Ladies and gentlemen, thank you for standing by, and welcome to the fourth quarter and full-year Dassault Systèmes earnings presentation. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. I must advise you that this conference is being recorded today, Thursday, the 6th of February, 2020. Now, I would like to hand the conference over to your speaker today, the Vice Chairman and CEO, Bernard Charlès. Please go ahead, sir.
Thank you very much, Priscilla. Thank you for joining us on our earnings conference call, sorry for the delay, with Bernard Charlès, Vice Chairman and CEO, and Pascal Daloz, Chief Operating Officer and CFO. Dassault Systèmes results are prepared in accordance with IFRS. Most of the financial figures on this conference call are presented on a non-IFRS basis, with revenue growth rate in constant currencies unless otherwise noted. Some of our comments on this call will contain forward-looking statements that could differ materially from actual results. Please refer to today's press release and to the risk factors section of our 2018 document reference. All earnings materials are available on our website. These prepared remarks will be available shortly after this call. I would like now to introduce Bernard Charlès.
Thank you, François-José. Thank you for joining us on this call on our earlier webcast. Summarizing 2019 in a few words, it was a year where we well achieved our five-year plan, delivering and our 2019 financial objectives, set the stage for multi-decade expansion. First, 2019 represents the achievement of our five-year plan, 2014-2019, to double EPS. We are delivering against our commitments thanks to the sustainability of our key growth drivers. 3DEXPERIENCE now represents almost one-third of related software. We are reaching more industries and achieving further end-market balance. Diversification industries represented over one-third of our software revenue in 2019 with 3DEXPERIENCE enabling this. Second, looking at the year 2019, we met our annual financial objectives with revenue up 13%, operating margin at 32%, and earnings per share up 17% to EUR 3.65.
As you have seen from our guidance, we envisage 2020 to be a year with a solid financial performance. Third, we unveiled this morning that we are opening up new horizons in health and life science with 3DEXPERIENCE for the virtual twin of human. To support our multi-decade ambition, we will focus on developing our leadership in life science and healthcare, continuing to extend our investment and leadership in manufacturing industries, and advancing forward in the promising infrastructure and cities sector. We also announced this morning the appointment of Pascal Daloz to the newly created position of Chief Operating Officer. In addition to continuing in his role as CFO, Pascal assembled a top talented new generation of leaders and set up a new operational executive committee.
We want to ensure excellence in operational decision-making on preparing the new leadership team that will carry forward our ambitions in the future in a seamless manner. Finally, we are introducing new product lines reporting beginning of 2020 to align our disclosure with these three sectors and to ensure that you have a clear line of sight on our progress. We have learned a good deal since 2012, when we opened a new horizon introducing our purpose and unveiled 3DEXPERIENCE on the 3DEXPERIENCE platform. At the time, I shared my belief that the 21st century would be a time of unprecedented invention and innovation by providing business and people with 3D experiences to imagine sustainable innovations, capable of harmonizing products, nature, and life. In 2012, we also dared imagine the 3DEXPERIENCE platform would become the most powerful vehicle for sustainable innovation.
I couldn't have imagined that the proof points over the last seven years would be so real. At the time, we were largely focused on products. In a world of things. Through our research on investment, Living Heart, Living Brain, 3DEXPERIENCE City, our multi-physics, multi-science capabilities are now the Medidata acquisition. We have discovered that we can go further. We are extending from things to life. We also realized that while social industry experience made good sense, it was not enough. Experiences are human, the power to create a better world, whether as a worker, passion, or citizen. We are speaking about human industry experiences indeed. To do so, we see three sectors of the economy that have a significant impact on each, on every one of us.
Life science and healthcare, infrastructure and cities, and of course, manufacturing industries, on where we believe that the system can become a global leader. Critical to this is virtual twin experiences. For Dassault Systèmes, they have been part of our DNA for more than 35 years, and we believe they can be instrumental to our contribution to a sustainable world over the next 20 years. There was a before and after 1989, the year where we created the first virtual twin of a gigantic airplane, the Boeing 777. There was a before and after February 9th, 2012, when we shift the center of gravity of the industry from product to experience. There will be a before and after the virtual twin experience of human body, which will have profound implications for the future of healthcare, life science discovery, and the human experience.
