Ladies and gentlemen, thank you for standing by and welcome to the Dassault Systemes to an H1 twenty twenty earnings call. Session. Now, I would like to hand the conference over to your speaker today, Francois Bottonado. Please go ahead, sir.
Thank you, Andrea. Thank you for joining us on our 2nd quarter earnings conference call with Bernard Charles, Vice Chairman and CEO and Pascal Chief Operating Officer and Chief Financial Officer. The Sosystems results are prepared in accordance with IFRS. Mill of 2 financial figures discussed on this conference call are on a non IFRS basis with revenue growth rate in constant currencies unless otherwise noted. Some of our comments on this call contain forward looking statements that could differ materially from actual results.
Please refer to today's press release and the risk factors section of our 2019 Docuement de estre Morin Yvessel. All earnings material are available on our website and these prepared remarks will be available shortly after this call. I would like now to introduce Bernard Charles.
Thank you, Francois Jose. We hope all of you are well first. And for those of you in the North Hemisphere that you will enjoy some vacation time with friends on family, December. To begin, let me share some key points on the quarter and first half. We delivered the second quarter financial performance well aligned with our guidance and consistent with the framework, we outlined in April.
Total revenue was up 10% in Q2 on 14% for the first half. Our results underscore the resiliency of our financial model, with a high base of recurring software revenue, and strong operating profitability. Recurring software grew 30% in Q2 as well as in H1 first half of twenty twenty benefiting from a good performance for maybe data on solid renewals on organic basis. As the cloud continues to grow over time and as our clients show subscription model, recurring software revenue will continue to increase as a percentage of software mix. At 83% are in the first half.
All 3 key metrics: recurring software, operating margin on earning per share came at the high end of our guidance range. We are benefiting from a well structured saving plants on Q2 PASCAL, helping mitigate approximately half of the economical impact of the global pandemic while enabling investment for the future. In research and development, we continue to strengthen our industry and domain leadership and to support closely our customers. Research and development staffing increased 5.5% in organic on an organic basis. We are also continuing to make investments.
This morning, we announced the acquisition of Proxem, a beautiful startup to expand our 3DEXPERIENCE collaborative data science capabilities. Looking at the year, The financial framework we shared with you last quarter had the objective of maintaining a 2020 earnings per share stable with 2019. Thanks to 3 critical factors recurring software resiliency, a continued strong level of operating profitability on for 2020 with growth at about 1% to 3%. Just talking about the purpose each quarter, we keep coming back to it. The virtual world improves and extend the real world, creating virtual twins and experiencing virtual twins enables to explore on Imaging Sustainable Innovation.
With our new equity revealed earlier this year, experiences human. When you move from social to human, it becomes very clear that innovations are made by people, for people. And if all of us think in this fashion, we can really change the world. The pandemic is reminding all of us that in a very half manner, we are all connected. We need to think about each other, our environment, ourselves, our world, we are all human.
This theme that we launched in February and to open the new horizon for Dassault Systemes. Is really about extending 3D experience from things to life. Linked together, we also launched the team, the only progress is human. And believe me, it was before the reveal of the pandemic in some way. A global initiative to increase awareness of today's societal environmental challenges.
And to inspire people to use the virtual world to imagine sustainable innovation for a better future. Remember, what we do is at the core of the innovation process. During a 2 year period, we are engaging with public through 10 acts to focus on some of the most pressing long term issues humanity faces with respect to health, cities, energy, water on those of area. At the same time, the business continuity is important. The global health emergency has underscored the power 3DEXPERIENCE platform to run our business from anywhere and to engage digitally with our customers as well as our partners.
The platform on the cloud is providing digital continuity including sales partners and for our clients interaction, while a number of our sites have seen a return of the workforce following phased in processes, phased in processes, Our number on one priority remains safety first for people. Let me come on briefly strategic trends in key sectors. Sterling, and looking at our markets from 3 strategic economy, the pandemic has revealed deep vulnerabilities in Manufacturing Industries, Life Science And Health Care And Infrastructure And Cities. In discussion with our clients, they believe that the health crisis will have a last thing impact on how they do business on the changing needs of their end customers or consumers in some cases. We are committed to help them make this crisis an opportunity.
