Good morning, everyone. I'm Francois Baldaldoaldo, the Sol system, Investor Relations. From the company, we have Bernard Charles, our Vice Chairman, Chief Executive Officer and Pascal Delo's newly appointed Chief Operations Officer, Congratulations Pascal and Chief Financial Officer. Would like to welcome you to Dassault System Fourth Quarter And Full Year 2019 Earnings Presentation Meeting, which is also being webcasted. At the end of the presentation, we will take questions from the audience and from participants on the call.
Later today, we will also hold a conference call. That's what systems results are prepared in accordance with IFRS. We adopted IFRS 15, 2018, so all comparative information is presented under IFRS 15. In addition, we adopted the new IFRS 16 lease standard as of January 2019 Most of the financial figures on this conference call are presented on non IFRS basis with revenue growth rate in constant currency unless otherwise noted. For an understanding of the differences between the IFRS and non IFRS, Please see the reconciliation tables included in our press release.
Some of the comments we'll make today during today's spring will mean during today's presentation will contain forward looking statements, which could differ materially from actual results. Please refer to our risk factors in our document, the reference 2018. Let me now introduce Bernard Charles, Bernard.
Good morning and thank you all for joining this event on those who are really online. I'm delighted to share with you the perspective about Dassault System going forward using the results of the 2019 2019 will be a milestone in the history of Dassault System as will be this day, in my mind, every 5 years, we have a special moment, because every 5 years, I take the time to write a paper, a position paper that provides you with some maybe key information about the long term perspective of Dassault System. And that's what I'm going to talk to you about in this first part before. I leave the floor to, the newly named the Pascal Daloz, Chief Operating Officer of Dassault System. We have achieved in 2019 our commitment to deliver on double the EPS from the plan that we set up originally in 2014.
We have even overachieved that objective. The plan was a EPS and we are at 3 point 65 on 3.55 if you remove the year end effect of metadata. We have also achieved something which we believe is a very important demonstration, diversification creating a landscape for the market of Dassault Systemes that really provides less sensitivity to cyclical industries and with a significant, of course, results with the evolution, the platform phenomenon in the industry, which basically, the 3DEXPERIENCE platform is demonstrating something significant, not in 2019, but in the last 5 years, is that one platform can be the same for cloud are on premise. On one platform can serve companies doing shampoo bottles or doing satellites on this collaborative innovation process can even be expanded to the life science and pharma sector. There is no other platform in the world that offers such kind of things and this cannot be measured on 1 year, it has to be measured on a longer term.
Under to be more specific about the 2019 objectives, The revenue was up 13%. Pascal will give you much more detail about that, a stable margin at 32%. On the EPS was up 17%. More importantly, this year, February 6 2020, there was a February 9th 2012, which I will come back to, for some of you who were there. Under one, we went up there.
It's good to understand the past. To navigate the future of Dassault Systemes. So, preparing the future means what is our ambition? What kind of markets do we want to serve on why do we have strong reasons to believe that we are changing the rules of how innovation is happening in the world in so many industries. Manufacturing Industries L SK on Life Science and infrastructure on construction.
And also, of course, the focus on innovation in those sectors and Pascal will give you some highlights about how we project longer term, the positioning of the company in those 3 gigantic sector of the economy. Companies doing things the products we use every day. Companies changing the life science world and companies creating mainstream innovation for our infrastructure. And of course, what I just mentioned starting this conference today is, the choice that, I did with Dominic Florach, my body for 45 years to really make sure that we put the new generation in power, I don't plan to retire. I am a pupil of ceftaso on on if you know them, you know that they have been working, for a long time up to 85 or even 90 for Mr.
Bassil. So that's not the point. Don't think one minute about that. This is not what is happening, but unpowering team. To take the lead to create the next 20 years of Dassault System is important.
And I will come back to that point too. But it takes a special kind of compass to understand the past and navigate the future. So let me, share with you what we published on February 9, 2012. We said 3 things: 1, the platform phenomenon will apply to industries. It has been visible in retail in banking.
It's going to apply to industries. The proof point today, it does. And it's a unique positioning for Dassault Systemes. We have the only platform that can create such kind of collaborative environment in so many industries at the same time. The second thing we said is we said the economy will move, and that's a paper that you can track will move from a product centric economy the value will move from products to experience.
It's happening. Look at operators, vulnerabilities, look at new mobility equipments, the proof point is there. The economy is moving from product centric. To experience Centric. And therefore, we said, by the way, the name of our platform will be 3DEXPERIENCE because we are going to use this platform to imagine new solution for the world.
Under certain that we said, which is a party pre, which is our raison debt. We did not wait for our financial community to explain that raison debt or propose is important. We did it far before. We said we put values on sustainable innovations and we believe we can create an innovation process for our customers or that will help harmonize product nature on life. You can go back to what was published February 9, 2012, this is it.
I have published a paper today that not so many people understand, I don't really care because we will read it in 2025 or 2030 and people will see that what we have written, I believe, will be happening which is related to the emergence of things to life and put things on life in the context of the environment. So that's why we published that little documents. On our website, we will have a more detailed white paper on it. At which is explaining that. The purpose is well formulated.
It has never been more prudent today And I think the society is expecting industries to change the direction in terms of how we invent the future for our children. On the amortization, so innovation is essential, it's not going to come from constraints. It's going to come from new solutions. We have been recognized in the last years based on that effort We put a lot of attention of what we call on print on footprint. In some way, you have seen so many companies talking about CO2 neutral, buying back CO2 rights.
That's good. But the mission of Dassault Systemes is far more powerful than that because it's survived how we help others massively reduce or impact the footprint. A study was done that illustrates that when to run our business, that that's a system, we produce, unfortunately, one ton of CO2, our contribution to the world is to reduce by the virtue of using our platforms with those clients companies reduced by 10,000 tones what they do. This is called footprint and print. I believe the future is not in sustainability about absolute terms.
It's about progression and speed of progression. The measure of footprint and on print is a significant, significant value unrelevant association to the purpose of the company. It was well recognized by corporate night. It was well recognized by Fortune, future 50 on well recognized in the MSI with the MSI ESG Index. Footprint, unprint the labor on the leverage to improve.
It's connected to what we said. The third message to you is also the following: the digitalization of the 21st century is not the digitalization of the industry, of the 20th century. It's creating new categories solution for new categories of customers, providing a much more sustainable and violent. And that's what we do at Dassault Systemes. Here is a quick video, illustrations.