To ensure that all operational decisions are made in a very coherent manner according to our corporate strategy, we are extending the scope of responsibility of key executives on establishing a new leadership system, combining talents on multi-generations, and led by Pascal Daloz, as Chief Operating Officer. Underlying the construction of our new operations executive committee are two important themes. First, we want to ensure continuity as we move forward by taking steps in advance to prepare our leadership transitions. Second, the key characteristics of our long-term performance and long-term value in Dassault Systèmes has been the ability to ensure resiliency of our performance. In other words, to see and manage, in a seamless fashion, key transitions in our business. In addition, we have strong leadership on depth across three sectors and all across the organizations, from strategy to operational excellence, research, and development. Congratulations, Pascal.
Let me turn over to you.
Thank you, Bernard. Hello, thanks for joining us today. I would like to share a summary overview, followed by a more detailed financial and business review, and finishing up with our new revenue reporting and 2020 financial objectives. Let's start with the year 2019 performance. With respect to our full-year financial results, both total revenue and software revenue increased 13%. We had a broad base of any growth, with the total revenue and software revenue up 7%, recurring software up 8%, and services up 9%. EPS increased 17%, with our operating margin at 32%, led by 100 basis points underlying improvements. Our cash flow from operation increased 32% to EUR 1.19 billion. Zooming in our fourth quarter, financial results were in line with our guidance. This was the case for the revenue and the operating margin.
EPS came in ahead on a lower effective tax rate, reflecting final year-end estimates refinements. SOLIDWORKS, SIMULIA, and Centric PLM delivered good growth. Results from Medidata are including as of October 29th, when we completed the acquisition. As we outlined our Life Science Day on November 13th, we see a significant growth opportunity, and we are off to a good start. Zooming in our 3DEXPERIENCE performance, from a growth perspective, 3DEXPERIENCE software revenue increased 22% in 2019, following the 24% growth in 2018. From a penetration rate or mixed perspective, 3DEXPERIENCE increased to 29%, up 400 basis points over 2018, and 800 basis points over 2017. From a license revenue perspective, 3DEXPERIENCE licenses revenue grew 12% in 2019. As you know, we had significant growth on the subscription side, adding to the total 22 software growth I mentioned.
3DEXPERIENCE has been an important driver of our diversifications. EDF, with whom we entered into a long-term partnership in June 2018, is expanding its adoption of the 3DEXPERIENCE platform. EDF will deploy our Capital Facilities Information Excellence industry solution experience to access real-time project data and to create the digital twins of nuclear plants, whether they are at the design, construction, or operational phases. This will enable EDF to have a single source of tools for every stage of the plant lifecycle, from early design and engineering to constructions, operations, and decommissioning. With these deployments, EDF expects to increase by 30% its operational efficiency and well support the partnership goals of strengthening plant performance and the overall competitiveness of nuclear power. Moving to industry highlights. Following double-digit growth for our three largest industry in 2018, we had some mixed performance during 2019.
Aerospace and defense software revenue was up high double digits on a broad-based trend. Transportation and mobility grew mid-single digit, with a number of automotive OEMs making significant new investments, while we saw a slowing of the automotive supply chain. Industrial equipment also had a mid-single-digit software revenue growth in 2019. We saw some improvement in H2 compared to earlier in the year, and this is visible in part in SOLIDWORKS' stronger second half results. With respect to our diversification industry, they would have represent about 50% of our software revenue on a like-for-like basis, assuming Medidata were consolidated with DS for all of 2019.
In home and lifestyle, Centric PLM is leading the way, working with more than 12,000 well-known brands around the world, helping them increase income, sales, improve inventory management, reduce logistic costs, translating into more new products, increased efficiency, faster time to market, and improved sustainability, thanks to less waste. Centric PLM leadership is evidenced with a strong growth in booking new client acquisitions and revenue during 2019. In consumer packaged goods, we are seeing a strong appetite for sciences. Creating the right formula is more complex than ever. Consumers are demanding more quality, transparency, and global and local regulatory bodies are creating more stringent guidelines for raw materials and product claims. CPG brands and contract manufacturers need systems in place to manage the product innovations, regulatory, quality, and cost constraints are the key drivers for the business success.