A number of topics emerged in our discussion with them on materialized in a beautiful collection of wins this quarter. Let me share some illustrations of that. In Life Science Moderna, on Medidata, are collaborating on Moderna's MRNA1273 trials, including its upcoming phase 3 trial, the largest COVID-nineteen trial in the world of this kind to date involving about 30,000 passions. The trial leverages our common perspective to push forward a passion centric approach incorporating directly data from passion and not receiving it from sites such as hospitals. The Medidata and Moderna team are moving forward with the speed on urgency necessitated by the global pandemic using the world's most innovative and scalable cloud platform for clinical development, the Medidata platform.
Working with BioVIA Brown Galapagos our clinical stage biotechnology company has adopted our 1 lab industry solution to improve collaboration as well as efficiency and to reduce regulatory compliance risk with a comprehensive digital trade. Moving to the world of communication, the 5g Technology Ericsson is providing with a progressive company wide rollout of 3DEXPERIENCE the 3DEXPERIENCE platform. Key values are strong collaboration across the research on development and manufacturing workflow, thanks to the 3DEXPERIENCE platform, managing all the requirements driving the product definition This marks the next step of a long term partnership with targets which targets to the quick and efficient delivery of innovative 5G solutions with Ultra Connect activity, enabling connected objects on driving change worldwide in Healthcare Energy, Transportation City, home life and infrastructure at large. In evobility, a well known company now being visible, Nicola, a U. S.-based pioneering electrical heavy duty SUVs on trucks as adopted the 3DEXPERIENCE platform and several industry solutions to roll out an R&D platform to support a rapid global expansion on to design and launch new model faster.
We are also pleased as a side note to see the success of Tesla. Of course, long lasting 3DEXPERIENCE client. GDC techniques on, AMD supplier in Europe see significant business benefits in time, in cost and in efficiency from improved collaboration with the 3DEXPERIENCE platform on its associated industry solutions. 3DEXPERIENCE will become the new backbone for engineering, manufacturing and service for strategic programs at Airbus Defense And Space. They are deploying the 3DEXPERIENCE platform, especially for their mal RPAS drone.
Program, ensuring end to end continuity from design to shop floor and operations. Key business values include improving affordability time to market and maintainability of this next generation highly complex products. More broadly, we are seeing increased investments in defense program as well as space among a number of companies across the world. Governments are providing stimulus to the aerospace industry in this unprecedented period in June, the project government passed a measure with, 1,000,000,000 in investment on loans to France, air bus, and other smaller companies in their supply chain. Moving to infrastructuring cities, This morning, we had just a joint announcement with Bouygues Construction, a world leader in Construction, reinforcing our partnership with the objective of recreating Ship, we will focus together on developing residential product line with 3DEXPERIENCE platform on the cloud for modular construction.
A few quick comments on collaborative data intelligence. Because we are a player there. We continue to invest in expanding our collaborative data intelligence. We are pleased to welcome FOXM, a specialist in AI powered semantic processing software and services that transform text data in actionable content and insights. With CoxEM, we will deliver new collaborative data science experiences on the 3DEXPERIENCE platform to enable industry to leverage data patrimony, which is becoming bigger and bigger, of course.
The combination of AI with modeling and simulation will drive new learning methods on the capitalization, of knowledge and know how. With that, let me turn the call over to Pascalia as a few things to tell you.
Good afternoon. Hello to everyone. We hope you and your family are well. I would like to start my comments with a quick overview of our financial efficiencies. First, total revenue was $1,070,000,000, increasing 10% in constant currency in Q2.
Revenues came in at the high at the midpoint of our guidance, sorry, with software at the high end and services below. For H1, total revenue increased 14%. Operationally, we are well managing our cost reduction efforts and during the second quarter, operating expenses decreased 5% on an organic basis. Our operating margin came in at the high end of our guidance range at 26.7% in Q2. And for the first half, we are at 28%.
EPS was $0.80 compared to our guidance range of $72 to 70 $7 with $0.02 benefit from currency. So we also are at the high end of guidance. Zoom in our revenue by type, software revenue was well aligned with our planning, both recurring software and licenses revenue. In total, software revenue increased 12% in Q2 and 15% in H1. On an organic basis, it was lower by 7% in the second quarter and 4% for H1, due to the impact of many lockdowns on a new business activity.
