We have Bernard Charlès, our Vice Chairman, Chief Executive Officer, and Pascal Daloz, Executive Vice President, Chief Financial Officer, and Chief Strategy Officer. I would like to welcome you to Dassault Systèmes' third quarter 2018 earnings presentation, which is also being webcast. At the end of the presentation, we will 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. During 2018, the first year of implementation of IFRS 15, we are providing IFRS financial information both on an IFRS 15 and IAS 18 basis. All figures and comparison during the presentation are under IAS 18 and are on a non-IFRS basis, with revenue growth figure in constant currencies unless otherwise noted.
We have provided supplemental IFRS 15 and IAS 18 non-IFRS financial information and non-IFRS reconciliation schedules in our earnings press release. We should arrive at an end with this double reporting in first quarter 2019. Some of the comments on this call will contain forward-looking statements that could differ materially from actual results. Please refer to today's press release and to the risk factor section of our 2017 document reference. Let me now introduce Bernard Charlès.
Good morning, everyone. Q3 is in line with what we said. A good quarter, double-digit on year-to-date. I think we have consistent growth quarter after quarter, 9% up total revenue year-to-date for the first nine months. License is also up 9%, excluding exchange rate, both, of course, on the software revenue. On the 3DEXPERIENCE, revenue is up 19%. We continue to have good success in high growth countries. As you can notice here, we have upped 18% on double-digit growth in transportation, mobility, energy sector, retail, CPG, consumer goods, consumer packaged goods, marine offshore, and even in natural resources. Basically, we are implementing our strategy that is based on three directions: social, industry, experience. Industry is the value creation, social is the reality of things, and experience is the game changer for the 3DEXPERIENCE platform.
As you will see in some of the showcases here, the priority that we have put this quarter, I would say for the second half of this year, is footprint. We reconfirm, as you notice in our press release this morning, the guidance for 2018, and Pascal will give you more insight about it. About the strategy, we focus on two things, the platform as an operating system and the platform as a marketplace to do value network to basically move from traditional supply chain to value network. What is noticeable this year is the number of new players in existing traditional industries. We mentioned it last year when we did the full 2017 review, but it is clear that in each of the industries we serve, the number of newcomers are significant.
Even in extremely heavy capital intensive, like automotive, Transportation & Mobility, we continue to see newcomers. As we referred to last quarter, those newcomers, they do use cloud directly. We have corporate product development going on the cloud directly without using traditional approach. Zero customization. We just configure the software, it's up and running, which provides a fast ramp-up for them. Also, it's a flexibility from a business model because it's subscription-based, so you can take advantage of it. We see it in aerospace, we see it in automotive transportation, even in the energy sector. We see it in most of them. That's why I will show you a few things related to that. Even in life science, with new personal equipment for the medical sector. There is a collection of what we call 3DEXPERIENCE Lab programs going on that you can see here.
You see the diversity coming from what we call Lego car for our last mile delivery. Those are very modular car for cities, which are used really to do different type of delivery, what we call last mile. These startup companies are doing vehicle now, and creating new categories of products that were never done before. You may have noticed also in China, what is called microcars, which are extremely small vehicles, and I think they sold 1.5 million last year. There is really, of course, all the articles on the news flow goes on autonomous vehicle, electrification, and so on. What I observe for every industry and why we are putting a lot of attention on the footprint is newcomers redefining product portfolio. I've taken the example of XYT here, also multi-sensorial robots.
There's a lot of things going on with mid-size, small size companies on the robotization aspect of it. This here is Leka. Digital orthopedics, Inergy, Biomodex for printing the digital twin and making the digital twin experience before the practitioner will do the surgery. You see BioSerenity, which is really something related to AI-based wearable, to have your body surveillance, basically for people who are having difficulties, a heart disease or something like this. Those are companies using our solution. XSun, this is another project for solar airplane, or Eminence for training of the practitioner in the medical sector. It's very noticeable in the last 24 months about the number of this new reach that we can have based on the fact that the solution is available on the cloud.
By the way, for most of them, it's not with SOLIDWORKS, it's directly with the CATIA solutions on all associated roles as we speak about them. This is a quick video that shows you an illustration that was presented at the Founders Forum in Boston two weeks ago. In these videos, all projects are real. They all are real. It's not your regular project. They are going on, and they are using the industry solutions. They are not using just a collection of small functionalities on a desktop. It's really cloud-based, open innovation platform. The priority for us is taking that footprint because they will influence the big players. In fact, we continue to do that even with the MIT Fab Lab and Makers Lab worldwide. You see all the dots here. This is the coverage.
If we go to 10,000 centers where we want to put the 3DEXPERIENCE in operation. This is Neil Gershenfeld, very well known. I was with him two weeks ago. Dassault Systèmes is building up the infrastructure for those companies. This is why in the press release, we said we don't believe that the 21st century industry will be digitalization of the past century. I think there is a real renaissance going on, and it's a big wave, and it's much more than digitalization. Those are practical examples why, on proof points that this is happening. By the way, all the examples that you saw for our open innovation are almost touching the 12 industries on 70 segments we target. They are not only in one sector. They touch everything.
