Ladies and gentlemen, thank you for standing by, and welcome to the Dassault System's 2019 Third Quarter Earnings Investors Call. I must advise I would now like to hand the conference over to your first speaker today, Francoisard Bordinado, Vice President of Investor Relations. Please go ahead, sir.
Thank you very much, Emma. Thank you for joining us on our earnings conference call with Ben Philes, Vice Chairman and CEO and Pascal Delos, executive VP, CFO and a corporate strategy officer. Dassault System 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 rates in constant currencies unless otherwise noted. Some of your comments and 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 Factor section of our 2018 Document refinance.
All earnings materials are available on our website and these prepared remarks will be available shortly after this call also. I would now introduce Bernard.
Thank you. Thank you for joining us today, both in London and with this call. I would like to begin our call a little differently and share my personal perspective by several conversations with clients today. We see industries with tremendous opportunities to change our lives. And at the same time, significant challenges, engineering, scientific, business, and financial to successfully bring these opportunities to reality.
It is very clear that sustainable innovation in customer experiences and business models is a strategic imperative of the 21st century. And all of companies are talking about it. So system is recognized as a leading player in this transformation, from ideation to design to supply to manufacturing, to go to market, to use on operation across all industries. I believe that the 3 d experience platform is coming at just the right time for that. Whether in sectors where we have add a long history of those where we are now establishing multi partnerships with industry leaders we are there to work closely with these companies and to be part of these journeys.
You have all seen our figures for Q3 2019 with revenue up 10% on, EPS up 20% on a similarly strong performance year to date. What is the story behind it? The first one is a strong dynamic around recurring revenue, which represents 75% of our total software revenue. And the addition of Medidata all subscriptions will further enhance this. 2nd, from an industry perspective, software revenue grew 10% in our core industries with Transportation And Mobility up 9%, aerospace and defense up 25% for the 1st 9 months.
Diversification Industries increased 9% with good growth for high-tech, Marion Offshore as well as an excellent dynamic in home and lifestyle with Centric PLN. Sirb, 3DEXPERIENCE software revenue grew 32%. In the 1st 9 months of this year, our 3DEXPERIENCE platform is establishing a very strong position in the aerospace And Defense Industry as a powerful catalyst and enabler of sustainable growth models. And in transportation and mobility, despite difficulties in the sector, especially on the volume side, companies are investing in transformation, therefore, engineering or future portfolio. 4th, we are advancing our purpose with Life Sciences now becoming one of our core industries with the completion of the Medidata acquisition.
We received final clearance last night as you now know. Finally, we are very well positioned to reach our 5 years goal of doubling in 2019 based on the 2014 plan. And this is really before adding Medidata. Let's talk about transportation and mobility moving to this industry review, I would like to begin, of course, to mention the Toyota Motor Corporation adopting 3DEXPERIENCE platform with what we call the power buy solutions. We have built a long standing relationship with Toyota of our multiple decades and see the expand the extending this extending into the future in a very meaningful manner with the 3DEXPERIENCE platform.
There will be one single truce from design to manufacturing. Our 3DEXPERIENCE platform will replace internal systems legacy systems at Toyota Similar to what occurred when several years ago Toyota selected Katya V5. Secondly, this will be a very wide deployment involving more than 40,000 users overall. Across a multiyear timeframe, spanning multiple brands application, depending on the user's role. So we are very happy to share this news, which probably will influence the entire sector.
In the word of specialized racing car, Spark Racing Technology, a motorsport manufacturer, specialized in the development on engineering of high performance e mobility cars on modules has adopted the 3DEXPERIENCE platform on several of our industry solutions. Separate press release issued this morning. We announced that Lockheed Martin Ironautics standardizing on the 3DEXPERIENCE platform, on leveraging multiple industry solutions for all new advanced development programs. This is a multiyear partnership agreement encompassing engineering and manufacturing a software solution, of course. The objective includes improving affordability and manufacturer ability.
This was a very competitive win, but more importantly, it's a very significant transformation for the company. We have a broad presence in aerospace, working with many companies in the under associated ecosystem. Using our DELMIA Quintiq Solutions SAS, Asia's leading food services supplier to airlines, is creating a 3DEXPERIENCE twin of a kitchen, industrial kitchen, basically, that pairs virtual and physical operations to provide data driven analytics for better resource planning. Moving to Consumer Packaged Goods on retail. Logxitan, a leading health and beauty company has selected our 3DEXPERIENCE platform, leveraging our DELMIA Apprisso application to improve its manufacturing production planning.