Oops, maybe I went too far. Those are brief illustrations of the number, incredible number of startups in the world, which are using the 3DEXPERIENCE platform as a ladder We have thousands of those across the world. We are working with MIT on innovation centers. We reached 5000 innovation centers in the world. And we believe that those innovators are creating the economy of tomorrow when it comes to the products on the service we are using.
There is more on our website. Why on how this could be possible. I'm often asked the question. Are you doing things with AI? Are we doing big data of course, the platform is managing gigantic data already from many sectors of the economic As you know, most of airplanes, 7 out of 10 cars are done with our software, those are gigantic precious data, which we manage we update and we manage over a long lasting life cycle 40, 50, 60 years.
So the platform being information intelligence, collaborative environment, creating the power of 3d for imagination, using simulation to connect that is really changing this world. It has been proven in these 11 sectors. I will not come back to all those clients they are really expanding the use of the platform across this. The reason why I wanted to start in on that point, at this point in time, today is because we believe, by the way, the implication of what I just said on what was published on February 9, 2012, is that we when we launched our new 5 years plan, The results are there. Pretoring the future, we have a new ambition moving from things to life.
The Dassault System platforms almost is used for every sync that you touch in your daily life. Home products, mobility, whether it's ground mobility or higher mobility, infrastructures, we will continue to expand our solutions in that domain, but we are going to move to life, the Medidata acquisition is not a marginal expansion. Of our scope. It's a fundamental bet that we believe we can do the virtual twin experience of human We have proved it on the heart. We have proved it on the bones.
Skins for human. The linear program has been adopted by the FDA, the regulator, as the great reference to help simulate all practices in surgery for especially vascular on heart surgeries, which are, as you may know, with oncology is the second reason of death in the world. By the way, as a side note, the 3rd reason is medical practice errors, which is not so well known, but the reality of it And we believe that with the virtual world on simulation, we can change that. So preparing the future, having this vision, having the proof points today that the 3DEXPERIENCE platform can help us and help the world of life science pharma on practices in the healthcare system. Connect the power of media data for clinical trial with the power of Dassault System to do modeling and simulation, to create real world evidence and connect them to the world of simulation will change that industry too.
So for that, we need, of course, to have something that illustrate this well. And let's quickly see this video because I think it's a
And so far, it was precious resource.
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The only progress is human.
It gives you a very clear inspiration about our focus for the next 20 years, and it's the result of what we have done in the past and what we want to do for the future. So this can be summarized with this little, illustration. We started 4 years ago by representing shapes. We then added the complexity it has changed the entire industry because people were able to do that without physical prototyping. And then we said we are going to add time to it.
We are going to do the life cycle, and we called it in our jargon PLM product lifecycle management. But it's not a technical thing. It's a very profound conviction that an holistic approach to innovation will change everything. We did the virtual twin experience of things, all things you touch in your daily life. Because evaluating how they are going to be done, what they should provide to people is more important before than after.
And we want to do the same for life science. And our future is to do the same for life. We are moving from things to life. So our ambition can be summarized today in terms of market, in terms of sizing, in 3 gigantic sector of the economy. The economy where people are doing things no matter if it's a satellite or plane or car or a ship or something for MetCare, people wants to transform the standard of care, the practices of health in life science.
And of course, better understanding about how people live in cities and how infrastructure should evolve to be to make it more sustainable. And we have two points. We are doing network Singapore. We are doing also significant projects around the world with virtual cities because to apprehend, to understand how to make cities more people centric simulation and prediction is needed. Those are the 3 ambitions, so it can be summarized with human in experience on more to be talked about that.
So the new organization that I have decided to set up with the support of the board, of course, even though it's by challenge to do it well, is to, ask Pascal to build the next generation team, the top talents of the world that will really be in charge of making sure that this does happen. And this is the core Operation Executive Committee, led by Pascal and why this position has been created. They will be well supported with a multi generation is younger than me. While I still run maybe faster than him, but his key is faster than me. So for the time being, I need to recover.
So that team is also unique from the fact that the chief of all attendees global strategy on execution for Dassault System is, an extraordinary talent, woman, talented woman, Florence She is leading now to 69 labs around the globe. She did the platform revolution at Dassault System. Also Florence, Werns, Werns, leading all the industries. This is the Fortis generation. Laurence Bartes, managing all processes, talents across the world.
So we have a great policy, young talents, and I think that, they are all very the like it shows there. There is no competition in our company. The competition is outside. There is an incredible power for people and solidarity and talent to work on this. And this is not very frequent in so many companies, and that's why the purpose we have is to sell you this one.
And of course, around them, Dominic and I are not planning to retire. So Dominic is going to focus on, the strategy for research on fundamental technology do a lot in deep learning on many of those things. I'm going to continue to make sure that the purpose of the company, why are we impacting the world? Why should we do it that way? Continues to be done properly.
Pascal has committed to be the chief of outcome. And so this is the team you see on the last remark I will do for this new talented team is that seasonally executive are going to be chairing those 3, strategic sectors I talked of the economy I talked about, Bruno La Chag, has been with us for 30 years. He knows almost all functions of the company. He is extremely well respected in all industry sectors. Aerospace Automotive with the top executives around the world is going to coach and share that committee.
Civaloron,
who made it possible to do virtual Singapore on menus or projects, huge in fast a project that we are doing the Beijing Airport, for example, on many users. This is for infrastructure. I'm Tarik Sherif, the founder of Medidata who has developed this company from a startup to the world leader in clinical trial, and they will be helping this bright new talented team make the choice that they have to do or make the decisions they have to do. That's what I wanted to share with you. It does not happen every quarter.
It happened every 5 years and update about the long term horizon. We have this ambition and we have the luxury to have a very stable shareholder structure where we know that we can take risk to make this ambition a reality. And with that, Pascal, I lays you the floor to command 2019 and more importantly, the ambition for 2020. And congratulations.
Thank you, Werner. So good morning to all of you. Always a pleasure to be with you at that time as a word because it's a way to do to step back a little bit and look at the performance. You noticed that Bernard renamed my title because I was convinced that I was chief of operations. Chief of outcome.
So let's speak about the outcome. That's the purpose. So start with the year 2019 performance. So if you look at the performance for 'nineteen, we are in line with our objectives plus 13% growth for the revenue as well as the software. With this shift in term of business model because the vast majority of the growth is coming from the recurrent parts and less from the license, It's up, it already happened in Q3, and you will see that it continued in Q4.
