Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Dassault Systèmes Q1 2018 Earnings Investor Call. At this time, all participants are in a listen-only mode. A short overview will be given, followed by a question and answer session, at which time, if you wish to ask a question, you will need to press star and one on your telephone. I must advise you, this conference is being recorded today. I would now like to hand the conference over to François Bordonné, Investor Relations. Please go ahead, sir.
Merci, Valerie. Thank you for joining us on our first quarter earnings conference call. Presenting today are Bernard Charlès, Vice Chairman and Chief Executive Officer, and Pascal Daloz, Executive Vice President, CFO, and Corporate Strategy Officer. Some brief reminders. Dassault Systèmes financial results are prepared in accordance with IFRS. During 2018, the first year of implementation of IFRS 15, we're providing IFRS financial information on both an IFRS 15 and IAS 18 basis. All figures and comparison on this call are presented under IAS 18 and are on a non-IFRS basis, with revenue growth figures in constant currencies, unless otherwise noted. We have provided supplemental IFRS 15 and IAS 18 non-IFRS financial information, IFRS, non-IFRS reconciliation schedules in our earnings press release. 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 factors section of our 2017 Document de Référence. A copy of this morning's broadcast presentation is available on our website. These prepared remarks will be on our website shortly after the call. I would now like to introduce Bernard Charlès.
Thank you. Good morning and good afternoon to all of you. We delivered a very good start to the year on broad-basis growth, with 3DEXPERIENCE software up strongly. The first quarter performance and activity demonstrated the improving breadth and balance of our growth. Our strong software licenses and earnings per share results were well-aligned with our outlook, which support our 2018 financial objectives. We benefited from license revenue up 14% in total and acceleration in 3DEXPERIENCE licenses revenue, which increased over 50%, both figures in constant currencies. All 3 sales channels, all major brands, and 9 out of the 12 geos contributed to the performance in a significant manner. The first quarter also well illustrated our social industry experience strategy at work. Social is evident in the increasing cloud adoption and the introduction of 3DEXPERIENCE for SOLIDWORKS community.
The wins we will discuss are illustrating how we are game changers, driving customer-centric innovation, whether our clients' customers are consumers, citizens, or even patients. Finally, based upon our first quarter achievements and outlook for the year, we are confirming our financial objectives with a license revenue target of 8%-10% at constant currency. The 3DEXPERIENCE platform and industry solution experiences are bringing strong value to industry leaders who are serving as references as they lead transformations in their sectors and to industry shakers who are changing the game and looking to scale rapidly. Together, they are triggering a major evolution. You can see this all around you and all around the world. We are experiencing truly a global industry renaissance in some way, bringing new ways, real and virtual, of inventing, learning, producing, and trading.
Triggered by transformations, industry leaders are undertaking and the impact of newcomers to different industries. The leading business of the future will be those that empower the workforce of the future and their value networks with knowledge and know-how to deliver new categories of sustainable solutions. From our perspective, Industry 4.0 is yesterday's ways of thinking, with people applying new technology to old ways of working together. That is not enough. Digitalization is not enough either. It can be a catalyst. It needs more. Tomorrow is about the makers and innovators, basically the ecosystem, about inventing new things and changing the way you do things in order to innovate with the end customer or consumer in mind, leading also to the creation of new type of services and new content that industries can offer to their clients.
Our 3DEXPERIENCE platform functions truly as an operating system powering our industry solution experiences with, of course, our brand application set. As a business model, thanks to the marketplace services. Digital experience platforms are the infrastructures of the 21st century. They have transformed retail, transportation, and hospitality services. The industrial world is next. The 3DEXPERIENCE Marketplace positions Dassault Systèmes as a catalyst, as well as an enabler of this transformation by connecting buyers and sellers of design and manufacturing content, as well as services worldwide. Among the first services of the 3DEXPERIENCE Marketplace, which we opened last January, is 3D printing services enabling any buyers, someone who wants to produce a 3D part, to find a seller, someone who is going to produce that 3D part. We are becoming part of the transaction, bringing together the buyer and the seller, hence the term marketplace.