We are going to cover today mostly consumer goods, retail, energy, process, utility, and Transportation & Mobility, while there's a lot happening in the other industries. Clearly, the priority for us in the Transportation & Mobility is cyber system. Cyber has been used for defense, but cyber is, in reality, defined as governance. How do you govern automated system? That's the definition of cyber. We are building with the acquisition of No Magic, with the system approach of our 3DEXPERIENCE platform, a cyber infrastructures to do cyber systems, to do mechatronics which are connected with smart things which really can be orchestrated all together. The No Magic acquisition has been a significant move for that. They are used, of course, by many of the U.S. defense player for system modeling, enterprise modeling, and mission modeling. This is part of the cyber system, what we call CATIA Cyber System approach.
It's being used for almost all sectors. Anything that needs to be connected to a set of service online needs a system model to be managed, tested, and validated, and even produced. That's a key focus here. Of course, electrification with battery technology. You have noticed that in Veolia, we have material science, so it's a very core thing for chemistry, and it's a core thing for the future of modular battery, and including power management, of course, the simulation. Autonomous vehicle or everything that happened with cyber system cannot be tested physically 100% and will not in the future. There are massive needs to do virtual simulation because it's impossible to test physically all cases. That's why this is really an intensive focus. We had many wins. Unfortunately, we cannot speak about them yet.
It will come. I will not mention any names, but they are prestigious names who are addressing the problem of how do I test and validate those extremely complex systems. This is a quick video that shows you the trends.
Change not only the way we drive, but the way we live. The future is all about cars that can connect to their drivers, to other cars on the road, and the city infrastructure that surrounds them.
An autonomous car is a car which takes over all the driving tasks. There are as many situations where you don't feel any joy of driving, standing in a traffic jam, finding a parking space, all these are tasks which can be taken over by the car.
As you look into the future of a fully autonomous world, the idea of driving becomes much more about what I want to do. If I'm with the family and I'm driving on a trip and I want to spend time with the family, I have the opportunity to engage with them more.
With the majority of traffic accidents caused by driver error, the autonomous car will make our roads safer. Computerized driving will improve efficiency, helping to reduce traffic congestion, making the city of the future a cleaner place to live.
Traffic, safety, pollution will be the primary issue that we need to solve. It will be the main driver for innovation in the automotive sector.
We are connecting the dots. This is not a pre-announcement, while many of those people in the video are good friends. This is game changer because I think it's a big different attitude from the one of doing a software update between V5 and V6. It's really about taking an holistic approach to those problems. The same thing is happening in Energy, Process and Utilities . Pascal will present a few significant wins there, whether it's capital facilities, life cycle management. You remember the announcement of the full nuclear value chain in France that has now decided to unify those 3DEXPERIENCE platform that was announced at the end of Q2, as well as in new material science, where I believe it's going to also change the way the industry is working.
The surplus of footprint, innovation, and makers shaping in all industries, cyber system to do modeling, simulation, and testing of things which cannot be done in the real world. We are basically here looking at another expansion of it, which is the problem of certification. This video they are going to see, don't take it lightly. Certification will become mandatory for all automated systems. It was only applied to sensitive energy sector up to now or to aerospace sector, civil. You don't certify satellites. They just blew up if it does not work. You have to certify airplanes, and you have to certify, in the future, all autonomous vehicles will have to be certified, which means not to be tested, but to be certified. There is a big gap between the two.
To do certification, you need digital continuity between the one who is designing, the one who is producing, and the one who is going to prove that it works. Not only that, in case of problems in operation, you have to define who is accountable for what. As you know, in all industries, this is changing the rules. This is the video that illustrates for an existing sector, what will happen in all sectors.
This transformation is important for Bureau Veritas and our customers to improve our processes, productivity, and efficiency, to better control project risks, and for Bureau Veritas, to differentiate ourselves on the market. We have implemented the NC Digital solution, which connects the nuclear equipment manufacturer and Bureau Veritas.
Framatome's challenge is to demonstrate that after manufacturing, we have met all the requirements related to nuclear pressure equipment. As part of the certification, we tested the NC Digital platform to gradually assess the compliancy of our components. Ultimately, going from document to data with this solution, we expect a continuous process that develops cooperation between stakeholders around the certification of our components.
With this platform, we bring a new service to the nuclear field. Beyond the digital tool, it is a collaborative platform, which allows everyone to work in real time and share information.
The value of this solution lies in the shared advantage for Bureau Veritas and its customers in terms of productivity, cost, and project deadline management and continuity of service, since we can ensure the traceability for five to 10 years. Once again, don't look at this only for nuclear certification. It will have to be applied for all industries which are provided automated cyber system. That's why this learning curve to really show digital continuity and predictive test coverage simulation and doing tests in the virtual world, that will never be done in the physical world, otherwise you will never ship the products. What needs to be done differently. This is what I call a platform phenomenon, to have the continuity for service in operation. This platform phenomenon is also necessary in life science and chemistry. Here is illustration.
