Dassault Systèmes SE (OTC:DASTY) Q4 2022 Earnings Call Transcript

Dassault Systèmes SE (OTC:DASTY) Q4 2022 Earnings Call Transcript February 2, 2023

Operator: Good day and thank you for standing by. Welcome to the Dassault Systèmes Fourth Quarter and Full Year 2022 Earnings Presentation Call. At this time, all participants are in listen only mode. After the speakers’ presentation, there will be the question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Beatrix Martinez. Please go ahead.

Beatrix Martinez: Thank you, . And thank you for joining us on our fourth quarter 2022 earnings conference call with Bernard Charles, Chairman of the Board and Chief Executive Officer; Pascal Daloz, Deputy Chief Executive Officer and Chief Operating Officer; and Rouven Bergmann, Chief Financial Officer. Dassault Systèmes’ results are prepared in accordance with IFRS. Most of the financial figures discussed on this conference call are on a non-IFRS basis, with revenue growth rates in constant currencies unless otherwise noted. Some of our comments on this call contain forward-looking statements that could differ materially from actual results. Please refer today’s press release and the Risk Factors section of our 2021 Universal Registration Document. All earnings materials are available on our website and these prepared remarks will be available shortly after this call. I would now like to introduce Bernard Charles.

Bernard Charles: Thank you, Beatrix. Good morning and good afternoon, everyone. Thank you for joining us. It is always a great pleasure to be with you today. We had a strong fourth quarter, wrapping up a very good 2022. We met or exceeded our financial objectives across the world. For the full-year, revenue increased 9%, driven by continued momentum in subscription, which is up 15%. Our strategic growth drivers performed well, with both 3D experience on the Cloud revenue rising 22%. We delivered strong profitability, with earnings per share up 19%. At the same time, we continued to invest to support our long-term growth, increasing headcount by 10%. Looking to 2023, we are on track to achieve our 2024 EPS objective of €1.20, almost a year in advance.

The governance evolution we announced last April is now in effect. I’m confident we have laid a strong foundation to support our growth well into the future. We are delivering on our financial commitments, Pascal and Rouven will discuss our performance further, in a moment. And just as important, we advance our purpose, creating sustainable value for all stakeholders. With generation of architecture, Dassault Systemes has been the catalyst and enabler of scientific, industrial, ecological and societal transformations. Every decade, we have disrupted the status quo. We have unflattened the world replacing growing by 3D representation. We have removed physical prototyping, thanks to digital market. And we have connected products and processes, virtually with product lifecycle management.

And now with the EXPERIENCE platform, we expand beyond the product and the service to the experience, which is, in fact, the final use by the consumers. Virtual Twin Experience of Humans is the next big step that you are all aware of. We are expanding from things to life. Virtual Twin Experiences for a Sustainable World must be part of this journey. As we look to our next horizon, let’s say 2040, we believe fostering the connection between the experience economy and the sustainable economy requires going far beyond a transformation. We think it is a real metamorphosis which is required. In fact, we can learn so much from life and apply what we learn back to things. While Virtual Twin aims at representing reality, experiences requires deep science.

Our science-based experience rely on a range of multiscale disciplines, biology, chemistry, material science, mechanics and electromagnetic, for example, allowing our AI engine to transform the gigantic unorganized data into structured knowledge and know-how. These virtual assets are becoming the enabler of new products and services to the end consumer, to citizens at large, which is what consumers are expecting, not just the virtualization of the product, but the virtualization of the product in context of its usage. This is what we call the experience economy and this is what experience is all about. The growing adoption of Virtual Twin, being able to experience it is mission critical for our clients across all sectors to address the customers’ needs with differentiated experiences and to reimagine their portfolio on service for sustainability.

It’s very linked to the purpose that we have in 2012 when we articulated our company mission, harmonized product nature on life, the real purpose of Dassault Systèmes. At that time, many did not fully understand our deep commitment to leveraging science and technology to benefit society, but today, I think it’s well understood. We need to change the way we produce and consume. With virtualization, we have transformed the processes of creation, the processes of production with a holistic approach to circularity, incorporating frugality on end of life into the design stage. We enable companies and society at large to measure a balance and balance what it takes and what it gives back to the planet. We call this the eco-bill. Working together, we can imagine new horizon and improve the work for consumers, passion, and citizens.