And if you look at the organic growth the recurrent part for the full year, we are at 8%, which is 200 basis points higher compared to year 2018. So clearly, it's a significant improvement. So 32 percent EBIT margin, which is a good achievement because we did sub acquisitions. That one. So clearly, we have been able to handle and to contain the dilutions coming from the acquisitions.
And finally, we are lending at EPS, which is ahead of our guidance and the consensus growing at 70%. Q4. Q4 is almost in line with the full year with 2 effects, I would say. The software growth at 17%, flat in term of license. And you remember when I gave the guidance for Q4, I already stated that we were looking for between being flat 5% and the 5% was assuming that we would be able to recover a little bit the Q3.
So we had the pipelines, we did. And you, I want you to remember that last year, Q4 year of 2018 was a very good quarter. That's 13% for the new license. So the base is really having an impact on this. So being flat means that, we did, we did well, in fact.
27% growth on the recurrent parts Obviously, you have the media data as part of it, and I will go much more details on the organic growth afterwards and EPS 1.2. Zooming on the 3DEXPERIENCE platform, the 3DEXPERIENCE platform, as Bernard stated, you know, in year 2012, you made the announcements if you look at now, we are close to 30 percent of the total software revenue coming from 3DEXPERIENCE platform. So between 122019 a third of our revenue. Growing at 22% this year, compared to, it's relatively well aligned with our objectives. And if you look at the license, This represents close to ALK, in fact, 45% of the new license are coming from Swedish France platform.
So it's 500 basis points more than compared to 'eighteen. So we are right on track with our objectives on this. Speaking about the 3DEXPERIENCE platform adoptions, I'm proud to say that EDF has adopted the or extending the adoption of the 3DEX platform. You remember, we signed a partnership with them in year 2018, and it was a strategic framework. And we are progressively expanding the scope.
Here, we are talking about the usage of the 3 XPERIENCE platform to run the plan. Because there wants to be the single source of truth to get access to all the information on plan and the But it's at stake and you have the numbers written here, they want to reduce by 30% the operational cost. That's significant. That's part of these projects. And without the platform, I mean, there is a mix in the way to make it happens.
The side note also, they are using the 3DEXPERIENCE platform as a way to ensure the certification process, which is very critical in this industry, as you know. Speaking about new industries, you know, in 'nineteen's, we had a double digit growth in some of them. So in overall, all the consumer oriented industries, home and lifestyle, consumer packaged goods, and to a certain extent, life science is. We see a high double digit growth in this space. And by the way, we see the momentum to continue in 2020.
We also had a very good performance in aerospace And defense with high double digit also. This is counterbalancing some of the softness we have seen in the auto sectors. You remember, we started the year growing at close to 10% and we are landing at mid single digit. And the softness is coming from the supply chains, more than the OEM by itself? It's not you.
I already commented in Q3, but we see these trends continuing. And by the way, we, in the guidance, I took this into account. Industrial Equipment is also growing at mid single digits, but with almost the opposite trend because you remember, we started very slowly the year, and SOLIDWORKS is a good indicator of that. And we have seen an accelerations of the growth Especially in the last quarter, you will see SOLIDWORKS growing at 9%, which is a good sign. And in a nutshell, the diversification industry represents more than a third of the total revenue of Dassault Systemes right now.
And you will see that if you take the contribution of Medidata for the coming years, we the what we call the diversification industry will represent half of the revenue. So clearly, a third of the revenue is coming from the platform and more than of the revenue is coming from the diversified industry, and it was the best in year 2012. A good example of this adoption of the 3DEXPERIENCE platform outside of the traditional, core industries is the Life Science. So we continue to expand our coverage in the space. And here, I'm pleased to announce Bibron.
Bibron, it's clearly world leaders in medical devices and pharmaceutical products. And the interesting things here, there are 2. Point number 1, we want this deal with a partner. And I remember you asking me questions about the ability of our partner to start to deploy and to send massively the 3DEXPERIENCE platform to, I would say, midsize to large companies. And here you are the proof.
Technia is one of our partners in Germany and the Nordics. And you see it's a significant deployments because we are talking about equipping 13,000 users. So we are capable to equip a number of users, not only in the Boeing of the World or Toyota of the Works, remember Boeing, we are talking about 70,000 people, mini quips, Toyota is 40,000. But here, we are talking about 30,000. So clearly, it's approved that this platform phenomenon is touching all the industry we are targeting right now.
And the core of what they do, they're going to use the license to cure solutions in order to manage all the regulatory and compliance things, which is very, very critical in these industries. If I zoom on the different region of the world, So Americas is growing very well 24% for the full year, 44% for the quarter. From a few organic standpoints, the growth is, exceeding in 5 10% for the full year. With the very strong subscriptions contributions and the subscription is growing at 15% in Americas, It's a proof that the market is shifting and the adoption of the subscription is taking off much more rapidly in the U. S.
Compared to the rest of the world. And we obviously have a good contribution of the acquisitions, Medidata for sure for 2 months as well as Centric and IQMS. Europe, 9% growth for the full year, 7% for the quarter. You have a constructive view in Europe. The north and the south are growing double digits, and we are flat in Germany.
So and especially because we are impacted by the supply chain in the auto sector. So this is where the slowing down or the softness is coming from. Asia plus 7% for the full year, 6% for the quarter, and the IP, the specific zoom for China because I know it's one of your questions. So China is growing at 16% for the full year and 11% for the quarter. So clearly, you have the proof that we are seeing some softness against in the auto sectors, but the rest of the economy is relatively sustainable for us.
And here, you have the proof. And I will come back for the guidance for specifically for the China situations. Correa is also going relatively better for H2. We started by growing mid single digit and we are back to a good double digit growth in Q4. If I look at from, the revenue performance by product lines, by brands, 6% for CATIA, Remember last year, it was 4.
So it's 2 point growth compared to last year. 1% for the quarter. So clearly, we had a good start and we are softening a little bit on the second half and you have the reasons. I mean, it's definitively true to the automotive sector, which is a large sector for CATIA in Germany and Japan. But we are seeing very good tractions of CATIA in specifically in the U.
S. And the in the aerospace. One thing I want to share with you, the new generation of CATIA called CATIA 3DEXPERIENCE is going relatively well. Plus 30% for the full year. So clearly, again, the dynamic for the next generation of CATIA is taking off and, we are very pleased with this.