In hormone lifestyle, Centric PLM is truly leading the way. Working with more than 1000 brands worldwide, well known brands, it's helping companies increase incomes on sales, improve inventory management and reduce logistic costs. Translating into more new product for the collection, increased efficiency, faster time to market. And more importantly, improve sustainability, thanks to less waste. We have now passed our 1 year anniversary since the acquisition.
Centric PLM's leadership in Home And Lifestyle is evident with strong growth in booking new clients' acquisitions on revenue growth. Moving to the world of constructions, cities and territory territories, let me share 2 customer examples: CRDC, China railway construction company is the China's leading railway company. It has adopted our 3DEXPERIENCE platform on multiple industry solutions to improve its collaboration among stakeholders and increase its design efficiency, leading to more productive construction process by testing in the full virtual world experience before building in the U. S. Co architects selected our 3DEXPERIENCE platform because it helps increase architects creativity by creating a tighter collaboration between the architect and builder working better together, reducing reduced waste on inefficiencies from design 2 constructions.
Their name co, COO, signifies their belief in tight collaboration. Could not be a better reference. Now I would like to move to the world of Health Italy's largest independent partner research organization for drug discovery on preclinical development. A company called IRBM has selected the 3DEXPERIENCE platform on the 1 Lab Design your industry solution experience. IRBM has built a world class drug discovery partner to the pharmaceutical.
Companies since its original established, as the Italian site of Merck Research Labs in the year 2000. In South Korea, JC Pharma, specialized in the development and commercialization of pharmaceutical products for using the fields of oncology and infectious disease as developed our 1 lab adopted our 1 lab designed to cure industry solution on the 3DEXPERIENCE platform to take full advantage of their resources and optimize them from initial research development to manufacturing. We are preparing to close the acquisition of Medidata very shortly on look forward to seeing many of you at our Life Sciences Day in New York on November 13. We will share our perspectives in great detail but let me briefly highlight some key points here today. Else is now core.
We have a simple dream to bring the right treatment to the right passion at the right time. In the age of precision medicine and new passion experiences. Combined together, we bring a new unified end to end approach to reserves on discovery development, clinical testing, manufacturing and commercialization of new therapies on Health Technologies. The 3DEXPERIENCE platform becomes the only platform to combine modeling, simulation, data science, AI, artificial intelligence, and collaboration in the virtual work to achieve sustainable innovation in life science. From a customer perspective, the opportunity is significant with a potential reach to 4500 pharmaceutical and biotech companies on over 50,000 medical devices companies.
Finally, with Medidata, we are adding a software portfolio, which is 100% SaaS and subscription, growing double digits. It will be a specific brand in our information intelligence domain. On great talents joining Dassault System, which we are delighted to welcome. Pascal, you now have the floor.
Thank you, Bernard. Hello, and thanks for joining us today. Let's start with an overview of our financial performance. Beginning with Q3, I will qualify Q3 as a solid quarter. Revenue up 10%.
Operating margin expanding 140 basis points and an EPS up sharply. Zooming in, we delivered strong performance across subscriptions, recurring software services led by 3DEXPERIENCE deployments, and operating margin, culminating in EPS growth of 20%. The key disappointment is coming from the Ciplage at the end of the quarter, having in mind that Q3 is our smallest quarter for licenses, and we have not been able to fully compound shapes those slippage. With respect to our 9 months performance, all figures, revenue, software, operating margin and earning per share, delivered very good results. On an organic basis, the growth was broad based with revenue software and recurring software all up at high single digits.
We saw strong progress with 3DEXPERIENCE software revenue up 19% in Q3. And 32 year to date. And from a license revenue perspective, a similar dynamic with 3DEXPERIENCE licenses software up 21% in Q3 and up 40 3% of the related license mix. Finally, cash flow from operation were also very strong up 34% crossing the 1,000,000,000 milestone for the 1st 9 months period. So let's zoom to our regional software performance.
