be insulting, but facts are facts.
When it comes to the other player, the one you have in mind probably with this so-called great business model. There is no platform there. The reason why I believe we are marking the changes in construction and infrastructure is because of the platformization power and the true native implementation of our roles and processes on that platform. Today, this other competitor in that sector is leveraging a huge install base of drawing-based systems. It's the right things they have to do. The market will change. As far as I know, people are very upset about Revit and not satisfied. I think this will take a long time to change. I want to play that card, too. We are respectful of our competitors. We want to win. I will respect more when I win, even more.
We think we can because we are providing solutions that no others are providing. The last competitor that you probably have in mind, in the area of simulation. The area of simulation is going platform-based. There is no way this will change on the integration on the digital continuity, because people want out of the shelf solutions. Finally, I want to be explicit. We believe that there is no room for Palantir in Dassault Systèmes customer base, zero space. We believe our platform can do data science better than them. They probably can do government things. It's not our real market right now, there is no room for them in our sector. We believe that today we are implementing with customers real case of on SNCF, the French rolling stock network with predictive maintenance on digital acquisition.
My answer related to that is the platform is collecting the data, do data science for predictive maintenance and planning. This is a significant opportunity for growth in the years to come. We have proof points today. With that, I have almost done a 360 on the, a 3D review of the competitive landscape. We can go back during the Pascal, you want to say something?
To give you some analysis on the numbers, because I saw it, and I was intrigued like you, Stacy. This remind me a story, which is the following. A few months ago, GE Predix was for sale, as you know. We spent time to look at it. What did we discover? That the vast majority of the revenue of GE Predix was coming from the internal usage. My guess is it's probably the same for Siemens. Siemens is a large company, and they are probably using these mechanisms as a way to make up a little bit the top line.
Stacy, as you can see, we have a certain intensity in providing a crisp answer on those questions.
Well, it's very interesting. Thank you. Thanks very much.
Welcome.
Thank you. The next question comes from the line of Michael Briest. Your line's now open. Please go ahead and ask your question.
Thank you. Good morning, Bernard and Pascal. Two from me as well. Could you just explain a bit more what you mean about making investments to support the strategic partners to drive software next year? I'd have thought you'd need the services people on site to get the project live to then start recognizing revenue. Or are you sort of discounting the services so that the customer's in a better position to pay for the software next year? Then Pascal, just looking at the life sciences performance, I think we can work out from the software performance overall, if it's a 4% organic growth rate and 4% currency headwind, that the acquisitions contributed about EUR 164.5 million. If that's all in life sciences because it's Medidata, what's happening to the rest of the business? It seems to be down about 20% year-on-year.
Okay. Thank you, Michael. The first question on this consulting and service. First of all, we have a lot of partners doing service and consulting, system integrators and partners as you well know. Our main activity in this area is focused on strategic large contracts, multimillion EUR contracts, where the topic is the transformation of those companies. It's not even the implementation. It's the transformation of the processes, the platformization of that. In the case that Pascal referred to on the arbitration we did, it was in some way rather simple. It was rather simple.
We agree with those customers that they want to keep the long-term dynamic that they have, the mid-short term and short term, long term, in terms of deployment, because they know they need the solutions. They have tactical problems and we could have decided that we postpone the work we do with them to lay out the transformation plan that helps them deploy. This would have created an impact on the time at which they deploy them next. We decided with them, and it was extremely welcome with many of those clients who are really long-term committed with us. There is zero relationship issues with them. They appreciate it very much.
We say, Look, our people are going to stay with you in this tough time, and we are going to make sure we don't change the plan that we have for the years to come, because this is what you want to do. It brings an incredibly positive goodwill in demonstrating that we are there in tough time without exposing the medium long-term. That's exactly the obligation Pascal and I did, and our teams are happy to be with them, not go back and take opportunistic, short-term tactical engagement on then exposing the follow-up deployment. That's exactly what we're doing right now.
Your second question, Michael. Yes, to a certain extent, you are right with your analysis. There is a good reason for that, which is the following. We are moving toward a subscription-based model and SaaS model for everything we do for in life sciences. As you may know, when we acquire Accelrys, the vast majority of their software were on-premise, on-prem, not integrated with 3DEXPERIENCE platform. The vast majority is integrated with 3DEXPERIENCE platform. We are promoting, as much as we can, the cloud solution, because this is consistent with the Medidata way. Next year, we will integrate the go-to-market properly. This is the model we are pushing. We are not waiting next year to start to basically promote the subscription-based model being SaaS-based. That's the reason why you can be perceive the rest of the life science business being underperforming.