Laboratories play a critical role in the research, development, quality, and manufacturing of pharmaceuticals, yet they are often considered a bottleneck. OneLab supports the digital transformation of the pharmaceutical industry by improving lab collaboration and productivity, all while reducing risk. With OneLab, leading pharmaceutical companies are planning and managing lab activities with a unified system for requesting, scheduling, and reviewing work. They're consistently preparing and executing experiments using OneLab to develop, manage, and share procedures. Lab personnel collaborate across geographic and organizational boundaries to get work done quickly. They are managing and tracking samples, materials, instruments, and personnel more efficiently than ever before. They're compiling and interpreting results to generate new insights that are easily shared with key stakeholders. Using OneLab to integrate and standardize lab operations on a unified digital platform, compliance reporting is simplified and streamlined.
With OneLab, BIOVIA customers are improving lab efficiency and productivity, reducing risk, and accelerating time to market.
The acquisition of Accelrys, a few years ago, the people were asking us why are we doing that? We believe that material science is going to be a major factor of our chemistry, especially with battery technology, other things. It's happening, it's working well. BIOVIA delivered very good results this quarter, the dynamic is very positive. We want to do with BIOVIA what we did with CATIA for manufactured objects, applied to chemistry and bioscience. Evonik is a good illustration of that. In Germany, a great group, a large group, doing highly sophisticated chemistry-based products, they are really building up the platform for the development, certification, and delivery of solutions.
As you remember, we concluded the acquisition of 66% of the shares of Centric Software last quarter, with an agreement to buy 100% in year two or year three based on the valuation of the performance. I must say, we are very pleased with the dynamic that Chris Groves and his team is putting there. We have decided to follow a policy that is the policy we did for SOLIDWORKS for 20 years, fully dedicated channel, fully dedicated to this sector, because we think that they have a solution which is very innovative and very focused for the apparel and consumer goods sector. The dynamic for the footprint is quite Well, gives you also beautiful pictures for marketing what they do. Those are the key wins this quarter, where you see here very big names, even in retail, for white label.
You see also the effect of cooperation, like the win of Marcolin eyewear as having an effect on the LVMH Marcolin joint venture, where we basically won the both of them for the collaboration. Again, here, I think it's a good illustration of footprint positioning in a sector which is a sector with an incredible dynamic around the world. I'm astonished with the number of companies who are really in that segment in the world. It's just, of course, less concentrated than what is car or planes. It's hundreds of thousands of companies, and having the proper solution here is, we believe, a high potential. I think we have the best solution in the market.
It's affordable, we want to do with this solution what we did for the mainstream market with SOLIDWORKS for CAD, to do it for PLM mainstream, starting with this huge number of companies around the globe. It's working well, I think the company is on a good dynamic, and we'll see more when we do the February announcement for the full year. Our strategy is in action from both social industry experience. The takeaway this quarter is footprint diversification, platform phenomenon on the connection between the makers and innovators and the big players. As you will see when you look at sector analysis, if you have colleagues looking sector analysis, we have an incredible view of what is happening in so many sectors around the world. Some sectors are under tremendous pressure. I don't think it's a bad news for us.
I like it, frankly speaking, because it's going to force accelerated changes, we are in good position to serve those customers. With that, let me turn it over to Pascal, thank you very much again.
Thank you, Bernard. Good morning to all of you, thanks for joining us physically. Always a great pleasure to see you face-to-face. With Q3 being well-aligned with our objective, I think we are delivering a solid year-to-date performance with what I call the triple nine. 9% growth for the revenue, 9% for the software, 9% for the license. Easy to remember. An EPS at EUR 2 or EUR 0.01, growing at 12, 19% if you include the currency effects. This growth is in fact fueled by the 3DEXPERIENCE platform. Bernard said a few words about it. 19% growth compared to last year, now it represent 22% of the software revenue, plus two point compared to last year. This quarter could be characterized by, in fact, we do not have large transactions the same way we did early this year.
As Bernard stated, we have expanded our footprint in a number of industries. If you look at in Q3, in fact, among the 12 industry we serve, seven of them are growing double-digit in term of license. This is, I think, a good sign. As part of this growth in multiple industry, I have extracted some examples in aerospace and defense. I think GE Aviation is a good case for you guys. One, because we told you that, in 2019, the supply chain in aerospace will start to envision 3DEXPERIENCE platform, following basically the Boeing decisions, we start to see this happening. GE Aviation, in fact, we are equipping the subsidiary dedicated to the aerostructure. Those guys, they had to ensure a digital continuity from the design to the manufacturing, also being very straight on the project management.
The reason is because they need to reduce their cycle time and optimize the respond times to customer requests. GE Aviation is serving both Boeing and Airbus at the same time. This is my first message to this one. The second one is, you know that GE used to be a Siemens boutique for a long time. I think it's also a proof point that we are displacing our favorite friends. Also, they have their own platform with Predix. They have decided to use 3DEXPERIENCE platform as their platform to collaborate with the supplier. I think, there is much more we can read behind this deal than only just a simple win. The second one I'm using is, in the high-tech sector, Nexperia, probably you know these companies, they used to be called NXP, part of Philips long time ago.
Now it's an independent company, 11,000 employees, EUR 1 billion revenue, and they are producing, if I remember well, 85 billion component per year. Why I'm selecting this? It's not because we are not involved in the design of the chip. We are not a predominant players into this space. Why? Because we have decided to focus on the IP management. This is where we have established a footprint in the semiconductor space. We are by far the largest player into this space. Here is a proof point, because again, they have decided to select the 3DEXPERIENCE platform with high-performance semiconductor solutions on top of it. What they want to accomplish, they want to have this capability to manage the quality, because they are producing billion things, but also to be able to manage a change management in a seamless way.