The highest growth was in the Americas, with software revenue up 19% on strong licensees, and recurring revenue results. Americas also grew double digits on an organic software basis. In Europe, 3 of our geos performed well, northern, Southern of Europe and France. Offset in part by the macro weakness in Germany, bringing Europe software growth to 5% for Q3. In Asia, Our 2 largest market, Japan and China showed a good financial results with, both, in fact, with software revenue up 10%.
Overall, Asia grew 4% in Q3, reflecting weaker results in Korea and India. On a year to year basis, software revenue grew 17% in the Americas, 9% in Europe and 7% in Asia. So let's move to the revenue backgrounds. Following to a strong first half for CATIA, where license revenue was up double digits, we encountered some softness in the automotive supply chain in Q3. In contrast, 3DEXPERIENCE adoption is progressing well with OEMs, transformation, driven by the product range electrification.
This is also evidenced by no magic good performance as part of our cyber system strategic initiative for this year. Overall, Catia Software revenue grew 5% in Q3, while year to date CATia Software revenue has increased 8%. Catia's 3DEXPERIENCE software review is up sharply for the 9 months. Similarly, following the strong first half, Innovia Software growth slowed to 3% in Q3. Principally reflecting several large sleep deals.
Overall, for the 1st 9 months, NOS software revenue increased 10%. SOLIDWORKS software revenue increased 7% in the quarter, above the 5% for the 9 months. It continued to show strong growth in Asia, up double digits and some improvement in Europe and the Americas. Its recurring software revenue performance continue to demonstrate a very stable renewal rates, and we are benefiting from the high level of license growth in year 2018 as client renew their support revenue. Looking at the market opportunity for SOLIDWORKS, today we work with about 22% of the target company in this space.
With more available in both the 2 d world as well as the 3 d world. On top of this, with 1,000,000 cumulative commercial seats sold. We have a significant opportunity to expand our footprint with solid worst customers, thanks to both the 3DEXPERIENCE platform and the 3DEXPERIENCE dot work solutions portfolio. Other software grew 17% for Q3 and 19% year to date. And on an organic basis, other software grew double digit led by DELMIA and Simulio.
Our manufacturing solutions continue to gain traction. We are pleased to share that Ericsson, is expanding its use of 3 excellent platform and 2nd, more specifically broadening its usage to our solutions to manufacturing engineering. Leveraging DELMIA as well as Innovia Applications. 5G represents a significant new opportunity for companies, challenge include time to market on the one hand and highly complex configurable products on the other. Therefore, it is critical to be able to manage a process from design to manufacturing, including an ensuring that for lower volume high configuration product company needs to be able to seamless managed plan reconfiguration.
Zooming quickly on our revenue results, in more details, we are benefiting from an improved recurring revenue dynamics, driving both our software as well as total revenue growth. In each of the 3 quarters to date in year 2019, recurring software has grown at a higher rate than licenses. As it represents 75% of our total software, this is a very good dynamic. 2nd, It is also driving growth for our total revenue and software revenue on an organic basis towards the high single digits. With an organic revenue higher by 8% in Q3 and 9% year to date.
Software revenue If you look at the recurring software and license and other software, zooming in more details, what do we see? We see an organic basis, license and other software decreased by 1% in Q3 on a sleep deal and weak in the auto automotive supply chain. And for the 9 months period, license revenue increased 5%. Recurring software revenue increased 10% in Q3 and 9% year to date on an organic basis with a double digit growth for subscriptions, and a very solid support growth across all customer channels. On an organic basis, Services revenue increased 16% in Q3 14% year to date, led by 3DEXPERIENCE deployments.
On a 9 months basis, the services gross margin was 9%. On the operating profitability and margins, we continue to deliver strong operational results. Our operating margin for the first nine periods at 31.3 percent, up 140 basis points. We had an organic improvement of 200 basis points compared to acquisition dilution of 100 basis points. Currency had 40 basis points.
EPS came in the high end of our guidance at increasing 20% in Q3 and 19% year to date. The strong growth in earnings per share came from our operations Revenue operating margin expansion, excluding currency, EPS was up mid double digits for both the 3 9 months period. Zooming on the cash flow and the balance sheet. Our net operating cash flow across the €1,000,000,000 milestones for the 1st 9 months of 2019, increasing 34%. Up 28% including the IFRS 16 lease implementation effects.