Last quarter, I mentioned our Perfect Formulation solution, well-structured to address these issues. In life sciences, we are consolidating our position in med devices segments. For example, leading manufacturers in this sectors, B. Braun, are selecting the 3DEXPERIENCE platform and the License to Cure for medical device industry solutions to accelerate the delivery of innovative, safe, and fully compliant medical devices. These solutions will allow them to eliminate scattered processes and data and to embed regulation as an asset, optimizing quality and compliance and reducing cost and time to market. These solutions will be deployed among 13,000 users. Looking at our software results, license and other software revenue increased 6% for 2019 and 2% in Q4. On an organic basis, license and other software revenue increased 3% for the year, with growth flat in Q4.
As you may recall, we began 2019 with a license revenue growth target of 10%-11% in constant currencies, and we ended the year, as I say, with 6% growth with the two major area of change being weakness in the automotive supply chain, decisions timeline shift by clients due to internal customer factors, and license and software revenue total EUR 1 billion for 2019. As we had maintained our revenue growth objective unchanged since the beginning of 2019, before adding Medidata, recurring software and services compensated for the softer license growth. Moving to our recurring software, it represented 72% for 2019 total software. For the full-year and on an organic basis, recurring software increased 8% at the high end of our growth objectives.
This represents an improvement of growth rates of about 200 basis points over 2018, compared to a target organic increase of 100 to 200 basis points we share with you at the start of 2019. In comparison to 2017, our organic recurring software growth is up 300 basis points, and both 2018 and 2017 growth rate were on a IAS 18 basis. For the fourth quarter, the organic recurring software revenue growth was 5%, reflecting continued strong super dynamics globally offset in part by the IFRS 15 accounting treatment, which affect not only the quarter-to-quarter variations for subscriptions, but also the year-over-year. In fact, in Q4 2018, under the IAS 18, subscription revenue growth was up sharply, in part related to catch-up on renewals. As a reminder, revenue recognition rules are different under IFRS 15, and we have been, in 2019, vigilant to renew subscription at each quarter end.
The amount of catch-up was much lower in Q4 2019. Moving to our software performance by regions. The Americas had a solid first quarter and year, led by a strong growth in subscription revenue and the contribution from acquisitions. In Europe, we continue to have a contrasting view. Northern and Southern Europe had a good growth all along the year. Germany continued to reflect macro weakness that we have seen most of the year. Finally, also recall Q4 2018, where we had a very strong 3DEXPERIENCE activity, notably France. Asia software revenue increased 7% in 2019, led by China, up 16%. In the fourth quarter, Korea saw some improvements. China grew 11%, slowing from earlier in the year. Zooming in on our software performance by branch.
CATIA had a contrasted H1 and H2 performance, with software revenue up 8% in the first half and weaker result in H2, bringing its growth for the year to 6%. Keep in mind that last year, CATIA was growing at 4%. What was very clear, however, was the traction with 3DEXPERIENCE, with CATIA posting 3DEXPERIENCE software revenue growth up just over 30% for 2019. Following double-digit growth in 2018, ENOVIA software revenue increased 5% in 2019, reflecting the combination of a high comparison base, particularly in Q4, as well as the extended decision-making timeframe. ENOVIA continued to maintain high winning rates over its key competitors. SOLIDWORKS software revenue saw better result in H2, with fourth quarter growth of 9% on an improving license performance and a very solid support revenue growth around the globe.
Just as a reminder, in Q4 2018, SOLIDWORKS grew 20%, so it was not an easy comparison. Moving to other software, DELMIA had a very strong good fourth quarter and year, with a strong offer in manufacturing. SIMULIA is benefiting from its broader multiphysics portfolio, and we are seeing an improving performance for BIOVIA. DELMIA Quintiq had a more difficult year with many opportunities, but some operational issues that slow its ability to convert this to sales. I believe they are now largely resolved and behind them. During 2019, Centric PLM expanded its industry-leading position, as highlighted earlier. Turning to Medidata, its revenue growth was driven by Rave Core, Rave Plan, and strong growth in Rave attached products as well as professional services, a large proportion of which is recurring services.
