Good morning, everyone. I'm François-José Bordonado, Dassault Systèmes 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' Q4 and Full Year 2018 Earnings Presentation, which is also being webcast.
At the end of the presentation, we'll take questions from the audience and from participants on the webcasted call. Later today, we will also hold a conference call. Dassault Systèmes' financial results are prepared in accordance with IFRS. In addition, we have provided supplemental, non-IFRS financial information. For an understanding of the differences between the two, 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 2017 document, "Références." Let me now introduce Bernard Charlès, President and Chief Executive Officer.
Good morning, everyone. I'm delighted to share this presentation with Pascal Daloz, to share with you, first of all, of course, our comments on the 2018. I know you know all the numbers by now, and you have read between the lines about the interpretation for 2019. In short, we are very pleased about 2018.
On many fronts, the organic growth, first of all the parameters that we committed to deliver are there. Second, the organic growth is also strong. Third, we did some moves last year related to acquisitions, which are very key to continue to expand our footprint. Last but not least, I believe that with 27,000 new enterprise clients, small and large, we continue to expand our footprint. That's my summary.
Of course, with the preview for 2019, we can have a long debate about the economy, but we plan to have 2019 with a similar profile to 2018. With that, let's go on the data that supports what I just said. The revenue is up 10%, the license revenue up 11% with EPS up 16%. You have the exchange rate here. I think the second thing that, because every year in February, we give you an update, I share with you an update on our strategy.
I think what is noticeable when I read some letters published by investors is, a long time ago, we formulated a very powerful purpose. It's at the core of what we do. I remember the eyes of people when we explained we're going to create a virtual universe that help harmonize product nature and life. The eyes were bubbling in 2012.
It was February 9th, 2012. I think we have put this in action in a serious way, and I think this is at the core of what Dassault Systèmes is and what we do. I will illustrate that, the purpose. The platform is taking shape with our software revenue up 24% for the 3DEXPERIENCE. As you know, it's our system of operation, and it is also our system for new business model with the marketplace.
Everything that Dassault Systèmes is doing for the future will be based on this platform. It is for most of the current large customer industry solution already there. Industry diversification, 11 industries, 61 segments. That industry diversification is also working, but we continue to work on three things. Geo diversification to reach the different countries around the world. Domain diversification expands from design, production, life cycle management.
Of course, industry diversification, which is to serve industries we were not serving before. Cloud is in good shape for us. We are probably one of the only platform on the planet to have a common platform between cloud and solution, what we call on-premise, installed at customer location, and it's the same platform. There is no much players doing that and none of our competitors. It's a very important factor for the future.
27,000 new clients, expanding with the addressable market, and we'll come back on these acquisitions that we did. Some are very specific talent on technology. Others are related to reaching new type of market like Centric Software, Centric PLM, as well as IQMS. Strategy update. You know now, simply said, what Dassault Systèmes is doing, we are creating the 3D digital twin experience of everything mankind produce.
Whether it's a car, a plane, a railway, a train, a computer, we want to create the full twin in the digital world that you can experience, simulate before you actually produce it. We are very serious about making this happen, and we want to do that for construction, too. I restate what I said last year, we will make this happen for construction territories and cities.
That's what is illustrated here, starting from 3D, we did the mock-up, which is a static view of things. The life cycle, you add time to it, aging of the system, and now the full experience. How will it work? What kind of service will be provided to consumers or customers? That's all here. Then the little illustration shows you the topics on which we do the showcase.
Mechanical parts at the beginning, an entire airplane in 1989, a manufacturing plant and car product families later on with Toyota, especially at that time. Now we say we're going to apply it to cities. We are not here for the next quarter. We are here for the long term. The purpose is very clear. February 9th, 2012, this is what was announced.
We have invested billions to make this happen, and we will continue to do so. When I say billions, it's billions. We invested EUR 1.2 billion in life science in order to reach that sphere, which is illustrated here. It's about creating this digital twin to really harmonize product maker online, because we need sustainable innovation. The world needs sustainable innovation.
On the last point, as part of what we call this equity system, is the fact that we believe that this virtual world help improve the real one, and we can prove it. Here is an example. There was another study last year that demonstrated that when Dassault Systèmes produced one ton of CO2 to run our business, through our clients, we save 10,000 tons.
It's called a handprint and footprint. Footprint, what we produce, unfortunately, and we need to continue to work to reduce that. The effect of what we deliver to clients is gigantic. That's why last year we were named the world number one most sustainable company. I think it fits very well with the purpose.
There are many other topic on that, but I believe that this is what makes people join Dassault Systèmes and why they stay, and they invent things that no one else has invented. A lot of things. The world of construction, I remember to have a question last year, and I gave a provocative answer when I said, "We have decided to change this market that is probably a slow market, construction, with very limited progress in the last 30 years." Very limited.
That's not truly acceptable. We are going to be active there. We have great customers, of course, with Gehry, for years, everything that Gehry is doing. We have also now the agency of Zaha Hadid doing amazing project. Listen carefully to the very short video, because I think it's a testimony which is very profound.
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Short, I think it's very profound, and it shows how we can improve the world, cities, infrastructures, life science, using digital twin to really establish solutions that have never been constructed or designed before. That's what Dassault Systèmes is about, and this is a good illustration of it. That's why I said we're going to change that sector. It's going to take time because they have to transform the way they do business. We believe we are the catalyst and the enabler to make this happen.
Jaipur city is another example. In incredible India, where it's so messy sometime, they are using the infrastructure, so innovative too, on the digital twin experience to improve the city. Those decisions are significant because they are not decision by one company. It's a state decision to use the platform to really improve, basically, the quality of the environment for people.