Energia plus 5% for the full year, minus 7% for the quarter. Again, on this, be careful because we have a very strong base compared to, 2018. And I put the numbers. If you remember, in Q4, or year 2018, the license was growing up to 48%. So sorry, to 84% not 48% and 37% for the full year.
So it's it's, the base is really playing there. And a good point for you to prove that the competitiveness of Innovia is still very good. In the winning rates. So I computed the statistic for the full year, and we are winning in 75% of the cases against SAP. 85% of the cases against PTC and 70% of the cases against Siemens Clearly, we are gaining market share with Innovia significantly.
SolidWorks, I spoke about it, 6% for the full year, 9% for the quarter. Keep in mind, Q4 year 2018, we were growing at 12%. So it's a good performance, the wins that we were growing at 4% to 5% in H1. And we see a good momentum in Asia and Europe at large. The line of the software is going at 28% to 48% for the quarter.
High double digit growth for DELMIA as well as Simuliya. Biovia is going double digit also. And we have the contribution of BD Data for 2 months. You remember, I gave the numbers to you, so I told you that it's 103,000,000 was in the guidance. We delivered 1,000,000, so 1,000,000 more.
And it's coming from 2 factors We closed the deal. In fact, we get the approval from the authorities 3 days before we were expecting. So This is explaining 10,000,000 in the 20, and they overachieved by 10,000,000 a quarter. So clearly, we are right on track with Medidata, and we are very pleased with the integration process going on. Revenue growth So 13% for the full year, as I was explaining to you, and the organic growth is 7% for the full year, plus 3% for Q4.
And the organic software growth is relatively aligned because it's 7% for the full year and 3% for the Q4. If I split the software revenue between the license and the subscriptions, so the organic growth for the license is up +3 percent in year 2019 and flat in Q4. I already commented it. And the organic recurring revenue plus 8% for the full year, 200 basis points compared to year 2018. It's 300 basis points compared to 2017.
So clearly, you see the improvements going on. And 5% in Q4. So this is probably the numbers I should spend time to explain because I'm going to have a lot of questions related to that. It seems to you that we are slowing down, but that's not at all the case. Let me explain to you why.
In 'eighteen's, we were using the IAS 18 standards, accounting standards. Meetings, the subscriptions was recognized on the pro rata basis. On a temporary basis, if you want. With the new IFRS 15, you remember, I did the explanations a year ago. We have to recognize 85 percent of the subscription within the quarter at the time of the renewal.
So meaning that in year 2019, we put a lot of disciplines to, renew the subscription on times. And what is the difference with 2018? 2018, we were using Q4 as a way to do the catch up for all the customer being late in the renewals. So here, you have a base effects. That's the reason why you, you, the numbers, which is 5% is very consistent with what we have seen for the overall year, which is really an improvement of the recurrent parts.
So there is no trick behind This is only the fact that with the different standards, you manage your operation in a different way, and this is the results. And you will see for the guidance for next year, I'm fully in line with this. Services revenue, 9% organic growth for the full year, minus one for Q4. And again, I just want you to keep in mind few things. Last year, we were growing at 26% organically because we did the catch up for Boeing in order to be ready to do the deployment in 2019.
So we had to accelerate in Q4 last year in order to be ready. So you have a base and by the way, just because I'm speaking about Boeing, just a few updates on this. Because it's probably a question I'm going to have. So Boeing, the re the software revenue is secure despite the difficulties that face. Okay.
So the commitments to continue the rollout of our projects is under controls. The only thing we are doing, we are slightly addressing the services bill because there is no need to accelerate the deployments given the situation they face. And second things, is it a risk? Do we have a risk with their supply chains? I'm sure you have seen the announcement they did last week?
They are committed to invest massively to sustain their supply chain. And there is a big reason for that. In the aerospace sectors, if you stop the time for you to create, to rebuild a ramp up, it's yours. So that's the reason why despite the difficulties they are facing right now continue to maintain their supply chain in operations to make it happen because you know that for the next decade, the number of airplanes has to triple the backlog exists. They are just slightly postponing some of the production cadence, but display chain stay intact.
On the operating margin, 32 percent, plus 0 one point. And here you have the bridges, 100 basis points coming from the organic improvements. The dilutions from the acquisition 120 and the positive effects of the currencies. So clearly, as I was stating to you, we have been able to handle the dilutions coming from the acquisition, and that's what the plan, anyway. EPS, plus 13% for the quarter, 17% for the full year, to 3.65 and the contribution of Medidata is 0.06 dollars.
So the point is this without Medidata, we would have reached in a way the targets of 350 that's the net of this. We have a positive tax effect for the EPS in the, in this quarter. And it's coming from the new French patent and software box regime. As you may know, there is some stacks and mortgages for the IP. And the software now is part of this new regime and you have the contribution.
It's a 1.8 decrease to the tax rate. The cash flow the cash flow is growing very nicely. We are reaching the close to 1,200,000,000, a little bit less, growing to 32%. And which is unusual because usually, I'm very proud to say that we are ending with a cash positive situations. Last year, it was 1,800,000,000.
Now we are, we have a debt situation of minus 2.60 66,000,000. And the key ratio is the debt ratio, and I put the computation here. So we had 2.5 which is well in line with our plans. At the time of the acquisition of Medidata, we were at 2.7. And again, we computed with Valerie, this ratio, taking into account the IFRS 16 rules, which consists to recognize the future lease as a debt.
So we are very close to the way the standard and post rating companies calculating this ratio, okay? And I just want to remind that our goal is to be at 1x leverage over the cycle of the investments, so which basically means in 2 to 3 years from now. Cash flow, 32% really driven by the activities. And you see for the trade account receivable, the balance up 4%. You have some, softness in the DSO, and it's really coming from the acquisitions, specifically Medidata.
Medidata contribute to 7 days But if you exclude the BD data and to sort of understand IQMS, our DSO is pretty stable. On the liability, the balance up, 8% at the constant perimeter, which is consistent with the organic growth. On the accrued compensations here, we have one exceptional since, which is the payment of the tax related to the pre acquisition stock options. So this is the reason why you have this minus 30 6,000,000 and Medidata tax is contributing to 1,000,000, 1,000,000 in fact to this number. The increase or decrease in the income tax payments, again, this is coming from the lower taxable income in your 20 eighteen's and the lower tax down payments.