From our lifetime day, we share that these three categories are expected to drive the large majority of its growth between now and 2023. Medidata's data analytics business, which includes Acorn AI, launched in early 2019, and its commercial analytics from 2018 acquisitions are the early stage and part of our longer-term business plan. For 2020, we are estimating Medidata revenue growth at about 13% in constant currency. Within the target range of 13%-15% growth, we see over the 2020-2023 timeframe embedding revenue synergy in the later part. One final point is the high retention rate Medidata ended the year with, on par with 2018, so a strong endorsement from its client base. Turning briefly to services, revenue increased 9% for the full-year on an organic basis. This was principally driven by 3DEXPERIENCE services engagements up double digits.
In Q4, on an organic basis, services revenue was lower by 1%. This reflects a large catch-up for Quintiq in the year-ago Q4, as we noted at the time, as well as a high base of comparisons of 3DEXPERIENCE services growth with the Boeing ramp-up. For 2019, our operating profit increased 17% to EUR 1.3 billion. Our operating margin was up slightly at 32%, thanks to an organic improvement of 100 basis points, largely offsetting 120 basis points of acquisition dilutions. Currency had a positive impact of 30 basis points. Moving to the earning per share, EPS increased 17% to EUR 3.65 in 2019, with a EUR 0.06 contribution from Medidata. Our effective tax rate decreased by 1.8 percentage points to 26.5%, related principally to the favorable patterns and software treatments in France. Our operating cash flow was EUR 1.2 billion in 2019, up 32%.
The principal contributors were growth in the net income and non-cash items, accounts receivable, and the lower tax down payment in 2019 relative to the 2018 U.S. tax change on the foreign-driven intangible assets fee. Contract liability was up 8% in constant currency and perimeters. Finally, following the acquisition of Medidata, our adjusted net debt including leases to be compliant with IFRS 16. So to EBITDA ratio for 2019 was 2.5x , right in line with our expectations. Before moving to our financial outlook, let me share changes we plan to make to product line reporting to reflect our new ambitions and also as a consequence of integrating Medidata. Our first grouping will be industrial innovation software revenue, where we will give total software figures and then break out CATIA and ENOVIA.
In addition to these two brands, the first group will include SIMULIA, DELMIA, GEOVIA, NETVIBES, EXALEAD, and 3DEXCITE. The second grouping will be life sciences software revenue, and here we will combine Medidata and BIOVIA. The third product line will be mainstream innovation software revenue, and this will include SOLIDWORKS, Centric Software, 3DEXPERIENCE Works, and 3DVIA. In this category, we will also break out SOLIDWORKS. In the Q4 presentation on our website, we have provided historical information for this grouping. Now, let's move to our 2020 financial objectives. For total revenue, we are targeting growth in the range of 21%-23% in constant currency. Based upon our currency assumptions, this will lead to a reported revenue range of EUR 4.84 billion-EUR 4.89 billion. For software, our growth target is 22%-23%.
Recurrent revenue will be the biggest contributor to this growth, increasing in the range of 28%. Assuming Medidata has been part of Dassault Systèmes for all 2019, our recurring software revenue growth target on a like-for-like basis would be about 9.5%. Our operating margin range is about 31%-31.5%, representing a decrease of about one half to one point. On an organic basis, the operating margin improvement we are targeting is between 80-130 basis points, excluding currency. Our EPS range for 2020 is EUR 4.15-EUR 4.20, growing 14%-15% based upon an effective tax rate of about 26%. Q1 EPS growth will be in the range of 3%-9%. For Medidata, we are targeting 2020 revenue growth of about 13% in constant currency, and they are entering the year with a coverage around 93% of their total revenue growth targets.
From an operational perspective, the goal is about a 200 basis points improvement in its operating margins. Now, to give you some further color from a structural perspective as well as a pipeline timing, the growth in license revenue is weighted to the second half of 2020. More specifically, we would expect license growth in the range of 5%-10% for 2020. Q1 assumes a decrease of about 5% to stable on a high comparison basis and reflecting macro and end markets as we see them presently. We are not able to fully factor the potential impact of health emergency, especially in China, where the temporary absence of freedom of movement can hit sales. To sum up, as Bernard has indicated, we are beginning a new horizon, setting the stage for the coming decades while advancing towards our 2023 financial goals.