We have this quarter a good proof of that. We received an outstanding ESG Evaluation from S&P Global and our outperforming the tech sector, as well as the overall market. So, I think it’s a clear indicator. We walk the talk. Before I conclude, the governance evolution that has been announced, that we crafted over many years to support the company’s long-term strategy is now in effect. As Charles Edelstenne, our founder and significant shareholder of Dassault Systèmes, take the role of Honorary Chairman and remains a Director, I look forward to continue our collaboration that we illustrated for 40 years, the entire history of Dassault Systèmes. We will replicate or plan to replicate this successful tandem with Pascal Daloz, who have been leading many of the activities of Dassault Systèmes for the past years from brand, R&D, strategy and many domains, a great experience, 20 years of experience already.

And we share the same conviction, the power of science-based virtual universes drives value and progress for humanity, for all stakeholders. Together, we will continue to advance the company’s legacy onset valuable ambition to realize our purpose. Now Pascal, as Deputy CEO, congratulations. The floor is yours.

Pascal Daloz: Thank you, Bernard. Hi, everyone. It’s a great pleasure to be with you today. I’m very thrilled to take this new role. And at Dassault Systèmes, we are focused on the long-term that include our teams, and thank you for having invested in me and prepare me well. So, we have enjoyed a successful collaboration for the 20 years, and I look forward to the next 20. So, in fact, we are just getting started. Are we, Bernard?

Bernard Charles: We are.

Pascal Daloz: So, it goes without saying that in my new role, I will remain deeply committed to helping clients overcome challenge and realize their ambition with game-changing innovations. So, in 2022, we unveiled the 3DEXPERIENCE loop, IFWE Loop representing the company unique ability to seamlessly link the value creations with the value experience. And I think this strategic fit opens up a significant opportunity to expand the value proposition on one hand, but also to reach new audience on the other hand. So, let’s zoom on a few proof points we have this quarter. In manufacturing industry, the transition to sustainable experiences is impacting all the subsectors from the new mobility to the clean energy. And we are leading the change as we have done for half a century, with both the large incumbent transforming, but also the new entrants.

I think the science and technology we provide are the foundation for electrification, battery development, and manufacturing. And this is a true race to innovate. Scale and speed are really crucial in this game. But at the same time, today, operating environment is incredibly challenging with unprecedented volatility in the raw material costs and availability, and this is reshaping the supply chain and value networks. So, to adapt, customers are expanding the way they use our technology, building the virtual twin of their company with 3DEXPERIENCE platform and the cloud. So, it’s not anymore the virtual twin of the products, it’s the virtual twin of the company how we make things. And to do this, they are combining the virtual twin with the real-world evidence, the data science and AI to lead the transformation of the entire organization.

We have an excellent example this quarter with Renault, continuing to foster the company groundbreaking revolutions announced last year by the CEO, Luca de Meo. With 3DEXPERIENCE and cloud, Renault is utilizing the data science and AI to project the impact of the raw material costs and also the variations in real-time to secure resourcing on one hand, but also the margin. And this is replacing 100,000 documents exchanged every week with all the suppliers. With the agility of the cloud, we have been able with Renault to execute the go-live with over 2,000 employees in just one month and reaching new audience such as procurement, finance, costing, FP&A. And with this initiative, I think we are also preparing Renault very well to measure the energy and the environmental impact of each vehicle in real-time.

That’s the first example. If we turn now to Life Sciences, this sector is also transforming extremely rapidly to accelerate the drug development, improving efficiency, and scale to precision medicine. This poses a particularly unique challenge in biologics because it’s derived from the living cells and biologics are highly complex and sensitive to minor differences in environments and processes and often require smart injectors. Needless to say, developing and producing biologics require deep scientific technology. In the fourth quarter, Amgen, one of the world’s leading biotechnology companies using already MEDIDATA, BIOVIA, and SOLIDWORKS, is deploying the 3DEXPERIENCE platform and the cloud to unify three things. The first one is all the applications we are providing, but also all the custom applications have developed by themselves with a single source of truth.

The second thing they are unifying is the life cycle management of the APIs, the ingredients for the drugs, if you want, the drug itself, the devices and all the processes to accelerate the tech-transfer to manufacturing. And the third piece is a unifying approach of the chemicals and the biologic manufacturing to ensure the quality and improve the regulatory and compliance. I think we are extremely pleased to continue to support Amgen as it advanced the patient journey. And driving this transformation in Life Sciences is a long-term opportunity, and we are not even in the first inning. I think we are pioneering the innovation with durable competitive advantage, and we are really the one changing the game for clients and also for the patients.