The sharp increase in 3DEXPERIENCE licenses revenue in the first quarter proves that our 3DEXPERIENCE platform, thanks to the comprehensiveness of our offer, of course, coupled with the POWER'BY approach, opens up entirely new market opportunities. The platform brings unparalleled added value for customers in terms of leadership as well as innovation. The 3DEXPERIENCE platform's unique value brought to clients is driving growth, increasing contribution and cloud adoption. During the first quarter, 3DEXPERIENCE licenses increased 53% in constant currencies. From a mix perspective, it contributed 34%, a nine-point increase over the year ago timeframe. Go lives are continuing with existing 3DEXPERIENCE customers extending their usage. Our new 3DEXPERIENCE investments are commencing with large customers, including adoption of the 3DEXPERIENCE POWER'BY, offered by customers in transportation, mobility, aerospace, and defense.
Formally introduced early this year, POWER'BY will enable all customers to benefit from the 3DEXPERIENCE platform's value immediately without any need for migration of legacy data. There are three levers to enable social collaboration: to leverage hybrid data for product configuration on bill of materials, or to use the full capability of the built-in application on 3DEXPERIENCE platform. We also saw our 3DEXPERIENCE cloud activity grow substantially year-over-year. Our cloud offer represents for large and small companies the possibility to reduce to zero the distance to their own clients. For the SOLIDWORKS users community, it represents the opportunity to benefit from a wide range of cloud services, from 3DEXPERIENCE PLM services to Marketplace or to SOLIDWORKS xDesign, a browser-based solution.
Kärcher, the world's leading supplier of cleaning technology, has adopted the 3DEXPERIENCE platform on the cloud to digitally transform its existing processes worldwide and be first to market with efficient resource-conserving cleaning system, products, and services. Kärcher is a member of the German Mittelstand, comprised of Germany's mid-sized companies who are world leaders in their market segment. In transportation and mobility, Evelocity, a new electric vehicle startup in the U.S. focused on urban mobility, has adopted 3DEXPERIENCE on the cloud with CATIA, SIMULIA, and ENOVIA process and solutions. Moving towards our new business in the quarter, Lufthansa Cargo, among the world leading in air freight carriers, offering tailored logistics solutions for a wide range of challenging freight consignments, has selected Quintiq to balance cost on service levels for optimal customer satisfaction. More broadly, Quintiq provides solutions to complex planning puzzles that all airlines face every hours of the day.
It is able to capture and request unique constraints, such as contract-specific requirements, labor regulation, and resource availability, as well as capabilities. Airline companies can define their efficiency, customer service, and profitability target, and Quintiq gives the tools and the feedback needed to plan accordingly to those targets. It also gives to planning departments the flexibility to handle last-minute schedule changes. Finally, just a few words on the life science business. In biopharma, companies are shifting toward patient-centric innovation in order to create more personalized and effective medicine. Manufacturing and quality control of biologics are much more complex and challenging than chemical components, triggering a shift to more predictive and adaptive manufacturing processes. In this regard, Gilead Sciences has selected our BIOVIA brand on our Made to Cure industry solution for continued process verification to produce as designed and as registered every time.
Let me now turn the call to Pascal. Pascal, you have the floor.
Thank you, Bernard. Good morning, and good afternoon to all of you. Thank you for joining us. In my presentations today, I will cover our first-quarter business review, financial highlights, and finish with our financial objectives. We apologize for the technical problem last quarter, which inadvertently cut off the short Q&A portion of the call. Let's begin. We expected a strong start to the year, continuing the trends we saw in the first quarter, and that was the case. Total revenue increased 9%, near the high end of our 7%-10% constant currency guidance range. Revenue, as reported, was EUR 771.2 million, versus our guidance range of EUR 750 million-EUR 770 million. Our currency assumptions were well in line with actuals. The operating margin expanding net 80 basis points at 27%, at the high end of the 26%-27% range.
