You for standing by. Welcome to the Dassault System Third Quarter 2018 Financial Results Call. At this time, all participants are in a listen only mode. A short overview will I must advise you that this conference is being recorded today. And I would now like to hand the conference over to French Guajase Bordonaro, Vice President, Investor Relations.
Thank you. Please go ahead.
Thank you Andrea. Thank you for joining us on our quarterly earnings conference call with Bernard Aleste, our Vice Chairman and CEO and Pascal Daloz, Executive VP, CFO and Corporate Strategy Officer. Some brief reminders. Vessel Systems financial results are prepared in accordance with IFRS. During 2018, the first Europe implementation of IFRS 15, we are providing IFRS financial information on those on IFRS 15 and IAS
18 basic. All figures
and comparisons on this call are presented under IAS18 and are on a non IFRS basis with revenue growth figures in constant currencies unless otherwise noted. We have provided supplemental IFRS 15 and IS18 non IFRS financial information and reconciliation between IFRS and non IFRS schedules in our earnings press release. Some of our comments on this call will contain forward looking statements that could differ materially from actual results. Please refer to today's press release and to the risk factors section of our 2017 Docuemain Le Ferrance, The copy of this morning's webcasted presentation is available on our website, and this prepared remark will be on our website shortly after the call. Perna, before we use.
Thank you all for joining us today. To begin, to begin, let me share my perspective on our progress through the 1st 9 months. We have delivered a solid year to date performance on a strong first half combined with the 3rd quarter well in line with our financial objectives. For the 1st 9 months, total revenue, software, licenses, and recurring revenue all have a common growth figure up 9% excluding exchange rate impact. We are building a sustainable growth driver of our mid term with our 3DEXPERIENCE platform on industry solution experiences.
On a year to date basis, our 3DEXPERIENCE software revenue grew 19% at constant terms. A major component of extending our reach on market leadership is through geography diversification. High growth countries software revenue increased 18% year to date On Delek presented 18% of total software revenue. We saw strong growth across many countries and the result on the results also strengthen our market position in the different industries we address. Looking at our performance by industry, our year to date software revenue increased double digit in constant currencies in 7 of our 12 industries with Transportation And Mobility, Energy, He processed on utilities, consumer goods, on retail, consumer packaged goods on retail, Marine And Offshore Natural Resources And Architecture Engineering And Construction.
Finally, with our firming our growth objective for 2018 targeting a total revenue growth of 9% to 10% at constant currency on double digit earnings per share growth, As we have discussed, we see a global industry shift, we call it the industry renaissance. Companies across all industries are inventing themselves to provide new categories of experiences, revealing new categories of customers. This long term trend is going to accelerate with the platform producing new experiences requires excellent in operation on high added value ecosystem With the 3DEXPERIENCE platform, we provide an operating system for customers to power industry solutions Our new business model for customers to cover their value network basically the shift between supply chain to value network. Moreover, the 3dextern platform under cloud enablers company to very quickly launch and create full digital continuity from day 1. As we see both in our commercial business and in our 3DEXPERIENCE Lab, our accelerator for startups.
Treed external lab is really, access to a footprint. In the world of the makers. In that regard, last quarter, I discussed our 3DEXPERIENCE Innovation Centers, which are part of the global effort by countries focused on industry and workforce of the future. In our sector in Wichita in the United States, we are helping clients innovate in a new experiences adopting new technologies, exploring how to streamline tools, methods and processes in a very short period of time, songs to the experimentation that they undertake at the center where they can basically do everything. Across the lifecycle.
To a greater industry positioning at large, our 3DEXPERIENCE Center in Beijing is helping companies to the workforce of the future to address new challenges. Today, I would like to discuss a second major initiative which is our 3DEXPERIENCE Lab, giving us a footprint in the world of the makers. We want to create an environment that will effectively In our presentation this morning, we highlighted a range of projects underway among them are 0 to infinity, creating a small satellite launcher as well as LICA a multi sensory robot for children with a special needs. I encourage you to look at this amazing example. Our U.
S. Sablabs was set up in collaboration with MIT's Center for PIX on atoms. And continues for MIT, the world benchmark. We were pleased that Professor Neil Grenfeld, Director of MIT Center for Vitzman Adams and the founder on key influencer on the Global FabLab Movement spoke at the grand opening Our 3DEXPERIENCE fab lab in Boston is connected to over 1800 major spaces worldwide through the fab foundation. We opened our 1st fab lab in Europe several years ago.