Each time something is changing at the design level, they know how to propagate the change to the rest of the company. They are also using, by the way, the platform to collaborate with some of our customers in order to design specific chips for them. Again, a good example of the footprint expanding with 3DEXPERIENCE platform. My last example, it's a small company, it's in Asia. In fact, Takemoto. This company is developing packagings for the CPG markets, and they are using the cloud solutions. They are using a solutions called Perfect Package available on the cloud. It's a mid-market solutions. This deal has been won through the channel, so through our partners. Why it is also interesting? Because this company does not have the size of P&G or Henkel.
To a certain extent, they need to achieve the same level of performance in term of high-quality productions. They are producing, they have 3,000 different packagings, and they produce small series. They do not have the times to do the ramp-up. They need to be at the performance very rapidly without waiting too much. Again, good example. They are using also the cloud because they have groups and teams everywhere in many countries close to the customer center, and they want to use the platform as a way to engage also with them and with the customers. Now, coming back to the business review. Per regions, a few things to notice. Americas, 9% growth year to date, 8% for this quarter.
What we can see is the situation in Latin America is improving well compared to what it used to be, and I think it's a good sign. For those who know us very well, we changed the management a year ago, and we start to see the benefit of this. We are also seeing a solid contribution from North America, also benefiting of all the recent acquisitions we did because some of them have a huge revenue coming from North America. Europe, 8% for this quarter. What we can say, Europe is split in two different parts. You have the North and the South growing at double digits, including Russia. And you have what we call E-West, it's mainly France, and E-Cal, which is Euro-Central, mainly Germany, growing at 5%-6%. This is where we are for this quarter.
Asia, still leading the pack with 13% growth for this quarter. Again, a double-digit growth in many countries, specifically for this quarter, China and India are leading the pack, you can see that South Korea as well as Asia Pacific South is also growing at double digits. We still have a good momentum in all the Asian countries. From a product standpoint, CATIA is growing at 7% with a double-digit organic growth. I think this is important to notice because this is the third consecutive quarter where we are seeing CATIA growing at double digits. This growth is really organic because, in addition, we also have the contribution of No Magic on top of this. The growth is also coming from the direct sales as well as the indirect sales. On both sides, we have a good momentum.
ENOVIA growing at 5%, 7% on a year-to-date. I think it's relatively linked to the fact that we do not have significant transactions or large transactions for this quarter. If you look at the ups year-to-date license revenue, it's up 14%, still a good momentum, and we are still confident that ENOVIA is on a good track. SOLIDWORKS, 4% for this quarter. You remember in Q2, I pointed that in Q3, given the comparison base we had last year with more than 30% growth in license, it will be hard to achieve a double-digit growth. It's 4%, 9% for the full year. We are still expecting to reach 10% on a full year basis for 2018. The other software line is growing well, 18%.
We should notice that DELMIA, all the manufacturing space at large is growing very well for us, as well as the simulations. Those are the two key domains where we see a lot of momentum. I could also say a few words, the BIOVIA situation is also improving. We are back to growth. For this quarter, we had double-digit growth for BIOVIA in terms of license. If we look at the revenue growth against total revenue, we spoke about it. Let me focus on the organic growth, which is probably the point you want to discuss. 5% excluding the currency effects in Q3 and 6% year to date. For the total revenue and for the software, it is 5% as well for this quarter and 7% for year to date. If we zoom on the software and we split between license and subscription and support.
On the license, the organic license is up 4% and 8% year to date. I want to draw the attention on this on one specific point, which is the following. This is to a certain extent, the consequences of the performance of SOLIDWORKS and professional channel for this quarter, based on the huge comparison base we had last year. If you look at the performance for the direct sales and the indirect sales independently of SOLIDWORKS, the two channels are growing double digits. Clearly, we still have a good momentum, and there is no sign about the fact that we will not be able to achieve an organic growth better than 5% for this year. The organic recurring revenue up 6% Q3 and year to date. Reflecting basically the solid support revenue and renewal rates we are seeing since the beginning of the year.
On the services side, we are back to growth. You remember in the first half, we were almost flat. Here it is plus 13% growth, excluding the currency effect. The growth is coming again from all the services related to 3DEXPERIENCE platform, which is a good sign. In fact, it is relatively in line with the license growth. Also, we had some good recovery in some brands. You remember the counter-performance on the first half was coming from some brands like 3DEXCITE and Quintiq. It does not mean we are fully back on track with 3DEXCITE, but I think the situation is improving. The Q3 margin is a little bit low compared to last year. The main reason, for the services I'm talking, and the reason is because we have to anticipate a lot of work in order to be ready for 2019.
The reason is, you remember we had this big ramp-up with Boeing, and we had to hire a lot of people, also to train them, and also to invest with certain extensions, not to have to do this early January next year when it will be the time for us to act. This is the reason why you can see this margin a little bit under pressure, at least compared to the performance on the growth. On the operating margin for the nine months. Same story than what I said to you in Q2. We are offsetting with an organic performance dilution coming from the acquisitions as well as the currency. You will notice that in Q3, the picture is not exactly like this. We still have 1.1 point dilutions coming from the acquisitions. We have some benefits coming from the currency effects, 0.2.
