System Investor Relations. From the company, we have Bernard Charlès, our Vice Chairman, Chief Executive Officer, and Pascal Daloz, Chief Financial and Chief Strategy Officer. I would like to welcome you to Dassault Systèmes' first quarter 2019 earnings presentation meeting, which is also being webcast. At the end of the presentation, we will take questions from the audience and from participants on the webcast call. Later today, we will also hold a conference call. Dassault Systèmes' results are prepared in accordance with IFRS. We adopted IFRS 15 in 2018, so all comparative information is presented under IFRS 15. In addition, we adopted the new IFRS 16 lease standard as of January 1st, 2019. 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.
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 during today's presentation will contain forward-looking statements, which could differ materially from actual results. Please refer to our risk factors in our 2018 Document de Référence. Let me now introduce Bernard Charlès.
Thank you, François-José. Good morning to everyone. There are sometimes good lines on things coming together. Last night, we got finally the CFIUS approval for Medidata. We are pleased with that. It fits very well in terms of timing to prepare the next year planning. That's a good news. We will be able to reveal much more at the next analyst meeting, of course. Let's talk about Q3 here. What you will notice is good progression of the revenue. The news flow this quarter is very important, and should not be looked at from a quarter relevancy, but from a midterm, long-term decision process, and I will come back to that with some of the major decisions from customers. Revenue is up 12%. Organic growth revenue is up 9%. On the software revenue for the 3DEXPERIENCE is up 32%.
As well as a double-digit growth in aerospace, marine and offshore, and on lifestyle, connecting that to Centric PLM. We are on track, I think, for the 2014-2019 five-years plan to deliver EUR 3.5 of EPS, doubling the EPS, as we said. The planning was good. The Medidata acquisition will be closed in the next coming days. Thank you, Owen and team, to be here, representative of Medidata. We'll have time to celebrate in a few weeks from now. Pascal will provide you more details. We are adding two months activity of Medidata for the full year plan of Dassault Systèmes. From a purpose standpoint, I think we are right at the middle of what it means. Harmonizing product nature on life means that we need to do more in life science.
From the impact on our platform application for industry development, I think there is a very strong dynamic from both very large-scale companies as well as very small companies, and I will try to illustrate some of this going on, thanks to the cloud, and also the financial model, the business model with recurring revenue and subscription. When you think about the kind of product and service we deliver now, I think it's good to keep in mind that moving forward with the portfolio, we are becoming customer-centric, of course, for manufacturing companies developing customer experience to their own customers, citizen-centric with platform for cities, and passion-centric for the health environment. Those are the highlights for what could be relevant in terms of announcement for this quarter. You are familiar with our purpose.
I will not go through all the detail now, but I think there is a formidable reason to believe that the bioscience and life science is becoming the next core sector for Dassault Systèmes with Medidata and the BIOVIA dynamic, by the way, that I will also mention. Transportation and mobility. There was, based on the news flow of volume production going down and being slow in the transportation and mobility sector, there are some concern about that sector for itself. Please remember that most of the players in the world have announced massive reorganization of their portfolio, whether it's about electrification. I'm thinking about Audi a few weeks ago that said that by 2025, which is for product development today, when you think about 2025 delivery.
They want to have half of their portfolio being electrified, whether hybrid. In terms of product portfolio, number of programs under development is very strong, whether you look at connectivity, electrical certification and technology, whether you look at the certification and compliance program, or you look at, of course, the battery technology per se, as well as the new architecture for vehicles, because the vehicles with electrification do not have the same architecture as vehicle with traditional engines. The flexibility on on-demand systems. Plans in manufacturing auto sectors are going to see significant new type of utilization because you don't produce those cars the same way. I was pleased to see that Tesla is now in the green, which is, we worked a lot with them for many past years. Those are the key trends you see here then.
That news from Toyota is, I think, a significant news because it's the platformization of their entire product development production on service. We're not communicating about a purchase order here. We are communicating about a significant decision for the sector. As we have communicated, Toyota has made the decision to use our platform for the entire life cycle, using platform-based processes as opposed to PDM-based product development, in order to transform the way the company is working. This was a long-expected decision. We worked a lot with them in the last two years. I think it will have a significant influence for the Japanese industry and a major influence for the entire auto sector.
On the other extreme, as you may remember, if you really look at the log of all the wins we have with the new startups in the e-mobility, we have almost won all of them, and they are doing real things on the cloud with our solutions. Spark is a good example of Spark Racing, where they are really redesigning and creating new type of vehicle. This is for Formula E racing. They are also demonstrating how the electrical technology will evolve for regular cars. There is a quite interesting video, I think, just here that I want you to watch.
Motorsports have always been a platform for developing new technologies, and Formula E demonstrates that electric cars are the future of the automobile. In the beginning, there was no Formula E. There were no races, teams, or race car drivers. A couple of crazy guys said it was possible to build 40 electric race cars. That's why Spark Racing Technology was born. Today, Formula E features the only fully electric competition car. Quickly, we went from a single model formula where all the teams were using the same car provided by Spark, to a championship that brings together nine international car manufacturers competing with their own powertrain and demonstrating their know-how in electric drive. The big step taken by Formula E was completing a full race without a pit stop, without a car change, and with a single battery charge.
To make this project a success, we needed tools that would allow us to go as fast as our ambitions, and that's what we found through 3DEXPERIENCE. We saved time, and we also entered new markets related to the electric drive and automobile fields. Spark has already changed the game by building the first electric competition car. It will definitely change the vision of the race car, but also of the everyday car. The future is electric.
Portability, speed, and capacity to change full architecture on integration between electronic software on new material science for this kind of technology or this kind of startups. I think this will have a big impact on big players. We see it with many of them already. The platform phenomenon is a real phenomenon. In aerospace, the same phenomenon is happening. Production rate, of course, and the capacity to expand on that aspect, the management of complexity on the new type of innovation as well as service to airlines. I think that Boeing demonstrated the adoption of the 3DEXPERIENCE platform. It's going on. Airbus made the same decision. I think in the defense sector, the decision by Lockheed Martin to really transform for the next generation of secret programs is, for us, a very significant event. Those are extreme technology companies doing extreme vehicles.
Many of them are really so special. The platform adoption is really not, again, an instant revenue generation, but a major decision for the future of this sector. One example with 3DEXPERIENCE on the cloud, they are really using the full digital virtual twin experience for kitchen on food systems. We are doing forecasting of ingredients and it's a quite big company, and they are providing services to the airports on big infrastructure. The value here is how can you use a platform to create a full digital twin experience of your operation and optimize them through the platform consistency. It's a great showcase. I think this customer is really making the difference. Consumer packaged goods. This time we look at this. I know that I've been observing the performance in the sector.