The reality, as I was explaining, we are extending our customer base by 16%, which is a lot.
Okay. Thank you.
Thank you. The next question comes from the line of Adam Wood. Your line is now open. Please go ahead.
Hi. Good morning. Thanks for taking the question. I've also got two, please. The first one was looking into the fourth quarter, shorter term. As you flagged, Pascal, it's a very big quarter compared to Q3, and obviously there's a little bit more nervousness about the environment than maybe three months ago. Could you give us a little bit of an insight in terms of pipeline coverage, how that would stack up against a normal year? Are you building in a need for greater coverage than normal to be able to hit numbers? If you could give any metrics around that would be really helpful. Then maybe a little bit longer term, I thought the case around SNCF and the data platform was really interesting. Could you maybe give us an idea around how you're charging for that kind of data collection analysis?
Is it to enhance the value of the platform to those customers, or can you actually drive a separate revenue stream? Then I'm reluctant to ask about competition in this space, but it's a different set than the normal ones. Maybe not about functionality, but just about sales presence, and the ability to get the message across to customers that you can do this as well. Could you talk a little bit about what you're doing there to drive sales? Thank you.
I will start on that, Pascal. Thank you, Adam. I will start and Pascal will really supplement on that. First of all, I have in mind, I cannot name the customer. I have a customer in mind in aerospace, where basically now we are in a situation, they were using the platform for the design production of airplanes. They are now using the platform for all the operational data as related to, by tail numbers, the availability of their airplanes in terms of predictive maintenance on availability. They are private jet. On the revenue balance between all the revenue we are getting from them, from basically the product development. On the platform-based revenue, 3DEXPERIENCE with data analytics and data science for predictive maintenance are going to become, in less than the next two years, equivalent. Equal.
Basically, it's a double footprint for us, doubling the footprint for us. This is not one of a kind. We have a similar situation for highly sophisticated equipment. Why are those customers doing that? For a very simple reason. It's easy to do because they can connect the data they collect with the way the product was produced, manufactured or engineered, and then improve that process. I think the message out with top executives, and with these companies we know the top executives, is relatively easy without a specialized team, because we can showcase very quickly. The last remark is related to manufacturing. We have done a lot with DELMIA on manufacturing engineering. You engineer your manufacturing process. Now, thanks to the data collection with Apriso, the data collection with DELMIAWorks, the possibilities of data collection with IoT basic software, that I don't really care.
I want to get the data, not the collection, not the technical aspect of it. We can take the real-world evidence of a production system and put them back and match them to the virtual model about what should be the real nominal performance of the plant and improve the plant. Another example where data science is playing a big role, and we are doing that with one of the world's best manufacturing company, and probably the biggest one in terms of scale, so you can imagine which one it is, right now. Real-world evidence in manufacturing to improve manufacturing process.
Adam, I think that the balance that you will see in the evolution of our solutions between data generation and then data science coming from modeling and simulation on data science, even the other way around, data collection and then creating new set of services, is going to be very visible in the years to come.
Related to the pipeline, Adam, we have a 220% coverage, so more than 2 times the revenue we should do. The target is usually if I look at the benchmarks the other years, it's much more close to 250, so we have some differences. The way to explain the differences is relatively easy. We have less large deals compared to what we used to have. It's not new. I told already this in Q2 and now it's visible. We also have, for the one of our indirect channel, which is the one selling the process, we have less opportunity in the pipe. This is the way I'm explaining the difference of coverage. The quality of the pipe is relatively good, and I think not having too much large deals to a certain extent, it should be a little bit less risky.
The question is the conversion rate, which is what I look at carefully. Believe it or not, the conversion rates of the pipeline have been pretty stable over the last two years. Clearly, I do not expect to have a drop in the conversion rate of the pipe.
That's very helpful, and thanks for the explanation on the data. It's very interesting. Appreciate it.
Thank you.
Thank you. The next question comes from the line of Mohammed Moawalla. Your line's now open. Please go ahead.
Great. Thank you very much. Morning, Pascal. Morning, Bernard.
Morning.