The principal contributors where growth in the net income and noncash items, accounts receivable management and a lower tax down payment in year 2019, where we are now benefiting from a U. S. Tax change on a foreign driven intangible asset and enacted in year 2018. Unearned revenue now called contract liability increased 7% at constant currency and perimeter. And the same parameters.
Zooming to the financing of the cash of cash acquisitions. Few words. In September, we completed our Eurobond financing in the amount of 3.6 1,000,000,000 to fund a large proportion of the financing of Medidata acquisition. The offering was well received So we also refinanced a EUR 650,000,000 bond loan set to mature in year 2022. The Eurobond financing has 4 maturities from 3 years to 10, translating to an average terms of 7 years, with an effective borrowing rate of 16 basis points.
Looking at our borrowings, Our net estimated financial expense are about 1,000,000 for Q4 and 1,000,000 for 2020. Now I would like to move to our guidance. I would like first highlight the key full year year 2019 figure for DS on a standalone basis. Of number 1, we are reaffirming our total revenue growth objective of 10% to 11% at constant currency. Our revenue objective takes into account a strong dynamics.
We had with the recurring software, representing the large majority of our software revenue, at the same time, our revenue output also reflects the potential for continued volatility in license activity in Q4. We then updated our currency for Q3 actuals and Q4 updated outlook leading to a total revenue range of 3.912000000000to3.952000000000. We are also confirming our earlier for both Q3 and Q4, bringing our non IFRS EPS objective range up to to representing growth of 12% to 14%. With these objectives, I think we are well positioned to reach our 5 years goal of sorry, to 5 year goes to double EPS to EUR 3.50 by year 2019. With the expanded with the expected closing no later than October 31st, we are adding metadata to our Q4 and full year guidance, assuming a 2 months contribution.
For Q4, we are estimating a non IFRS revenue contribution of about 1,000,000 and about of our non IFRS earned earning per share. Just remind that we have been carrying interest expense on the related funding debt starting in September. With respect to the year of 2019 on a combined basis, We are targeting total revenue of 13% to 14% at constant currency, translating to a revenue range of 1,000,501,000,000 4.55000000. The non IFRS operating margin of about 32%, and a non IFRS earning per share of up 13% to 14%. Further details on the fourth quarter and our in our earnings press release and in our earnings presentation on our website.
In term of currency rates, we are assuming a U. S. Dollar to euro rate of 1.15 and a Japanese yen to euro rate of 125. Before aging for Q4. To conclude, we are advancing our purpose across product Nature And Life, our platform strategy and our science based DNA is really starting to be visible from the outside.
From a financial perspective, recurring software revenue is moving front and center as a key enabler for our strengthening organic growth. Looking forward, we are focused on continuing to improve our executions. We have a strong financial model and a significant runway of opportunities, thanks to our growth drivers. We hope to see many of you in New York on November 13th, for our Life Science Day. And we will now be happy to take your questions.
And thanks again for your participation on this call our earlier webcasted meeting held in London. We're ready to take questions.
Our first question comes from the line of Jay Lee Shover from Griffin Securities. Please ask your question.
Thank you. Good afternoon, Bernard and Pascal. I'll save the I'll save the metadata questions until we see you here in New York in a few weeks. So I'd like to start with my first question concerning the BT business. You've noted the Toyota and Lockheed Martin news.
And the question there is those are among 2 of the oldest most established customers in the industry, of course, for your kind of software. Those selections or decisions now were perhaps years in the making. And so the question is, what other large customers of that kind are you seeing perhaps in the process of reconsidering or potentially retooling, deployment decisions that were made 5 or 10 or even 15 or more years ago. How have the selection criteria changed for these kinds of decisions versus the original criteria. And in the meantime, when you are doing large BT renewals, in your core markets, what are you seeing or trying to achieve in terms of pricing or incremental pricing versus the prior contracts?
And then a couple of follow-up questions.
There is a wrong perception that we need to resolve with existing customer. What was announced, and I will be explicit on that just to help clarify. In the context of those customers, they have been long lasting customers of Dassault Systemes in a certain scope of usage. Mainly Catavis5, sometime manufacturing DELMIA. Here, for example, with Toyota.
If you recapfully, the press release, it's not about what we do now. It's about the total new core infrastructure to replace a gigantic legacy system. That are many years old, and that's the case of so many companies, even existing clients, whether it's legacy PDM or multiple information systems where the unification is changing the core system for everything. So it's not even PDM. It's the next generation integrating single version of truth across all discipline.