We also want to share with you that our success will not be possible without the intelligence, dedication, and pride of all the Dassault Systèmes employees, energized by a purpose, giving strong meanings to our daily experiences as employees, citizens, and human beings. We hope you will put a save the date on your calendars for our Capital Market Day in Paris on June 12th. Bernard and I will now be happy to take your questions.
Thank you so much. Ladies and gentlemen,
Operator?
Thank you so much. We will now begin our question-and-answer session. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A queue. This will only take few moments. If you wish to cancel your request, please press the hash key. Once again, please press star one if you wish to ask a question and the hash key to cancel your request. The first question comes from the line of Jay Vleeschhouwer from Griffin Securities. Please go ahead.
Thank you. Good afternoon, Bernard and Pascal. I have three subjects I'd like to ask about, starting with SOLIDWORKS, then Medidata, and then finishing up on cloud. For SOLIDWORKS first, Bernard, I'd like your thoughts on the very long list of objectives that SOLIDWORKS seems to have over the next year or more, including accelerating its unit volume growth. It looks to me like in 2019, units were up just about 2% to maybe 81,000 or so. Perhaps you could comment on that and your expectations for driving better unit growth. Additional objectives that SOLIDWORKS seems to have include doing more large transactions than has historically been the case, 3DEXPERIENCE platform, DELMIAWorks, SIMULIA for SOLIDWORKS, and 3DEXPERIENCE Marketplace and so forth. It's a pretty long list of objectives. Perhaps you could just give us your prognosis for that and how you're thinking about the SOLIDWORKS growth over time.
I'll finish up with my metadata and cloud questions. Thank you.
Thank you, Jay, and good to talk to you again. I will let Pascal make whatever remarks he wants to do about SOLIDWORKS, but let me just take this opportunity to say that the main objective for SOLIDWORKS is the platform game changer approach that we will be introducing at 3DEXPERIENCE World next week in Nashville. This is about having SOLIDWORKS users enjoying the power of a platform to expand the use of what they love the most, the SOLIDWORKS capabilities, with mobility, native cloud, web-based SOLIDWORKS experiences, for one. The second aspect of it, because today SOLIDWORKS is only mainly available on a workstation, on a PC. The mobility of SOLIDWORKS. The second big thing is being powered by the platform is to be able to move from 3D design and assembly to basically real virtual twin experience using other type of SOLIDWORKS-like roles on the platform.
That will be revealed next week with very concrete availability plan. That's, I think, going to create the next 20 years of growth for SOLIDWORKS. To be noticed that the growth accelerated in revenue. Pascal, I will let you comment on that. Also, while the unit might be seen as modest, the number of new clients are significant. Pascal?
Yes. To just echo what Bernard is saying. We are talking about 25,000 new customers. This is the order of magnitudes. In term of unit, we are close to 18,000. I'm sure, Jay, you will appreciate that those numbers are big one, and not so easy for the competition to replicate, right? If you look at the track record for SOLIDWORKS for the year, as Bernard mentioned, yes, you are right, we started with growth between 4%-5% for H1. You have seen that we lend by 9% for the Q4, knowing that last year, Q4 2018, was growing at 12%. I think we are seeing a significant improvement of the situation, especially in Europe and Asia. I will say the growth in the U.S. is probably more modest compared to what we have seen in the other parts of the world.
To complete, to add what I said this morning, Pascal, I might mention something which is important. There is a lot of piracy around SOLIDWORKS, I will say giant piracy. We don't want to be brutal on that topic. We continue to improve the compliancy processes. Clearly, those clients using it without paying, to be simple, I think they will progressively pay. We are going, without being brutal, we are going to progressively introduce the idea that subscription will be mandatory. That shift is going to be progressive and will be converging because with cloud, that's the case. You can imagine that we have clearly a high promise, both on value, footprint, platform phenomenon, and the evolution for the years to come, both for partners and clients.