Subscription and support Our recurring software revenue represented 82% of total software in the 2nd quarter, and recurring software revenue grew 30% in total on a good performance for renewal across virtually all of our geos, and double digit growth for many data. On an organic basis, recurring software increased 4% in Q2 and 5% for H1. Zooming on licenses and other software. It came at the low end of our planning range, decreasing 32%. We do expect this to be the weakest quarter of the year with a slow ramp albeit much better in total for H2 compared to Q2.
With respect to services, the COVID-nineteen pandemic has created a significant headwind with revenue decrease in 5% in Q2. On an organic basis, we saw a decline Moving to original software review, let me share perspective on the impact of the pandemic in Q2 compared to Q1. Beginning first with Asia. Software revenues slowed from 7% in Q1 to 3% in Q2. On an organic basis, Q1 was lower by 1% 4% in Q2.
Licenses revenue decreased in a similar manner compared to about 20% versus Q2 at 21%. Asia Pacific sales performed well and both China and Japan were much more resilient this quarter. It was the 3rd quarter for India as one would expect. Support revenue growth was very solid in Asia except for India. Zooming in on China our direct sales had the best performance continuing to show pickup in activity following what we saw at the end of Q1.
Wind in the second quarter, including high-tech, Marine And Offshore, Transportation And Mobility, And amongst our clients is NIO, a high hanging smart electrical vehicles OEMs They have adopted the 3DEX trans platform in connection with rolling out an R&D platform to support rapid global expansion and to design and launch new model faster. In Europe, the health crisis had a big impact in Q2 in terms of slowing customer decisions. In combination with a high Q2 2019 comparisons, Europe software revenue decreased 4% in Q2 from growth of 2% in Q1. Our traction in Life Sciences continue with Bigall Research And Development Center, based in Israel and selecting our design to cure industry solutions with biogas in connection with research they are doing to fast track development of the COVID-nineteen vaccine. In the Americas, Overall software grew 43% in Q2 and 44% in H1.
Life Sciences And Aerospace Defense were key contributors. North America had the most deals in the top of 20, spread across a number of industries. A good example could be a dotfoods, a largest food services redistribution company in the United States. They are expanding their use of DELMIA Quintiq to increase warehouse efficiency. This is another example displaying the wide diversity of industry and company where DELMIA Quintiq's technology brings significant value.
Moving to a view of our software revenue by product lines. Industrial Innovation software revenue decreased 9% in Q2 and 5% in the first half. Support revenue was very solid that this growth was more than offset by the sharp decline in license revenues. In addition, you may recall that both Katy and Innovia had a very good Q2s last year, so this had to the swing. In Life Sciences, Middle Data Total revenue was up double digit in Q2 and for H1 as well.
On a comparable basis, During Q2, Medidata achieved record new bookings by over 20%, accelerating backlog growth driven by on one hand patient clouds and on the other hand by the data analytics offers. We could also notice a substantial operating margin improvement at the same times. Importantly, Medidata is well positioned to achieve its growth objective for the full year. And with the global Hess Foundation has been a headwind to the single study clinical trial, the strong new booking is a tailwind for the full Moving to the mainstream innovation. It showed a good redundancy with a strong growth in recurring software.
In Q2, we also saw growth for Centric PLM and for DELMIA Works. And software revenue for mainstream innovation decreased 2% in Q2 and were stable for H1. Zooming in on our profitability our non IFRS operating margin of 26.7 percent came in just ahead of the high end of our objective range of 25% to 26.5%. The 2 principal factors were: First, a stronger performance in our core business, bringing about 120 basis points Similarly, Medidata coming in ahead of the plan, adding about 20 basis points. And 10 basis points from the currency compared to our guidance rates.
The offset to this was our recent acquisition of Centric PLM and IQMS coming in 50 percent basis points below plan combined. Let me remind you our saving plan, targeting about EUR 170,000,000. And offsetting about half of the revenue reduction we had estimate in Q1 from the COVID 19 compared to our initial 2020 guidance in February. About half of the targeted savings, relates to the selective hiring as we are just doing in research and development in particular with the staffing increase 5.5% on an organic basis. And on the other half, to discretionary expenses.