This is the second example. Third example is coming from the infrastructure and cities and especially energy. As you know, the geopolitical events of last year brought sustainable energy supply cost and independence to the front-end of the global community, especially in Europe. And the solution to the crisis has been pursued with urgency, and interest in the nuclear energy long forgotten is seen as a resurgence. And in fact, I was checking some numbers. The International Energy Agency expects the global nuclear power capacity will need to double by 2050 in order for the world to reach the net zero emissions. So, to unlock this potential of carbon-free nuclear power, we need to achieve a new scientific breakthrough and ensure, at the same time, the collaboration of the entire value network from the operators to the suppliers and the regulators.

And I think with the science-based Virtual Twin Experiences, we are the leader in this industry, working with nearly all the nuclear energy players from the incumbent like EDF to the new disruptors such as Neha or to the government agency like CEA. And this quarter, we have another proof point, which is Framatome. And Framatome is adopting this 3DEXPERIENCE platform to ensure the quality and the safety, and at the same time, reducing the cost and capitalizing on innovation. As you can see, many of our example we are using and proof points, in fact, using this 3DEXPERIENCE platform and the cloud. And this adoption is really broad-based across the geographies, the industry and the product and by both the new entrants and the incumbent. And I think this is reflecting our strong cloud offering.

I think we have now more products available on the cloud than we have on-premise though the scope of solution is extremely broad. We are operating at the highest standards of global security and availability, and with 3DS OUTSCALE, we have a unified cyber governance offered to three level of trust cloud; the dedicated one, the private one, and the international one. Now, let’s say a few words about the performance and we start by the geography. In the Americas, growth accelerated to 11% driven by a good performance in Life Sciences, High-Tech, and Aerospace, and we see also a continuous strong preference for the subscriptions. And Rouven will come back on this. In Europe, I think we have demonstrated the resilience, increasing 6% ex-FX, driven by an excellent result in France and the south part of Europe and also driven by transportation and mobility and aerospace from an industry standpoint.

Asia Pacific rose 7%. India and Korea were up double-digit this quarter and year-to-date. And Japan performed extremely well with up mid-single digit for the quarter and double-digit for the full-year. This is, in fact, offsetting the slowdown we have seen in China. China is growing single digit as extended shutdowns continue to weight on the activities. Now, let’s zoom on the different product lines and I will start by industrial innovation. We delivered strong growth with the software revenue, up 11% driven by CATIA and extremely with having a good momentum with revenue up mid-single digits in Q4. And this growth is coming from different pieces. The first one is the cyber systems, which is one of the domain of CATIA, which has been adopted by the large industry starting with aerospace, and we’re expanding more and more in the auto sectors and also in energy, but also the new generation of CATIA, the one being based on the 3DEXPERIENCE platform.

And this quarter, again, we have a good momentum and good demand coming from Aerospace & Defense, High-Tech and Transportation & Mobility, specifically on Electrification. ENOVIA had an outstanding quarter, also reporting a very high, I should say, double-digit revenue growth, driven by the 3DEXPERIENCE platform. And SIMULIA also displayed very good growth, up double-digit, driven by high-tech sector specifically. Now, I want to say a few words about the competitive landscape. I think we continue to expand our market share and leadership positions. And we computed that in 2022, the win rates in average was above 80%, if not 100%, in some specific cases, right. For example, we are replacing Agile largely in the High-Tech sector, especially in the tech giants of the Silicon Valley.

In Life Sciences, software revenue rose 12%, and we continue to have an excellent performance of MEDIDATA this quarter and BIOVIA is back. We have a mid-single-digit growth, thanks to the customer adoption in both Life Sciences, but also material science because you remember with BIOVIA, we are also serving the material science, and this is extremely core for the sustainability. We continue also to expand the broad portfolio, including ENOVIA and DELMIA and other leading brands. As you have seen with Amgen this quarter or Sanofi or Boehringer Ingelheim and Novartis recently when the press release we communicated the last few quarters. Now, let’s turn to the mainstream innovations. The revenue increased 3% this quarter and during the fourth quarter, but also throughout much of the year, the mainstream market was impacted by the macroeconomic uncertainty, particularly by the high level of inflations, which basically delayed the decisions to invest, but also by the China COVID shutdowns, which continue to be a headwind for us affecting the SOLIDWORKS results, specifically in the upfront license growth.