That's the case of Toyota. When it comes, so basically Still to be announced will be the next generation of product solutions, in many domains of application specialization. So in short, significant new footprint. Same for Rocket Martin, those companies are doing highly sophisticated processes, high-tech systems. And there are a lot of legacy application on systems.
And in the case of Rocket Martin, and they authorized us to communicate the fact that they use on the power order product design, simulation, production, with from one single platform. Again, a new scope of coverage, which really addresses the specialized audience but a much broader all people involved in the Coravonic process. So, This is, this is what is happening. In many clients, Ericsson, is another example of what we have announced. They are 100 of, information database that they want to remove and replace by one single version of truth, and this has never been done.
So So again, here, it's a new scope. So I think we see that more and more with clients, And the net of all this is the size of the business we could do with those giant is at least X2 or more. In fact, as proven, with the giant contract that we signed 2 years ago with Boeing, where the scale of the contract had nothing to do what what we did for the past 20 years. That's, Jay, what is behind those announcement. And it's changing also, of course, the ecosystem because the nature of the products they are doing is evolving.
They are creating new generation of vehicles for immobility connected vehicles. Electronics is part of it. Software connection configuration is part of it. And this is why this is, really not only a new game, but game changer. So keep in mind a long lasting fully committed Dassault System client having done great business with us and we on us having done great business with them.
We can multiply by X2 to X3 the potential business with them.
As Bernard stated, the I just I just speak with on scope knowing that the purpose is to expand the scope, but let's zoom on the equivalent scope. You have the price of the platform coming in addition. Okay. So it's a, I mean, it's €1000 per users. And then you have the Maisons and Super rate increasing from 18% to 21%.
So the goal is really what Bernard explained is to expand the scope either on the upstream or the downstream using the platform. That's really where we are creating the value and how we do it.
The second question has to do with your cloud ambitions. I've watched your webcast 2 days ago. That you presented at Bernard on your cloud offerings. And we talked about this a bit a quarter ago when I asked you about your relationship with micro off, for example, vis a vis cloud. And the question, has to do with your internal investments on your own cloud infrastructure and whether in the long run, the most prudent thing to do is to be largely, if not mostly dependent on your own internal infrastructure, in this case, the out scale versus working more with the hyperscale companies to, pursue your cloud ambitions.
Just in terms of achieving better economies of scale as your customers presumably will adopt, cloud, not only for CAD, but for the, for the other businesses. And then my final question after that. Thanks.
Thank you for participating to the our cloud seminar. I think the testimony from customers were quite impressive in terms of how they are using cloud for new projects. You're right. I think the reason why outscale is becoming 3ds out scale, a core brand is because we believe that, customers value the fact that that is a fully controlled stack of security and efficiency and optimization, delivering the service to them. So the number of clouds we have around the world are is increasing significantly as you know, one of the things we have done, which is unique, is we have done our own PLM to manage our own multiple clouds.
So we offer 3 types of clouds, public, private and dedicated clouds. Based on the customer needs. We have a good relationship Amazon and we use them for elasticity. But there is no doubts that our customers wants to have the guarantee of total service and also alignment fiscally and legally under territory. And so your point is well taken and we agree with it and we continue to develop our own cloud infrastructure to differentiate because basically, as Pascal said this morning, from a profitability standpoint, all in all, whether it's, whether it's with, PLC, ALC are basically upfront.
Upfront on the annual license charge or subscription based, for us, the operational margin is the same. Which is a performance because it's not the case for many companies.
The final question has to do with your management of the portfolio. That is to say, the existing DS portfolio, is quite complex. In terms of numbers of roles and apps and the large number of what you call trigrams. And we've sort of gone back and forth over the years in terms of the portfolio growing, then you try to simplify and so forth. And, where are you in terms of that complexity and, managing the very large number of roles But at the same time, doing so at scale and, profitably so that the portfolio isn't, so to say, over and built.
And we've sometimes seen in your industry almost an inverse relationship sometimes between complexity and growth. And so perhaps you could address that issue.