We provide those maker spaces with solidworks and more recently, we added X Design, the new generation of solidworks products to a browser based on 3DEXPERIENCE platform as well as the 3DEXPERIENCE services in particular the social collaboration services The grouping the millions of SOLIDWORK users in the world on older marketplace services are also connected to that same platform. So from our client to the meeker's world, there is a seismic shift underway. This is why we see a significant runway and opportunity for Dassault System, We believe industries are prioritizing investments around transformation that will drive significant innovation over the next 5 years In other words, these investments are indeed time sensitive. In all sectors that we serve, whether transportation and mobility, aerospace and defense, or even energy process and utilities, we observe our radical transformation of the offers. All businesses are putting the next generation portfolios at the top of their agenda.
In our largest industry, transportation and mobility, there are significant investments being made. With over 100 new startups around the in research on the platform to address the technological challenges with electrical vehicle on in autonomous driving where virtual simulation will be required will be mandatory for driving certification at the rest of Paris Motor show, which is the biggest in the world, companies share their expectations to have an important portion of the lead to be electrical vehicle within the next 5 years on safety acting as an accelerator for introducing higher levels of assisted driving features. So safety, pollution and traffic are key areas where innovation and resources are being focused. In energy, process and utility companies are making significant investment in 2 principal areas. In Capital Facilities Lifecycle Management, amid Advanced Materials Life Science Management.
Life title management. Last quarter, we discussed, EDF and also ExxonMobil, EP EPU represents another major industry undergoing transformation. We see that clients adopting our the experience platform are also using it to enable them to become platform companies in the way they deliver product and solutions. In 2017, we announced that Bureau Veritas a world leader in laboratory testing, inspection and certification services that had adopted our 3DEXPERIENCE platform for Marine And Offshore. Today, is now using the 3DEXPERIENCE platform for the nuclear industry as environmental and safety related regulations in the nuclear industry increasing number on complexity.
Bureau Directas needed to improve its efficiency. When interacting with manufacturers for the device certification. It adopted an integrated approach with our strategic platform as the foundation for its compliance activities connecting its entire ecosystem. 1 of Bureau Veritas client Framatome is adopting the 3DEXPERIENCE platform on Innovia and CATIA application roles and portfolio to manage complexity on risks. Enable long term traceability and transform the way they collaborate with Bureau Veritas through the certification process.
In the population industry, the role of platforms also create crucial to support research on development. With one lab industry solution experience on our science cloud infrastructure. We integrate deeper resources, processes, data on India basis for improved efficiency and collaboration. Evonik, one of the world's leading specialty chemicals in this company, is adopting the 1 lab industry solution for on Biovia to increase speed and collaboration and simplify reserves avoiding unnecessary experiments on improving productivity for scientists to capture, retain, search and reduce result, basically the knowledge and know how. Moving to consumer goods, we see a similar opportunity the industry is being appended in a significant manner.
Today, PLM is a critical software to manage their can be set process complexity in apparel for design for goods, leveraging our portfolio in design, simulation and manufacturing and in the retail to provide white glove services everyone is looking for today. New up on store trends, for example, same day delivery or having the store do the shopping for you with the same day pickup. These are among 3 key trends that are driving the adoption of Centric PLM on why we acquired a majority interest early this year. We see some trick PLM establishing itself as the mainstream market leader similar to what solid works are done in design. Our goal is to help support centric software mission to accelerate the digital transformation of the fashion retail and consumer sector.
I'm pleased to report that something PLM SB is building on the momentum in the market and continues to expand its footprint in various geographies, in particular in China, across segments
I. E, fashion,
outdoor, footwear, eyewear, and even retail. As well as a long term on tire supply chain. With that in mind, let me now turn the call to Mastercard.
Thank you, Bernard. Hello, and thanks to all of you for joining us today. With our 3rd quarter well aligned with our financial objectives, We have delivered a solid year to date performance, demonstrated improving breadth with total revenue up 9% software revenue up 9% and new licenses up 9% and recurring software up 9%. And earnings per share were up 12% or 19% excluding currency headwinds year to date. Moving to our business review, let me begin with 3DEXPERIENCE.