We, of course, always look at our customers' performance to look at where things on the trends and what they need. In that sector of CPG or fast-moving consumer goods, a lot of transformation happening, especially with the sensitivity of green consumer behavior, which are impacting massively packaging and recycling. The trends are quite obvious because they have an impact on not only the product packaging, labeling, definition, or material usage, but also an impact on the production systems. How do you make those happen with new materials? Here, L'Occitane is a good example of that. They are facing many challenges, transformation of the production system. The new customer behavior I talked to you about, margin pressure, that's true for almost all sectors. Regulation and compliancy is increasing from that standpoint, as well as, of course, new ways to deliver.
L'Occitane is a good example of that here, and you see what we are doing for their production system. Home and lifestyle, you remember the acquisition of Centric PLM. We don't own 100% of it yet. This should happen in the next 18 months, two years. The dynamic is remarkable in terms of new brand acquisition. We are really quite impressed with that, and the relationship is excellent with the team, and they are really leading on their market. I think it speaks for itself when you look at the number of logos on the footprint they are taking here are the incredible dynamic in terms of branding adoption. The portfolio of Centric PLM is expanding from organization of the product collection, timing, sourcing, but also on the capacity for collaborative negotiation process happening between the commercial aspect of it and the collection development.
More to be discussed when we will do the full year review. In that sector, where are the impact from a business value standpoint? It's really to increase the performance, reduce inventory, and reduce the cost of logistics. If I go on and move on another sector where we said that we will redefine the standard is the construction sector. I believe that we are making significant wins in that sector, what we call territory, infrastructure, and construction, because this sector is far behind in terms of digitalization. It's about project management. It's about the right way to do modeling, simulation of construction before you actually do it. A big showcase here on construction, I think in my mind, so much is happening in China.
We are focusing in China, we are focusing in India, and we are focusing in projects around the world, but in some way, less in developed countries and much more in developing countries. This is CRDC. They are doing the entire infrastructure with the 3DEXPERIENCE platform. Watch this video that illustrates well what they do.
China Railway Design Corporation is the only comprehensive grade A survey and design institute under China Railway Corporation. The corporation pioneered many industry firsts since its establishment in 1953. A good standard is required to ensure comprehensive life cycle of railway engineering construction. The standard being referred to also requires software support. The Dassault Systèmes 3DEXPERIENCE platform is based on a single platform and design library, and is well-suited for our needs. Moreover, we can enable many design disciplines to co-design on a unified platform. The 3DEXPERIENCE platform is the gold standard due to openness and support of the China Railway standards. The 3DEXPERIENCE platform is not only used for 3D design, but more importantly, it is integrated with a management platform. Managers can access various data from the management console and have clear visibility into the design process.
A short summary of what was never done before. This is in the construction sector, huge CapEx, huge OpEx for predictive maintenance of the installation later on in the life cycle. We are redefining the BIM standard in China for China. I believe that new BIM standard, which is 3D-centric, will have an effect on the rest of the world. Another example here is a lot of architects now are seeing the value of cloud-based. Before, they were using very simple, low-cost software, you know the brand names. The fact that they can have platform-based mobile is a big difference for them. Here is another showcase of an architect using this 3DEXPERIENCE platform.
Kohn Architects is renowned for its extensive portfolio of large and complex institutional, civic, academic, medical education, and science and technology, as well as healthcare projects. Digital continuity really allows for the clear communication of project goals, the vision, as well as the intended execution throughout the process, to ensure everyone involved understands what they're working towards and need to ultimately achieve. At every handoff to a different discipline or different trade contractor, and at every switch and deliverable medium, whether shop drawing, fabrication model, mock-up or other, the risk of departure from the original intent greatly increases. With Dassault Systèmes' 3DEXPERIENCE platform, the same model is used by the entire ecosystem. Everyone sees the same data, contributes to a truly integrated project repository, and can evaluate the impact on the project goals immediately and collectively.
The 3DEXPERIENCE platform brings us much closer to complete digital project documentation across all disciplines and scopes of work. Overall, it supports our approach at Kohn Architects of using technology not just for increased value, but also with meaning, with purpose, to improve long-term performance and minimize the impact on the environment while creating innovative, impactful, and lasting architecture.
We are expanding, in short, the leadership in this market from two extremes. Architects redefining the way they work with their supply and extremely large, complex programs, like infrastructure and section of cities, and more to come in this area, or railways. Those are two extremes coming together. In the middle today, there is a very conservative industry, and we believe that the platform phenomena will change the game here, too. It's a quite good, fun time to see all this happening, and the potential is significant from that standpoint. In life science, briefly, the different challenges are well formulated today about whether it's personalized health, capitalization of knowledge and know-how for not only education, but improved practices, total quality and the safety, and of course, the development, especially in biologics and the connection between R&D, research, development and manufacturing.
In biologics, the complexity of large molecules is to produce them in a reliable way. Of course, closing the loop with the upcoming connection with Medidata for clinical trials. You can imagine that a platform is more than digital continuity. It's about connecting all those dots to do a comprehensive assessment on targeting, on deliver solutions which are relevant to the disease that they are targeting to solve. This is an illustration here with a company called IRBM, on where they are basically doing research using the BIOVIA solution with the 3DEXPERIENCE platform, with a solution that we call OneLab. The OneLab platform is used there to increase speed and efficiency, to improve compliance on quality, on the proof points that they can follow the right processes. Of course, task execution, standardization, training, and tracking of what people are doing in those processes.
We are reducing massively the customized software they've been using in the past. It's a good trend, and it's something that will not stop in that sector. It's at the beginning of a new phase. It's more than document-based. It's a platform simulation-based process tracking. GC Pharma, same approach here from research to manufacturing with the same objectives. Speed, quality, time to market, and compliancy on putting the collaborative process at the heart of what they do. This is, again, the BIOVIA ONE Lab Design to Cure solution. As you notice, we are now naming the solutions for what they do, and not for the functionality they have. The value versus the capabilities. Medidata acquisition. Pascal will give you more information. Whether or not we would have got the CFIUS last night, we knew it was coming. It was a clerical process that was a little bit longer.
Funny to see someone in vacation, so you cannot get the signing. It can happen in America. This acquisition now is going to be closed in a few days, and Pascal will tell you more. The positioning of what we're doing together is very clear. I think it's represented here in a very, hopefully, useful and comprehensive way for you. In the healthcare and pharma sector. It's about 20- 30 years behind other sectors of the industry from a digitalization. Most of what is done up to now is digital documents. It's not digital production, digital research, or digital development. It's digital document everywhere, at best. We want to change that, as we did when we did the digital airplane, digital car, digital train, on all this.