At the end of H1, Our operating cash flow for H1 reached 1,000,000, a strong level of and just 4% below H1 year 2019. We benefited from Medidata's improved cash generations and better collections on the one side. Offsetting this factor is part of what some of the extended payment terms to help our clients as well as our resellers. Contract liability totaled for 1,000,000,000 160,000,000 and were up about 3% in constant currency and parameters. DSOs remained stable on a constant perimeter basis.
Zooming for a minute on our cash position, It increased 23% in H1, and we are now back to pre mediator levels with cash and cash equivalents of EUR 2,410,100,000. Combined with the debts of EUR 4,610,000,000, our net financial position improved EUR 460,000,000 to a negative 2.210000000000@june30. Moving to our financial objectives as we outlined last quarter, our key objective is our commitment to a stable non IFRS earning per share for 2020 in comparison to 2019. In the means of the global pandemic based upon our results of the first half and assessment for the second half, We confirm our objective now targeting a non IFRS EPS of to This estimated expected tax rate remained unchanged at about 25.2% and our exchange rate assumption for the USD and Japanese yen remain unchanged for Q3 and Q4 in spite of a euro dollar volatility we have seen the last few days. On and summarize in today's earnings press release.
First, we are maintaining our revenue growth range at plus 12% to +13 percent in constant currency. We are increasing the reported revenue range at the midpoint by EUR 15,000,000 to EUR 4,540,000,000, with some puts and takes 1st, plus 1,000,000 for currencies, plus 1,000,000 for software and minus 1,000,000 for the services For software, we are increasing the range to 14% to 15% from 13% to 14%. With recurring revenue expectation unchanged for the full year. On a sequential quarterly basis, we would expect a progressive lowering of our organic support revenue growth as we saw in 2019. Based upon our updated perspectives, we are improving our outlook for licenses software revenue evolution.
And looking at our updated pipeline for the year, We do see a willingness on the part of clients to resume investments, and we are not generally seeing large deal. With the pipeline made of smaller deals. The sales process in term of maturity seems well advanced given us greater conditions for Q3 and also Q4. For services, We removed about 1,000,000 from H2 Outlook. This implies that a little less than 10% of our services staff is on the bench due to the postponement of activities by clients beyond 2020.
We have observed willingness on the part of clients resume investment, and we have decided to keep this resources. We know estimate to services revenue trajectory ranging from a decrease of 2% to growth of 1% for 2020. Compared to a growth of 5% to 7% estimated earlier this year. Operating margin we are refining our non IFRS operating margin target to about 29.3% to 29.4% for the full year. 2020.
For EPS, we are adding 3 points at the high end and tightening the range to from EUR 0.07, bringing us to EUR 3.70 to EUR 3.75. To summarize, While our business is not immune to the COVID 19 crisis, I think our financial result demonstrated the resiliency of our business model. Moreover, our strong level of profitability and financial strength enabled us to continue to invest in our strategic priorities, to create value for our Berna and I would like now to take and answer your questions.
Andrea? Thank
you.
You.
We're now taking our first question from the line of Andrew DeGasperi from Berenberg. Please ask your question.
Thanks. Good morning. I just had 2 quick ones for you. I just, first of all, in terms of the SMBs I know you mentioned that churn will likely pick up in the second half. I know you foresee some bankruptcies emerge in September in Europe, specifically.
You tell us if you've seen as of today any delayed payments from these small and medium businesses? And then, secondly, I know you said that admitted that our bookings were up 20%. Can you maybe give us overall bookings from a constant currency basis? Thanks. Not.
Okay. So Bernard, I will probably answer this question. Please feel free to
handle what you want. Of course,
So relative to the churn of the SMB, you are right. We raise, the guidance when we made the framework last quarter, and we raised from 10% to 12% the churn. Actually, we have observed in Q2 a 9% churn, so which is a good sign because it's usually historical level, we have seen. Nevertheless, we decided to keep the guidance the weight has been designed because we do expect to see some bankruptcy in Q3, at least more than what we have seen in Q2. So we keep the 12% churn for the SMB market compared to the 9 we are seeing right now.