We improve our operating margin 240 basis points, which enable us to absorb 110 basis points currently headwinds, as well as offset 50 basis points dilution from the acquisitions. EPS, thanks to the combination of the revenue operating margin expansions and the lower tax rates, grew 11% as reported, and 26% at constant currency. EPS was EUR 0.59 compared to our range of EUR 0.54-EUR 0.57, well in line with our EPS objective. Let's look in more details, beginning with our software revenue performance by regions. In the Americas, software revenue increased 11%, led by North America, with strong performances for SOLIDWORKS, SIMULIA, DELMIA, and BIOVIA. In Europe, software revenue was higher by 6% on a strong comparison base and was led by France and Southern Europe.
The most dynamic region during the quarter was Asia, up 16%, where we enjoyed a broad-based growth across Japan, China, Korea, India, and across our three channels. All of our major brands, CATIA, SOLIDWORKS, ENOVIA, and SIMULIA, delivered strong software revenue growth. The broad-based growth during the quarter also benefited from the good breadth from an industry perspective. We had six industries with double-digit software revenue growth, including transportation and mobility, industrial equipment, and aerospace and defense within our core industry. Within diversification, a very good performance from natural resources, consumer goods, and retail, and architecture, engineering, and construction. Moving to our brands, CATIA licenses revenue were up double digits, led by Asia on a strong growth in both our direct and indirect sales channels, and in the Americas with a good progression in indirect sales.
3DEXPERIENCE transactions represented more than half of the CATIA top 20 global wins in the quarter, coming from aerospace, defense, transportation and mobility, marine and offshore, and industrial equipment. We estimate that CATIA is involved in 80 electric vehicle programs, including the recent win with Evelocity, and become the reference in this domain. ENOVIA software revenue increased 11% this quarter, driven by large deals, and on a regional basis, was led by Asia and Europe. 3DEXPERIENCE represents over 75% of the licensed software for ENOVIA. SOLIDWORKS had double-digit licensed revenue growth on strong performances in Asia and the Americas. Other software grew 14%. In addition to SIMULIA, we had a good performance in manufacturing with DELMIA and in mining with GEOVIA. Let me focus on our SIMULIA brand and share some further detail with you. Over the last two years, we have significantly enhanced our multiphysics simulations capability.
We now cover more than 70% of the core physics market, with leading technology in structural electromagnetism, in particular high frequency, which is so critical to enable Internet of Things or smart products, smart mobility, and smart industry. Finally, in advanced fluid simulation with the next generation Lattice Boltzmann technology, with the Exa acquisitions completed in November of 2017, and our earlier fluid acquisition. In turn, we have strengthened our market leadership positions, and we believe that among all the PLM players, we are on a pro forma basis in the number 2 position from a software revenue perspective. Moving to the services, we indicated in February that 2018 will be a start of point for growth over the next several years, given the large increase in committed services engagements that we have. In the first quarter, we had a strong growth in 3DEXPERIENCE-related services.
Overall, services revenue was flat on a mixed performance by several brands. Services came in about EUR 6 million below our target. Operating margin. Our first quarter operating margin of 27% came in at the high end of our objectives and increased 80 basis points compared to a year ago first quarter. As mentioned earlier, we had an underlying improvement of 240 basis points in the operating margin, absorbed currency headwinds of 110 basis points, and offset acquisition dilutions of 50 basis points. Earnings per share was also well-aligned with our objectives. EPS increased 11% with currency headwinds, hitting our true progression. In constant currency, EPS increased 26%, benefiting from our revenue growth, operating margin performance, and lower effective tax rate. Our cash flow from operation was up 17% in the first quarter to EUR 407 million, reflecting our net results and improvement in working capital.