Which is to create a platform where from research, discovery, to pre-clinical development, clinical testing, validation on manufacturing process, compliancy on safety, up to the commercialization. We not only have a digital continuity of documents, but we have real digital experience that are the proof points that what is being invented, developed, and produced is targeting the right results from a healthcare on practices on results. The blue things are what we have been focusing in the last 14 years with bio-intelligence, then the Accelrys acquisition and the creation of BIOVIA. In those transformation, it does not go fast. It's a slow process, especially when you touch research and development. We are there, and there is no other competitor. By the way, to have also competitors, you need science-based platform that understand organic and non-organic modeling and simulation. There is no other platform on the market for that.
That's the blue part. The beautiful aspect of what Medidata has been doing as a world leader in clinical trial is connecting the pieces that were not there, which is the confrontation between virtual and real, which is happening at the time of clinical trial. There is no overlap, zero overlap. It's high complementarity, and I believe that this is going to be something which is going to be perceived. We already know that customers are welcoming this. We have positive feedback from their side, from our side, and that's a quite interesting thing. The brand is very well-positioned. It says what it is, Medidata. It's intensive data for medical sector on biologics.
In our famous compass orientation, to not lose the orientation, when you look at us, it's on the east side, which is the power of information intelligence, which is the case for clinical trial. It's clear on our industry core focus from the framework we did, and it's also very key from the way we reach on the market, looking at the number of companies in medical device, med tech, and as well as, of course, the companies in the pharma sector. This is, I think, a move that, first of all, we love it. I think we mutually love it. We think there is something to be done here, and we think that the current landscape has been underserved. On doing it together, we can do something different.
With that, I think I give the floor to Pascal to give you more illustration about the aspect of financial results. Pascal, you have the floor on more of the strategy, too.
Thank you, Bernard. Good morning to all of you. Let's start with the business review first for Q3. I will qualify Q3 as a solid quarter, because if you look at the number, 10% growth for the total revenue, an improvement of the operating margin by 140 basis points, and 20% growth for the EPS. Delivering the, in fact, the high range of the target for the EPS and probably 2x-3x more than the consensus. Why it's a solid quarter? Because the drivers for the growth drivers are in place. 9% growth for the software, and it's mainly driven by the 3DEXPERIENCE platform. I put the number for Q3 and the year to date. You see 19% growth for the Q3 and 32% growth since the beginning of the year on the total software for 3DEXPERIENCE platform.
If we zoom on the license, 21% growth for this quarter and 40% growth since the beginning of the year. Now the 3DEXPERIENCE platform is representing 27% of the total software revenue and 43% of the total license revenue. Clearly, the 3DEXPERIENCE platform being the cornerstone of the strategy, these indicators, these KPIs, in fact, is well in place and the momentum is very good. The second message on the software growth, you notice it, the recurring revenue is accelerating. If you compare to last year, is more than three points. The organic growth for the recurring revenue is exceeding 10% this quarter. There is maybe some business model changing.
We'll see if the trends continue. If you look at since the beginning of the year, the growth of the recurring revenue is, to a certain extent, a little bit more steady than the license. This growth, and I will give you more detail afterwards, it's not only the result of the good support and maintenance activities. It's also because the subscription is accelerating as well. In Q3, the subscription is close to 20% year-over-year. The last point is, yes, we are seeing some volatility on the license. You see it's 2% growth for this quarter, 9% for the full year, it's still good for the full year. For this quarter, we are seeing some volatility. This volatility is coming from this slippage.
In fact, the last three weeks of the quarter, we have seen a number of deals shifting from Q3 to Q4. Surprisingly, to some extent, I was surprised because it's not in the auto sectors. I remember telling you that we were cautious with the auto sectors and especially the supply chain. This volatility was coming from aerospace, life science, and shipbuilding, where you see with Bernard's presentation, this is where the business is going very well. If we zoom on the regions, what can we see? Americas is growing at 19%, 17% since the beginning of the year. In Americas, all the drivers are really delivering, in fact. They are signing the large deal. We have seen Lockheed Martin for this quarter. The recurrent revenue is accelerating, mainly driven by the simulations.
We have some contribution of the recent acquisition we did, IQMS, last year, and Centric as well. Nevertheless, from an organic standpoint, the growth for this quarter is 14% for Americas. Europe growing at 5%, 9% since the beginning of the year. Europe, to some extent, you can slice in two pieces. You have a good performance in France, the Nordics, including U.K., and the south part of Europe, where the growth is exceeding 10%. In fact, to be more precise, it's 14% for the south part, 11% for the north part, and 9% for France. To some extent, the counter-performance is coming from Germany. It's not new. We already have seen it in Q2, but it's still the case in Q3. Asia, 4% growth for this quarter, 7% growth for the full year. Almost the same story.
China continued to deliver, as well as Japan, by the way, with a 10% growth for this quarter. Since the beginning of the year for China, we are exceeding 15% growth. This growth is partially offset by some weak results in Korea and India, being largely impacted by the supply chain in the auto sectors. If we move to the product line, CATIA is growing at 5% this quarter compared to 8% since the beginning of the year, and you remember 9% for the first half. This quarter, CATIA has been impacted by this volatility in the auto supply chain sectors. That's the reason why you have seen this growth. Keep in mind that the growth for CATIA is still steady in the larger OEMs, because as Bernard pointed it, we still need to electrify their car, and you cannot do this with CATIA V5.
You need CATIA V6 to make it happen. We see a good performance in all this, what we call CATIA Cyber, all the set of applications dedicated to design the embedded systems and also the system of systems, including NoMagic, an acquisition we did recently. ENOVIA growing at 3%, 10% since the beginning of the year. You remember, the ENOVIA performance is intrinsically linked to the size of the transactions. Q3 is probably qualified by the fact that we do not have too much large transactions. We have a bunch of mid-size transactions. This is the reason why you have this 3%, but overall, the trend is still good for ENOVIA, and we continue to win market share. SOLIDWORKS, 5% since the beginning of the year, 7%. I think it's a good sign. You remember, we had this discussion for the first semester.
SOLIDWORKS growing at 4%. I told you that I was still confident that on the second half of the year, we could reach the 7%-8%. This is a proof. The growth is coming mainly from Asia, where we see a double-digit growth for SOLIDWORKS. We have seen some improvement in Europe and America, where we start to be back on growth. The other line, we call it other software, growing very nicely at 17% for this quarter, 2019 since the beginning of the year. You have a double-digit growth for SIMULIA as well as DELMIA. Clearly, the momentum in simulations and the momentum in the manufacturing at large is still very good. The simulations contribute a lot to the improvement of the way you see the subscription.