We have a -0.2 on the organic performance. Again, this does not mean we are not improving our organic performance. It means that, you remember we were late in terms of hiring early this year, and we have decided to catch up and especially on the services side. Also on the marketing side, it is time for us to invest to prepare next year. This is the reason why we are launching also all the marketing program intensively for this quarter, Q3 and Q4. Last but not least, last year you remember we were back-loaded and Thibault used to be very cautious in the way we were controlling the cost, just to be sure that the end of the year will not be squeezed. Also we have some base effects compared.
Nothing to say except that I think we are on a good track on the operating margin. EPS, 11% growth at EUR 0.71, so slightly higher than the consensus and the guidance we gave to you. 19% growth excluding the currency effect for the full year. This is a direct consequence of the margin expansion and the lower tax rate. As a reminder, I put the year-to-date tax rates going from 32.6% to 28.6%. So clearly, four-point gains compared to last year. In terms of cash flow, EUR 747 million for the nine months, which is above the full year last year. If you remember last year, we generated EUR 745 million for the full year. So in nine months, we have accomplished what we did in a year, last year. I think it is a good sign.
You see also, basically, the cash out from the acquisitions. As part of this, you have all the acquisition we did since the beginning of the year, Centric, obviously, No Magic as well. Also we had a remaining piece of the 3DPLM when we took the full control of 3DPLM. On the different line, nothing specific to say. The unearned revenue is really in line with the 7% growth at like-for-like, so it is collectively consistent. For the financial objective for the full year. We confirm the full year objectives. What we did, we have reintegrated into the revenue, the EUR 12 million currency gains for the Q3. Now we have a full-year revenue range between EUR 3.425 billion-EUR 3.450 billion. We have also reintegrated EUR 0.02 at the EPS level, and now with an EPS range between EUR 2.98 to EUR 3.02.
EUR 0.01 coming from the currency effect and the other one coming from the good activity from the organic improvement. In a nutshell, this is the full year objective. I already commented the revenue. If we go on a lower level, on the software side, it is a 9%-10% growth, excluding the currency effects. On the license, 9%-11% growth, the recurrent at 9%. On the operating margin, we are landing on the high end of the range we gave to you early this year, 31.5%. We are still envisioning a dilution coming from the acquisitions of that seven point, and the currency effect of -2 points. Tax rate at 29%. An EPS, as I told you, growing at 11%-13%. If you exclude the currency effect, 16%-17%.
I just want to remind you that, compared to the first guidance we gave to you early this year, it's EUR 70 million more in terms of revenue. Half coming from the acquisitions, the other half coming from the currency effect. Also we have substitute EUR 15 million services by EUR 15 million software revenue. We are adding EUR 0.14 at the EPS level, EUR 0.08 coming from the activity. If I remember well, EUR 0.03 coming from the tax and EUR 0.04 coming from the currency effect, and minus EUR 0.01 coming from the acquisitions dilutions. I think it's pretty decent number. We are keeping unchanged the exchange rate for the full year. Q4, I think I do not want to comment line by line its returns. I think I want to draw the attention on two numbers because I think they are symbolic number. One is EUR 1 billion revenue.
First time we are achieving EUR 1 billion revenue for a given quarter, and EUR 1 EPS, which is also a symbolic number. It also has a conclusion for this presentation, a good sign about the opportunity we are seeing in front of us and the quality of the pipe we have. Bernard and I will be ready to take your questions and pleased to answer.
Thanks. It's Adam Wood from Morgan Stanley. I've got two, if I could, please. Just first of all, when we look into 2019, you've commented previously that you were still comfortable of doing the original guidance in the long-term plan that you gave. Maybe, first of all, could you just say whether after what you've seen in Q3, do you stick to that? Then maybe when we think about how we get there, you've talked about a couple of points of revenue acceleration needed. We've not really seen any acceleration in Q3. I know you had a tougher base comp. Again, on the license side, it feels like it's in a similar range in Q4. Could you just give us some feel for the mechanics of what you see in the pipeline and the deals that you have coming through that gives you the confidence that that can happen?
Then secondly, maybe just on the environment more broadly. I think software companies have been pretty bullish about the demand environment. We've actually had a relatively weak reporting season in Q3, and profit warnings are company specific until they're not, and it becomes a sector thing. Could you maybe just talk a little bit about what you're seeing, in terms of demand and macro, and whether what we're hearing in the kind of macro environment is putting any pressure on the sales? Thank you.
Bernard, I'm taking the first. Yeah. You go. You will say a few words on the last one. For next year, I do not want to give guidance more than what we did during the Capital Markets Day . We still have the EUR 3.50 target for next year. As I was stating clearly during the Capital Markets Day , organically, we are pretty confident to achieve EUR 3.30, and EUR 0.20 will come from the acquisitions. We already did some acquisition. If you compute the numbers, you will see that we are close to EUR 0.10. We are short to some extent of EUR 0.10. This is what we have to find in term of acquisitions between now and next year. On the accelerations, you are right. Again, the Q3 performance has been hurt by the base comparisons.