Yes. Well, the range is that with the number of industries we cover, a number of processes we cover or number of segments we cover, what will continue to happen is the number of roles, meaning type of champions we want to serve, the number of process, meaning teams on solutions, meaning the outcome for the company is going to grow because we want to be highly dedicated to the segments we serve. The reality is that it's very easy for a startup company and small company to understand what they want and what they need because for an analyst to look at the total portfolio is one thing, but a customer is in one industry. On discovering a limited number of process. So when you go and instantiate that for a given customer, it's very simplified.
And, so that's a unique approach that we have because most of the other players are based on functionality and we don't want to sell functionalities. We want to sell outcome, excellence, or variality of the roles, outcome of the solution, performance of the process, virality of the roles. And, the testimony from our cloud based customer. And we have a quite large installed base of cloud based customer. We have a very large installed base of education students, schools, very large base, probably much bigger than some of the latest announcement from, what I've seen last night in terms of acquisition, far bigger it's simple for them to provision the roles.
And it takes just a few hours. So that's the reality on the feedback of what I say.
Thank you. And our next question comes from the line of Andrew DeGasperi from Berenberg. Your line is now open.
Thanks for taking my question. First, I guess, on the SOLIDWORKS growth, is there any scenario that you see returning to that double digit range in the near midterm? And then maybe broadly speaking, given there's a potential that the market becomes more competitive. Do you think the product is adequately priced on this at this point?
May I say these are past candidates before you provide the insight? You have to know that now with the SOLIDWORKS family, it's becoming a family. We announced what we call 3DEXPERIENCE dot words. At the beginning of at the SOLIDWORKS world. We I want to explain briefly the following.
There are 3 type of things we offer to the SOLIDWORKS type of clients, number 1 SOLIDWORKS Desktop. Issue number 1. Number 2, sorry, what's this stuff powered by the 3DEXPERIENCE platform on the cloud? And that's why we have seen SIMilia growth for SOLIDWORKS customer recently because they use SIMilia directly on the cloud. On number 3 web based native mobile application natively on the 3DEXPERIENCE cloud on it was called X Design, during the, during the field test on the customer test that we run for almost 12 months on it's going to be delivered to the market and available to the market under the the name of 3 d creator.
And that category web based, no apps on the device. Is extremely well received. And ultimately, this will have the same functionality as the SOLIDWORKS desktop, but everything through a web browser on progress are being done. So those Under the SOLIDWORKS line, all this will appear to be the evolution of revenue. And with that in mind, Pascal
So, but I think if you, element of the answer, how competitive is the products against the different solution you have on the market because no one can claim to have this scope of solutions. And at the same time, there's a level of integrations between them. It's point number 1. Point number 2, if we zoom only on the traditional solid works. I still believe, you know, the reservoir for growth is still there.
You still have 40% of the market still being in 2 d, and you still have a migration from 2 d to 3 d. It's almost 4%. The 1,500,000 company, 40% of them being still in 2 d, migrating into 3 d every year. And for SOLIDWORKS. This is what I say this morning.
It's 40,000 new license every year. Okay. For 3d to 3d, as you may know, we are now winning market share in the 3d space using SOLIDWORKS. And we are replacing some of the incumbents with a well priced and very functional solutions, so called SOLIDWORKS. And I look at the track record, we are almost gaining a point market share in the 3 d space with SOLIDWORKS every year for the mainstream market.
And then you still have the large installed base we have. And as you know, many customers are growing and they continue to buy on a regular basis. New licenses. When you do the math, I mean, if you combine all the growth drivers we have described by Bernard plus the one I just gave to you, mean, I'm still convinced we can go back to double digit growth.
Great. Thank you.
Thank you. And our next question comes from the line of Jason Celinio from KeyBanc Capital. Your line is now open.
Hey, guys. Thanks for taking my question. Just one for me today. Can you just provide a little bit more color on some of business dynamics you're seeing in Europe and Asia, maybe our products, what industries and how this compares to maybe prior times when business demands weren't as robust?
A few insights. The, China is a major driver of Asia as well as Japan, by the way. China being a significant double digit with a 20% growth. 10 for this quarter on, obviously, for
the 1st 9 months, 20
for the 1st 9 months, I think that can. So, and there was a lot of term about the sectors like commodity and mobility, is it slowing down? It is in some way in volume, but in terms of product portfolio on the bench to be developed through engineering and design for new, electrified vehicle it's a huge, huge number of programs around the globe. So, that's one thing that should be noticed. Iowa space was up 25%.