If I zoom on SOLIDWORKS, because it was one of the question you had last quarter, I just want to remind you that for SOLIDWORKS, the potential for the growth is still there. With SOLIDWORKS, we are targeting 1.5 million company. Okay. Today, the market share is 22%. We are reaching 1 million commercial license with SOLIDWORKS. You still have 40% of the market still using 2D. Every year, you have between 3%-4% of this market migrating from 2D to 3D. On this, we are roughly a 50% market share. In average, a company moving from 2D to 3D, they have four seats. Every year, we have 40,000 new license coming from the migration from the 2D to 3D. On the other part, you have 60% of this EUR 1.5 million companies using the 3D systems. We are gaining market share.
In fact, with SOLIDWORKS, we are gaining market share against the competitors. We are gaining roughly one point every year. 20,000 new license are coming from there. The remaining, which is roughly 20,000 license, is coming from the large install base we have, extending their usage. My point to you is, the potential for growth is still there, and you have the details. There is a second layer of SOLIDWORKS. In 2019, we will reach one million commercials license in production. I'm excluding the education side and the academics, where you could probably add two additional millions. For those guys, there is a lot of value to connect them with 3DEXPERIENCE platform. This is the plan for next year, because this will automatically bring an additional value to them.
Today, if you look at those guys, they are using sometimes Dropbox, some community things, some chat systems. All those basic capabilities are inside the platform, available, and CAD aware, meaning that it's embedded into the systems. As soon as you deploy the platform, we have the leverage to sell to them the additional new category of products we have developed for this market. You remember DELMIAWorks, the IQMS acquisitions we did few months ago to expand the scope in the manufacturing side. The simulation is becoming critical also for this mid-size company. The fact that we have the computing powers available on the cloud, the fact that we could have the marketplace to get access to specialists to help them to do the simulations is opening these sectors. For sure, the product life cycle capabilities provided by ENOVIA.
We have two legs to continue to sustain the growth for SOLIDWORKS. This is, I think, still a very core drivers for the future for Dassault Systèmes. The manufacturing, I just want to highlight this win, because if you remember, I heard some rumor related to Ericsson. Here you have the proof. Those guys, they continue to expand with us. Why so? Because 5G is a big opportunity for Ericsson, as you know. There is a window for them to take this market. The type of equipment they are developing are highly configurable because it's a mix between software, hardware, and the services. It's not a volume production. It's a mid-size series they have to produce.
The ability to reconfigure the production systems accordingly is supercritical, and this is the reason why they have decided to deploy all the manufacturing solutions with us. If we zoom to the financial highlights for this quarter, to go quickly. You have seen the growth in terms of total revenue, 10%, 12% in the beginning of the year. From an organic standpoint, the organic growth for this quarter, it's 8%, 9% in the beginning of the year. If we zoom on the software, the growth is 9% for Q3, 11% in the beginning of the year, and it's 7% organic for total software for Q3, and 8% since the beginning of the year. If we split the revenue, the software revenue is the two different pieces. The license is growing at 2% for this quarter.
From an organic standpoint, it's minus one. It's related to the volatility I just explained to you. To give you an order of magnitude, we had almost 10 deals representing EUR 20 million who shift from Q3 to Q4. We had also an additional 10 deals representing almost EUR 10 million we were expecting to close. This give you an order of magnitude of the volatility. I'm still expecting to close them in Q4. By the way, we put some incentive to be able to close them before end of November. The key point is related to the subscriptions. You see 10% organic growth for the total recurring software, 9% in the beginning of the year and 17% for the subscription. Clearly, you have the details about the fact that the subscriptions, the recurrent part and is really going nicely for us.
Maybe the business model is changing. We are probably too early to say it. We have to see a little bit how it will continue to evolve in the next quarters. For sure, Medidata will add a significant subscriptions contributions to the model, and we will exceed 80% of the recurrent revenue in the coming years. On the EPS side, 20% growth with the services. I was willing to jump directly to the EPS. The services activity is really steady, 21% growth for this quarter. You remember last year, we were suffering in services because we had to do the setup to be able to deploy all the large transactions we signed in the last 18 months. Now the team is in place, the structure is in place, and you see the benefit because the growth in the beginning of the year is 23%.
You also see the improvement on the gross margin because we are almost doubling the gross margin on the services side compared to last year. The operating margin, 140 basis points improvements, 200 coming from the organic side. It's the result of the mix. The more you have recurrent revenue, the more leverage you have on the operating margin. 100 basis points coming from the dilution of the acquisitions, specifically Centric and IQMS. You have a positive contribution of 40 basis points from the currency for this quarter, which lead to the EPS growth 20% for the quarter, 2019 in the beginning of the year, and it's direct consequences of the top-line growth and the improvement on the operating side. For the cash flow, as you know, now the cash flow is becoming critical given the fact that we have the debt.
We are exceeding the EUR billions for the 9 months, and the growth is 34% in the beginning of the year. Clearly, we are doing in 9 months what we did in one year last year. The cash flow growth is really driven by the net income and our ability to manage working capital. You have the details, and you will see it's relatively explicit. Coming to the financial costs, I am sharing this with you because this will help you to modelize Q4 and also year 2020. You have the details for the bonds, and especially the borrowing rates and the maturity. You could expect to have EUR 9 million costs for 2019 for Q4 and EUR 41 million for 2020. With this, I think you have the details, and you will be able to do the modelization properly.
We move to the guidance. Here is the key messages. Before adding Medidata, we confirm our growth objective to 10%-11% growth for the full year. We are updating the revenue and the EPS taking into account the currency, the exchange rate, you have the details. After, we are adding Medidata, just because we received the CFIUS confirmation last night, I took as an assumption that we will be able to close before October 31st, or at least at the latest, at the end of the month. Meaning you will have two months' contributions of Medidata for Q4. Here you have the details. If you take the previous guidance, you had the Q3 and the Q4 currency effect. It's EUR 42 million additional revenue, you have the guidance. To take into account the volatility, I have slightly enlarged the range.
You remember, we used to communicate with a EUR 30 million range. Here I put EUR 40 million. I do not have the feeling that I'm cheating. Why so? You remember when we were a EUR 1 billion revenue, we were already having a EUR 30 million range. Now EUR 1 billion, this is what we do within a quarter. I think it's appropriate to start to enlarge a little bit the range. You have the contribution of Medidata for two months. It is EUR 103 million, not in USD. We are lending to this new guidance, which is EUR 4.05 billion-EUR 4.055 billion for 2019. On the EPS side, the same exercise, the currency effect is adding EUR 0.05.