Thank you for that. On Medidata, could you comment on any product integration or cost synergies that you've accomplished thus far? What you're thinking of in one or both of those for 2020, in terms of further integrations, perhaps with BIOVIA and cost synergies. For Pascal, you're guiding to a 20% operating margin for Medidata for this year. However, given the magnitude of the amortization of intangibles for that acquisition, would it be fair to say that the IFRS operating margin for Medidata would be closer to the mid-single digits?
Well, the first thing, before I leave the answer to Pascal, is we are thrilled to have Tarek Sherif and Glen de Vries with us. They are top leaders. They are part of the family. We feel part of their family. They have built this startup to be almost a EUR 1 billion company. They have a significant ambition to lead us together in this new sector of the economy, which is really life science and healthcare. Above all, this is a big thing, and I think we are in a position to realize our mutual dreams, coming from different perspectives. I think the setup done with Pascal is a great one. Pascal, you can comment on the short-term steps.
If I start by the second part of your questions. The vast majority of the operating margin improvement is coming from the growth because now Medidata being with us, we have the infrastructure in many countries, and there is no need for them to invest as much as they used to do to develop some presence in some countries. And I've been very specific during the Capital Market Day, that the synergy will come later in the plan because the primary objective is to continue to fulfill the growth. That's the point. Coming back to the first part of your questions, we already have seen some synergy between BIOVIA and Medidata, especially with ONE Lab solutions.
As you may know, OneLab is used for the preclinical, and we have a company, and especially, for example, the CROs, significant partners and also customers of Medidata, and they are more and more interested by also endorsing and adopting the solution of OneLab. Clearly, it's mainly on the commercial side. For 2020, we do not want to mix the two sales teams because we want this to be structured. The way we do it, we have selected the number of customers we want to approach jointly with a very well-done set of solutions and combined value proposal. Tarek and Glen are guiding this approach across the board.
Finally on cloud. At the 2016 Capital Markets Day, the company gave some very explicit forecasts for your cloud contribution in terms of user growth, for example. I know that's a few years ago already, but we've not really heard from the company in terms of explicit contribution of your cloud business, although you've certainly talked about your products deliverable on the cloud. Would you, as part of your new disclosures, consider giving more regular updates on the contribution from the cloud business? That's the question. Would you be willing to provide more like that?
Jay, I love you. I love you for one reason, is because you're right. As part of the new revenue reporting, we disclosed this morning, and I briefly spoke about, there is one thing I didn't touch, is the willingness on our side to a certain extent, to report the different business model we have. One, we call it software as a license, and the other one is software as a service, which is nothing more than what you are calling the cloud. To answer precisely to your questions, we want to make our own experience within this year before to start to disclose the number in such a way, because we need to learn how to do it. We need also to learn how to guide you guys, because those are two different business model, and we do not want to mix up.
Clearly, I have set up the team, I have set up the framework, all the reporting line internally to make it happen. If we conclude this is the right way to do, in 2021, you will have the visibility on both lines.
Very good. Thank you both.
Thank you so much. The next question comes from the line of Stacy Pollard from J.P. Morgan. Please go ahead.
Thank you for the second chance today. Looking at your guidance for 2020, when I subtract out Medidata, it looks like the revenue growth is underlying maybe around 4%-7%, or maybe that was 6%-9% in constant currency. Does that sound about right? You used to talk about licenses accelerating into the double digits. Obviously, tough comps and macro today, so we know where we stand today, but is that still possible in the midterm? A third component, is there any impact from sort of a conversion to subscriptions, perhaps in SOLIDWORKS or something over that midterm?
Again, on Medidata, I gave you almost all the numbers this morning because in the guidance we took 13% growth excluding the currency effect. I told you that the like-for-like growth is 9.5%. If you, to certain extent, you do the reverse engineering and you look at, it should be the organic growth as a consequence of the rest, you will lend much more close to 8% than six. At least this is the way the guidance has been built.
Around 8% organic, and then mid-term opportunity to get license into double digits still?
I was speaking about the recurrent part, right, Stacy?