This is the reason why you have this explanation. And we put another lines to be fully transparent with you because you will be able to compute it. It's the payment of the fees related to the insurance of the bonds and the term loans. And here, you have an impact of 1,000,000. With this, you have the complete details on the cash flow.
Bernard stated the new ambitions. You have seen it okay. And on the same times, we did the acquisition of Medidata. So we came to the conclusion that the revenue reporting should evolve in order to take this into account. And this is what I would explain in these sections.
Point number 1, if you look at the diversification industry, you know, what we used to call diversification industry, if I do the like for like, assuming that Medidata would have been with us since January 1st year of 2019, this is representing half of the Dassault Systemes revenue. So half of our revenue is coming from what we call diversified industries. So we came to the conclusion that it's not anymore the way to report to you guys. Because it's a significant part of the revenue. So it's much more accurate to start to slice to split those diversified industry in the 3 sectors of the economy Bernard was mentioning.
So we are adding, you know, to the core industry, the manufacturing industry, the high-tech, the home and lifestyle and the consumer packaged goods? Thanks. We are obviously, isolating the life science sector because this is becoming the 2nd largest industry for us. And we are bundling all the industry related to infrastructures and cities, namely construction city and territories, as well as materials and energy and as well as business services. And with this, you have the split of the total revenue of Tasosystem.
So still 70% is coming from the manufacturing industry, where we have been our leadership, 20% in the life sciences where we have the critical mass and we will continue to expand and 10% in infrastructures and cities where we have Reasons to believe we have certain footprint in certain industry, but we have to expand and capitalize on what we need. The goal ultimately on the long run is to have those sectors being equivalent for that specific strategy. This is what it means. And this is the reason why we want to report along this way because it's a way for us to prove that we work the talk. So to our revenue breakdown, same story.
In fact, if you look at the other lines, the other software revenue. In a like for like, this now represents 45% of the total software. So we took the decision to split this line accordingly. Why we decided to create some categories It's because in this line, you have all the acquisition we did for the last decade, but all the acquisition are serving different purpose, different leaderships. And this is the reason why we have built those 3 core domains, 3 core categories for the softwares.
So first one, which is really related to Industrial Innovations. The same way you have Industrial Automations, we believe there is a category for Industrial Innovations. It's what you put usually behind PLN. The Life Science software revenue at large because now it's becoming core for us. And against progressively, we will expand the lifestyle and software to the health care over the time and mainstream innovations.
And we are separating mainstream innovation from industrial innovations because we are convinced with the platform we can serve business midsize business or sometimes business, which are not really industrialized if you want. Because with the platform, it's a different game. And this is what is behind. The way to split it, so I will continue to report the CATIA and Innovia numbers. But I will glue another lines in this category, gluing Simulria, Dania, Jovia, Net Vibe, Exelining, and 3Dxite.
I will give you the combination of Medidata and Biovia for the life science. So you will be able to track our footprint expansions and mainstream. It's the combination of SOLIDWORKS Centric PLM, 3dVR and what we call behind those 3dexperience works, 5d, specifically, for example, IQFS, the acquisition we need. With this, I think we have the proper setup for the, at least the next decade. And as you may know, we not changing the revenue reporting often.
Bernard was seeing every 5 years is doing a press release to announce a newer reasons. So last time we changed it, it was almost 15 years ago. So I think, we are not treating you guys We just want you to be Here are my assumptions. So total revenue, grows up to 21% to 23% excluding currency effects, relatively consistent for the software, 22% to 23%. Here is the way I did the split between license and the recurrence parts.
So between 5 to tens for the license, And keep in mind that the 5 to 10s, it's an organic growth because like for like, all the acquisitions we did are contributing the full year and you will have a pure, it's a pure organic growth. The recurrent revenue up by 28% And just for you to make your mind, I did this exercise to give you the like for life. So because Medidata is obviously contributing significantly in these lines, And if you do the like for like, we are at 9.5%. And if you do the reverse engineering of the numbers, I will simplify you, your life just to calculate the organic growth of the core without BD data for the recurrent part, you will find that it's 8%. I took some assumptions for Medidata.
So the Medidata total revenue growth is 13% including the currency effect. Very consistent with I, while I share with you at the time of the Capital Market Day in November, because I gave the range between 13 to 15. And the on the operating margin, I'm also expecting Medidata to improve significantly's EBIT margin by 200 basis points to reach 20% EBIT margin. On an organic standpoint for the organic margin, I'm still expecting to improve by 80 to 130 basis points. In order to contain, again, the dilutions of the acquisitions.
Tax rate decreased to 26% compared to 26.5 in year 2019. And for the exchange rate, a positive euro dollar at 1.15 and 125 for the Japanese yen. And did you have the numbers? So revenue expected for year 2020 between 1,000,000,000 to 1,000,000,000 And operating margin is between 31% 31.5%. So remember, we took the commitment that with the Medidite acquisition, we will know will not go below 30%.
In fact, it's not below 31%. I think it's a good achievement. And on EPS, between to growing at 14% to 15%, which relatively well aligned with the consensus. For Q1 revenue, it's almost the same. In terms of trend, except one thing, I took some cautiousness on the license, and there are a few reasons for that.
The first one is because the pipeline is backloaded, which is usually the case for us. It's also because in China, we don't know yet what's going to be the impact of the health situations. We know that we're going to have some impact. And especially because the resellers, they cannot travel inside the country. They cannot visit any more of their customers, and we have no clue how long Yema takes.
So that's the reason why I took some cautiousness It's hard to compute the risks. So I do not consider that all the risk is factored in these numbers, but I took a piece of it. Okay. And for the EPS is $0.90 to $0.95 growing between 3% to 9%. That's it for today.
So the takeaway, just to summarize, is we believe that 2019, we deliver on commitments. We think that 'nineteen, we exceed the 5 years plan And we believe with the acquisition of Medidata and the strategy we have developed over the last decades, with 3 d experience and the diversify industry, the new industry, we are right on plan to achieve the EUR 6 EPS for the next plan, which is the one ending in 2023. And for that, I'm going to give more details to you at the time of the Capital Market Day in June. So please save the dates. It would be in Paris, in Delizio, or, and I'm, we'd be pleased to welcome you at that time.
That's it for today. So Bernard and I will be happy to take your questions now.
So we'll start from questions from the room. Don't be shy. Hello. Yes. May I have a discussion about your competitors in Manufacturing claims.