So related to medi data, Yes, there are a few things we can say. The first, the new booking has been extremely good this quarter. For Q2. It's almost the size of a Q3 new booking quarter. So that's a that's a good sign.
And, the new booking is up more than 20%. For sure. We are also seeing an acceleration of the backlog growth. And there are a few things you should take into consideration. First, the way we monitor this, this growth along 2 different axis.
The first one is what we call the 12 months backlog at par, assuming that we will renew the existing customer without increasing the bill. And the backlog is growing at 13% at par, which is exactly in line with our plan. And then you have the renewals. And we are also monitoring the renewals. And over the last 12 months, in average, the renewal growth has exceeded 20%.
So the combination of the 2 give us certain level of confidence to deliver the H2 for BD data, aligned with the plan, and give us also some good perspective for 2021. Last but not least, to answer to your questions, we have roughly 95% coverage of H2 for Medidata So the remaining piece we have to fill with incremental booking is I think achievable.
That's very helpful. Thank you.
Next question, please.
Yes. Next question comes from the line of Jay Vleesch Schover from Griffin Securities. Please ask your question.
A few questions starting with SOLIDWORKS. Looking back at Q2, Pascal, how would you say the year over year decline in new SolidWorks licenses compared with the 11% decline in Q1. I'll assume it might have been a larger decline, but perhaps you can clarify that. And then looking forward, what are you thinking in terms of the adoption of 3Dx Works, which has just been released to the channel. And I know that, Solid Works has a program in place to try to activate or reactivate, what is a substantial dormant base of customers not on maintenance, your non maintenance paying base is larger than the active basis of your peers.
What are you doing programmatically to convert more of that back on to maintenance. And then some other questions besides Solid Works. Thank you.
So Bernard, I'll take the first one. Yes, please. Maybe answer the second one. So the For Q2, the performance for SOLIDWORKS, you have seen it. It's minus 3% total software revenue And if you split between the new license and the recurrent part, the recurring part is growing at 6%.
And if you do the math, you will discover that the new license are decreasing by a little bit less than 20%.
But regarding the adoption of the 3DEXPERIENCE works, the As you know, the entire, now solidworks associated portfolio is moving from functionalities to roll some process coverage. An example of that is our, what we are is what we are doing with DELMIA Works connected with solid works or similar works, which by the way are showing very interesting, success dynamic So that program is well understood by partners and clients. We are just at the beginning, as you said, which was announced during the sorry, we're doing a 3DEXPERIENCE world, early this year, and now it's just being leased. So we are very confident that number 1, it's well received by the clients we have seen it. 2nd, the 3DEXPERIENCE platform, helps to expand the functionalities of SOLIDWORKS Desktop and also open the possibilities of SOLIDWORKS through a browser So this is now, can be provisioned just with a click and buy process.
Which is quite interesting. So, we are at the beginning of this program, but there is no doubt that the powered by the cloud, 3DEXPERIENCE cloud infrastructure should be a good lever for future growth. Which by the way is, also kind of answer to your 3rd question related to, the subscription Success SOLIDWORKS is providing very high degree of satisfaction to users on, very high. I mean, the user community is powerful. Very vivid and very active.
And I think the fact that it was demonstrated with my solid works. I mean, they share a lot of information. This is being powered by the 3 d experience. So we believe that progressively, just the virtue of being connected will by As a result, create a subscription revenue flow, at least related to the, what we call, the collaborative process that should be a very interesting value for the SOLIDWORKS base. We don't want SOLIDWORKS users to be isolated.
My solid works was the first step 3 d experience. Works is the second one with capabilities both on new growth as well as marketplace that I think is quite promising. It's also a way to make sure that our partner sees the value up with their clients. So, that's basically how the 3 topics are connected.