Yeah
For the new license, where we are coming from is the following. First of all, the pipeline is back-loaded, and especially on H2. Okay. No surprise. It happens almost every year now since the last five years. Two, the base comparison is, to a certain extent, helping us on the second half. Three, as I was very specific this morning, I took some cautiousness for Q1 because the Chinese situation is providing some uncertainty, and we believe the license is probably the one going to be impacted if the situation stays the way it is for a certain time. Combining all these effects, we are relatively confident that we could come back to high single-digit, maybe a double-digit growth on the second half on the license. To a certain extent, this is what happened for SOLIDWORKS, Stacy.
You remember we started at 4% and we are landing at nine, and all the indicators we have are giving some confidence about it.
That's perfect. Thanks.
Thank you. The next question comes from the line of Michael Briest from UBS. Please go ahead.
Yes. Thank you. I forgot to say, Pascal, congratulations on the new role. You've got a lot of hats to juggle.
Thank you, Michael.
A couple from me. Just in terms of SOLIDWORKS, Bernard, you talked about an improved compliancy process there and mandatory subscription. I take it you mean sort of mandatory support. Was that a driver in Q4 of the strong growth? Are you being more forthright on auditing your clients? What proportion of clients today actually take support, if you like, on SOLIDWORKS? Then I've got a couple more for Pascal.
Well, Michael, I don't call this support. Let's be clear. When we deliver such kind of incredible functional deliveries on new roles every year, it's not support anymore. It's really true subscription on expanded scope. We are changing really the approach because this is not support anymore. This is subscribing to significant evolution on capabilities that we deliver. That is a big difference because in some way, this can easily justify the fact that it becomes monetary. It's too easy for too many clients to pay once and get all the updates for free forever. We are going to change that rule.
Are you introducing a program of, I don't know, going around and checking on license compliance? How would you actually enforce this unless you had cloud-based delivery and sort of keys to access the product?
That will be presented to the partners and customers first.
Okay, understood. Pascal, I think you said on your comment on the 3DEXPERIENCE, that licenses were up 12% for the year. I think at the nine-month stage, they were up 40%. Was there quite a big slowdown in Q4, and can you talk to the causes of that?
Oh, Michael, when the license growth is flat for two quarters, whenever the mix is represented by 3DEXPERIENCE platform, automatically you have the consequence. 40% and flat on the second half, even if we are increasing the mix to a certain extent, you land with almost what I provided to you. What is missing is maybe, last year we had one or two very large deals at the end of the quarter. Those two large deals are missing.
I told you this morning, we had more than 140 opportunities exceeding EUR 1 million with 3DEXPERIENCE platform for the full-year. I think less big contract to a certain extent, but much more sizable opportunity. This is the way the pipe is now for 3DEXPERIENCE.
Just finally, I appreciate you've got Medidata on board, and it's at least historically been more CapEx heavy. What guidance are you giving for CapEx and interest expense this year?
The vast majority of the CapEx for Medidata was coming from the cloud. Just because we have some of our capacity being available, the extra CapEx you could expect from Medidata will be primary redirect to the usage of our own capacity. I'm not expecting significant changes compared to what you have seen previously.
On interest?
Sorry, Michael?
Finance charges or interest expense.
I'm not sure I understand.
Well, how much was the interest on the Medidata bond going to cost every quarter?
Well, Michael, I do not have the information in front of me, if you don't mind.
Okay
I'll answer to you by email.
All right. Thank you.
Okay. Thanks.
Thank you. The next question comes from the line of Jason Celino from KeyBanc. Please go ahead.
Hi, guys. Thanks for taking my question. As it relates to SOLIDWORKS and the move to more cloud subscription and more user compliance, what do you anticipate customer and channel feedback to be?
Very good, because that's the platform phenomenon. I think when you apply such rule for the same scope, meaning a license on a PC, it's very different from moving to subscription of service and capabilities with the platform power. As the scope of the offer is evolving, it's very easy in my mind to articulate why this is the way to go. We know ultimately that at a certain horizon, most of, if not all, in the mainstream market, will be one way or another cloud-based, which by the way, is the converging point. We didn't change the rules on the desktop only, but as you go platform, it become a logical value for everyone. We have tested already with partners, and I think they see the rationale and they see the value.
We've said we want to be doing it with a good value for everyone, including the users.