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Not the best.
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It's a very clear illustration that it goes far beyond 3D. It's about big data analytics, how the city, how people are living in the city, how they are moving the city, how energy waste is managed, connecting those dots together. If you have the possibility, try to influence Grand Paris, because maybe in 20 years, they will decide to do something. That's a local message.
The platform is built for. By the way, they are not doing any simulation. The platform is aimed at doing two things, being the system of operation for everything we develop, because then things can be connected. Being a platform to trade things. We call it the marketplace. Can someone produce something for me? How fast? At which cost? Online, one click away. That's what we are doing with the 3DEXPERIENCE platform. It's not a technical thing.
It's a new business model. Of course, we need to build not only solution, but partner network, who are going to be the producers on that platform, and that's what we have initiated. The news, I hope, is out for the Airbus announcement this morning. They were nice to publish this announcement together. We are pleased to see Airbus confirming the adoption of the 3DEXPERIENCE platform for all the airplane program.
It's more than a tool decision as Guillaume Faury is quoted in the press release. He's talking about a real group transformation for Airbus. Basically, he wants to use the platform as the catalyst and enabler for a new way to develop, produce, and life cycle maintain airplanes for its clients. It's a big program. It's another step. The 350 program was very successful program in creating a full digital twin.
It created the proof points that they could go further. We are very pleased with that decision. Of course, it's not only Airbus, it's the ecosystem. It's a first phase. Don't try to extrapolate as compared to previous gigantic contract that we signed 18 months ago with other players. It's a serious one and an important one. We're very pleased with that. Safran continues to adopt the platform.
This is for Nacelle. By the way, those things are very complex objects. Extremely complex, and they continue to adopt the platform for that. Safran is a very diversified group. They do landing gears and so on, and we are very well adopted inside the group for many disciplines. More importantly, I want to comment briefly the cloud dynamic.
It's not going to be so visible on the numbers from a revenue standpoint yet because it's a subscription, it takes time to build a snowball. What we measure is the number of users and also the data volume on our cloud. Here are a few, I think, impressive examples of what our cloud solution is doing.
Picture this, you have an iPad or a PC. You take one link, you click, and you have the power of software of the biggest companies in the world are using online without installing anything on your computer. ECCO, you will see a quick video in a few second. They are doing customized shoes using the cloud. McGrath. They are doing this kind of impressive facade buildings that you see here on the picture, everything on the cloud.
This Skyway company, a new company creating new type of mobility for cities. As you can see here, they are designing and producing using the cloud. Kärcher, well-known for many of you, I suspect. All their equipment now are designed, produced using the cloud system of Dassault Systèmes. Takemoto, you see those packaging here.
Quite sophisticated, there's a lot of science to do those packaging. It's not a minor job. They are also using our cloud solutions. EVelocity, that's an amazing company. They've started as a startup to build electrical autonomous vehicles in the Silicon Valley. They started with a team of 15 people. They are now several hundred. Everything is done on the cloud. The cloud is not for fun.
Those projects are real, we are doing projects and managing complexity of projects, which are similar to what clients have been doing, buying our software and installing them at their own location. The cloud approach is very essential to reach new type of clients, increase the speed at which the services are available, and I think it's an important factor for the long-term growth of Dassault Systèmes. Here is a quick illustration.
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Mass customization. All this is done with our AI platform that can do the interpretation of the data and create the 3D-printed structure of the shoe, all on the cloud. Naval Energies, this is a subsidiary of Naval Group. They are also creating those new energy system on sea. They are also using the platform. Why? Because when you're a startup, you have to have the capacity to get the best possible tools in an affordable way.
For them, using cloud is a way to do that. The acquisition of IQMS. This is something that might have been a surprise to you. This is ERP. This is manufacturing ERP. The ERP market was not up to now the Dassault Systèmes target. There are big players, you know them. Big players around the world. Why have we done this investment?
For a simple reason. We think that the small mid-size companies are underserved, that the current solution are too expensive for them, too complex, and we think we can fix that the same way we did fix the design world in the last 22 years with SOLIDWORKS, with a brand that is almost at a $1 billion brand today. Making ERP on digital continuity between design and production affordable for small, mid-size companies from both simplicity, cost, and speed of deployment.
That's our goal. We did the market analysis. It's about EUR 5 billion market. We think that only 15% of these customers are equipped, but more than that, they are not very satisfied. We are taking the challenge to take this company, create this integration, and do on the business management of those companies, what we did for design with SOLIDWORKS. That's the deal.
We're going to have fun doing that. Of course, it will come on the cloud too, at the proper time with the 3DEXPERIENCE platform. That's the why. Next week we have the 3DEXPERIENCE World in Dallas. There will be about 6,000 to 8,000 users, and we're going to explain how we plan to serve them in this way. I think we can simplify their life and make them more efficient.
That's what is going to be announced, a new category. Basically, if you have understood the power of CATIA for the world of large industry and the power of SOLIDWORKS to make design available to the small companies, we are going to replicate that for the platform on the ERP functionalities. IQMS will be rebranded as a part of the DELMIA, which is our brand for production. It will be called DELMIAWorks.
The platform that will serve those clients will be called the 3DEXPERIENCE Works, which is basically to make a clear statement that there's a category of solutions aimed at serving those clients in a simple way, affordable way, with the proper speed. It's consistent, and clarity is going to be an element, of course, of importance for customers to make their decisions. With that, Pascal, it's your turn to make some more precise comments about the numbers. Thank you very much.