On a year to date basis, our 3DEXPERIENCE software revenue grew 19% at constant currency. It represented about 22 percent of the related sales year to date compared to about 20% in the same period in Marine And Offshore, Aerospace And Defense Consumer Packaged Goods Retail And In Transportation And Mobility. Let me zoom in some of the specific examples of why companies are adopting our 3DEXPERIENCE platform and industry solution experiences. First up is GE Aviation Angle, a subsidiary of GE Aviation that focuses on able structures and its headquarters in the UK. They will use a 3DEXPERIENCE platform from design to manufacturing to develop next generation aerostructure.
The main objective is to integrate the value stream from design to manufacturing through simulation in order to provide digital continuity for the entire year of product development The strong value in the control of engineering activities and deliverables through project management This represents a key win in the supply chain of the aerostructure where suppliers are moving toward digital continuity from a design to manufacturing. GE Aviation Hamburg is a supplier to Airbus And Boeing. Our second example is in the high-tech sector where our largest segment is with Semiconductor Companies. While we are not present in the design of the chips, We are the largest providers in the management of the semiconductor companies intellectual property. Nextperia headquarters in Netherlands is a global leader in discrete logic devices.
And in deepened and in sorry, an independent company since year 2017, next period focus remain on efficiency producing consistently reliable semiconductor components at a high volume around 1,000,000,000 annually. They are adopting the 3DEXPERIENCE platform with our high performance semiconductor industry solutions to improve the product quality, achieving 0 defects and in terms improve their bottom line. The final example takes us to Asia to a value solutions channel customers, Takimoto, the packaging company's savings, company in the CPG Industry. They are adopting our perfect package mid market industry solution on the cloud, with more than 3000 different types of glass and plastic packaging, containers. Takimoto business objectives are to improve global collaboration, increase its agility to produce and deliver product efficiently in small and large lots of sizes and drive innovation and cost performance.
Now let's move to 8% in Q3, 9% year to date. From a growth perspective, Latin America has seen sharply improving new results We have put in place a strong teams and they are making good headway. Quarter was led by CATIA, DELMIA and Biovia. Overall, in North America, our results are solid to date and we are also benefiting from the addition of acquisition. In Europe, software revenue increased 8% in the quarter, and 7% for the 1st 9 months.
Activities in Europe was led by North And South of Europe 2 areas, including an increasingly important part of the European dynamics. Demonstrating our geo diversification in a very meaningful way. We also saw strong growth in Russia, Innovia, DELIA and Quintiq all had an active quarter in Europe with large deals. Asia continued to be the best performing regions in year 2018 with software revenue up 13% in Q3, and 14% year to date, while China and India led the quarter for the 1st 9 months in total, we benefited from a broad based growth. Moving in our plants, CATIA has continued to have a good dynamic with 3 quarter consecutive of double digit license revenue growth.
Its new acquisitions No Magic also contributed to this growth, but on an organic basis, Catalya Sands revenue were up double digits. In the third quarter, this was driven by our direct sales channel, while on a year to date basis, our value solution channel took the lead. With a good growth across all the three regions. Catcher software revenue was higher by 7% in 3 6% year to date. As we shared with you last quarter, solid worst Q3 presented a very high base of comparison last year, which explained its software revenue growth of 4% in Q3, year 2018.
For the year, in total, we expect SOLIDWORKS to deliver a strong performance as you can see It's in a year to date software revenue growth of 9%. Innovia software revenue increased 5% in Q3 and 7% year to date. 3DEXPERIENCE sales represented over 70% of Innovia licensed software through the 1st 9 months, driving its license revenue up double digit. Other software increased 18% in a third quarter 15% year to date. DELMIA and Quintiq were the strongest performers in the quarter and we saw improving results at Biodia.
Year to date growth was led by single year as well as DELMIA. Our recent acquisitions are performing well, including Exane with power flow in fluid stimulation and centric payments for apparel. Zooming in on our software, our license and other software revenue increased 7% in the quarter, and with a high comparison base, the organic growth was 4%. We had notably strong results for CATIA, DELMIA Quintiq and Biovia, all delivering a double digit licenses growth and by channels that was also the case for direct sales and indirect sales through our value solution channel. On a year to date basis, licenses and other software increased 8% on an organic basis and 9% in total.