Great. Thanks. One question for Pascal. Looks like Asia was up 6% growth for the quarter, and you mentioned Korea and China were double digits. Can we just reconcile maybe some of the other areas that weren't as strong as China and Korea?
Well, Japan is almost flat. India is growing mid-single digits for the full-year as well as AP South.
Got it. Is Japan mostly flat just on automotive?
No, it's flat on the overall software. Again, the pressure is coming from the auto supply chain. Same situation that we are facing in Germany. Having said that, you remember that we are making good progress in Japan as well. We signed a big contract with Toyota, so it's not because, to a certain extent, you are not seeing the momentum in the numbers. That, however, the 3DEXPERIENCE adoption by the Japanese market is not happening. It's happening, yeah.
Great. I appreciate the color. Thank you.
You're welcome.
Thank you. The next question comes from the line of Neil Steer from Redburn. Please go ahead.
It will be our last question. Please go on, Neil.
Thanks very much. I just have a couple of quick ones, if I may. Firstly, Pascal, many congratulations for your new role. Just backing out the commentary on the services growth. It looks, obviously, if we include the contribution from the Medidata business this year, it looks as though on an organic basis, services are likely to be flat or minimal growth. Is that the case, and can you just explain that dynamic over 2020?
For the services at large or for Medidata as well?
No, just take Medidata out of the equation, just in non-Medidata services in 2020. What's the sort of revenue trajectory there?
We see a good momentum for all the 3DEXPERIENCE related engagements. I think we will continue to grow at high single digits on this. The question mark is, as I was stating clearly this morning, we had some issues with Quintiq. Quintiq, it's a larger services revenue because in this business, not only you are selling the software, but for one you spend in software, you almost have 1.5 in services. This is where the gap is coming from. On Boeing, I have been explicit this morning. You could expect some reduction on the services bill aroundAnd if you combine those numbers with Medidata, you lend to the 19% growth I put in the guidance.
Ex-Medidata, it looks as though there'll be sort of flat, just a little bit of a change in the services growth. A separate question on SOLIDWORKS. You've mentioned a couple of times this morning, and also on the call now that, you believe there's quite significant piracy there. Can you just explain the situation that has occurred whereby customers in the past have been able to buy a license, and it seems to be that you're describing year in, year out, they are getting updates and support for licenses that they're not entitled to. Is there no audit process? How do the sort of management information systems exist that has actually taken place?
Yeah, of course. We have a compliancy team and processes for that, but piracy is piracy. There is a significant piracy, so we are evolving with the systems to reduce that factor and the one who want to have piracy are very smart. We think that with evolution of the platform on mobility, on connectivity, this is changing. The profile of usage is not anymore one client on one PC. When you go platform, it changed the landscape about how the profiling of usage, even the affordability, the entry price for, let's say, what we call 3D Creator, which is really SOLIDWORKS native on the web, on a phone or on a tablet. It's providing a wide range of solution that will contribute to reduce piracy.
To complement what Bernard is saying, we have the rights to do audits. In every contract we sign, we have it. When you are targeting the mainstream market, if you want to do audit in the 200,000 customers we have, you need an army. You need to find a technological way to do it. That's the reason why combining the cloud approach with the subscription base is really the way to handle this.
Okay. Without wishing to go into too much detail, is this more of a channel issue than it is a selling issue, and does that have implications for the management there?
Well, I think it's also making sure that every users will see the value of being in a more regular environment. That's why I mentioned the mobility, the collaborative cloud online, and all those services that are making this, even for those who have been doing piracy, at the end of the day, a good deal to pay. That's what we want to do. This is why we want to be constructive looking forward because on the other end, they do love our software. We want them to continue to use it, but to really solve that issue.
Okay. Thanks very much.
Okay. Thank you very much all of you for participating in this call. Thank you for your interest. As you know, we are setting up a very wide horizon. It's very exciting despite the uncertainty for the 2020. We hope to see you soon on, as Pascal said.
12th.
12th, information. We will talk to you of course in April for the first quarter results. Thanks a lot. Have a good day.
Thank you so much. That does conclude our conference for today. Thank you for participating. You may all disconnect.