Thank you, Bernard. As usual, I'm always pleased to be here with you, and I think we have good results to announce, so it's always a pleasure. Let's zoom on the business highlights. The key point I would like to address here is the organic growth. Behind the 11% growth on the license side, 9% is coming organically, and the vast majority of this organic growth has been driven by the 3DEXPERIENCE platform.
Here you have few data, I think, highlighting the tipping points. Point number 1, on a full year, the 3DEXPERIENCE platform represent 25% of the total software revenue, compared to 21% last year. The growth is 24% for the full year. More important, if you look at on the license side, which is the incremental growth, you notice that on a full year, the 3DEXPERIENCE platform represent 40% of the new license growing at 31%.
For the last quarter, it represent half of the new license are coming from this product line. When we highlight at the Capital Markets Day that the real economic cycle for us is much more of the adoption of our technology by our customers, this is a proof because when the adoption is starting, the organic growth automatically improve and increase. From a regional standpoint, the growth has been driven by Asia this quarter, with 19% growth, 16% for the full year. It's true in every region of this world, China, Japan, South Korea, AP South, and India.
It's true on not only on the license side, but also on the recurrent part, which is a concern because as you may know, it's a region of the world where the subscriptions and the maintenance and support is something we pay attention to be sure that we have the same rate than the others.
Europe is growing well, 12% growth for this quarter, 8% for the full year. Here the growth has been driven by the large projects related to 3DEXPERIENCE. Particularly true in France, but not only. It's also true in Germany and other countries in Europe. Americas, growing at 7% for the full year, 4% for this quarter. There is a mixed performance for this quarter.
We had good traction from the indirect channels and also from Latin America, North America has been penalized to a certain extent by modest performance on the direct sales, mainly due to some large deals slipping to Q1 and Q2. For the full year, 7% is still a good number. Moving to the brands, to the product lines.
ENOVIA is the star for this quarter with 33% growth, 84% growth for the license, a record for ENOVIA. This is proof that when the 3DEXPERIENCE platform is deploying and gaining traction, automatically the ENOVIA is also embarked into those deals, 14% for the full year. Those are really good numbers. SOLIDWORKS back to double-digit growth, 12% for this quarter, 10% for the full year.
Well-aligned with what I told you last quarter when I was telling you that in Q4, we had the base comparisons, Q4 will be back on track. I think this is important. Also, as you may know, SOLIDWORKS is the early indicator for us to understand what is going on in our sector because it's definitively the product line being sensitive to the economic conditions.
The fact that we are double-digit growth is also a good sign about the investments continuing in our domain. CATIA, 2% for this quarter, 4% for the full year. Keep in mind that last year, CATIA was growing at 10% for the Q4. We really have a base comparison. It's relatively aligned with our expectations. The other software, good growth for the full year, around 15%, 13% for this quarter.
The growth has been driven by DELMIA in the manufacturing space, specifically in aerospace and defense. The simulations domain at large, thanks also to the acquisition we did a year ago. The good news is also coming from Exalead and Netvibes. Why? Because we have now the proof that we can win significant deals with only selling the platform and the analytics, not having to sell CATIA or all the large authoring tools.
For example, we signed big deals in the U.S., related to aerospace and defense using Exalead and Netvibes as a way to dashboard the entire business. We also had good traction on the BIOVIA license in Q4, which is a good sign also. You remember, BIOVIA, since the acquisition, the growth on the license was relatively modest.
Now we see the investment we did paying off, this license sector is really dynamic for us at large. Zooming to the industry, eight of the 12 industries are growing double digits. The good point is all the core industries, namely automotive and transportation, aerospace and defense, industrial equipment, are also growing at double digits. It's not only the diversifications, it's all industry at large.
In terms of mix, we are at 32% of the total revenue coming from the diversification. It's relatively stable compared to last year, despite the acquisition we did, which are usually enlarging this, reinforcing this percentage. This is a sign that the core industry is really dynamic for us.
In terms of acquisitions, let's make a quick zoom, because not only in 2018 we delivered the organic growth and we are playing with all the growth drivers, but we are preparing the future. Bernard spoke briefly about it. With Centric PLM, you remember, we are reinforcing our PLM positions in the industry of the consumer goods and the apparel and fashion industry at large.
We did this acquisition in July last year. With IQMS, Bernard spoke about it, so we are enlarging the addressable market, and we closed the transaction in January the 3rd, to be precise. We did some very interesting acquisitions in the system design. This is key because as you may know, all the products are now connected, and the point is not anymore to develop the electronics or the embedded software inside the products, but also to design the way those products will interact between them.
This is what we call system of system. It's a completely new generation of solutions we are developing, and we did No Magic last year. I spoke about it. We did a small one, Argosim. We closed this acquisition early this year, and I will come back to give more details. Last but not least, we are also differentiating our solutions in the simulation space, specifically for the formulated industry, which is usually not the one where we are strong.
It's still a very unique market for us, but we are gaining a lot of traction with this acquisition, COSMOlogic, and we closed these acquisitions late December. Let's zoom, and I will give you some data. On IQMS, I do not want to come back to the profile of the company, Bernard did it. Keep in mind, EUR 56 million revenue in 2017. We closed the transactions on January the 3rd.
In the guidance for 2019, the revenue will be integrated. To simplify your life, I'm supposed to give you the number I put in the guidance. I put EUR 58 million, compared to $69 million due to the exchange rate. Clearly, keep in mind, this product line is growing at a little bit more than 10% per year.