And again, this quarter, that’s what we have seen. In terms of potential reopening, we are hopeful for the full-year, but still cautious for H1. I think now it’s time to hand over to Rouven, who will give more detail about the revenues of profitability, but also our 2023 objectives. Rouven, you have the floor.

Rouven Bergmann: Thank you so much, Pascal, and thank you, Bernard. Welcome from my side as well. Good morning, good afternoon. Simply put, we had a very good fourth quarter and total revenue is growing 16% as reported and 10% at constant currency. And this is relative to a high comparison base. These excellent results reflect the confidence and the trust that our customers have been working with Dassault Systèmes, especially in times when volatile macroeconomic challenges require to accelerate change. Software revenue rose 9% at constant currency in the quarter, driven by strong recurring revenue up 11% and subscription revenue growth accelerated to 18% in Q4, while license revenue recognized upfront grew a healthy 5%. The combination of subscription and upfront license revenue together rose 12% at constant currency during the quarter.

The combined growth of both revenue streams is a good measure to look at the new business growth, irrespective of the contracting model, and the customer preference. And as we continue to increase our share of subscription revenue, it is our conviction that aligning with the business models of our customers across the geos and industries by offering the flexibility of both subscription and the CapEx-oriented license model, creates a unique differentiation of our platform. Now, rounding-off the good performance of the quarter, services revenue increased 15% at constant currency during the period. Fourth quarter operating margin was 34.9% and earnings per share rose 20% to €0.34 as reported. This strong finish complemented very good results for the full-year 2022, well in-line with our revenue objectives and demonstrating the resiliency of our model with total and software revenue up 9%.

Recurring revenue grew 10% at constant currency and averaged now 78% of software revenue for the year, an increase of 70 basis points relative to last year. While upfront license revenue was up 6%, we continue to deliver strong subscription growth for the full-year, which was up 15%. And here, I want to highlight an important takeaway and milestone for you. Because for the full-year 2022, subscription revenue was 1.5x the level of license revenue and is growing significantly faster. This is an important milestone, as I said, and as you will see in our 2023 outlook, it is the foundation of our growth model in the future. Together, subscription plus upfront revenue was up 11%. In 2022, we fully executed our strategic investment plan, aligning us with our long-term growth initiatives.

We capitalize on these investments in 2023 and beyond, and I will elaborate further on this point in a moment when I talk about the 2023 outlook. At the same time, as you can see from the numbers, we delivered on our profitability objectives. For the full year, earnings per share grew 19% to €1.13 as reported. This was well ahead of the objectives we set at the beginning of the year. Now, let’s move to our growth drivers of 3DEXPERIENCE and cloud. They both delivered excellent results again this quarter. And as you heard from Pascal and Bernard, clients from large established enterprises to also new players and disruptors are adopting 3DEXPERIENCE and cloud to unlock the full potential of virtual twin experiences to accelerate innovation, scale operations, and propel growth.

3DEXPERIENCE revenue grew 24% at constant currency and accounted for 37% of software revenue in Q4, an increase of 4 points relative to last year. On a full-year basis, the growth was 22% with a share of 33% of software revenue, which is up by over 3 points. Cloud revenue was 22% ex-FX, driven by continued strong MEDIDATA performance, up 13% on top of a strong comparison base and a very healthy growth in 3DEXPERIENCE and cloud. For the full-year, the cloud revenue is up 22%, and it’s improving its share by 3 points to 23 points of software revenue €“ to 23% of software revenue. Now, let me turn to the fourth quarter financial results and how we performed relative to the objectives we set. Total revenue of 1.584 billion was 36 million higher than the midpoint of our target range, reflecting the resilience of our model and strong execution by our team.

We reported software and service revenue above the midpoint by 7 million and 10 million, respectively. As well, we benefited from FX impact of 19 million during the period. We reported an operating margin of 34.9%, which is in-line with the objectives, relatively stronger revenue growth, partially offset by higher expenses, resulting in a net negative small impact of 0.5 points. There was no FX effect on the margin as revenue and expense impacts offset one another during the period. It is clear from the numbers we delivered on our profitability targets. And at the same time, we hired 400 net new team members in Q4. And we fully completed our strategic investment plan. As you heard from Bernard, we grew headcount by 10% year-over-year overall and with more than 50% of the new R&D hires in India.