Excluding currency effects, unearned revenue under the IAS 18 increased 9% in total and 6% on an organic basis, well-aligned with recurring revenue growth figures on the same basis. In the appendix of the earning press release, we discussed the impact that IFRS 15 has on unearned revenue, therefore, the figures are not comparable at March 31 under the IFRS 15 and IAS 18. This is due to the fact that the March 31, 2018 balance sheet line items unearned revenue has been reduced by EUR 158 million under the IFRS 15, reflecting mainly the one-time permanent difference of EUR 110 million, the higher amount of recurring revenue recognized in the first quarter under IFRS 15 compared to IAS 18 in the amount of EUR 49.4 million.
Finally, we are reconfirming our full year objective for 2018 on a non-IFRS financial objectives for revenues, operating margin, and earnings per share, as well as our principal currency exchange rate assumptions. Underlying our objectives, let me provide key details. We are reconfirming our target for licensed revenue growth of 8%-10% in constant currency for 2018 to reflect improving breadth with an increased contribution from 3DEXPERIENCE and a good growth for SOLIDWORKS, but on a moderating from the 2017 pace. We expect recurring revenue up 7%-8% in constant currency, coming from solid growth in both subscriptions and support revenues. For services, we are confirming that it will be back on track on growth in 2018, up about 9%. With software performing better than services in the first quarter, we did moderate the growth rate for services from the 12% growth initially.
We are confirming an effective tax rate of about 29.7% for year 2018 compared to 33.2% in year 2017. These assumptions aggregate to a total revenue growth of 8%-9% in constant currency, an operating margin of 31%-31.5%, which embeds acquisition dilution of about 60 basis points and negative currency impact estimated at 40 basis points. EPS of EUR 2.83-EUR 2.88, representing growth of 6%-8% or 11%-13% at constant currency. Turning to the second quarter, let me begin with some key details supporting our financial objectives. First, with respect to the license revenue, we are targeting a growth rate of between 6% and 10% in constant currency, which will bring our first half license revenue growth rate to between 9%-12% at constant currency.
Second, a good level of recurring software revenue growth up between 8% and 9%. Third, services growth of about 9%-14%. Combined all together, we are targeting a total revenue growth of 8%-10% and an earnings per share of about EUR 0.65-EUR 0.68, representing a reporting growth rate range of 5%-10% on an FX currency headwind. The EPS growth rate at constant currency would be about 16%-22%. Let me turn the call back to Bernard Charlès.
Thank you, Pascal Daloz. I believe that the first quarter of 2018 illustrates very well where we want to go this year. First, we delivered a strong start to the year, on improved breadth and balance. Our long track record of performance with growth in revenue, earnings, and cash flow have been enriched by our multiple growth drivers. Second, our results demonstrate our strategy at work and our focus on strengthening our execution. As a result, we are expanding our market positions across the major value streams of our clients. Third, the 3DEXPERIENCE platform power both as an operating system and as a business model are now both evident with the introduction of our first Marketplace set of services. Fourth, 3DEXPERIENCE on the cloud opens up new market opportunities for industry expansion to new type of users and for business model expansion.
We look forward to welcoming many of you to our Capital Markets Day on June 15th, 2018, to meet with all members of the executive team, some of our next generation leaders and several of our clients. Pascal Daloz and I would now like to open the call to your questions, and thanks you for your participation in the call earlier this morning at the webcast.
Thank you, sir. Ladies and gentlemen, if you wish to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. You can cancel that request at any time by pressing the hash key. Your first question comes from the line of Jay Vleeschouwer of Griffin Securities. Please go ahead, sir.
Thank you. Good afternoon, Bernard and Pascal. A couple of questions arising from two Dassault events that occurred over the last two months. First, 3DEXPERIENCE World, in February, then last week, your customer conference in San Diego. At 3DEXPERIENCE World, it was quite interesting to hear that the company had communicated the objective to your channel of reaching $1 billion or more in SOLIDWORKS revenue within the next number of years. That would be your second $1 billion-dollar brand, of course. The question though is: What are you assuming in terms of any significant changes with respect to sales capacity or product mix to achieve that level of revenue? Are you assuming that you're going to be able to sustain double-digit new seat license growth as you saw in 2016 and 2017, to get to that level of revenue?