We will accelerate, but for the first year, the time to put in place, we are stabilizing on the historical growth rate. This will have a dilutive impact on the operating margin around 30 basis points, and an estimated positive impact on the EPS of about EUR 0.02. The market opportunity is very large.
Bernard highlighted, you have more than 250,000 company to be equipped, and the penetration rate is still below than 15%. Clearly, it's really a large market. It's close to $5 billion, and I think it's an avenue for us to fulfill this need. Argosim, I spoke about it. You remember, on the picture, you have our system strategy. With CATIA, 10 years ago, we started to develop this mechatronics approach, and recently, five years ago, we started to develop what we call cyber-physical system.
It's really the way you connect against all the different equipments between them. An autonomous car, for example, this is definitively what you have to do, otherwise it will never work. This is introducing a new level of complexity in the way to design things. No Magic was really a way to do the modernizations. With Argosim, what we do, we are capable to validate the specifications. Why?
Because when you do design, usually you have a gap between the requirements and the tests. You have to wait almost the end before to test if you are fitting the requirements. With this new technology, it's a way to specify semantically, and we know how to run simulations and test it very early in the process and discover some inconsistency. For example, for under-specification or sometimes functional scope, which is missing. Small team, 12 employees based in Grenoble in France, but with very advanced technology.
EUR 1 million revenue for 2018, growing at 10%. COSMOlogic, again, it's a new acquisition we closed late December. This company is based in Germany. What they do, they have developed a chemical process simulations capability, and especially in the fluid phase. For all the industry mentioned on the charts, the chemical industry, the consumer goods, the pharmaceutical industry, the petrol chemistry, all those guys, when they use our solutions called Perfect Products or Designed to Cure, they are doing a lot of simulations.
This capability is unique because they have a very advanced computation method, and this is creating a huge differentiation at this level. Small company, again, EUR 2 million revenue, 16 employees, state-of-the-art in terms of technology. We continue to infuse these talents inside the organizations.
Moving to the financial highlights. I will be quick on this because you already have the numbers, I will really draw the attention on the organic growth. The organic growth for the revenue for this year, 7%, 10% for the Q4, relatively in line with what we were expecting. On the software side, 8% for the Q4, 7% for the full year.
Clearly, you see these accelerations coming. If I zoom, if I split the software between license and subscriptions, same things. On the license side, the revenue up 11% organically speaking in Q4 and 9% for the full year. On the recurrent part, 6% for Q4 and for year 2018. On the services side, you notice it in the press release, we had a good recovery in Q4.
You remember in Q1, Q2, we were relatively late in our services projects, and we catch up in Q4. We catch up on two fronts. We still have a very good growth on all the 3DEXPERIENCE services-related activities, which is a way to support all the large deployments we are doing. Also we had some good recovery with Quintiq.
You remember in Q3, I explained to you that Quintiq were a little bit late, they had a good growth, +24% on the services for Q4. It's a catch-up. You see automatically the impact on the gross margin because we are at 12.9% for the full year, a little bit better compared to last year, and significantly better in Q4 at 24.7%. Clearly, this situation is much better compared to what it has been on the first half of the year.
Operating margin, it's relatively easy. The organic performance is almost offsetting the dilution coming from the acquisitions. If you have 0.7% organic improvements, you have 0.8% coming from the dilution of the acquisitions, the currency is having 0.1%. On the EPS, good news, 24% for the quarter, 16% for the full year, EUR 3.11, compared to EUR 3.1, which was the guidance we gave. We are slightly better, if not a lot better.
The reason it's coming, on one hand, from the activities, which is a little bit better compared to what we were expecting, but also you have some tax benefits because I put the tax rate for the full year, 28.2%, it's 5 points less compared to last year. This is having almost a EUR 0.14 impact for the full year. The organic improvements is contributing to EUR 0.41.
The cash flow is growing accordingly to the EPS, almost 21%, EUR 890 million. You notice that the growth is coming from the good activities we have. We are closing with a net financial position of EUR 1.810 billion. Not too much to say on the operating cash flow. We had strong billing activities at the end of the year, it's well aligned with the balance up of 15%, excluding the currency effects for the trade accountable and the receivable.
On the annual revenue, the balance up 10%, relatively consistent with the growth of the recurrent part of 6%. In decrease in the income taxes payables, it's mainly due to the fact that we pay some 17 taxes in Q2 this year, we had a lower tax rate in the U.S. Coming to the financial objectives, a few things.
You remember, we are now completely implementing the IFRS 15, we will report in IFRS 15 for the full year, I will give my guidance for the full year in IFRS. Just a quick reminder for you, this is impacting only the ratable recognitions of the subscription revenue. Previously, we will recognize over the time, now we have to split between the rental fee, the license portion, the subscription portion.
We have to separate the two. There is no real impact on the full year, as you can see, because applying this method to 2018, it's only EUR 8 million difference. Very consistent with what I told you last year, EUR 11 million. The real net impact is in Q1, the reason is because this is really the quarter where we have a lot of renewal contracts.
This is the reason why you have +EUR 50 million additional revenue being recognized in Q1. The second impact is implementing the IFRS 16. Here, it's easy to understand. First, it's only related to the lease for the facilities for us. That's it. Previously, it was off the balance sheet, the only thing we had to do is to integrate the lease cost as an operating expense.
With the new method, what we have to do now is two things, to put the right of use as an asset on the balance sheet to put the future lease payment as a liability. You have the impacts being described here. Second point, the lease cost, we have to split between the operating expense and the financial aspects.