Now the guidance is EUR 3.50- EUR 3.55 without Medidata, meaning that we are delivering the five years plan without Medidata. This is the low range. The EUR 350 million is now becoming the low range of the guidance. Medidata will add EUR 0.02 for Q4 and for the full year. Now the new guidance is between EUR 3.53- EUR 3.57. With this, you have the details. I already commented the revenue side for the full year. In term of EBIT margin, we are expecting to reach the 32%, pretty stable compared to last year. You have the detail about the organic improvement. The tax rate will be relatively consistent since the beginning of the year. You have the EPS growing at 13% to 14%. For Q4, the range will be on the revenue side between EUR 1.172 billion- EUR 1.212 billion.
You have the details between the software license and the recurring parts. In the recurring, you have the contribution of Medidata, this is the reason why we are almost doubling the performance of the recurring. The license, I took into account this volatility, this is the reason why you have on the low range, the fact that we could expect to be flat compared to last year. I remind you that last year, the Q4 was an outstanding quarter from a license standpoint because we signed a lot of big deals. I'm still expecting anyway, given the pipeline we have, given also the deal shifting from Q3 to Q4, the ability to over-perform compared to last year by 5% on the new license, which means a software growth of between 15%-19%. EBIT margin, 32%-33.5%.
The dilutions coming from Medidata is around 2 points, which means an EPS of EUR 1.05-EUR 1.10. With this, I think you have a pretty good view about the quarter, the details, the business momentum, the guidance. I invite you to attend the Life Science Day, November 13th, to have all the details about our strategy in the life sciences and what next between the combination of Medidata and Dassault Systèmes. Thank you.
We're ready to take questions. We'll start with the room.
Thanks. It's Adam Wood from Morgan Stanley. Could I ask a couple, please? Maybe just first of all, you brought up the topic of SOLIDWORKS, so maybe if we could dig a little bit into that. I wanted to discuss, first of all, on the technology side, when you're delivering SOLIDWORKS as a cloud solution to customers, is that a native cloud solution of SOLIDWORKS that you're delivering? On the kernel shift, is that now complete? How does the data compatibility work from the older versions of SOLIDWORKS to ones that are going to be on the newer kernel? Where are you with the platform shift of enabling? You talked about next year when we actually have that platform availability and the cross-sell of the products. Then maybe linked to that, PTC has obviously made quite a big move overnight buying Onshape.
They're discussing the disruption they can bring in that sector. Could you maybe just describe a little bit how you see that being different to your own purchase of SOLIDWORKS many years ago that went on to disrupt that market significantly, and why it's going to be more or less difficult for them to do the same thing? Then just secondly, on the fourth quarter guidance, it's a pretty big slowdown organically from what we've seen year to date. Could you maybe just give us a little feel? Is that natural conservatism or is that seeing a really big shift in the environment and the macro? I suppose really it's less important for Q4, but more important when we look to 2020, because this is the first tough quarter from a comp basis that you're facing. Obviously, you've got tough comps for most of 2020.
Should that be a concern for us? Thank you.
Thank you, Adam. The first question related to the portfolio on evolution of SolidWorks, simply said, we offer three things. First of all, the SolidWorks desktop install base is gigantic. It's almost a world standard for mechanical desktop. What do we offer to them? Solution number one, you can use the platform on the cloud to power what you have. You have what we call collaborative innovation on the cloud. You connect the desktop to the cloud, and you can do collaborative process. Solution number one. Solution number two is what exists for CATIA with 3DEXPERIENCE. Native common kernel, as you mentioned, as you follow us carefully, there is an evolution. Longer term, mid-term, we will support both Parasolid and the CATIA kernel for SolidWorks usage. Solution number two is a tighter connection with the cloud platform.
You can do simulation online, you can do manufacturing online and supplement what SOLIDWORKS does. That exists, too. Solution number three, which exists and is in its market introduction, is browser-based native design tools a la SOLIDWORKS experience on the platform. We call it 3D Creator. It was called x Design in the beta testing in the last 12 months. This is exactly head-to-head with Onshape. To make it simple, I think for Onshape, it's too late. We have far more licenses even on the browser today than what they can refer to. We will see. I love race. I love Formula One. I love race, and I love sport. This is going to be a sporty win, but I think, simply said, it's too late. We are already there.
On the compatibility that we offer between the three things, desktop, the power of the 3DEXPERIENCE with all the solutions we have for enterprises, the position we have with millions of users already in education, Fab Labs. I remind you that for The Fab Foundation, the software standard is Dassault Systèmes 3DEXPERIENCE on SOLIDWORKS, nothing else. This is going to be 5,000 touchpoints across the world of Fab Lab with the MIT program. It will be a good try, but I’m very confident that should have been done before. Too late. Coming back to your second questions, Adam. No, I think I took some cautiousness, and I say it explicitly because, remember, I met with you guys almost a month ago, and I was pretty confident on the pipeline for Q3, but we see this volatility, and I want to take into account this volatility.
This is the reason why maybe you can perceive the Q4 numbers being a little bit high. I think it's much better to deliver than to miss. The second point is, at the end, the commitment we took in front of you was to deliver the 350. We took this commitment five years ago. Now I'm telling you that the low range of my guidance is to deliver 350. I remember nine months ago, eight months ago, some of you were still having doubts about our ability to deliver it, including you, Adam.
We accept doubts. We work on the doubts too. We listen to you.
I think the pipe is good for Q4. That's probably the questions behind this. The pipe is good. We have large transactions in the pipe in almost all the different sectors, including the auto sectors. The China contribution is still also outstanding. If you look at what has been the growth drivers in the beginning of the years, we all have those growth drivers in the pipeline for Q4.
Thanks. It's Mohammed Moawalla from Goldman Sachs. Perhaps, maybe you want to drill into the recurring dynamic because that is now starting to accelerate. To what extent, you talked about subscription growth accelerating. How do you see the resilience and more importantly, the growth of this as you move into next year? Is there also a structural shift away from licensed purchasing to recurring that you think could be more pronounced as we move next year? The extent to which you obviously signed up a lot of big customers with big contracts, how is that coming through? As you look into next year, I don't know if it's a bookings metric or something you can give us that this could be underpinning at least your kind of expectations for the next year.
Second question, Bernard, is when you signed Boeing, we've obviously then seen this on network effects with, obviously Lockheed today, but Airbus, et cetera. In the auto sector, obviously Toyota is quite a significant development. How do you see those network effects? You talk about Japanese autos, but more broadly, for you in terms of pushing the 3DEXPERIENCE platform through. Thank you.