And is GE, which is in difficulties now, is GE less for company to offer no or not?
The facility you want to take it? Or I need to learn how to lead the questions to you still. The, the manufacturing is a wide it's a wide scope, okay. So if I read your question related to the way he thinks out on basically plants on the plant's formation, we see several trends. First of all, reduction of size of plans, not because of capacity, because of modularity and because of new ways to produce things in a more sustainable way.
And in this area, we are having very strong successes with a brand that you may remember in our brand portfolio called DELMIA, in three areas, what do we call manufacturing execution system, MES, it's So jargon of the sector, on manufacturing operation, but also in supply logistic So the connection between the flow between the different sites to really produce what you want to produce. We're very with what is called TENIA Quintiq. I think this activity is we want to be a world leader there We are making progress, significant progress in the past years on this well known, for example, that one of the best Manufacturer in the world still is Toyota in terms of efficiency is using our solutions in a big way from that standpoint. Point. So, I think we are gaining market share on where we need to continue to focus there.
We'll take now a question from the conference call. Operator, would you please give the floor to Stacy Pollery? From JP Morgan.
Thank you, Paula. Your line is now open.
Hi, thank you very much. Just you have pretty ambitious plans in life sciences. Can you say what portion of solutions do you think you already have today and what other product areas you might need develop or acquire over time. So really thinking mid to long term, not necessarily short term given the existing ratio? And then just a quick second follow-up after.
We started well with Biovia. Stacy, we are on the R side, research side. The life science world is, is a document based world. They use digital document, very so basically what you know under PDFs or documents, office documents. They are not they are not doing modeling and simulation.
They are not able to do what the manufacturing is doing yet. That's what we want to do. We started Biovia. It's a modeling of cells, human cells. It's the modeling of chemical, the modeling of, and it's the best platform for that.
The modeling of organic or nonorganic. It's the world best platform. It's now part of the 3DEXPERIENCE platform. Adding Medidata, it's about adding what we call a real world evidence in clinical trial, big data. So we connect to big data to the models, to the simulation.
That's why we are doing something unique. And, the metadata is on a good Pascal. You might want to comment on that, but that connection with the platform is to make the difference?
Yes, definitely. And I was looking, by the way, the competitive wins Medidata did last year. Many data, they continue to win against our apples, against Viva, against IBM, against many players in this space. The growth is also driven by all the new modules have developed recently, you know, because you remember, they had their core product called RAVE and you on top of Rev, you have a collection of new applications and 60% of the growth is coming from there. And also the revenue coming from ZH exploitation or the massive set of data they have capitalized over the time is starting to take off.
1 of the largest deals they signed in Q4 is related to this. Now to complement what Bernard Faye, because the question was related, do we have this in the solutions? There is one axis we want to continue to push from a strategic standpoint. Here, we are talking about serving the industrial and the life science. Specifically the pharma company and the medical devices company, but we also want to touch progressively the practitioner.
In the clinical trial, we are already doing it because the practitioners, the physicists, the doctors are part of the process. But we are convinced that more and more the science we have developed could help the practitioner the way they do the diagnostics, the way they prepare the surgery, for example. So there are many, many, many usages. We see appearing And this is a domain where we want to expand and to be positioned for the future.
Very interesting. And then the second quick follow-up was there are a number of large deals that you announced. Just you give us any sense of a pipeline for further potential large deals? And then perhaps within the deals that you've already mentioned, of course, EDF is obviously progressing well. Are there others with such upscaling potential?
For the pipeline, I would say when I look at the pipelines, we have more deals exceeding the millions,
but we have probably less mega deals.
Why so? Because in this given time of the year, with the uncertainty on the economy, The big deals require some sales. It requires from our customers to implement a big change management programs. And right now, we see many companies focusing much more on the short term decisions and a little bit less on the long term decisions. The net of this does not mean the pipe is, right, not at all.
We have a good pipe. And as I was telling you, especially on the second half of the year, but we do not have, more, I would say, sizable big strategic deals compared to what we used to have. Now we have those deals in the pipe. And as I was telling you, EDF is a good case. We continue to fulfill and to continue to penetrate those large accounts with 3DEXPERIENCE platform.
And this is the driving force for 2020. One thing maybe I could add, because it's questions probably related to how secure is the recurrent part of the revenue. The so you have our track record for the core, so I think you are able to make your minds. The, maybe, the unknown things for you is maybe data. So in the guidance I gave to you, I have a coverage of 93% of the revenue with the backlogs they have for 2020.
With this, I think you will be able to assess the solidity of the recurrent part of the review.
Thanks. That's great. Thank you.
If we haven't question from the room We'll take another question from the call. Joach, can you connect Julian Serafini, please?
Thank you. So I want to touch on the pipeline a little bit more. I think you've said pretty clearly that you have confidence in the pipeline coming through in the in the back end loaded in the second half of the year. I mean, are these specific verticals maybe that are different than automotive that you have confidence that these will both in because you have been talking at the same about some economic uncertainty. So it'd be interesting just to gather a little bit what gives you confidence that you kind of close these deals and they will come through later this year?
Against, on the auto sectors, the softness is coming from the supply chain, not the OEM. And we continue to have a good traction for the OEM, for senior reasons, because the regulation is changing and they have to introduce new car, electrical car, autonomous car, and they have to comply with this new constraint. So we have a lot of programs going on. It's point number 1. Point number 2, the vast majority of the auto is still using, Cataw V5.
And to develop this new car, the new vehicles, you need to jump to the 3DEXPERIENCE because there is no way you can develop a cyber system with CATIA VFA. You need catch up with the expense to make it happen. So that's the reason why when we build the guidance and we look at the pipelines, still relatively confident for the large OEM and for the supply chain, I took almost what we observed for the second half of last year, which is a softness especially in Germany, Japan and to a certain extent, India. That's the way we did it.
Thank you. That's helpful. And if I can ask just one follow on too. You mentioned factoring in China a little bit in your guidance for 1Q and uncertainty around that. Mean, I guess, can you share, I mean, have you already seen any impacts from what's going on in China today?
And then is there anything that you can share around, how big is China as a percent of your revenue maybe to help clarity on any how big the impact could be. So what
do what we have seen, on the stone half of the year in China against is a softest for the household sectors. We have not seen any specific sign related to the health issues we are facing. Now you remember Q1 is an important quarter for China because this is their new year. And usually, it's the largest quarter for China. And China represent a little bit less than 10% of the revenue for Verso System.