So you're going to see +EUR 11 million operating margin, and you will see a EUR -13 million financial results. The net is almost neutral. Okay? Coming back to the guidance, what are we expecting for this year? We are expecting a 10%-12% growth in license revenue, excluding the currency effects. A recurrent revenue growth up to 9%-10%. Services with revenue growth 14%.
An increase of the organic operating margin by 1.1% and excluding the currency effects and 80 basis points coming from the really organic improvement, and I will give you more detail afterwards. The tax rate at around 29%. As an exchange rate, we took those assumptions. So EUR 1.16 exchange rate with the U.S. dollar for Q1, and we are pretty well advanced in the quarter, so it's easy to do.
For the rest of the year, we took an assumption of EUR 1.20. We are stabilized JPY 130 for the yen for the rest of the year. For the full year, you can see 2019 almost in the same spirit, in the same dynamic than 2018. 9%-10% growth for the total revenue, 10%-11% if you exclude the currency effect.
If you split between software and license, you will see 10%-11% in software. If I zoom on the license, 10%-12%. The most important thing, I think, for you is the recurrent part. Because you remember when we signed the Boeing contract, we told you that in 2019, you're going to see the full effect. Here is one of the effects.
The organic growth of the recurrent part is improving by 1 points-2 points compared to 2018, and 2 points-3 points compared to 2017. This is a combination of the Boeing contracts playing the full for the year, and also the good subscriptions we have, thanks to the simulations. The growth for the operating margin, the operating margin will be at 32%-32.5%.
It's an improvement between 2.2%-2.6%. Again, the acquisition are still creating some dilutions, 0.7%, and we will offset by the organic improvement of 0.8%. You have the IFRS 16, the one I just explained to you, the fact that you have +EUR 11 million impact on the operating margin, and this is creating a 0.3% additional benefit.
On the EPS, EUR 3.35-EUR 3.40 range with a tax rate at 29%, which is almost a growth of between 7%-9%, 9%-11% if you exclude the currency effect. For the Q1, good dynamic, which is a proof that we are not drying the pipeline in Q4 to do the number. So we still have a good dynamic, and specifically, if you zoom on the license part, +15%-18%, so it's really the sign that the business dynamic is solid.
This is translated in a total software growth of 9%-12%, and an EPS to EUR 0.78-EUR 0.82. I think those 2019 objectives are well-aligned with what we told you at the Capital Markets Day in June last year. We are pretty confident we will be able to achieve our five-year plan. We communicate to you in 2014, so five years back, with A350. The guidance is at 340, we're still confident that things can improve within a year, we still have some acquisitions we can do.
The A350 is really achievable. It's a good start for the next five years plan, the one targeting EUR 6 in 2023. For one single reason, if you look at 2018 and 2019, all the growth drivers are in place. The industry part, the 3DEXPERIENCE part, the good dynamics on the mainstream market, those are the ones going to fulfill the growth to achieve our long-term growth. That's it for today. Bernard and I will be very pleased to take your questions. Thank you.
We'll start first with question from the room, then we'll go to the call.
Thank you. Good morning, Trigo Ramirez from Bryan, Garnier. I would like to come back on the guidance of operating margin organically, 0.8 percentage point, it looks to be that there is some seasonality between H1 maybe and H2 when we look at the total operating margin growth between Q1 and the full year. Could you just come back on maybe the productivity gains that you could generate on the sales force, or maybe some plans which could be delayed on the sales force?
Okay. The 0.8 is significant because we did a 0.7 in 2018. It's a sign that we are convinced that we are capable to improve the productivity on the sales side, not only, this productivity gain is coming from all the different functions, it's mainly due to the size, as simple as that.
Now, coming back specifically to your questions, you remember on the sales side, we have improved by two points the productivity for the last four years, I'm still expecting we are in the middle. I still believe that we still have 2.2 gains over the next five years. The main lever we have is coming from the size of the transactions. The more we sign 3DEXPERIENCE platform deals, the bigger are the transactions, this has a direct impact on the productivity for the sales.
Next question, please, from the room. If no question from the room, operator, John, can you ask questions?
Thank you. As a reminder for everyone on the phone, if you wish to ask a question, you can now press star one on your telephone keypad and wait for your name to be announced. Once again, for any question, please press star one from your telephone keypad. First question comes from the line of Michael Briest. Please ask your question. The line is open.
Good morning. A couple from me. Pascal, in terms of the acquisition contribution this year, you've highlighted the impact on recurring. Can you say how much software and total sales will benefit? Bernard, in terms of the Airbus news today, can you give some more color? Obviously, Boeing was something which you called out as impacting your financials going forward.
Does Airbus have the same magnitude? There doesn't seem to be any sort of numerical attachments that you've made to it. Finally for CATIA, it had a slow finish to 2018. What is the outlook for 2019 there? What proportion of the installed base is now on 3DEXPERIENCE or V6 with CATIA? Thank you.
Okay. I'm going to take the first one related to the acquisitions. You almost have all the numbers in the presentations. Again, to simplify your life, you remember No Magic, EUR 12 million growing at 10%. It's easy for you to compute the number. Argosim, COSMOlogic, EUR 1 million for Argosim, EUR 2 million for COSMOlogic, also growing at slightly better than 10%. IQMS, I gave the numbers. EUR 58 million for 2019.
The remaining part is Centric Software. Centric, when we did the acquisitions, they were doing $61 million. They are growing at 35%. The reason why it's a little bit less compared to what they did previously, it's because they are transitioning their license model to a subscription base. This has an impact on the top line, but clearly, it's a good dynamic. With this, you will be able to compute the number and put the right things into the guidance.