Okay. Secondly, in your remarks earlier, Pascal, I think you used the phrase, resume investments when speaking of of certain customers. Could you relate that view to the manufacturing and supply chain business specifically There seems to be a good deal of, let's say, ferment in that part of the engineering software market, where a number of your peers are paying a good deal more attention to that class of software, enterprise software companies as well. Microsoft highlighting it, for example, conference this week. So over the years, Delmi and Quintiq had grown, but it's been a fairly lumpy business, as you know, So, what could change that lumpiness and make this look much more like an ongoing retooling or reinvestment cycle specifically for DS in that area?
Before to answer to your question, I want to correct one thing. The Quintiq business is white unplanned compared to the acquisition plan we developed at that time. So and the reason is, as you clearly express, believe it or not. This market is not well served right now. There is this strong belief that the ERP player are serving extremely well in this market, but that's not true.
What they do, they do inventory management. Managing a hand to end supply chain process is much more complex. Because you need to have a virtual twin of the supply chain to make it happen. And that's one of the unique differentiators we have with Quintiq, because not only we have the optimization engine, you know, others they have, but it's in conjunction with the virtual twin. Of the supply chains.
So we can do multi scale optimization. The other usually they are struggling to do. So coming back to your questions, yes, you are right. This domain is extremely important for many customers right now because they are looking for a short return of our investment. And optimizing the supply chain is one of the easiest way to reduce your cost of operations.
Believe it or not when you buy your products between a third to sometimes more than 2 third of the products. Costs are coming from the logistics. So if you know how to reduce significantly the logistics costs, Franklin speaking, you are doing a lot of savings. And with the new technology coming like 3d printing, it's, you know, it's a way to redesign and reshape completely the supply chain, and that's what is happening right now. So to come back to your questions, we are seeing a lot of traction in
the manufacturing industry coming from the integration of the supply chain management with the manufacturing operation management. Related to the win rate in MES sector, which is then the DELMIA, not DELMIA Quintiq, the DELMIA appraisal on So DELMIA works, we have a high, a very high win rate in MES. I mean, DELMIA appraisal is becoming on our in several industries. And we have replaced those MES of, competitors like Siemens or SAP, quickly on his working on the tracking cost is there. Whether you talk about A and D tier 1 Automotive on many of those sectors like industrial machines.
No, I think it's a wrong perception the DELMIA portfolio is progressing very well.
And lastly on metadata, Is it possible that the strong bookings, the 20% or so, which is above the revenue CAGR that you've talked about for that business could in fact translate into an even faster revenue CAGR, for metadata for some time. And if that were to occur, would there be faster margin leverage in the embedded data than you've spoken of previously, such as at your presentation at the Life Sciences Day back in November?
So I will to answer to your question, I will start with the second part of the questions because as you remember, we we outlined the plan for the profitability of Medidata a year and a half ago, where we say we will win two points, EBIT margin every year for the next 5 years. So where are we? In Q2, we had 20% operating margin with Medidata. Which is well aligned with the plan. In fact, we are slightly ahead.
And the reason it's obviously coming from the good momentum, but also, you know, and I should thank Tarek and Rouven for and Glenn for what they did. They have put the discipline financially speaking without compromising the momentum on the top line, which is a very good thing. So now coming back to your point, I think let's assume we have an acceleration of the growth for Medidata, it's in our interest in a way to continue to invest. So I will follow the plan. We have defined because we need to reinforce our ability and capability to tackle this market.
And I think from a pure sales coverage and also from a research and development standpoint, we are far from having, you know, the full capacity. So I will not try to overachieve compared to the plan I just outlined.
Thank you very much.
You welcome, Jeff.
Next question please.
Yes. We are taking next question from the line of Jason Salino from KeyBanc Capital. Please ask your question.
Hello. Thanks for taking my question. Building on Jay's previous question, you mentioned customer's willingness to make to resume some of these investments. Was there a particular month or period when you saw this begin?
In fact, it's it depends, from a 1Q to another 1. Let's start with Americas and especially United States. We saw a good start for the quarter because many people they were anticipating, you know, the lockdown, and we signed some sizable transactions. I will say the 1st month. And it was a little bit more difficult at the end of the quarter.
In Asia, especially China and Japan, I mean, China, you know, we had a good recovery the last few weeks of the Q1, and we are basically moving along the same trend. Japan, we saw some decision moving forward in Q2. In Europe, I will say that's not it was not happening in Q2. Many decisions have been stuck because people, they were still building their plan. And we start to see now people having not only a plan, but having a time lines in mind to be much more selective on the investment they want to secure and continue.