If you look at what we are envisioning for Q4, I give a range between 8%-13%. Maybe you will challenge me about the fact that the range is a little bit large. I know you guys. I want to draw the attention that if you take the high end, it implies 10% organic growth, which is what we stated to you guys. We are still in line with what we are saying. On a lower level of the guidance is almost the organic growth we have for this quarter. Why such? It's because, as I was saying to you, compared to Q3, we have a lot of large transaction in Q4. Some of them are sometimes difficult to predict. This is a reason why you have this range. Adam, I'm convinced you will see an acceleration.
I think with all what we have seen on the news flow for Adam, about your second question about the sector news flow, the sector we cover, of course, our market target, on the effect of this news flow on our business. I have two answers. The first one is what I try to illustrate here. There is really an increasing selective focus from those companies to invest on the right topic for the portfolio they need to do. When things are easy, the current infrastructure, like for us to be concrete, V5 was perfect. Now with electrification and so on, there is a need for battery modularization and many other things. We see that, without, again, doing any pre-announcement as a acceleration decision factor. That's my first element of answer. The second is the pipeline is good. That's it.
Just coming back on sort of the outlook. You talked about sort of footprint expansion. You're clearly now a lot more diversified or getting more diversified. If we look at the last time we sort of saw a downturn, and we don't know what sort of, if there is a macro slow down, what it looks like. Digitization across all these industries is at a kind of unprecedented level.
How do you see, to what extent is some of the spending for your customers discretionary versus necessary? Based on your views on the pipeline and the product cycle dynamics, how would you see the business, and how do you manage it accordingly in that, is that an opportunity to further accelerate the footprint expansion or land grab?
Thank you, Mo. We think that way. Exactly. The reason why two quarters ago when we thought with the team about our focus for the second half, of course, we have to focus on execution and doing the traditional business. We already saw things that you are discovering in the news flows of the sectors in which we are. Of course, we don't need to speak for them. We saw it already six months ago about the tension coming on discussion with the CEOs on executive committees thinking about how they were preparing those sectors to face any slowdown or face any new landscape, the shaping of their market. That's the reason why we did first the moves we did in the last even 16 months. No Magic is one of them. The cyber system focus is another one. The chemistry for material science is concrete.
We cannot reveal when we do this announcement why we are doing them per se, except to say it fits well. Sometimes people are asking us, "Well, it fits well, but is it core?" I think now it's core. The dialogue with those companies, and I can imagine the kind of names you have in mind based on your question, Mo, is the dynamic is they are deeply looking at what have they missed that they should reconsider, and what do they need to reshape their portfolio. I will not do that remark exactly for aerospace, because for aerospace, they cannot keep up delivering on the backlog. Their backlog is gigantic. Of course, it's a very concentrated market, but the backlog is huge. For those of you who look at the sector, please look at it.
You will see that they have a backlog for 2027 or more, 2030, and the challenge of production and ramp-up. They have a visibility, and I think it's visible on their stock, too. That's what I will say. The footprint to really connect those things that were never connected before, for us, is very key because you need the proof point. If we want to be the world leader, and I think we are about to be the world leader in battery technology, to design, do power management, safety, test. You need to have proof points, and I think we are the only one in the landscape that can do the connection between chemistry, power management system, and safety crash. This is on the agenda. Before it was marginal. I need a few cars being electrified. It's core.
All the announcements in the last four months are reveals to the public. That's basically why we focus this quarter on saying what we have been preparing is to lever on leverage this dynamic. It's going to take time. I think we want to be on the preferred list for solving the problem. That's true also for not only T&M. It's true for the energy sector. It's even for the medical sector. Now there is an incredible pressure on the pharma sector. You have seen all the debate about the payer, the issue on pricing of new molecules. I remind you all that Amgen is our biggest customer in this sector. They are probably the world's biggest leader. Regeneron is another one. We are there with the platform. Those are best-in-class companies.
They are showing to many other big players where the biotech is going from a development where in this area, for example, I will stop here. The product is the process, not the molecule. The process is the product, not the molecule anymore. We are there for those evolutions. Last but not least, if I remember 2008, we demonstrated resiliency because of the footprint, because of the geo side, because of the diversification. I think we are in even stronger position today on this diversification standpoint. You have seen the number every year that we communicate. We'll take a question from the call. Stacy?
As a reminder to all phone participants, please dial star one on your telephone keypad to ask a question. We will now take our first question from Stacy Pollard from JP Morgan. Please go ahead. Your line is open.
Thanks. Thanks very much. Sorry that I couldn't make it there in time in person. Thanks for taking the call, or the question from the call. A couple from me. First of all, at the Capital Markets Day, you mentioned a desire to get more aggressive in the AEC space. Just asking how that's looking. What is your competitive advantage there? Secondly, when we think of 3DEXPERIENCE deals, is that usually CATIA as the majority of that deal or as the leading application? Are you now driving that from other major applications, maybe that's SIMULIA or ENOVIA or DELMIA? The third quick one, just on M&A plans. I think your midterm guidance suggests you're going to get more aggressive there. Just wondering what the pipeline and areas of interest are.
Thank you, Stacy. There are multiple questions, I missed the first one.