That's a lot of detail, maybe too much. At the end, we want to deliver what we said for the full year, and that's it, and make the purpose a reality. Airbus, please don't do computation as compared to previous contracts, because we are in a different phase of development of the cooperation with Airbus.
To be explicit, we did a great program with them, as you know, with the A350, making the digital reference for the Airbus A350 extremely successful for them. As Guillaume Faury mentioned in the press release in a very precise way, he sees that decision of the 3DEXPERIENCE platform as the catalyst and enabler for a deep transformation of the Airbus Group. The decision is group-wide, not only civil.
By the way, it was already announced in the cooperation of military program that the decision for the 3DEXPERIENCE platform was taken between France and Germany, between Dassault Aviation and Airbus. It's group-wide.
However, the reason why it's not 10 years or more like the contract you are referring to, is because we are in a phase where we are introducing the next generation after CATIA V5, basically, which is called 3DEXPERIENCE, and we are implementing it as a delta improvement of existing programs, NEO programs, production and so on.
This three to five years contract are there to reorganize and transform, so that the evolution of it is to make sure all future programs are done that way. That's it. It's, therefore, a very important decision. The scale of the contract is more multiple tens of millions of euro, not a scale of billion euro, yet. It will come.
The last question is related to CATIA. For year 2019, we expect CATIA to be between 5%-6% growth for the full year. Related to the 3DEXPERIENCE penetrations inside the CATIA install base, we are exceeding the 20%.
Okay, thank you. Was Airbus a contributor to the strength in Western Europe in Q4, or is it more of a 2019 event?
I can answer to this one if you want, Bernard. There is a piece in Q4, and it's reflected in the ENOVIA number. You will not explain the record performance of ENOVIA just only due to Airbus. We have plenty of different contracts, but there is a piece of Airbus being reflected into this number. Coming back to your questions, you could expect to have contribution in 2019 and 2020.
Understood. Thank you.
Next question, please.
Thank you. Next question comes from the line of Stacy Pollard. Please ask your question. The line is open.
Hi, thank you. A few questions from me as well. Can you talk more about the 3DEXPERIENCE pipeline? I know you spoke about some things maybe bumping into Q1. In terms of large deals, though, where are the industries that really you're seeing the highest demand? Maybe a comment on Toyota, if you can.
Then, kind of that bigger picture view, what penetration have you had of the installed base, as kind of following up on Michael's question, or even penetration of your total opportunity? How do you think of it that way? Second question would be just, hopefully a shorter one, is the services growth a bounce off of the 3DEXPERIENCE? Is that a short-term effect, or is that kind of double-digit growth that could last for several more years?
Thank you, Stacy. The 3DEXPERIENCE platform is now for new sectors or new customers. It's a systematic decision for 3DEXPERIENCE platform. When we expand, diversify, reach new clients, it's the 3DEXPERIENCE platform. Of course, there is a huge install base, which is highly diversified. You have an install base where they are using the 3DEXPERIENCE platform to integrate their legacy.
We call it POWER'BY, which is really to connect multiple CAD to one platform, and then also things like simulation. That dynamic is very well appreciated by clients to prepare the simplification of their environment. Basically, the third lever. First lever is new markets, new clients. Second lever, POWER'BY, how you prepare the simplification of your environment using the 3DEXPERIENCE platform.
The third is to use the platform to do things we have never done before, big data analytics, or a new type of approach for digitalization of production. You see in the dynamic of new license of the 3DEXPERIENCE platform, all those levers are playing. There is one that I hope we are going to be able to make it much more visible in the 3DEXPERIENCE platform, and of course, cloud, I mentioned that clearly in the presentation, is the adoption of 3DEXPERIENCE platform for the small, mid-size companies using the cloud.
There is a lot of new product portfolio coming in 2019 to connect SOLIDWORKS with the 3DEXPERIENCE platform to provide web browser-based design tools. You take a mobile phone, pad, zero download, and you can design online. Those are coming this year. In fact, it's going to be the main program for next week at 3DEXPERIENCE World. The question should not be, is the 3DEXPERIENCE platform replacing V5? It is.
The 3DEXPERIENCE platform is changing the game for clients to transform big way, the way they digitalize their enterprise. That's the focus we have. To make those companies platform-based companies. It means like for Amazon, if you look at Amazon, they're platform-based, everything is one platform, all services, one platform. We're doing the same with clients.
You asked the question about Toyota. It's going in the right direction. We're enjoying the partnership with them. I cannot quantify anything, but they love us, and we love them. Let's put it this way. The plan in the good direction. We also mentioned a lot of wins of competitors, clients who are now moving to 3DEXPERIENCE. A long list.
If you take the quarters, the past quarters announcement in the last eight quarters, it's hundreds of companies migrating from our competitors' landscape to Dassault Systèmes for one reason, the platform. It's the future, the question is not now, is it an add-on? Everything we sell, everything we do. Everything we do going forward is one platform, cloud on-premise for the future.
To answer to your question related to the penetrations of the install base. I gave the number of 25% of the total software revenue coming from 3DEXPERIENCE platform. It's a good indicator. To give you some perspective, when we announced last year the next five years plan, the one reaching EUR 6 in 2023.
As an underlying assumptions, we have 66% of the total install base being equipped with 3DEXPERIENCE platform. In term of dynamics, 40% of the license are coming in 2018 from 3DEXPERIENCE platform. Same mechanisms. You have to assume that more than 50% for the next few years will come from 3DEXPERIENCE platform.
Comment on services?