I just had one question. Could you comment around some of the other product areas? You called out strength in ENOVIA, but SOLIDWORKS was particularly strong. What's driving that dynamic? Also, any comments around the simulation business, any comments around how some of the renewals are going? One other actually question I had was, you talked about Johnson & Johnson renewals. I think Moderna was another one that you had last quarter. What is the sort of uplift you're getting, in terms of these deals when you renew them? What is the sort of, the stuff that you're kind of upselling into those life sciences customers? Thank you.
Pascal, you know me to start with a few remarks.
Yes, please.
On the SOLIDWORKS, we will see a very positive recognition about the value more of the platform, 3DEXPERIENCE, coupled with SOLIDWORKS in two ways that we call POWER'BY. You have the platform for collaboration, SOLIDWORKS on desktop, and then you do the collaboration on the cloud-based. Please remember, to SOLIDWORKS customers, we sell only cloud-based platform, not the on-prem for SOLIDWORKS client, except if it's a big company already using it internally. That's one event. The second thing is, we were surprised with the interesting dynamic with ENOVIAworks to manage projects for those SOLIDWORKS clients, and I think this is a very good sign for the future. The third remark is, there is a very excellent focus on the SOLIDWORKS team to change the game in simulation by having platform-based simulation.
As you may know, we have left our plate open for SOLIDWORKS install base to use non-Dassault Systèmes Solid simulation software, which are relatively not so well connected. Going with platform and integration is welcomed by clients. The 3DEXPERIENCE, the SIMULIA Works is also showing excellent reference that I think we should replicate. The challenge here, Mo, as you always said, know, is to make sure that our resellers know how to speak, demos it, or make it happen. The delivery system is different because it's on the cloud. We can be involved to help them online, which is a big step as compared to just selling on a PC, on a desktop. That's the dynamic going on now, and I think the team at SOLIDWORKS is very excited.
Last point is 3D Creator, which is SOLIDWORKS' native user experience, is absolutely native web-based on the 3DEXPERIENCE platform, and it's a red product. It's a SOLIDWORKS experience for the SOLIDWORKS community, and there is more to come in this area with xShape and others. That evolution to cloud is a quite interesting dynamic. It's not a big lever in the numbers, the 9%, but what is the lever is the fact that people now know that SOLIDWORKS desktop has a big future leveraging the platform, which was a question mark before. That's for the dynamic in this area. Of course, I think the DELMIAWorks was not too bad also.
Yeah, plus 6% for this quarter.
The DELMIAWorks, which is the former IQMS, as you know. You also asked a question, Pascal.
Yeah. Related to the large deals we signed recently in the life science sectors. Yes, you are right. They are sizable deals. The vast majority of them, they have a starting date, next year. Take Moderna. Moderna, we are doing some trials right now with them. However, the full deployment is expected to be early next year. Why so? Because they have a device piece in those trials, as I was explaining previously, and need to find a way to ship the device to all the patients after they have been enrolled, and this is taking time from a logistics standpoint, and that's the reason why you have some lag effects between the signature and the renewal and the system being in operation at scale. The good news with this, Mo, we could expect to see some acceleration of Medidata next year.
Last question that, Mo, probably was implied in your simulation in large account. Simulation in large account, at this point in time, is very connected to the platformization of what we do with large accounts, because each time we do a big step in platformization, they want to use out-of-the-shelf solutions. I think that we have a lot of competitors in this sector, very specialized competitors. They are doing a good job, no doubts about it. We think that the multiphysics integration is going to be an important factor, and it's becoming an important factor. I think this field is really open for more opportunities to do different as compared to the way customers are working today, which we think is what I call the platform effect for them.
Great. Thank you very much.
Welcome.
Thank you, Mo.
Thank you. The next question comes from the line of James Goodman. Your line is now open. Please go ahead.
Great morning. Thanks very much. Coming back a little bit on Q4, but really more broadly, just on the way the licenses are behaving. I was a little surprised at the lack of progressive recovery expectation given the strength in Q3 or the relative strength as you called out. You mentioned the shift to subscription in the pre-existing life sciences business. That's a theme across the sector at the moment, that customer behavior is also shifting in that direction. I wondered whether you're seeing that more broadly from your customers as well as internally, whether in Q4 maybe you were making some allowance for any potential shift of customer uptake towards subscription and whether there's any implications there just in terms of how we think about forecasting the license line as we look forward. A couple of quick clarification questions, if that's possible.