We saw a good breath with double digit growth for CATIA, Innovia, as well as DELMIA and well supported by high single digit growth for solid work. As a reminder, a large majority of SIMILIA software is purchased on a subscription basis. Recurring software revenue increased 10% in Q3 and 9% year to date. On an organic basis, the growth was 6 percent for the both periods and continue to demonstrate excellent renewal rates in all the three regions. Recurring software represents 73% of the total software year to date.
Moving to the services, We had a better performance in the first quarter with revenues up 13% at constant currency on the 3DEXPERIENCE activities, and the benefit of acquisition as well. While we had softness in our smaller brands, It was to a lesser extent than in H1. Year to date services revenue increased 6% at constant currency and represented 11% of the total revenue. For both the quarter year to date, the Americas regions drove the growth in service revenue. The gross margin for services was 7.8% in the 3rd quarter.
Compared to 12.4 in the year ago period. The gross margin shifts reflect several factors, mix, lower utilizations as we prepare for projects as well as the new resources investment we are making in different parts of the world, which will take time to ramp. Moving to our operating margin, our third quarter was in line, bringing us a year to date operating margin of 29 0.4% stable with year 2017 period. We generated 100 basis points of underlying organic improvement, which enables to absorb acquisition deletions of 70 basis points as well as was also well aligned with our objectives, increasing 11% in the 3rd quarter, with currency having a neutral impact. The effective tax rate was 29.1 percent and is aligned with where we see our effective tax rate for the full year.
On a year to date basis, EPS increased 19% in constant currency, benefiting from our revenue growth and lower effective tax rate. Our operating cash flow performance has been strong, toward the 1st 9 months of the year, it has increased 11% reflecting our growth in net income, non cash element, and a strong growth in operating working capital translating to a total of 1,000,000 above the year 2017 full year figure. Our enhanced revenue totaled 1,000,000 at September 30 under IAS18. This represents an increase of 7% compared to our organic growth for recurring revenue, up 6% year to date with both figure at constant currency and perimeter basis. Moving to the full year financial objectives.
We are reconfirming our total revenue growth of 9% to 10% in constant currency. On a reported basis, our revenue range moved up 1,000,000,000 at the midpoint of our range to to 3,450,000,000 in comparating the third quarter currency upside. We are also tightening the range given 1 quarter remaining to the year. We are leaving unchanged our exchange rates assumptions for USD and JAP and Japanese yen. In term of our operating margin objectives moved to 31.5% from 1.5 previously.
I believe we are doing a good job of managing investment for the future and delivering a good level of operating margin. In comparison to the 32% non IFRS operating margin we reported in 2017, Our underlying operating margin performance will help us mitigate the full year estimate acquisition dilution in the range of 70 basis points and negative currency impact is debited at 20 basis points. Combined this brings to our non EFS earnings per share objective range to to representing about 11% to 13% from 10% to 12% previously. At constant currency, our EPS growth rate range would be about 5 Underlying our year 2018 full year objectives, we are also confirming our licenses revenue growth target of 9% to 11% in constant currency for year 2018 and recurring revenue growth of about 9% in constant currency. For Q4, we are targeting a total revenue growth of 9% to 11% with software revenue growth of 8% to 10% and earning per share of 8% to 12%.
Our final objectives are presented under AAS18 and on a non EFR rate basis with a revenue growth rate at constant currency. All the details are in the Q3 presentation on our website. To conclude, we are expecting a solid Q4 with a total revenue objective of about 1,000,000,000 and an earning per share reaching about Given the record high quarter, we reported for new license and other software revenue in 2017 first quarter. We believe this objective demonstrates very clearly the market opportunity before us. More broadly, Partner and I have discussed We believe our strategy and offer are well aligned with our global industry investment priorities driving a solid performance for us in year 2018 and a sustainable growth opportunity for us over the near and medium term.
We will be now happy to take your questions and thank you very well for your participation on this call and our early webcast today. Andrea, we can start with Q And A. From there?
Operator, we are ready to take questions. Thank
you. And your first question comes from the line of Jay Viessofa. Thank you. Please ask your question.
Thank you. Good afternoon, Bernard and Pascal. Pascal, let me start with you a short term question regarding solid work and Bernard asked some longer term questions. So on SOLIDWORKS, over the last number of years, we've seen that, on the margin, they have become more promotional in terms of offering and periodic, pricing, promotions and the like. And I'm wondering if you're expecting that will continue at the pace that we've seen over the last number of years for Solid Works.