Yeah, the service, Pascal mentioned it, Stacy. We are learning how to improve the speed at which we can deploy our solutions with customers because of the maturity, the completeness of what we call industry solution. I think that has a direct effect, and we think that it will continue to play a good role there. However, I must mention that our priority is to continue to develop our relationship with system integrators because we want them involved.
Some of the implementations are so large, we need them. Good examples are visible today, what we are doing for the nuclear full ecosystem integration with Framatome, or what we're doing at WiG with Accenture. I could take many other examples around the globe where we are promoting the idea of the cooperation with those partners, and I think this is important to speed up the capacity to scale.
Great. Thanks for that.
Next question, please.
Thank you. Next question comes from the line of Adam Wood. Please ask your question, the line is open.
Hi, good morning, Bernard. Good morning, Pascal. Thanks for taking the questions. I've got a few, if I could, please. First of all, on the guidance, a quick back of the envelope suggests that you're guiding to about 4 points of revenue contribution from acquisitions in 2019, which, if I take from the revenue growth, probably gets us to around a 6%-7% organic growth in revenues in total.
If I remember correctly, you were suggesting that the large deals might be able to add 2 points of growth to 2019. That just still feels a little bit slower than what we had in 2018, if we adjust for that. Is there an element of caution in there that you're maybe a little bit more cautious in terms of how quickly those deals ramp up?
Is there a little bit of caution on the macro, or am I wrong on the M&A contribution? If you could just help us on the guidance, first of all, that would be great. Secondly, on Airbus. Given you've now got Boeing and Airbus here, could you help us understand what the benefit could be on the supply chain side of things? Maybe help us what the big delta is between Airbus and Boeing.
Is it maybe adoption on the manufacturing side will be the change? Finally, you mentioned selling the platform just for dashboarding analytics, so really a kind of big data dashboard. Could you talk a little bit about who the competitors are in that space? Is it the usual SAP, Oracle, IBM competitors, more modern Silicon Valley players? What's the big differentiation for you selling there against those players? Thank you.
Can I start from the last one? Yes, please. I think analytics for everything we do as we do the digital experience twin, is our job. I think what a player like Palantir is doing with our clients is temporary and will be legacy soon. We don't plan to leave this market open to anyone else, we plan to use the platform effect to provide all the analytics tools because they are already there.
The reason why some of companies have been using those legacy environment, those third-party solution, is because things were not integrated. When things are integrated, the platform is the place where you do all the, what we call, information intelligence. We are very focused to make sure that this provides great value to clients.
I have a good example with what we do with Dassault Aviation, with Gulfstream or with Safran, for example, concrete example. You take the flying data and we look at the health of engines, or we look at buying profile of parts and we optimize the entire buying process for supplying parts. There are many examples which are in operation today. We don't talk too much about it because we have so many topics to cover.
Adam, we are very serious about making sure that this is part of the services of the platform. On the previous question related to Airbus, I don't want to mention the other name because I want to make Airbus the visible partner today for the announcement, it's a duopoly, almost, this world. I will say simply, each of them have their own plan.
Incredible renaissance of the industry infrastructure, incredible new possibilities that they are both. You will understand that we don't want to talk too much. We have a track record over 35 years to have done very specific things with very specific clients. A lot of secret projects which have been very successful, which are making them differentiated in their offer.
I don't want to even your question, Adam, and I understood it, believe me, about the touch point on production rate, and how they will deliver the backlog. We are there everywhere, serving the objectives. That's the best I can say on this point. I forgot one question about the pipeline with Stacy. The pipeline is good. Next question. Adam, your computation on the guidance for the license is right. This is a good number.
Having said that, we are almost in the same position that we have been in 2018. Good start of the year, but relatively back-loaded also, especially for the last transactions. This is the reason why I want to follow the same path Thibault did, which is it's much better to come back to you and express that we are beating the expectation rather than to explain that we are missing.
I think some cautiousness is. So far, you're doing well. Transition was good. Yeah. This is the reasons. Again, if you step back a little bit, this year is more secure because we have this organic growth on the recurrent part. To a certain extent, we do not have macro signs specifically impacting us right now, just to be sure that we will not be impacted anyway, this is the reason why we took this guidance.
Perfect. Thank you very much.
Next question, please.
Thank you. Next question comes from the line of Charles Brennan. Please ask your question, the line is open.
Charlie, are you there? Okay, we go to next question, please. Operator.
Okay, next question comes from the line of Deepshikha Agarwal. Please ask your question. The line is open.
Hi all. This is Deepshikha Agarwal from Goldman Sachs. A few questions from my end. To what extent is PLM now going more mainstream and now not viewed as discretionary anymore, and thus is decoupled from macro? Further, are corporates now accelerating their standardization around single end-to-end integrated platforms like yours?
Thus, how big is the land grab opportunity over the next few years? Further, on the Airbus deal, how big a validator is this deal in terms of Dassault replacing other incumbent PLM players, so that's opening additional opportunities for you?
Maybe on the mainstream question. If you look at what we did in the last 20 years with the design world of mainstream, namely SOLIDWORKS, I think we have created a new standard. It was a high value for many of those professionals. You remember, 20 years ago, those guys were doing drawing systems. We have created an industry work standard, which is of real value for many of those companies.
We want to expand by integrating the business aspect and the collaborative aspect needed by those companies in the mainstream market. It's a lot of companies. You remember over 27,000 new enterprise clients, some are small, some are big, in just one year. We think that's a very important footprint for the future. The attention we have now is to add to design, simulation, manufacturing on business applications, IQMS, for ERP manufacturing companies in the mainstream.