I thank you Mo for this question. I will let Pascal provide insight on the first question. I just want to make one comment. Pascal and I on the team, and you are aware of that, we are working very hard to clarify the way we should present our results going forward. Not now, but at the beginning of when we initiate the next program in early 2020 for three reasons, which are embedded in your question. First, there is an obvious reason, which is the event of Medidata and the fact that we've been reporting on CATIA, SOLIDWORKS. Should we present it in a different way with industry view? That's one factor, right?
The second factor is exactly to your point, the evolution of the nature of the subscription model with Medidata, again, but we also cloud, and even the nature of contract with large clients when they want to do the network effect with supply. They want to say, "Well, you should not acquire the entire platform for my entire ecosystem," and then it creates a new way to engage with them. We have made the decision, and it's not a big reveal, but that we will adjust that way of presenting the results to provide you with the proper visibility to address those questions, which are really implying the view of booking versus evolution of recurring. We think this is a good news.
This is a good news because it shows the way we are transforming the business model of the company, and we are very comfortable doing that. That's the background. It will be easier to discuss that in February than now, but let Pascal make some comments, and I will come back on the same question.
Mo, it's probably a little bit early to give you guidance for 2020. Let's finish first the year. Nevertheless, you remember in the recurrent revenue, you can slice into different pieces. You have the maintenance and support representing two-third, and the third is coming from the subscriptions. The subscription is growing for this quarter at 17%, so clearly a high double digit. The contribution is the simulation, because the vast majority of the simulation is under subscriptions. The cloud, as Bernard said, the network effects for the supply chain. Also we see more and more large customers using the specialized application with the subscription model. I was mentioning products like NoMagic, now being part of CATIA. You have a bunch of customers willing to go on subscription for these kind of applications.
Those are the reason why the subscription is taking off to a certain extent or accelerated. Next year, you remember Boeing is accelerating the deployments, I'm still expecting to have a few percentage coming from there. On the support and maintenance side, the levers is the mix. 3DEXPERIENCE platform represent 27% of the total software revenue. You remember the maintenance rate between 3DEXPERIENCE platform and V5 is an improvement from 18%-21%. The more mix we have, the more contribution we have from the 3DEXPERIENCE platform suite, the more levers we have also to accelerate this growth. I'm still seeing the 3DEXPERIENCE platform continue to grow next year due to the large deployments. The three points you have seen this year, pretty confident those three points will not disappear.
To the second question of the network effect, I think we have discovered an interesting market dynamic. There is a lot of new startups in each of the sectors which we consider as our core sectors. You have a lot of players in e-mobility. You have seen latest announcement for even air electrical mobility. We are extremely successful with cloud on the 3DEXPERIENCE platform. In fact, the 3DEXPERIENCE platform is adopted by almost all of them. That's one piece. In the middle of that, you have the tier 2, what we call tier 2 and tier 3 suppliers of big OEMs. They have been adopting a good dynamic for 3DEXPERIENCE. The slowest piece, which you know, were related to the OEM transformation itself. That's, by the way, across all large sectors.
That's why we insist today on the relevancy of those decisions which are made because it's not the purchase order, it's the decision effect of those players. They are, both of them, and all the one we have referred to, they have a big influence on the market. I believe that newcomers, tier 2, tier 1, on the connection with OEMs, on the OEMs adopting a platform approach provides mid-term and long-term visibility for the snowball effect. I think that's why with Pascal, we need to structure the way we report for the next five years, before more. In a way that reveals that in a more accurate way, which is not done today.
Good morning. It's John King from Bank of America. Just a couple of questions. Actually, a follow-up on the last point, just with the Toyota deal. Can you go into a little bit more detail as to what's changing there over and above them taking a new version? Is there any competitive displacement or new scope, or is it more a case of, I guess, the higher pricing that you would charge for the 3DEXPERIENCE applications? Perhaps just one question for Pascal on the cash flows. Obviously, been very, very impressive this year. Maybe just a couple of thoughts about what we can expect for the full year, because obviously it's running well ahead of net income right now. How sustainable is that, or should we expect some weakness in Q4 to compensate?
Thank you for the question about Toyota. It's not an update of software. It's not even necessary replacement of existing solution. It's a full transformation of the way the company is working. Many of those big players still have incredible legacy of software. I think for those of you who are following the banking, many banks are running infrastructure which are 40 years old. You have to know that with these big OEMs, the legacy for what they were calling the BOM management, those are very old systems. In the case of Toyota, without revealing too many secrets, we are replacing two gigantic database systems that are managing their data flow across the group and the plants. In fact, in our communication, we say Power BI, because it's to make sure that we express that it's not even the replacement of V5.
It's the expansion of the entire backbone in an area we have never been. By the way, none of the players have been. None of the players on the market today have been, except the old infrastructure from IBM and Oracle, but really what I call database-oriented systems, we are replacing all those systems. Most of the OEMs today are in that situation. It's a big footprint expansion. That footprint expansion is creating the very positive context for the adoption of the industry solutions in a second step. Same thing at Boeing. You remember it was called DCAC MRM, a strange name for something that was a huge legacy data environment for what their production systems that we are replacing. It's expanded footprint. We mentioned 40,000 users, but ultimately it's going to touch almost everyone in the company.
This is where we see the real labor. Of course, it's changed the rules for production systems. As you know, the manufacturing engineering at Toyota is very powerful. In fact, it's the core of Toyota. They are adopting that approach.
Okay.
Maybe I will add few words because I know that you want to move to do some modeling. It's 40,000 people we're going to have to equip over the next five years. The project is supposed to finish in year 2023. It's divided by slice equally, so it's per year, and it's EUR 1,000 per seat.
Okay.
It should be easy for you to compute the number. Coming back to the question on the cash. This is without counting, this is the Power BI only.
This is only the Power BI.
You must understand that this is not the replacement of CATIA or the replacement of the application for DELMIA or the replacement for SIMULIA and all those things which will come on top of that. We're talking about contracts that should be similar to the Boeing size, ultimately for different companies of that size. For the cash flow for the full year, again, if you look at the contributions, the levers, it's mainly coming from the net income. The net income with the guidance I gave to you should be able to compute it. We have some improvements from an organic standpoint. The DSO, you saw our DSO moving. It used to peak at exceeding 80 days, and now we are back to 77, if I remember well.