So it's a strong dynamic. On also a new scope for us, because it's about rate production as well as supply production. Related to the supply chain, what we see is that the startups in the sector in both domain, by the way, for e, fly or e mobility at large, an incredible number of new startups. Most of them I can claim, we can claim are based on the 3DEXPERIENCE cloud solutions on premise, but it's 3DEXPERIENCE in almost all cases. And then in the middle, you have what we call Tier 1, Tier 2 large suppliers.
They initiated the adoption of 3DEXPERIENCE before the OEM On the on this quarter, there was a certain slowdown in that segment subsegment of the market, but we don't think it's a we don't think it's a trend. Because they are creating a lot of innovations. So think about value, Delphi and many others. So that's basically the feeling we have. Pascal mentioned this morning that the pipeline is good for and I think our visibility for 2020 is 2 hours to speak about it.
If we look at the
what we call the diversified industry, not the core. We are also observing some key trends. The life science sector is going well. At last, Europe, Asia, as well as the U. S.
So home and lifestyle segments is also going very well. We continue to gain market share. I mean, this company, but if they are suffering to a certain extent, but they are so far behind in terms of digitalization. They are investing a lot to catch up. The high-tech sector also is going well because with all those new equipments, with the IoT This is driving a lot of the demand.
And last but not least, believe it or not, the shipbuilding is also a domain where we see a growth and especially coming from Asia.
I think we are building the Asian standard of shipbuilding, replacing legacy systems. Simply said.
Next question please.
Thank you. And your next question comes from the line of Michael Breeze from UBS. Your line is now open.
Yes, thank you. Thank you. Good afternoon. A couple from me. So just in terms of solid work, I think you walked through some of the drivers of unit growth this morning, Pascal, around 80,000 being the target.
Can you talk a little bit about the unit volumes in Q3? And I think the comparatives are reasonably hard for Q4. So I mean, do you think you can sustain that 7% growth?
That's the goal. That's really the goal. I do not have the exact unit number in mind for Q3, but usually if you apply the seasonality of the revenue, you will find it's relatively correlated to this growth.
And then there's a useful slide 31, looking at the proportion of business coming from 3DEXPERIENCE and you're now a little over a quarter of total on 3 d experience from total software. Could you maybe say on Catier where you're up to on that transition?
Last time I look at it, you have more than 20% of the installed base Kitya being under 3DEXPERIENCE platform. Whatever it's native or through the power by approach.
And are there any standout sectors, which are sort of either ahead or behind that 20%?
All the new sectors for Catia obviously, are starting directly with 3DEXPERIENCE platform?
Yes. Architecture construction. All new startups in e mobility or native directly. So as you said, all new sectors are directly going through the experience, Native 0 customization, provisioning the service at the need.
The Aerospace also is, moving very fast with Cattress on 3DEXPERIENCE platform. And the automotive sector, we're probably the one being more difficult to move. But as they are now saying, with electrification of the car, this is we are seeing the acceleration because you need the new generation of CATIA to do it.
Cyber, what do we call Katya Cyber?
Okay. And then, thank you. Just finally, on the guidance for Medidata, I think there was a question this morning around this. If I take the consensus $196,000,000 apply your exchange rate and take 2 thirds, come to about 1,000,000. And that's about 1,000,000 more than you.
And I mean, it's a cloud business, so presumably the 85 percent of revenues from cloud locked and loaded. So why are you being so conservative on, what do you expect to get from the business?
So I mean, your computation is probably a little bit extreme, but nevertheless, I say it explicitly this morning. I took some cautiousness. And again, believe me when we do this kind of move you take the risk to defocus the company for a few weeks. And this is the situation I would like to avoid. And that's the reason why we are taking some cautiousness.
And again, I'm not talking about only Medidata. I'm also talking about Dassault Systemes. Because the time we spend with as an executive with the BD Data teams are the time we are not spending with our current customers. So maybe you can bring me to take too much consciousness, but I'm fine with it. But it's less than what you stated.
Okay. Well, I'll go and back and have a look at that, but thank you very much.
There are no other questions this time. Please continue.
Okay. So very thank you very much for participating this morning on this afternoon for some of you and we are always there to address your questions on We wish you a good day. Thank you very much. And see you see you mid November.
Thank you for participating. That does conclude our conference for today. You may disconnect.