And then similarly, perhaps you could corroborates some arithmetic. And I understand the difficulty of the year over year comparison for solid works, but when we look at it sequentially versus second quarter, would it be correct to say that the volume of new business, new cattle licenses, declined more from second to third quarter this year than might have been the case in previous years from second to third quarter, and then I'll ask my question for Bernard. Okay. So coming back to the promotions, I just want to draw your attention on the fact that we If you look at for the next the last 5 years, we have increased the price of SOLIDWORKS. And I'm not talking about
the lease price. I'm talking about the street price. And the reason is because we saw it was premium. In fact, we have been able, thanks to the multi products approach. To enrich the configurations people are selecting.
So this is really what we did Now coming back to the fact that sometimes we are using the promotion as a way to activate the pipeline creations. I just want to reassure you that if you look at what we did this year, we almost slowed down this practice. Because the reality now we're fully worse. We have established not only a footprint, but the reference for the market. And there is no need anymore to activate commercially with the promotion mechanisms.
Your second question related to, the sequential growth between Q2 and Q3. You are right. What you are seeing is, is true, but if I may, if you remember last year, Q3 was at the time when Autodesk announced the fact that they were basically asking all their customers to endorse a subscription based model. And we had the flow of users leaving, in fact, Autodesk to join SOLIDWORKS at that time. So This is the reason why, by the way, the comparison base is, is high with the last Q3 last year.
And this is the reason why also you cannot draw conclusion on the fact that between Q2 and Q3 this year, you have a drop in term of, unit like something sold because it's not, it's not a real, way to compare things. I hope I answered all your questions.
Yes. Thank you, Pascal. So for Bernard, let me turn now to some longer term issues. When you consider the difference if there is a difference between your, core customers in ARO and auto, for example, versus customers in your Diversification Industries, is there a material difference that you're seeing between the two classes of customers in terms of their new technology adoption or mix is 1 more heavily weighted towards, V 6 than the other, one more heavily weighted towards perhaps Delmi or Catina, or anything of that kind, if you would think from a high level, might distinguish the, the 2, classes of customers And then as well, one of the things we've talked about over the years with BS is seeing more consistent growth in your manufacturing software business, Dummy and Quintiq, and you had a good quarter now, but Are you in fact expecting or seeing that the growth of business for DELMIA and Quintock and Aprizeau will be more consistent and less lumpy than you might have seen over the last number of years.
Thank you, Jay. Good to talk to you.
Core clients on new industry. The new industry usually, they start directly on the Swedish expense platform because there is no basically, value to them to start on higher level. So that's a real trend on almost a de facto situation. The second, you asked me the de felons in behavior, so that's one. The second is in new industries, we see faster adoption
of cloud.
3D extends Cloud. Those are two factors. Now, clients do not do only conserve these things either for core clients what we see for new domain like cyber system. What we call integration of systems. I know that you are familiar with no magic and what we are doing in the system approach, but to make it understandable for everyone.
Then the cyber system, they directly start on the experience platform because they take this as an additional domain of coverage. So if I have to put a kind of extreme, I would say core clients when they go for new domain of coverage, they go through the experience when they go for connected expansion, they go with the current V5 architecture. Other time being for those who have not made yet to this decision for the roadmap to 3 year experience. That basically the profiling of things. However, I should say that if I don't call them core clients, but core industry, then the newcomers in the core industry, like EV startups, they directly go to 3DEXPERIENCE also.
By the way, as well as some of the supply chain clients, because we have seen on, I think, this all extros it very quick, very, very in a very real number that, for example, in the T and M ecosystem, the tier 1 and tier 2 at the OEM, but tier 1 and tier 2 are very, very I am investing a lot in innovation. For example, for autonomous vehicles, a lot of the technologies done by Tier 1 and Tier 2. That quick review of the profiling obtained On the manufacturing, you're right. What we but it's coming from the fact that There are 2 phenomena. One is, as you mentioned, DELMIA appraisal has been very successful in terms of MES Manufacturing execution system on Manufacturing operation management.