So given the fact that it's a largest quarter, Given the fact that it's representing 10% of the revenue and the vast majority of the revenue is coming from the indirect channels? This is the reason why in the guidance, I took some cautiousness. But again, it's hard for me at this stage to factor the completely the risk because I do it's too early in the quarter to know it. I will have from you a better view, I would say, beginning of March or mid March.
We'll take another question from Nicole, operator.
Your next question comes from the line of Michael Brace from UBS. Please ask
your question. Good morning. Thank you for letting me on. Just a question around Life Sciences. There's some interesting disclosure in page 61 of the size.
I think you're helping us build the bridge from the new guidance for 2020. Just looking at Life Sciences, I think in Q3 2019, it's 1,000,000 and 1,000,000 of that comes from Innovia. If I go back to your previous acquisition, Excelris, I think the last quarter they reported in Q3 2013, was $30,000,000 of product sales, so license maintenance and subscription. It definitely has been a lot of growth over the last 6 years. Can you sort of square what's happened with Accelerists since you bought it and where the the growth has come or not come in in life sciences?
Thanks.
So, Michael, you missed something very important. In the Acceleris product line, you had a product called QMaths, and Cuemath was related to compliancy and quality management. And I've been very clear that the revenue is now part of Eleovia. So when you do the math, you forget to take into account that we are just displacing the revenue from accelerate to Innovia specifically for Cuemath. If you do the computations, you will see the when we did the acquisition of accessories, the 1st 2 year was a little bit tough,
right?
But since then, now we see for the last at least 2 years, right, it was true in 2018, but also in 2019. We see the momentum back And I've been very explicit. We are growing at double digit. So I would not draw the conclusion you are growing, Michael.
I mean, I think Cuemath only had $20,000,000 of sales when Excel reported, but just on solid work. I mean, there was a very good performance in Q4 and almost seems counterintuitive given the macro environment and you indicated in the past that's a more macro sensitive business. How would you see growth for solid work this year? And are you seeing much of a switch to subscription or SaaS based delivery for that product?
I answer the first part, and you take the subscription part. So if I look at the 20, 20 years, Against, we are in the range of what I communicated from a new license standpoint, which is a growth between 5% to 10%. This is what I'm expecting. The reason is, as I was stating to you, we see a good momentum in Europe see a good momentum in Asia, but China is contributing significantly to the growth, for Asia. And I do not want to be, to replicate the performance we have seen in Q4 for the full year.
So I'm taking some cautiousness on this.
As you notice in Pascal's presentation, we have now our section of the sector of the market, which is called mainstream. Next week, we have the what we call 3DEXPERIENCE World, which is really replacing a solid works world, which is the big event for SOLIDWORKS because our users are discovering the value of a platform to expand our business as as does the partner. So the portfolio is evolving from desktop to platform based solution, including cloud. Why do I say that? Because we are, we are not going to be too much brutal with the market, but there is gigantic PRACCE.
On SOLIDWORKS. Please translate PRACI free software, which should be paid So there is a lot of PRC. There is a second phenomenon, which is lack of a tendency to renew subscription for all installation, to be more specific, you have a large installation and you just pay for a few, users for the subscription, and then you you do what I would call PRACI for all the rest of the users. We are going to fix that and without being brutal to the market, we are going to progressively progressively made this mandatory. And that's a significant factor to manage carefully because they love us.
We love them. But it has to become normalized and it will. And the last point is it's also necessary because when you avacao platform by definition, we know is online, so we know we should pay.
We'll take one question from the room, Laurent. Thank you. It's Raul Handoff from Kepler Cheuvreux. In fact,
I have 2 points. The first is on your guidance on Medidata 13% growth and the visibility you already have today. I was wondering if the 10,000,000 beats you had over 2 months, which is quite significant compared to the size of metadata? Is it a one off? Or is it something that is more structural in other words?
Is there room to do much better than 13% growth for the year? And my second question is on the infrastructure and the cities. Is it possible to have kind of a trend you've enjoyed in the last maybe 2 or 3 years?
Okay. If I take the first questions, the 10 minute extra, not all is coming from the software. You have a piece coming from the services as well. So keep this in mind because when I'm building the guidance, the most important for me is obviously, the software revenue. Okay.
That's for for the Q4? For the full year, yes, the range is between 13% 15%. I didn't change my mind. I'm just because I need to guide the markets, I have to take one assumption so I took the low part of the guidance. That's the way I'm doing it.
Which is a good idea. I see. Related to the city, I think there is a lot First of all, we use the word in city, but there are a lot of customers doing roads on bridges. With what we call infrastructure. So this what we call now, this new sector of the economic structure, which by the way, as a side note, it's almost 50% of the world GDP.
As a side note. But very behind in terms of digitalization. So we concentrate on CT and infrastructure. We have a good project, but I must admit, for the time being, they are kind of one of a kind. We mentioned that already several times, it's one of a kind kind of projects.
We are not at a stage where we can replicate systematically. I believe we can reach that stage in 2020, probably. Provided the focus of the team now on that sector. But that still need to be the key point to really create a sustainable double digit growth in that sector with strong visibility.
We'll take one other question from the room and then we'll be back to the call.
Yes. Salig Bluffinos Connect. I just wonder, are you going to give the margin in your new presentation? By sector? And if yes or if not, can you give us an idea of the normative operating margin of the EONIO term?
So I'm not planning to do it. For one single reason is because the vast majority of the cost is in research and development, And half of the cost in the investment in research and development is related to the platform, and the platform is the same for all the different sectors. So it would be not relevant to give you a operating margin per sector.
And you give an idea of, maybe that far operating margin for 2020?
Yes, yes. I am doing it because as part of the investment case, we are, I've been very explicit about the fact that not only I want to double the revenue of BD data over the next 5 years. But I want to have 10 points operating margins of Medidata over the same time periods. That's the reason why I'm very explicit and transparent just because it's a way for you to check if we are delivering the commitment.
And this increase in margin is mainly due to increase in sales
or It's both. It's both half of the organic improvement is coming from the revenue growth, and the other half is coming from, synergies on the cost sites. Specifically on the platform, on the cloud, on the research and development as well, and some G and A cost.
Okay. We're back to the conference call, operator. Could you give the floor a second?
Your next question comes from the line of Adam Wood from Morgan Stanley. Please ask your question. Hi. Thanks so much for taking the question. Barbara too, please.