AEC.
The first one was about the AEC.
Oh, the AEC. Well, I think that's an important question. I mentioned a clear statement at the beginning of the year, if you remember. Well, I think overall, the win that we had that week and the mini-wins we have in China are proof points that something new is happening. The way I will summarize our competitive advantage here is buildings are not anymore constructed for being a building by itself, but being inserted in a city. Many of the activities we have now are related to how a building performance will be. The dialogue is with developers, not only with the engineering firm, because it's about positioning the building in the city, looking at the economical performance of the investment, looking at the economical performance if it's an economical building versus for people to live in. This sector is changing.
As a matter of fact, the BIM, what is the famous BIM, is also being redefined in many countries. I think we will be able to reveal in the next quarters, we did WIG, we did others, significant new Zaha. We did, of course, Gehry. We have also mentioned many other projects in the past 16 months, that there is a game-changing situation in that sector. Smart buildings, cities, management of infrastructure, connection between all those elements. We are the only one that can do it. I'm very confident that what we stated will happen. As a matter of fact, we have now to show the proof points. They are coming.
You want me to address the two other questions?
Yeah.
In fact, which brand is leading the 3DEXPERIENCE platform adoptions? The first one is ENOVIA, just for you to keep in mind, because you have more than 70% of the software revenue of ENOVIA being already on 3DEXPERIENCE platform. The second one is DELMIA. DELMIA, you have a little bit below than the half being already on 3DEXPERIENCE platform. After, CATIA and SIMULIA at the end. You remember, the average is 22% of the total software revenue. The question related to the M&A, yes, Stacy, you are right. When I communicated during the Capital Market Day, we have an aggressive plan for the M&A. I think the market condition is helping us. I should say. It would have been much more difficult to do it a few months ago. Now, I think opportunities are maybe much more affordable. We have built a pipeline.
We still have five years anyway to execute, and maybe in five years, we will identify new targets. I hope so. We already have a pre-established target list. The domain where we are looking are still, if you look at the 12 industries, 17 segments we are serving, you still have vertical at a sub-segment level we could reinforce. This is one axis. The second one axis is really on the two or the big domain we want to tackle, the city at large, the territory, I should say, more than a city. Also the life science outside the traditional pharmaceutical and med device industry. There is a lot of things we can do, and the platform is really well-tuned for this market. Those are the two key domain where we are working on it.
That's very interesting. Thank you.
Stacy, please go on.
Oh, no, I just said thanks.
We will take a question from the audience.
It.s Charlie Brennan here from Credit Suisse. Just two questions. Firstly, can I come back to the organic growth? It feels like there is a disconnect at the moment between some of the very large deals you are winning and the relatively muted growth in the quarter. I know you have talked about tough comps from the prior year, but at the same time, we have got some softness in the services growth margins. I am just wondering if you are encountering any implementation complexities that is deferring any of the license recognition, or is it all due to new signings in the quarter? Secondly, just a number clarification. It seemed like the M&A contribution to this quarter was slightly bigger than I was expecting. I am sure I can do the numbers from the maths, but just to make life easy, can you break out the M&A contribution between license and subscription?
Lastly, what's your M&A guess for the fourth quarter, based on the current deals?
Thank you. I will comment on the implementation aspect. At the beginning of the year, we did a significant evolution of the organization for what we call value engagement, which basically is a process by which we sequence the course of action to do successful implementation. I think we see big progress there. In fact, it's visible on the service performance this quarter, finally. You remember Q2 was weak. The practice are being well-established. We have a new executive in charge of that globally, by the way, that joined us, and she was the CIO. She was a CIO for a very big firm, so she came to Dassault Systèmes for that topic. As a matter of fact, it's a good question. We'll probably give you better visibility next quarter on this, but it's improving significantly.
At this point in time, it's not a factor that slow us down. The one that slow us down is prior to implementation, which is helping the client to orchestrate their transformation. That's why what we did with Accenture on WIG is a good learning curve for us. As you remember, we announced that this is a joint activity with Accenture. We also did Capgemini for EDF. Implementation is improving. In short, front-end consulting to orchestrate the transformation needs further improvement. Related to the number, it's in the deck, by the way. If you look at the organic license, it's 4% compared to 7%, so difference three points is coming from the acquisition. On the recurrent parts, it's 6% the organic growth compared to 10% the reporting, excluding the currency effect. Four point is coming from the acquisition. The reason is because you have Exa.
Exa
PowerFLOW
The PowerFLOW. It's really a recurrent model. The vast majority of the revenue is in the recurrent part. For Q4, Exa will be almost integrated because you will not have any more this discrepancy because we conclude the acquisition early last Q4 last year. Did I answer any of your questions?
Thank you.
Another question. Alex?
Hi, Alexandre Ao from Deutsche Bank. Thanks for taking the question. Could you please confirm the contribution from Centric from a license and a total software perspective in the quarter? Is that business progressing as well as you hoped it would do? I guess, they did EUR 16 million of revenues last year, growing, I think, strong double digit, suggests potentially an impact of about EUR 10 million in the quarter, which I guess would have all gone into the ENOVIA segment, which would suggest that the ENOVIA segment barely grew, excluding the acquisition. Given the comment that this is where most of the 3DEXPERIENCE revenue is recognized, given the slowdown in 3Q for 3DEXPERIENCE relative to the first half, are you kind of pleased with the performance that you're achieving in 3DEXPERIENCE, relative to some of the stronger growing areas like SIMULIA and SOLIDWORKS? Thanks.