The first one just around the services margin. The cost base in services was extremely well controlled. I'm just wondering how you're managing to do that, whether you're having to make quick adjustments in that cost base or you're sort of redeploying that resource, how you're managing the costs there. Finally, just around churn. I think you said there's been no uptick in churn this quarter, but you're, in the release, I think, talking about some potential increase in attrition. Just some insight into exactly what you're seeing around the renewal rates. Thank you.
Okay.
The last part is important. You need to comment on that. Yeah.
Yep. Related to the subscriptions, it's not new in term of trend. You have seen for the last almost four quarters, you have seen a dynamic in the subscriptions sometimes being higher than the dynamic we have in new licenses. As Bernard clearly stated, the business model will follow the offer. First, you change your business model because you have built a competitive advantage, and you need to build the competitive advantage first, and the competitive advantage is the 3DEXPERIENCE platform. Clearly the goal for us is to have penetrated the install base broadly with the 3DEXPERIENCE platform, and progressively, we will adjust the business model to subscriptions.
There is one domain, nevertheless, which is the life sciences, because we are a newcomer in the life sciences. Medidata already is a critical mass, and we have the proof that the subscription model is the way to go because it has been well accepted by many of the customers. That's the reason why we can take probably more radical decisions along this way. Related to the services, yes, you are right. I think we did a decent job on the margin side. The way we did it, in fact, I have adjusted the subcontracting. I preserved the larger project we have in conjunction with Capgemini, Accenture, Deloitte, because usually they are also linked to the strategic programs we want to preserve. For others, I have reduced by a third the subcontracting, and this is reflected into the margin obviously, because automatically the utilization rate is improving.
Last but not least, the churn. Keep in mind, the renewal, in H1, we renewed almost 65% of the support contracts and maintenance. The remaining piece is almost split between Q3 and Q4. When I look at the trends, it's consistent with what I said last time. We are seeing a little bit the churn increasing with SOLIDWORKS. It has been well factored into the guidance, because some company are going to bankruptcy, and this is where the churn is coming from. For the rest, it's pretty stable, around 5%, which is what usually we have.
Okay. Thank you.
One last quick question.
Yes, sir. The next one comes from the line of Charles Brennan. Your line is now open. Please go ahead.
Great. Thanks very much for taking question. Pascal, I think you'll love this one. It's back on the 2021 momentum, if we can. I totally understand that there's a lack of visibility on the license side, but there should be greater predictability in the recurring revenues. Are you in a position to help us with a framework to think about what recurring looks like for next year? We're obviously trending at 4% growth at the moment. I guess Medidata puts some upward bias on that for next year, but the low level of licenses this year presumably put some downward pressure on it. Are you in a position to give us a framework for recurring? Then lower down the P&L, is it arithmetically inevitable if we see license growth, that we'll see margin growth?
Is it possible that you have to put costs back into the business such that margins could be flat to down, even if licenses grow next year?
I am in agreement with your first statement, Charlie. I love your question. No, it's a little bit early to give the framework. Nevertheless, when we are telling you that we want to preserve some of the software growth, especially with some of the large customers we have, and you know that some of them are basically in subscriptions with us, clearly you have a good sense about what I'm talking about. Namely, in aerospace, we have large customers with commitments, and what I'm telling you is the commitment for next year will stay the way it is. It was part of the negotiation we had with them. I do expect to have incremental revenue coming from those guys. Medidata, yes, I think, I would be not pleased, let's say this way-
Disappointed
disappointed if we are at least not gaining one point.
Yes
organic growth with Medidata next year. Related to the margin, it's yes and no, because we contained significantly the margin in order to absorb the volatility by preserving some of the investment, which are really the one being strategic. At some point of time, we still have gap in terms of coverage in some countries. We still have some positions to reinforce on the field. Clearly, I do expect to be back on the hiring process the way it has been in the past year. To a certain extent, let's say this way, if the growth is back, it will be a mistake not to invest. It's a way to fulfill the growth. It's a way to also build the relationship with more customers, and that's the way we do it here.
I would not expect next year to have a significant lever on the margin, even if we had to do it, we still have the ability to do it, but that's not the plan. It was a long answer, but maybe between the lines you can read.
Very helpful. Thank you.
With that, thank you very much to all of you for participating. Really, we appreciate your questions on the relationship that we have built, on transparency, on integrity. We will have a call this afternoon, and hopefully we will also have a dialogue on November the 17th. Thank you very much. Have a good day, all of you. Bye now.