This segment, we believe it's important because it's not well served, and there is a lot of value to bring. The second, those players are important in the supply chain. Our large customer value our action with those players because it becomes a consistent digital thread for collaboration.
The third is there are sectors like construction, like life science equipment, personalized equipment, where a lot of innovation is coming from those small, mid-size companies, not from the big ones. On the cloud, on the mainstream solution, therefore, for all those reasons, it's an exciting market that we do want to serve and serve well.
There's a lot of innovation going on every aspect, energy systems, even mobility now and others. Never seen before, by the way. We want to be there. That's the dynamic that we have on why we did the move. I think they are not risky moves. We need to do it well, like what we did with the SOLIDWORKS experience, quality, speed, and affordable for those companies. It's a good play from that standpoint.
Airbus, the question was related to which system are we replacing, I guess. We are replacing the one being developed by our Boston friends. Definitively, this will be standardized on 3DEXPERIENCE platform and ENOVIA, CATIA, all the product suite from the Dassault Systèmes.
I don't know. Is that okay for you?
Yeah, it was basically how do you see it going forward? As in, does it open additional opportunities going forward for you, like the Airbus deal win? In terms of the competitive environment, how do you see there?
We are a game-changer player. When customers select us and replace their legacy, it's because we are changing the game. We have done in aerospace, we have done in automotive. We have won almost all electrical automobile car companies in the world, all startups. It's not all but one, all of them. All those startups are not big, but we are there, everywhere with the 3DEXPERIENCE platform.
On the Silicon Valley, we are everywhere. We are game changer. We want to be game changer in industry, in energy, because I don't care about replacing legacy. I care about doing sustainable innovation for all industry we serve. This is what is happening. You cannot have a purpose that is a paper thing and not act accordingly. We act accordingly, and that's what makes us different from most of the players, if not all of them.
In life science, same thing is happening. That makes our job fun every day. It's important to have it relevant, useful, and creating sustainable innovation that has not been done before. We are not going through industry digitization. Forget this idea. It's a renaissance of the industry. If we don't do it in Europe, China will do it, because they are there already. They are building railways, energy system with full digital twin already.
This is not a minor thing of just selling software. It's transforming the way the world produce service and products for citizens and people. It's not less than that. This is Dassault Systèmes. This is why having a family-controlled owner is essential. We're not subject to takeover, and we have a plan. This is what we are executing. I mentioned that last year, you see new leaders in Dassault Systèmes coming.
Pascal Daloz, new generation. Florence Verzelen, new generation. We are building up the team for the next 20, 30 years. That's the definition of our company. It needs to be understood because this is what is inside the numbers, the long-term view of what we do. I think it's differentiating ourself, and this is why big companies are trusting us. There are companies now coming to us and saying, "We don't do benchmark.
We are going to select you." It's hard to put it in place because we have to transform them. They tell us, "We trust you." Look at carefully what Guillaume Faury said in his press release. Don't look at the number. There is a declaration of trust. My future company, Airbus Group, is going to be transformed, thanks to the platform. That's the game plan. It's more than just pushing pieces of software.
We'll take one last question.
Thank you.
Pool.
We have one question left. It comes from the line of Mr. John King. Please ask your question. The line is open.
Hey, good morning. Thanks for taking the questions. Two quick ones. Pascal, I think following up on Adam's point around the guidance for the full year, I haven't done the numbers, but I'm guessing it would encompass a not particularly strong growth in services, which somewhat surprises me given the ramp that you're obviously doing with Boeing. Is that further weakness potentially on the other side of the services, on the 3DEXPERIENCE side?
Perhaps I've got the numbers wrong. Another clarification. I think you called out China as being strong in Q4, but obviously CATIA was relatively weak. I think you've said in the past that a lot of the Chinese demand comes through the CATIA line. Perhaps just an explanation of perhaps what they're buying in Q4. Thank you.
On the services side, I gave the number. For the guidance, it's 14% for the full year. It's taking into account a slight recovery for 3DEXCITE. I think it's going better, not much better, but better. This market is still tough. The reason is because you remember, we are transitioning a services business into a software business.
I think the core value of what we do is not anymore to have a bunch of people working like an agency. It's to have more and more all the tools and the contents being ready to be repurposed on a web, on a mobile, on a configuration engine, in a shop. This is what 3DEXCITE is about. We did a lot of R&D investment for the last few years. Now we have the product on the market.
We see the traction on the software, and we progressively are rebalancing the services activity into the software. This is what we do. China, I think, no, the perspective for China is still good. I did not mention, but we signed a lot of large deal across the world, but China was definitively a dynamic region of the world, including for the large deal, and we will continue with great opportunity to improve compliance sales. Thank you very much. I think it's the last question, or?
Yes, there is a last question from the room.
The very last.
From Eric Markland.
Very last question.
Yeah.
Thank you for taking my question. Pascal, you mentioned at the last Capital Markets Day, 50 basis point margin increase on an organic basis. You did better in 2018. You still shoot for better in 2019. How do you explain this upside compared to what you saw a few months ago?
For the Capital Markets Day, I have to give a perspective for the next five years. I did an average. I think the discipline which consists to offset the dilutions coming from the acquisition with an organic improvement, I think is a good one, and you can count on me to continue to do it this way.
With that, thank you very much for participating to this event. Of course, we put a lot of comments on the strategy because it's the full year review. The next quarters will be much shorter on the numbers, but I think keep in mind, investors who are investing in Dassault Systèmes, they need to look at the raison d'être, the purpose of the company also, not only the numbers. Thank you very much, and have a good day.
Thank you. That does conclude our conference for the day. You may all disconnect. Thank you.