A couple of additional questions stemming from a call last week.
Pascal might want to Jay, thank you for the question, by the way, and thank you for participating to those two events.
As a lot was shared there by also customers. We don't expect any specific levers. As a matter of fact, there is a race between, I would say, if I may say so, you know well our solution. There is a race between our SOLIDWORKS brand and our SIMULIA brand. There's no expectation of any significant changes. I think if we extrapolate, it can be achieved in the timeframe we discussed. The mood of the resellers, as you may have noticed for what we call now the volume channel, is very positive, extremely positive. They are motivated. Of course, the expansion of the services we provide with the 3DEXPERIENCE platform, as presented at the 3DEXPERIENCE World, will help accelerate. We don't expect this to be the only reason to make it happen. Pascal?
Jay, thank you for the question. I will complement what Bernard said. Point number one, the SOLIDWORKS model could fly over EUR 1 billion with basically the existing foundations. Let me remind what are the growth drivers. One is basically the 2D to 3D migrations. Frankly speaking, when I look at the 2D install base, we still have a lot we can do before to convert them into 3D at 100%. Two, more and more, we are seeing a traction coming from 3D to 3D migrations. As you may know, with SOLIDWORKS and with basically the web package and this well-defined price point We are winning significant market share against almost all the entry-level and mid-range 3D solutions on the market. Last but not least, we are basically complementing the portfolio of SOLIDWORKS with new domain like obviously simulations, manufacturing, and so on.
Basically, if I mix those two, we have the very strong growth drivers. Now from a numbers standpoint, remember the 2D and the 3D migrations represent 70% of the revenue of SOLIDWORKS, 30% are coming from all the new extension we do like ENOVIA, simulations, manufacturing, and so on, and the extension are growing very well as well. My last point is when I look at where the new license growth is coming for SOLIDWORKS, it's also an interesting data point. 65% is still coming from new customers we are winning. Okay? Basically, this channel is a fantastic machine to establish a footprint on the market. 45% of the new license are coming from existing customers extending what they have. This balance, between 50/50 almost, is also another leg, if you want, to sustain the growth on a long-run basis.
I hope I gave you some data point to answer your question, Jay.
Yeah. Thank you. Yes. With respect to last week's event, which was more about the rest of the business besides SOLIDWORKS, there did seem to be, at least anecdotally, some interest in POWER'BY and adopting V6 and so forth. But how are you thinking about the metrics for the revenue impact for POWER'BY? In other words, when you think about perhaps additional revenues per customer or adoption metrics, how are you thinking about that? For instance, we learned last week at the conference that you now have approximately 3,200 customers on V6, up about 1,000 over the past year. Would it be fair to say that the average size of new deployments is increasing? Or maybe you could just talk through some of those metrics regarding V6 and POWER'BY adoption.
There are several reasons for us to go this way. The first one is, remember, if I look at the SOLIDWORKS install base compared to the CATIA install base, we are not at the same level of the install base being under maintenance. Okay? With this POWER'BY strategy, we want to give access to a new category of services for them to be able to catch the gap we have compared to CATIA when I look at the install base under maintenance. So this is basically a big lever, because not only you have the revenue coming from the 3DEXPERIENCE, but also indirectly you have the additional support revenue stream coming from basically this install base. It is a strategy we have already put in place partially, you remember with MySolidWorks. It was exactly basically the point.
Two, when we look at the type of services and the applications we want to add to complement the SOLIDWORKS desktop with the POWER'BY, it is also an interesting case. Because with ENOVIA, we are doing very well to manage the vaulting, as well as basically the basic product structure. If you are to go a step forward and being able to manage your configurations, I think we want to use the 3DEXPERIENCE platform with PLM services in order to do it. We see more and more cases like this, not only in the large, where SOLIDWORKS has a large install base for a given customer, but also when people are doing a little bit more complex products. For example, it is the case in the medical devices, in some industrial equipments.