So I do expect, Q3 to be better for Europe at large.
Okay. And if you look at your 3Q range for new license growth of minus 18 to minus 8. It's quite wide. Can you maybe talk about what it would take to get to the high end of the range? And maybe what would happen to get to the low end of the range?
So the way we did it first, we were looking at the pipeline. And if I compare the pipeline versus last year, we are grossly between 85% to 87% of the pipe, depending the country and depending yields. However, the level of maturity of the pipe compared to last year is much better. And the way we measure it, we have what we call a stage gate we are looking all the different opportunities we have in the pipeline. And depending where they are, at which stage we have a level of maturity being formalized and quantified.
So if I compare the Q3 pipeline compared to last year, even if it's smaller pipe, but the level of maturity is 10 points higher. And the last piece, We have less dependency on last transactions. The last transaction has been sliced in smaller opportunities. And we do expect the conversion rate to be at least equivalent to what we've seen in Q2. So if you put some freedom, some range on the 3 indicators I gave to you, basically you come with the high end of the low end of the range.
We'll take one last question.
Yes, we are taking our last question from the line of Michael Breeze from UBS. Please your question.
But You love us, Mike.
You close the call this morning and you're going to close the call in San Fernando.
Okay. I've got a couple of that's for Pascal. So just in terms of the services business, obviously the Q1 and Q2, you've given the organic numbers. Coming out that Medidata had a little over 1,000,000 in services this quarter and about 1,000,000 last. So it looks like MedData subscription revenues are flat sequentially.
Would you sort of agree with that analysis or the numbers
No, Michael. First, I never gave the services number for Medidata.
The currency numbers.
Yes, but the organic, yes, you're right. You can make basically the assumption, but you need to have the base compared to last year. So you will have our time to recompute, but nevertheless, just to help you. The growth for the services is in line with the rest for Medidata. So when I say it's a double digit growth, it means it's a double digit growth for both.
Okay. I mean, so for the last year, are you adding in metadata? I mean, it was quoted in Q2, so we've got the numbers for that, it did, I think, $35,000,000 of services in Q2 last year. So I should grow up.
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Michael, who said we are defining the services the same way.
Or what would have changed?
I mean, we have different policy. That's the reason why it may be not fully comparable with the numbers you have. That's probably the reason why you have our time to recompute the number. But I can ensure to you that the services business from Medidata is growing along the same way than the software.
Okay. And then just another one on services. I think you said that you've got about 10% of the workforce on the bench. The margin performance looks very good. If you're again just taking the revenues, they were down, I think it was 1,000,000 question
on the bench does not mean they have their utilization rates, it's at 0. It means they are not fully loaded. That's the reason. Maybe my question was to extreme.
I mean, so revenues were down $11,000,000 quarter on quarter and cost were down 1,000,000. And I know you also talked about subcontractors. So can you give a sense of how much of that 1,000,000 reduction was just letting go of the subcontractors?
For the subcontractor, we are reducing by almost 50%.
And that will be the majority of the $12,000,000 reduction costs?
Yes. Not the majority, but you are covering definitively to sell.
Okay. Okay. And then for the rest of the year, margins in services would be similar to Q2's level, do you think?
I hope so. I hope so. All right. That's a very fine. I mean, it's very fine to manage the marginal services.
That's the reason why, you know, and if you look at the range we gave for the top line for the services in Q3, between 0% to 10% growth, the range is pretty large to a certain extent. And this could have, impact on the margin, obviously, So that's the reason why I'm taking some cautiousness as a way I'm answering to your questions because the visibility on the short term is not at the level we want. But I do expect any way to contain and to try to protect the margin as much as we can the same way we did for Q2.
Understood. All right, thanks very much, and have a good summer.
Afternoon. And of course, as you know, we can take your calls after this one and continue to have the proper action so you can understand how the business is going on, we are going to be busy this summer to make sure that we do a good second half as we as we committed to you. Thank you again and have a great summer for you.
This concludes the conference for today. Thank you for participating. You may all disconnect.