We expect to stabilize this a little bit because this, I would say, improvement of the DSO is coming from the fact that the recent acquisition, we are putting the disciplines and they didn't have this ability previously. Also there is something which you have to take into account. Depending the country, you have payment terms which are slightly different. The best being the German, for sure. The worst, the Chinese. The more growth you are coming from China and the less growth you are coming from Germany could slightly impact DSO. Yes, you could expect to have a trend which is similar.
We'll take one last question for the moment from the room, and then we'll take it from the call.
Yes. Thank you very much. It's James Goodman from Barclays. My first question was just around the clear optimism you have on the construction industry, actually. The way in which you described that is something of a fundamentally different approach to some of the vendors that we follow in that space. I was just curious whether you think that you have the full product set to address that market in the way in which you want to, whether there's sort of a disproportionate multi-year organic investment that needs to go into that, or whether there would be acquisitions considered in due course. Then the follow-up question just on the quarter is just the inclusion of Medidata. The number was slightly lower than what I anticipated for the quarter, particularly given phasing.
Maybe if you could just comment whether there's any conservatism baked into that or anything we should consider in terms of the final quarter from a Medidata perspective. Thank you.
You're right on the fact that the construction is going through a significant transition. It's a conservative sector. The showcase we have now, the touch points we are now are showing that our solutions are rather complete if you transform your process to leverage them. In concrete term, in the architecture we presented last time, we presented the Zadig showcase. The Arup showcase. There are other customer here. They are doing gigantic programs. In the case of Daxing, it's this new gigantic airport in China. It's not only about the shape of the airport, it's the entire flow on construction infrastructure. It is having an effect on the engineering, on procurement, on construction of those gigantic infrastructure and buildings, same as CRBC. What you saw is not a video just to represent this. All, every details of this infrastructure are done with our platform.
The solution can provide this kind of very significant outcome performance in cycle cost reduction on project management, like what we did with McDermott, by the way, on oil and gas, as long as you transform the business processes. I think the biggest slowing factor for market adoption is going to be related to the capacity for those players to transform themselves, which we don't plan to do me too from the past. We don't plan to buy all things, to be very explicit. In some ways, 30 years ago, the same exact thing happened in manufacturing. Boeing decided to do Boeing 777 with 3D Master, it was not drawing production, it was 3D Master. It went through BMW, it went through all the other actors outside aerospace. We want to replicate that.
Yes, there will be expansion, there will be investment that we will need to continue to do, but in the new way of doing business, not in the old way. Don't be concerned about any move acquiring legacy things in this area. It's more doing things which have not been done before. On Medidata. Rouven and I, Rouven is the CFO, the COO of Medidata. He's in the room, maybe you can ask the question directly to him. We took some cautiousness because when you are integrating two company, usually you are creating some defocus. We want to be sure that we will not be penalized that time. There is one indicator I could share with you because Medidata will not release the Q3 numbers.
The incremental annual contract value, which is really the key indicator for them, grew at 15% in Q3, which is a good sign of the quality of the business. It will be bad to start on a wrong ambience. We want the ambience to be positive going forward.
Thank you. It's Charles Brennan here from Credit Suisse. Can I just ask two clarifications around topics that already been discussed today? Firstly, it sounds like at the margin, there's been some switch from traditional license to subscription. Are you able to quantify that for us? Do we need to think about that when we start to do our modeling for 2020? I know you would typically want to aspire for 10% license growth, but do we need to think about that structural dynamic when we think about 2020? Secondly, you're signing up more and more of these large multi-year platform deals. I'm assuming that starts to give you, to Mo's point, an order book and some future license visibility.
Are you able to give us a sense of how much of your typical quarterly license is coming from in-quarter deals versus some of these multi-year deals that you may have signed in prior quarters? Thank you.
Okay. A lot of question in two. It's not an easy exercise to do, what you are asking, but we try to do it. Theoretically speaking, if you do the math, one point in YLC equal at least four to five points. Subscription, sorry, equals at least four to five points in new license. If you do the math. Okay. The more important, we try to modelize the acceleration of the YLC, of the subscription for this year and what is the equivalent of the new license, or what would have been the equivalent of the new license. We did this exercise. It's not pure. It has not been audited. Clearly take it as much more a way to understand the phenomenon. We are convinced that it's an equivalent of six point of new license.
In Q3 or year to date?
Year to date. No, year to date. Again, the difficulty is the growth from one quarter to another one, you should not count twice. We did the sum for the first nine months. Okay. The second question you ask, again, I understand it's difficult for you to do the modeling
You have no clue about the renewal dates. You don't know the size. You have no view on the incremental size of the subscriptions. The multi-years, with new IFRS constraint, we have put strict rules to the sales force. We do not want them. It's maybe good for one year, but you pay the full price the year after, because you recognize almost 2/3 the year of the signing. To avoid to be in these situations, we have put a very strict discipline with the salespeople. We say, "Guys, we want to have multi-years, but we want to be in a position to do it on a yearly basis, not to have to artificially infuse growth within a year and then pay the full price the year after.
Okay. We'll move to the call. Brian, do we have questions on the call? Brian? Operator?
Yes, sir. Your first question is from Julian Serafini from Jefferies.
Hi. Thank you for taking my question. Just one question on the deal slippage. I think, Pascal, you had mentioned putting in place some incentives to get deals closed by the start of November, it's a week away. Can you give more detail on what incentives are you talking about? Is this more commission to a sales representative? Is this discounting? Can you explain that a little more, please?
Oh, it's only commission.
Okay.
In fact, the rules, and Bernard can confirm, when the customer is not signing in a given quarter, we increase the price.
It's a reality. It's only commission.
Okay. Thank you.
Thank you. Your next question is from Nicolas David from ODDO BHF. Your line is open.
Yes. Hi. Good morning. Thank you for taking my question. Actually, I have two regarding profitability. Regarding your Q4 guidance, it implies a profitability which is down between 100 and 150 basis points, excluding Medidata. I understand that you have the subscription migration, which is not helping, but do you have something else also which is weighing on your margin guidance? My second question is a more structural one, also regarding profitability and the subscription ramp-up and the cloud ramp-up, actually. Could you share with us your profitability at gross margin level and your ability to lever on your cloud revenue? Is it more or less in line with what you can do in on-premise sales? Or should we expect a kind of dilution there? Thank you very much.
Okay. I will start with the second part of your question. The profitability is equal, whether it's on-premise or on the cloud. It's easy. The first question you asked me related to the profitability for Q4. In fact, you remember we were late in the hiring since the beginning of the year. In fact, after starting September and especially in Q3, we hire a lot of people, especially in research and development. The reason is because, during the summer you have all the internships, and it's a good way for us to test the new candidates, to select them. Usually, we are hiring them between September and October. In Q4, you have the full effect of this, and this is the reason.