And we continue to see those. But there is a phenomenon. We in most of the cases, we are displacing existing players where it's on grow or it might be 1 of the, automation players, or it might be one of the ERP players on when you displace basically to avoid to be pushed out, they almost provide us software to for free, we don't do so, but it creates a pricing pressure at the beginning. When we are there and installed, summer don't see any problem to buy more at the right price, but they ask us is a price to enter or assign to enter. And then after it easier.
So that's the phenomenon you see on the MES model. On the DELMIA engineering, I think we see a very interesting trend, which is basically what we call Manufacturing Engineering, the front end part of it. There is clearly now a very clear conviction from customers that the 3DEXPERIENCE platform connecting design configuration beep, what we call export engineering bomb and if Mbomb Manufacturing BOM is a high value And even DELMIA Manufacturing Engineering is also used now for construction engineering, sequencing of construction, And we have very good feedback from the construction sector. That's basically so I hope to your on our model question, can we see a more, consistent quarter after quarter business dynamic there. I hope so, the things that the signs are for very positive steps.
Okay. Lastly, if I may, you and Pascal and parts of your answer used the term price and pricing, The broader question is following up on the analyst meeting from 4 months ago, and you've talked about outcomes based pricing as part of your longer term strategy. As you may recall, I had some, frankly, doubts about that. And I'm wondering if there's any progress you can report on that concept, or whether you've given any further thought to instead or as well, adopting more of a usage based pricing model rather than the outcomes based pricing model?
It's coming. We have not done big noise about it yet, but, I think we are, we have already signed contracts on outcome based pricing by definition, it will come with the outcome. So it's not for this order. It's probably not following a quarter either, but we are
very pleased to
have now the showcase in operation for that.
And to confirm what they are saying, okay, I will not oppose the tomorrow. For example, we have real cases whereby we people are using our software on the cloud and we charge 15% of the end result. So it's nothing more than a kind of usage base approach. And we are also taking a fee of 10% to do the intermediation with the end user. So to follow my thinking, I think those two models could complement each other.
Understood. Thanks very much.
Next question comes from the line of Monica Garg. Thank you. Please ask your question.
Hi, thanks for taking my question. You know, a couple of the macro side first, there is tariff discussion between U. S. Other countries and some of the auto suppliers have guided down Caterpillar, the big industrial company here talked about tariffs increasing their cost of goods sold. So the question is what are your customers telling you regarding tariffs, do you see this could impact your growth over the next 2, 3 quarters?
What is visible from a sector level now in some way, as I mentioned it this morning, was visible to us 6 months ago. Many of those companies were already preparing themselves or, you know, cautious But the reality when it comes to what we do, we see that, which is really basically the innovation platform. We see, it will increase the selectivity of where do they invest? I believe that when it comes to the nature, very nature of what we do because it's really related to the portfolio and the performance out to what they have to deliver. The signs are positive on on I would say simply, the pipeline is providing a good visibility?
Just as a follow-up, like, how long would you say is your pipeline visibility 6 months, 9 months, 12 months?
That's related to the site that is dependent on each of the three channels. To make it simpler, the relevant pipeline, I'm not taking my incentive. We communicated that as country. No. Bhavapri, okay.
I'm seeing it. Don't sell into it too much. We will usually use, we will usually use, but we don't want to provide too much there. We will usually use a kind of pet parents of 12 months 6 months on 3 months. And you can understand for which channel those 12, 6, and 3 can apply?
Got it. Yes. Thanks. The question on the construction industry, in U. S, I mean, you are seeing like a lot of venture capital money being board into a lot of construction startups.
There are 1,000,000,000 plus private valuations of number of companies here Autodesk has been talking about a construction industry. NEM Check has acquired company. Maybe could you just talk about how do you see this market develop for you in the software side and you know what I in general like how do you think this market develops?
Yeah. As you know, we have a collection of wonderful showcases that we have basically established in the last year, whether it's a Gary Ziner, Kongu Kuma, but also very big player like WIG with our announcement second quarter. And also with companies, centered in China, like Shanghai Construction, a corporation on several others. So, that's all the background. Those are real case and we are replicate each of them are scoped in a different way.
I would add to that to showcase we are now doing for cities. It's not only Singapore. There are many other projects ongoing. So that in mind, we want to do in architecture, engineering and construction, what we did for other industry which is to change, to be game changer, how I think developers will not continue to build buildings without having the context of the city. You need the city context, not only to insert the building but to look at the building performance and the impact on the inflow outflow traffic on many other aspects.