Just first of all,
on the market share, you talked a little bit about the Innovia Revolution wondering if you could just broaden that out a little bit. When we look at some of the other companies in the PRM space, if you look at PTC or for their lenses, this integrating at a faster rate, Could you maybe just talk about how much of that is because of different end market exposures? How much of it is maybe a kind of shift to subscription? And just talk a little bit around what you see in the market in terms of deal wins around the rest of the products rather than just Innovia And then secondly, you mentioned EDF on the run side of things. Could you just talk a little bit?
You obviously have been very successful on the MIS side in discrete manufacturing. What are the plans on the process side? Would you look to become more competitive over time with the AspenTechs and the VV drivers of the world? In that run, please. Thank you.
Just maybe a comment Pascal on, you provide the substance. Okay. I think one one more remark I will provide for this question is, Pascal mentioned the very strong winning winning rate in winning market share decision. When we win, let's take, for example, Ericsson, very important company for Europe, 5G, they are adopting in a gigantic wavier platform. They are transforming the complexity of extraordinary number of digital environment to 1 consistent platform.
When we have these decisions, we don't get the revenue upfront. It's a very progressive We win the case. We know it's not going to be a competitor on after quarter after quarter we will orchestrate the deployment based on the transformation of the company. And many examples of that in the high-tech but in almost all sectors. It's very different when we win new customers in new sectors from evolving with the platform on existing customer base.
So it's a different dynamic. So that's the explanation for the perceived on the reality of the gap between the winning rate of between 65% to 85% of the case are one case on the instant revenue reported. Because this is building up a high visibility pipeline going forward. That's for the context, especially for the platform based decisions.
Anadam, it's a little bit early, because we need to have all the competitors reporting before to compute the market share. But, as far as I understand, we are on the same trends compared to the last few years. Which basically means we are gaining between half a point to a point market share in 'nineteen against the traditional competitors I was just mentioning before. And in the life science, because I do not want to mix the 2. For clarity, the combination of the ecosystem and media data, we are at 9% market share.
So not at the same order of magnitude compared to what we have achieved in the PLM domains. And here, if I, against based on my expectations, we will at least gain a half a point on this. So the dynamic is good. The second question was related to manufacturing and where we see the growth coming from, I guess, Adam?
Exactly. Why it was also around would you be Where are you on the process side? There's obviously MES for discrete, but there's also the run of process factories. Is that an area it sounded like with EDF as a shift and EDF is not completely a process industry, but there's a shift in that direction. Is that something we should look to in the future you and the manufacturing side, will you stick very much the discrete when you talk about the run of factories?
Well, I want to, Adam, I know you know I think for everyone, I want to take your question to, you know, now we are building 2 categories of industry solutions for manufacturing. We have agreed the acquisition of IQMS, which is now called DELMIA Works. Please connect to solid works. We are creating a mainstream offer for small midsized companies. So it's extremely well received by the market.
It has been on a very slow start, unfortunately, in 2019, because we need to set up the distribution properly around the globe for what is called DELMIA works, but the idea of, so the point is we have, we are building mainstream for small midsized companies, not only for design, but for simulation and for manufacturing. And we are, allow me to say I'm offer which are used by large companies, which is based on the DELMIA Manufacturing Solutions, which are really doing well. So that's the context. So the mainstream has very not started yet. It's a 2b business.
And I believe this 2020 will be a good test to see how we can accelerate that growth been it has it is on a slow start right now, but we still are convinced that it's the right thing to do because there is there are massive needs in that segment of the of the market.
To complement what Bernard is saying, so keep in mind that this mainstream market for the manufacturing, it's a 1,000,000,000 dollars market underserved. So the bet is still the same, is one single product using an indirect way to reach the massive number of company we want to equip. By the way, half of them are using SOLIDWORKS today. So this is the leverage we wants to have by touching to equip these markets. Coming back to your question related to the process industries, because you are right, right now, our focus is mainly on the discrete manufacturing industry.
It's not too much on the process. Here, we want to be game changer. Because we believe all the company you just mentioned, they are addressing the automation of the manufacturing. They do not do what we do in the discrete manufacturing called operation management, manufacturing operation management, which consists to link the operations, with the design, with the decommissioning. So it's really managing the entire lifecycles managing the operation in the context of the life cycle.
And this does not exist in this industry. So that's the reason why if you remember, we want overall and, they are using the platform. Despite the fact that we are we do, we are not a massive players in the oil and gas. And why they are using the platform? Because they want to link the upstream to the downstream activity accordingly at the year because there is the only way for them to manage efficiently their operations by linking the 2.
That's the way we want to penetrate this process industry, rather than to try to be big what the company being well established are doing right now.
Thank you very much.
We'll take one last question from the call.
Next question comes from the line of Nicholas David from ODDO Securities.
Actually, I have 2. The first is going back on the Ironic supply chain in the U. S.
You
mentioned that you are not very worried But I remember that you expected some catch up, from contract that you didn't sign in Q3. Set up that happen in Q4 or not? And if not, is it linked to the issue of Boeing? And what do you expect for 2020 for the supply chain? And my second question is regarding your operating margin guidance, you expect a sharp improvement on our billing standpoint in 2020, which is maybe more optimistic that the midterm vision you gave us 2 years ago.
So what's changing there and where do you find some additional leverage? Thank you.
Okay. So So to answer to your first questions, which is related to the supply chain, the Boeing Supply Chain, in the U. S, specifically. And, yes, you are right. In Q3, we had some deals in the aerospace.
But those one has not been impacted by these situations going on. And to be more precise, because I was very here that we had 20,000,000 at stake, deal shifting from Q3 to Q4. We signed half of them. So still missing 1,000,000, but the 1,000,000 are not in aerospace. So in the other industries such as oil and gas, specifically.
Okay. In Europe, it's probably a little bit different, okay. Now the second question is related to the leverage on the operating margin. Yes, there is one thing you are missing, Nicolas, which is the growth is coming from the recurrent part of the revenue. And as you may know, it's the margin for this at this line is much higher compared to the new license because the cost of sales is not the same.
That's the reason why you could perceive me a little bit optimistic on the leverage on the operating margin, but I'm not.
On this nice comment, Pascal, thank you very much for participating to this session this morning. Will have a call this afternoon. You're always welcome. There is a lot of new information on the website on easy date to go there. Thank you very much, and thank you for the interest you have in Dassault Systemes.