There are few things I should correct. Point number one, Centric revenue is not in ENOVIA. It's in the, what we call other software. The way we spread by product line. All the acquisition usually are here. When it's not the case, we say it. Point number one. Point number two, for the quarter, it's exactly in line with what I told you last time. You remember, there is some seasonality with Centric Software. You have 55% of the revenue within a quarter, which was a July month. July obviously is not in our revenue. We have only 45% of the quarter, but we have two-third of the cost. This is the reason why you have the dilutions at the margin level.
Okay. It's exactly in line with what I told you. The growth compared to last year is 48%. We think we still have the momentum. For Q4, I think this is probably the question, because you remember we also have the same effect because January is also a month usually representing 55% of their Q4 quarter. What I put in the guidance is very simple. The quarter is expected to be for them at EUR 30 million. You take 45% of this number, then you have 60% software and 40% services.
Of course, next year we're going to align all that.
Yep. Starting January the 1st, everything will be based on our calendar year.
Alex, do you have finished? Do you have another?
Yeah, I guess the general observation that the growth this year to date, has been driven more by SOLIDWORKS and SIMULIA. I guess we don't know the exact growth number, but those look like they've been the really strong areas year to date and stronger than 3DEXPERIENCE.
I am not in agreement with your statement because, as I stated, CATIA, the billion brand, is growing nicely, and this brand is able to deliver double-digit growth for the last three quarters. I will not be in agreement with your statement about the fact that the growth is fueled only by SOLIDWORKS, which is not true.
We'll take a question from the call. Jardus?
Thank you. We'll now take our next question from Jardus from Barclays. Please go ahead. Your line is open.
Good morning. Thanks for taking my question. I just have a question on 2019 and perhaps beyond on the whole Boeing and the potential supply chain standardization there. Are you able to give us a bit more kind of color how you expect that to impact 2019 kind of numbers? What kind of tailwind should we expect in 2019? When do you think that will peak between, let's say, the 2019 and 2021 kind of period where I expect that rollout will happen. Thank you.
I think it's too early to speak about 2019. I would give you a color or not on the numbers, but the partnership with Boeing is going extremely well. As a matter of fact, we continue to expand even beyond the scope of what we signed because we are expanding in a concrete way on the manufacturing side with our new programs. Too early to speak about it. It's clear that the Boeing ambition is significant in terms of unifying all supply chain. I think we will integrate that as part of the 2019 items.
To complement your answer, Bernard, it's still in line with what we told you at the time of the Boeing announcements. 2019 will be the time where we start to engage with suppliers. You will see some revenue materializations in 2020.
Thank you.
Next and probably last question from the call, Michael.
We will now take the question from Michael Briest. Please go ahead. Your line is open.
Yeah, thank you. Good morning. A couple from me as well. Just on SOLIDWORKS, Pascal, obviously Q3, you highlighted the tough comps there on licenses. What is the situation for Q4 and going into next year? I mean, SOLIDWORKS 2019 is out. Is there any sort of accelerated shift to the cloud you perceive for that product? Secondly, on the GE win, just to understand the context of that, I mean, it's GE Hamble, which I think is a single site. Presumably there's a lot more to GE Aviation. Can you talk about how this relationship may develop? It seems odd that they would pick to use you just in a single site, if you like. Thank you.
You take SOLIDWORKS and I take next year on cloud on relationships.
Yep. For SOLIDWORKS for the full year, that was clearly stated. We expect a 10% growth for the full year. If you compute the number on the year to date, we are at 9%. It should be easy for you to extract the growth for Q4. We are pretty confident.
SOLIDWORKS 2019 is out, and I think it's extremely well received by the market. Related to the cloud effect for SOLIDWORKS, we will see it as a marginal effect in 2019. A marginal effect from a revenue standpoint, but a very interesting effect from reaching new footprints, because as you may remember, we are doing SOLIDWORKS web-based capabilities on the 3DEXPERIENCE platform. With zero download, it's browser-based modeling. I think because it's a subscription model, it will be marginal to the total SOLIDWORKS revenue in 2019. We'll discuss about that. The GE relationship, in fact, for cloud, I think the fastest is 3DEXPERIENCE with all the industry solution, because this is now in operation, and it's quite successful in the implementation we have for vehicle, whether they are cars or even airplane on the cloud. We also said about packaging in the consumer packaged goods.
GE relationship, there is a positive dynamic here because GE is restructuring massively. Through that restructuring, it seems that what they thought was useful for them in terms of in-house development is less useful than what they thought. I think our platform is going to bring them value on analytics, value on many things that are welcomed at this point in time. As you know, GE is already a client. There were divisions that were not, and we are cracking the divisions that were not, and I don't see why it should stop. I think it will probably continue.
Great. Thank you.
With that, thank you very much for your question and participation this morning. Of course, we continue to be available to address any further questions. Have a good day, and we're going to enjoy the fourth quarter.