Before it was not possible with our platform, for the first time ever, it's possible, and this is game changer. The second Mark, I want to say on. So we want to accelerate that approach. The second aspect of it is related to building performance on lifecycle. Today, the work done to life cycle management of buildings.
It's just a collection of documents which are updated from time to time. We are being restricted to building on construction life cycle management. And China has understood that this is important for them. The future program of contraction in China will call not for the or the bin, but what you which is called information management, but we'll be Construction Lifecycle Management, which calls for Haley Planning And Operating the maintenance evolution of infrastructures. China is leading by far U.
S. And Europe in this area. And this is where we are. And this is where the territory where we're building this these recurrences. So indeed on last point, the cloud, we have the highest adoption of our solution for cloud is coming from fact, we are going to change the world AAC itself, next year on, but I will tell you more about that.
I think the AAC is too old, It's the it's almost just on it that I want to transfer name itself. But that's for February.
Then just the last one on demand trends across all geographies. I mean, the growth across all geographies was good. China was like double digit. You know, though we do hear like China growth slowing down, but you had very strong growth in China. Maybe could you just talk about what is your view on the demand trends across different geographies?
Thank you.
The pipeline of the hole is good on but anything you want, but I think the pipeline is consistent with the profile of the business we have reported year to date, but going forward, on In China, I think we are welcome.
But if I compliment what Bernard is seeing, what are we seeing right now? If you take Europe, you see Europe being split into different parts, both the North and the south plus Russia and growing well in fact. And where we see a much more modest growth is in what we call Euro Central And Euro West is mainly mainly France and Germany, where the growth is modest, I will say. On the in the Americas, We see a good recovery in Latin America, but we started from very low. So have we gone through too much conclusions on these statements?
And the North America is still going well and especially in the new sectors like Life Sciences. This is really where the growth is coming from for us.
We also do extremely well in India,
in India. And in Asia, in fact, We have a double digit growth in Asia, sorry, in China, India, Asia Pacific South?
South is in West.
As well as, Korea. For the year to date. So, Japan is probably the only country where the growth is slightly below double digit. Next question, please?
Thank you. Next question is from the line of Nicholas David.
Yes, hi, good afternoon gentlemen. Actually, I have two questions. The first one is about recurring business. I was a bit surprised that see the material acceleration in Q3 of your organic growth on recurring business and neither actually in your guidance for Q4. As maybe we expected at the beginning of the ramp up of Boeing.
So could you give us a bit of details there? What's happening that the Boeing contract, which is a bit late or the other part of the recurring, which is a bit soft.
No, I do not understand why you see, because we have an organic growth of 6%. On the recurring revenue. And you remember that, we acquire exact workflow last year. So clearly in Q4, you will have a comparison on organic on a few organic standpoint, This will increase by the integration of the exact contribution because Exights only a subscription based model. So to a certain extent, you remember we are coming from, less than 4%.
So it's accelerating.
So I think it's accelerating. Now coming back to to the question related to Boeing. The Boeing is going well and we are preparing the ramp up for next year. So this is the reason why we have invested in Q3 on the services side just to be ready for the ramp up.
And we always said that there will be marginal effect. Since the beginning of the year we reconfirm every quarter that they were marginally margin in margin effect on Boeing for 2018.
Okay. So just to make sure to reconcile the figure of organic growth for the recurring, as you mean that it was 4% in Q2, 6% in Q3, and you expect something like 7% to 8% in Q4. Is that the trend we maybe Actually, yes, my main contribution wrong for those lines. Is it true? Is that correct?
Something
I did.
Thank you for correcting me. That makes sense actually. And my second question, is regarding the pipeline for Q4, could you give us a bit more flavor around this? Is it about more large rig experience deals you expect? Or an acceleration is the V6 apps selling to your installed base?
Or it an acceleration in the auto softwares or the brand you have? So could you give us a bit of flavor around that?
But we don't communicate more than just saying that the pipeline is good because we have provided the guidance. So Don? No, but I want to have an inconsistent statement.
I could maybe give some flavor in addition to this. Because this is what I say this morning during the webcast. Q3 was really a quarter where we had a significant new reference, we call it as a footprint quarter. So in Q4, we had exactly the same kind of lead your pipeline. Plus, for sure, this is the end of the year.