And of course, a significant portion of these hires continues to fuel MEDIDATA’s momentum. Now, turning to the fourth quarter earnings per share. We delivered strong growth of 20% to €0.34 as reported, well aligned with our objective range, which was 12% to 18% growth. The growth in Q4 EPS benefited from two topics: first, a lower tax rate and higher financial income contributing €0.012; and secondly, a slightly more favorable U.S. dollar-euro conversion rate, which had an impact of €0.005. The non-IFRS tax rate for the quarter of 19% versus our guidance of 21.4% was driven by a continued benefit from higher FDII tax reductions in the United States. Now, let’s turn to the cash flow and balance sheet items. Cash and cash equivalents totaled 2.769 billion, compared to 2.979 billion at the end of last year.

This reflects a decrease of 210 million. Our net financial debt at December 31, 2022, decreased by 662 million to 227 million, compared to 889 million at December 31, 2021. This keeps us well ahead of schedule on our deleveraging objective. Now, let’s take a look at what is driving our cash position at the end of 2022. First, the operating cash flow is slightly down year-over-year by 5%, mainly due to two effects. First, let’s look at the changes in operating working capital. The timing and seasonality played a critical role in the second half of the year as collections in Q4 were impacted by lower Q3 activity. At the same time, in Q4, we signed large deals and renewed invoice before the end of the year, and this resulted in a strong increase of receivables.

And as you expect, we will see the corresponding positive impact at the time of collections in early 2023 in Q1. Secondly, as it relates to the change of nonoperating working capital and the evolution of noncash items, the largest impact is related to higher tax payment in the United States in 2022. And as discussed in previous quarters, this is due to the mandatory capitalization of R&D expenses for tax purposes. And consequently, the deductibility of this expense is delayed, resulting in an increase of cash taxes we pay. The total of one-time net cash impact for the full-year was about 130 million. Adjusting for this amount, plus an unfavorable impact from the delay of tax reimbursements, cash flow from operations would have been up 5% on a strong 2021 baseline.

As we’ve said before, we are committed to returning value to our shareholders through innovation, strategic acquisitions, stock repurchases, and the prudent use of debt and our dividend. Consequently, in 2022, we used operating cash for share buybacks, net of proceeds from stock option exercises at a total of 379 million. We paid our dividends of 224 million, and we repaid debt at the level of 886 million, net of proceeds from 250 million commercial paper issued in the second half of the year. Lastly, of note, we had a benefit of 71 million from FX during the year, which is much less than at the end of Q3, due to the strong increase of euro versus U.S. dollar in December of 2022. Now, let’s turn to our fiscal 2023 objectives. Looking to 2023, my key message is that we are on track to achieve our long-term financial objective of €1.20 earnings per share well in advance.

This underscores, again, the resiliency and the focused execution to double EPS according to our long-term plan. Total revenue is expected to grow between 8% to 9% at constant currency to a range of 5.925 billion to 5.975 billion. Software revenue growth rates are in-line with 8% to 9% growth. We anticipate recurring revenue to increase by 10% to 11% and license revenue recognized upfront to grow between 2% to 5%. As such, we expect the share of recurring revenue to increase by 100 basis points for the full-year to now 79% by the end of 2023. We are forecasting subscription revenue to accelerate growth by over 200 basis points to a range of 17% to 18% for the year, driven by continued strong 3DEXPERIENCE and cloud growth of approximately 20%, which keeps us on track and on trajectory to achieve our target of 2 billion by 2025.

As we always said, it is our objective to progressively increase the share of recurring revenue from subscription and cloud. At the same time, we continue to leverage our leadership position to capture more of the market and increase our growth rate of new business. Now, this is reflected in the combination of the growth of subscription and upfront revenue from licenses, which is expected to accelerate by 200 basis points to a range of 11% to 13% in 2023. For services revenue, we are targeting 5% to 7% growth, reflecting robust activity, delivering innovation to clients across all segments and this good margin. Now, let’s turn to profitability. Our 2023 operating margin objective is 32.3% to 32.7%. This is 60 basis points below last year and reflects the carryover effect from our 2022 investment plan.

Last year, to compensate for the relatively lower levels of investment during the pandemic, we accelerated hiring engineers, sales and services resources to sustain our long-term growth. As I mentioned earlier, this investment plan has been successfully completed. This year in 2023, we will capitalize on the previous investments and reduce the hiring rate significantly to absorb the run rate and reduce the expense growth, which will allow us to snap back the margin level of 2022 by 2024. Before closing, let me briefly share our objectives for the first quarter to give you some color. We are targeting revenue growth of 7% to 9% at constant currency, with recurring revenue increasing 10% to 11%. Again, this is driven by strong subscription growth in the range of 12% to 16%.