The more you have, by the way, Internet of Things and connected object, the more the configuration is becoming something key. This is also basically a second reason, is also to be able to provide an advanced PLM capabilities in an affordable way using 3DEXPERIENCE platform on the cloud. Last but not least, you also have specialized products, and it is particularly true in the simulation space, where we do not have the capabilities available inside the desktop. So through this approach, you are able to connect the desktop with the native 3DEXPERIENCE applications. This will bring additional capability. If I take, for example, the architecture and constructions, you know this domain by heart, and you know that there are some architects or people into this space using SOLIDWORKS to do things.
If you are able to complement with the rest of the portfolio we have, automatically you have a much more broad and comprehensive product solutions. Those are basically the levers
One, to increase the subscriptions and the support. Two, to add additional capability on the PLM services. Three, to be able to expand the scope of solutions by adding some specialized products which are not part of the desktop solutions. This is the rationale behind POWER'BY.
That wasn't quite the question, but I'll just ask a final question regarding your cloud infrastructure. You seem to have now a few hundred customers on the PLM side of the business that are on the cloud, perhaps more. Is it your intent to have your cloud services provided solely by your own cloud infrastructure, meaning Outscale? Or do you think it would be wise to rely increasingly, for example, on working with Microsoft or other large-scale partners for cloud infrastructure?
Today, we do leverage Amazon AWS very successfully. It's very efficient. It works well. We have these dual possibilities between our own infrastructure on AWS. At this point in time, customers are very satisfied, and it has never been a topic of doubts or debates. In the future, we will do more with local telcos, because we are putting a lot of attention on sovereignty for certain type of usage, where there is a need for territorial-centric services. We have those type of customers. The unique thing about Outscale, which is not anymore only seen as one element of Dassault Systèmes, is that we have created our own PLM for multiple cloud. We can manage unlimited number of cloud environment, including private clouds or on-premise cloud for certain large companies. More to be discussed there, but the strategy is very clear.
The precise answer is more toward telco connection, where we want to look at partners who are certified by governments.
I understand. Okay. Thank you, Bernard. Thank you, Pascal.
Welcome.
Welcome, Jay.
Thank you. Once again, it is star and one if you wish to ask a question. Your next question comes from the line of Monika Garg of KeyBank. Please go ahead.
Hi. Thanks for taking my question. The first one, SIMULIA, I think if I remember correctly, first time you have mentioned about 15% of revenue for Q1. Fair to think that SIMULIA is at least running at 15% of the yearly revenue also? Where do you think this business could be a part of total revenue?
Hello, Monika. Pascal, you take the question?
I will take the question. Feel free to add what you want. You're right. It's first time we are disclosing the weight of the SIMULIA business in our total revenue. I confirm that 15% is basically representing, it represents not only for the quarter, but basically for the overall year. You are right. Why we do it, there are few reasons behind this. One is because now it's material, and it start to be visible. Also because we want you to give some capability to benchmark what we do with our peers. I think if you look at the track record of simulation for the last few years, I think we enjoy a significant growth and good momentum.
Obviously, in the structural analysis, which is the core of what we do, but also in the new extension we did recently in the high frequency as well as the fluid dynamics. This is basically the reasons behind this, your assumption is correct, Monika. Thanks. You have made some acquisitions in simulation recently. Do you think you have all the pieces of different types of simulation, or you still think there is something missing?
The answer to that question has to be put in perspective of the industries we serve. We are really focusing on 12 industries, 70 segments. If you look at physical goods, we have a quite comprehensive and complete offer. If you look at bioscience, on the bio world and life science, there are a lot of opportunities, and there is also a huge market. We have really been clear on the fact that the life science, bioscience, biomaterials, and so on, are at the core. It's at the core. It's not adjacent. At the core of the future of Dassault Systèmes. The world of modeling and simulation is expanding due to those three. If you remember, I call them the spheres. One sphere is the product you make. Another sphere is the life science, the life world, the bio world. Another sphere is the geo world.