Okay. Just a follow-up on the subscription cloud margin. Do you plan, like a lot of SaaS companies, to maybe capitalize some costs in order to smooth a little bit the potential impact of the delay of revenue on your profitability, like sales commission costs and so on?
We are not doing it. Clearly, I already answered to this question. By the way, it's one of the discussions we had with Medidata, because we would expense all the R&D costs day one. For the sales commissions, as far as we are concerned, Dassault Systèmes, we are not doing it. Medidata, they are doing it. We have to take into account the way we want to treat it for 2020.
Okay. Thank you very much.
Thank you. Your next question from Alex Duval from Deutsche Bank. Your line is open. You may ask your question.
Yeah. Hi, guys. Thanks for taking the question. Could you just, I don't know if you mentioned this, quantify the impact on licenses from Lockheed and Toyota in the quarter and kind of the cadence that you expect around license or whether those are majority subscription deals looking forward? Secondly, I see that the inorganic contribution this quarter to licenses was quite a lot less than last quarter, 3% this quarter versus 5% last quarter. I recall you saying that July is a very large month for Centric normally, and you have the impact from IQMS. Is there something that I'm missing there? Why has that contribution inorganic fallen so much in the third quarter? Thanks.
Okay. I will answer to the second questions. Remember the date when we acquired Centric? It's almost a year. Next quarter it will become organic. Okay, this is what we did. We did a pro rata temporis for the quarter, and this is the reason why the contributions of the external growth seems a little bit below. That's the reason. Now coming back to Toyota, I think I already answered the questions.
The question was for Lockheed Martin.
For Lockheed. Lockheed, it's a large deal. It's close to EUR 10 million license. It's a license deal, it's not a subscription deal, as well as for Toyota. You could expect to have the subscription part of these deals over the next few years. Again, the fact that Lockheed has decided to deploy the 3DEXPERIENCE platform means that obviously we have other opportunity with them.
Yeah, this is a very beginning. It's only on one secured program. They have a lot of programs.
Great. Thanks. Just to be clear, the license portion of those deals did fall in Q3, and it was around about EUR 20 million.
No, not at all.
Okay, when did it fall?
I already answered the question, so it's EUR 10 million in Q3.
Right. Just from Lockheed or from Lockheed and Toyota?
No, for Lockheed. Toyota, you have no revenue in Q3.
Okay, great. Thank you.
We'll take one last question from the call. After that.
Thank you. Your next question comes from the line of Stacy Pollard from JP Morgan. Your line is open. You may ask your question.
Hi. Thanks for taking the call. I've dropped out of the call a few times by accident. I hope this hasn't already been asked or answered. Just a quick one, maybe two, long-term opportunity in automotive, how well penetrated is 3DEXPERIENCE across the various OEMs and supply chain, and how much do you think you have to go? Second question, I think this was touched on a little bit. I ended up dropping off, just the question about margin evolution as we look at the shift from towards cloud and subscription versus license. How do we need to think about that in the coming years in terms of organic margin?
Thank you for the question. On the auto sector, I believe that the midterm, long-term is bigger than everything we have done from the past 30 years because the platform effect is all the new things we are doing are domains that we had not covered yet in the past. The Power BI for Toyota is a good example. It's a massive change in their infrastructure of legacy. On top of that, you have all the modernization of what could be simplified by saying the CATIA V5 portfolio going CATIA V6 portfolio on the platform, the 3DEXPERIENCE platform. The potential, in short, for the auto sector is very large. It's more dependent on the speed at which they transform their legacy environment. I think the Toyota decision, as the other that we have communicated, shows that they are not acting like in the banking sector using 40 years old software.
They are going through this new next-generation, platform-based infrastructure. You shouldn't be concerned about the potential. The valid question is about the speed, for the potential, it's there. Related to the EBIT margin moving forward, again, it's probably a little bit early to speak about 2020, you have to take into account the two mechanisms, including the dilutions coming from Medidata. At this stage, what I can say to you, we will not be below 30%.
I guess that's a start. Again, you talked about the percentage point difference in license one versus four to five sub versus license. Any way to quantify that around margins or maybe too early?
Remember, Stacy, the margin is the same, whether it's a subscriptions or a cloud or an on-premise.
Okay. Thanks for that.
We'll take a last question from the room. Michael.
Thank you, François. Michael Briest to UBS. Two from me, I'm afraid as well. Just firstly, on the subscription business. The guidance for Q4 for a business which is twice as large as license, you've got the same range, so it's 25%-28% versus 0%-5%. Just in terms of how you book the subscription revenues, it's not always ratable, is it? Sometimes you would book some of it, if you like, upfront, splitting the revenues between a recurring element and a sort of instantly recognized piece. Is that right?
Again, with the new accounting rules, you have to recognize upfront an equivalent of the license during the quarter when you do the renewal or the signing. It's neutral for the full year. There is no discrepancy, except if you sign multi-year contract and you commit your customers that I've been very explicit about it. The rules for the salespeople is fine to have multi-year contracts, but we do not want to have these accounting mechanisms whereby we're going to recognize 2/3 of the subscription within a year and then pay the price the two or three years after. The numbers are clean, Michael.
No, I wasn't suggesting they weren't, just to clarify the treatment. Bernard, just on the macro environment, obviously, where these deals slipped quite late in the quarter, it seemed to be in multiple sectors and countries. How do you feel about the world today and your sort of outlook into 2020? Not talking guidance terms, but what's going to drive an improvement, if you like, relative to what we saw in September?
As Pascal said, I think we have a very good visibility for the Q4. On the news flow about those deals and those decisions, I think we will create, but it is too early to speak about it, a quite good visibility for 2020. Yes, we see, like you, the news flow from the global economy about tension in different sectors and so on. The reality is, in the sectors that we have commented more specifically today, auto and aerospace, we want to simply share with you the fact that for us, we clearly see growth in 2020, and we are comfortable with the dynamic. That is why we insisted on those deals, because we do recognize your concerns from this sector news flow. This morning in interview, I mentioned that keep in mind that all those players, they have to redefine their portfolio for the next five years.
It's a lot of work, and they need new type of solutions, and they need to simplify their R&D development process. Vehicle architecture, mobility architecture are changing rather quickly. It's not just like doing a new model year, which we think is where we can help them in a big way. More to be discussed in early next year where we want to really set the new five years plan. You have already some inputs about it. I think mid-November, we will give you the specific program for healthcare and life science. Two weeks from now. With that, thank you very much. Thank you for all your participation. We are having fun, even though the economy is tough. Which is the most important thing in life.