We are forecasting upfront license revenue growth down in the range of negative 7% to negative 2%. The reason for the soft start in the year is simply a very strong comparison base of Q1 2022 and the high potential of continued headwinds for our business in China. While we are hopeful for a return to more normal operations, we want to be cautious at the same time. For service revenue, we are predicting 11% to 12% growth in Q1. In terms of profitability, we are forecasting operating margin of 30.7% to 31.3% and diluted EPS of €0.27 to €0.28. This reflects the seasonally lower margin profile in Q1 and higher expense levels from the carryover effect mentioned above, which will improve throughout the year. And also, please keep in mind that Q1 last year was exceptionally low in terms of expenses as many COVID-related restrictions were still in place.

And of course, for additional information and to review what we’ve just discussed, I refer you to today’s earnings presentation. Now, I would like to conclude. 2022 was a year of highlighting the resiliency. We continue to advance our strategic priorities, gaining market share, and strengthening our leadership position. You see this reflected in the acceleration of both the recurring revenue and the subscription revenue growth, which is driven by 3DEXPERIENCE and cloud. We completed our investment plan to support our long-term growth opportunities, while delivering on our profitability targets with an EPS growth of 19% for the year. For 2023, we are providing a strong guidance despite the challenging macroeconomic backdrop, positioning us to advance towards our EPS objective of €1.20, which puts us ahead of the schedule.

And therefore, we invite you already this year to our next Capital Market Day this coming June at our headquarter in Paris to talk about the next long-term financial plan, and we hope that you can all join us. And now, Bernard, Pascal and I will be very happy to take your questions.

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Q&A Session

Operator: Thank you. Now, we’re going to take the first question, and the question comes from the line of Nicolas David from ODDO BHF. Your line is open. Please ask your question.

Nicolas David: Yes, hi, good afternoon. Thank you taking my questions. I have three. The first is related to the mainstream business and the growth we can forecast for 2023. Because on the one hand, it seems that some of the SMEs in the industrial equipment might be postponing some investments, and also the weakness of the business in 2022 might probably impact the recurring revenue for 2023, but on the other hand, China could bounce back. And you mentioned earlier today that the pipeline in Aero and Mobility is good. So, all-in-all, could you give us some color? And all-in-all, could we expect the main three segments not to be dilutive for the group growth in 2023 or is it too optimistic? And my second question is regarding your assumption on price increase for 2023.

What are the assumptions on your guidance? And my last question is, we talked this morning about the impact of cloud on your margin and it’s pretty clear that it has no impact, but we didn’t talk already about cash flow, potential cash flow impact to other cloud and subscription. Should we be aware of some structural change on your working cap implied due to the move to subscription? Thank you.

Pascal Daloz: So Rouven, I take the first one, right, and you will probably cover the two others. So Nicolas, in fact, for €“ to help you to modelize and to predict the trend for the mainstream market, you should start from where we landed in Q4, right? And progressively over the year to be back to what we are targeting, which is 8% to 9%. And there are two reasons for that. One is the base effect is not helping us on the first half. It’s really helping us much more on the second half. And as you say, we still have uncertainty on the reopening for China. And I think at this stage, we just want to be cautious because we do not have the evidence that it’s so easy. And remember, the reason, which is €“ the main reason why the growth is sometimes constrained by the confinement is, in fact, the people cannot travel within the country, it’s a huge territory.

And it’s one of the region of the world where we do business by visiting the customers, by coming on their premise, demonstrating the products. So, we are still doing the business this way, and that’s the reason why, before to have the clean situations, I think it will take certain times. So, that’s how you should modelize it, so from 3 to 4, right to 8 to 9.

Rouven Bergmann: Okay, and I’ll continue. On the price increase, Nicolas, the situation is, we successfully implemented a price change in 2022. And this comes in effect when clients renew, when clients purchase new software from us. We typically have annual renewal cycles. So, you will see even some of those come into effect in 2023 from the price increase in 2022. And when we will adjust our prices in 2023, you will see the same effect as this €“ it’s an ongoing effect. And the average price increase was €“ that we put in place within the range of our inflation rate and how we adjust it, for example, for salaries. Again, this doesn’t come into effect immediately everything in one-year. We have it over two to three years where you see that increase reflected.