So usually the largest transaction are usually done in Q4. But we have the voucher. So it is really similar to the one we had last year.
Okay. And it's a Swiss experience, obviously, signing. So good for for Energia. Yes, at the end of the day, for sure. Thank you very much.
That's very clear.
From the line of Gal Munda. Thank you. Please go ahead. Hey,
thanks for taking my questions. I just got a few. The first one I'd like to just touch a bit on the recurring revenue growth a bit more. You say the Katia Innovia grew licenses in double digits. In constant currencies.
You said the SOLIDWORKS is growing high single digit, licenses. You look at the software disclosure, it's 75% and 4% respectively. This kind of implies no growth in maintenance revenue those two products. Can you just talk me through, is it the impact of the chargeback that's kind of, now gone away, or what what is it that's kind of causing maintenance revenue not to increase for those products? Thank you.
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So, there is few things that should correct solid words for this quarter is not going did not grow in your high digit. I was very
I think the digit is on page 4 of your presentation, high single digits for for
the full year, not for the Q3.
Pipette.
Okay. And, so again, there is no trick behind the You remember, the recurrent revenue is composed by, on one hand, the maintenance and support and on the other hand, the subscription. For the maintenance and support is really the direct consequences of the license growth you had the year before. And for the for the subscriptions, I mean, it's following it's mainly the simulation space. Is driving the growth.
And the aerospace And Defense sector, which is usually using this rental model at large. If you look at those 2, those 2 domain simulation is going very well, And Aerospace And Defense, not only boring, but this entire sector is also growing very well. So there is no reason that the organic record revenues should not grow the way
I'm just thinking more specifically as I can for Katia because even if I look at for 9 months, Katia, So the software revenue growth is 6% saying with double digit growth for concierge and Innovia is 7% with double digit growth. That basically assumes that maintenance is growing much slower. Is it anything you have on renewal. 5 that's different. A few years when maintenance was actually outperforming licenses growth.
So I was just trying to understand what the what the dynamic is?
There is no trick. Catcher growing at 6% year to date. And the recurrent growing 6% organically, it's very consistent. Innovia growing at 7% year to date you know, it's against those numbers are consistent and there is no trick behind. This is first not our style.
If we have something, we will tell you, but no, no, if you compute the numbers, you will find it works.
It really works. Okay. Maybe we can take it offline. It might be easier. And then just in terms of questions on stimuli, you mentioned, it's a very, very good market at the moment in simulation.
It's something we're excited about. Can you just comment on the organic growth excluding Exa, what you were seeing in this quarter? And maybe for the 9 months, is it kind of in line with that 8% to 10% growth? What's simulation market is growing? Would you think you're doing more than that?
The new license on a year to date is growing double digit for familiar. And I'm not talking about the subscription. I'm really talking about the new license. And this is a pure organic growth because Exa is only on a subscription basis.
Yeah. We are waiting. We are waiting market share there.
Okay. And which which product do you think are the strongest in of the winning the market share? Is it the Abacus product that maybe benefited from some of the consolidation in the industry? Or is it some of the other scooters that you've acquired recently?
Abacus really, becoming the standard in the linear and nonlinear structure analysis. So there is not too much anymore player in the game. And on the electromagnetic, CST is also start to be established as a standard for the high frequency. Not yet for the low frequency but for the high frequency for sure. Perfect.
Just the last, if I can, you signed a few exciting deals, last few quarters. EDF is one of the to kind of stock up. How do these deals compare with in terms of the size and maybe split within licenses and services to something like when you do when you sign a boring deal on Airbus deal. Can you just kind of talk about how is a similar impact? Should we get very excited about 2019 effect of that?
In the F, it's a different kind of contract we signed because it's a framework. And then after we, we have commitment by business units, it's not a commitment at the group level. So which is very different compared to Boeing because Boeing is it's a commitment for all the different business cities. Okay. So
it's kind of land and expands more. Okay.
Perfect. That
makes sense. Thank you so much. To all of you and thank you for participating to this call or this morning at our presentation in London and see you talk to you in February or maybe before if you have any further questions. Have a good day.
Thank you and that does conclude our conference for today. Thank you for participating. You may all disconnect.