We are going to balance and cover those, because the world of simulation today is very fragmented. It's a collection of niche things, and the problem is the world does not work with niche things. They have to be integrated to understand what is happening in the real world. Yes, in short, we will continue to invest.
Got it. I have a question on demand trends. Caterpillar, the big industrial equipment producer, yesterday said that cost of manufacturing is going up because of some tariffs in U.S. and other reasons. Also said there could be some trade issues between U.S., China, which could impact results, which they don't know yet. The question I have is could you talk about demand trends you are seeing in all of your geographies? Has any of your customers highlighted any of these issues?
No, not really. To be simple, the pipeline is a good pipeline, as Pascal mentioned this morning. The type of customers we have, and we have large companies and also a lot of mid-size and small companies, they will adapt to the business constraints. We are truly global. We grew 16% in Asia. You have seen quarter-over-quarter in the last 10 years, evolution from quarter to quarters between Americas, Asia, and Europe. There is still a lot of things to be built in the world, and no specific, yes, concerns expressed from a geopolitical standpoint, but not from the investment standpoint.
Got it. Thanks. Just a couple of more, if I may. How much is Boeing contributing in 2018, and how much could it be in 2019?
I will take this one. Maybe a bit early for a guidance 2019, Monika. Nevertheless, I already answered the question this morning, I owe you this answer. It's less than EUR 10 million for this year. EUR 10 million is not the total revenue. Of course, the incremental revenue. The incremental.
Yes.
This is what we are talking about, Monika, I'm sure. I want to make sure for the others that they do not make the confusion between EUR 10 million on the revenue we get from Boeing. For next year, the impact will be around one point on a recurrent part of the revenue.
Okay. One point on top of the EUR 10 million of incremental this year, right? Higher. Okay. Got it.
Yeah.
Thank you so much for the color. Just can you remind the Boeing deal, is it for all the products, like for CAD design, PLM, simulation? Is it?
No. I will answer, and you will complement. Point number one, in the deal right now, we told you some indication about not giving the exact number, we say it's more than three times what we do on the long run. It's basically the 3DEXPERIENCE platform, the ENOVIA, as well as basically all the product line related to manufacturing. Simulation is not part of it. It's in addition.
All right.
Regarding CATIA, again, it's basically not everything in CATIA. For example, all the new things coming from CATIA system are not part of it.
Perfect. Thank you. Very helpful. The last one just here. If I look at 2018 guidance, which you are retrading, there you have guided to license up 8% to 10%, constant currency, I'm talking only. Recurring revenue, talked about 7% to 8%. The question is, are you seeing more demand that means for perpetual licenses, and that's why that growth is much higher than your recurring revenue than from subscription license?
In fact, you're right. We are offsetting basically the gap in services, which is around EUR 6 million, not a big deal, with more subscription revenue. We are pushing a lot for subscription. By the way, all the new cloud win are by definition that way. The snowball will come later, which is what we like. Nevertheless, if you look at this quarter, Monika, the subscription part of the recurring revenue is growing at 26%. And if you, on a pro forma basis, if you exclude Exalead, because Exalead is mainly a subscription model, it's +10% organically. I think it's good traction.
Perfect. Thank you so much. Really appreciate your time and color.
You're welcome.
Thank you.
With that, is there Please go on, Valerie. Sorry.
I was just advising you that there are no further questions, sir.
Okay. Thank you. Thank you very much all of you for participating. As always, we are available to address any further questions on, please remember our June 15, right? Yep. June 15 on campus for the giving you more visibility. Thank you very much for following Dassault Systèmes. Have a great day, and we are up for the next quarter. Thank you. Thank you. Thank you. Bye-bye.
Thank you, ladies and gentlemen, that does conclude your conference for today. Thank you for participating, and you may now disconnect.