Dassault Systèmes SE (OTC:DASTY) Q4 2025 Earnings Call Transcript

Dassault Systèmes SE (OTC:DASTY) Q4 2025 Earnings Call Transcript February 11, 2026

Dassault Systèmes SE beats earnings expectations. Reported EPS is $0.4744, expectations were $0.47.

Marie Dumas: Good morning, everyone. I’m Marie Dumas. I’m the new Investor Relations Director for Dassault Syst�mes. Some of you might recognize my voice from my previous role at the company, and I’m delighted to reconnect with many of you today. Joining from Dassault Syst�mes with me are Pascal Daloz, our Chief Executive Officer; and Rouven Bergmann, our Chief Financial Officer. On behalf of the team, I’d like to welcome you to Dassault Syst�mes Fourth Quarter and Full Year 2025 Earnings Presentation. Following the presentation, we will open the floor for questions. First, from the room, and then from participants joining us online. Later today, we will also host a conference call. Dassault Syst�mes results are prepared in accordance with IFRS.

Most of the financial figures are presented on a non-IFRS basis, with revenue growth rates in constant currencies, unless otherwise noted. For an understanding of the differences between IFRS and non-IFRS, please see the reconciliation tables included in our press release. Some of the comments we will make during today’s presentation will contain forward-looking statements, which could differ materially from actual results. Please refer to our risk factors in our 2024 document d’enregistrement universel published on March 18. With that, I will now hand over to Pascal Daloz.

Pascal Daloz: Good morning, everyone. Thank you for joining us today to review the Dassault Syst�mes performance for the fourth quarter and the full year 2025. Let’s start with an opening comment, which is at Dassault Syst�mes, we do not manage only for the quarter. We build platform that lasts for decades. I think 2025 was a year of transition. 2026 is a year of executions. And I think those 2 years are financial foundations because they are the year when we prepare the next cycle of growth, scale and long-term value creation. So let’s start with the facts. 2025 was a disappointing year for you, but also for us. We finished at the low end of our objective with 4% growth, excluding foreign exchanges. I think this performance does not meet the standard we set to ourselves as part of the long-term plan.

And we own that. That said, we moved the company for a while. And I think we made meaningful progress on the priorities that matter the most for the long-term success. What moves forward? First, the 3DEXPERIENCE and the Cloud. I think we deliver significant wins and competitive displacement. And in 2026, we will build on this momentum, turning headwinds into tailwinds and deepening our leadership in industrial AI. And I think our ambition is clear, it’s to remain the partner of choice for all the industries. Second, MEDIDATA and Centric PLM, they faced challenges in 2025 and weighted our results. I think we are seeing the early sign of the recovery at Centric, and for MEDIDATA, we are investing for the long term. Keep in mind that Life Sciences is undergoing a fundamental transformation from inefficient document-based process to AI-powered Virtual Twins that redefine how pharma innovates, complies and operates.

So this shift is really structural, and the structural changes usually take time. Third, in 2025, we introduced 3D UNIV+RSES, a new environment where virtual twin and AI converge, connecting the virtual and the real in a seamless dynamic loop. In 2026, we turn this vision into concrete value. Finally, we remain disciplined on costs while continuing to invest on our future growth. Execution matters and returns matter as well. Now as we enter in 2026, we are scaling our transformation plan, ensuring every step we take positions Dassault Syst�mes and our customers for sustainable successes. And our transformation is built around 3 strategic pillars. The first one, the product offering. We are reshaping our portfolio, accelerating towards 3D UNIV+RSES and investing where scale matters.

Q&A Session

Second, the go-to-market. We are strengthening the go-to-market execution with targeted end-to-end engagement, especially in Life Sciences for the top 50 large accounts and consumer industry for the formulated products. We are also transforming our partner ecosystem to generate demand, not just distribute licenses. And to support this, we have strengthened the leadership with the Transformation Officer and an Operating Officer focusing on the execution and performance. Third, the business model, and this is a very important part. As customers accelerated the adoption to subscription and cloud, we are introducing the annual run rate reporting in 2026. I think this will provide a clear visibility into the health and the momentum of our recurring revenue base.

In parallel, we are also evolving beyond the seat-based pricing toward a value-based pricing model for AI-powered solutions. Because we don’t just deliver the software, I think we are delivering outcomes and we will capture a fair share of the value we are creating. This transformation is not just about growth. It’s about building a resilient customer-centric company ready for the generative economy. Now let’s step back a little bit and look at the market realities. Every industry we serve, whether it’s manufacturing, life sciences, infrastructure and cities is under an intense pressure. Supply chain volatility, rising regulation, aging infrastructure and an urgent need for breakthrough innovation in all the domains. These are not just constrained.

In fact, they are catalysts, and this is exactly where Dassault Syst�mes step in, not only as a vendor but as a strategic partner for many of our customers. We are helping them to turn the complexity into a competitive advantage that last for decades. In manufacturing, we see 2 realities. The traditional sectors face margin pressure and demand uncertainty. At the same time, defense, high-tech are bold, they are making bold investments where the complexity and the collaboration are the new normal. And this is here where the 3DEXPERIENCE platform is becoming the de facto standard, enabling faster cycle, collaboration at scale and streamlined operations, reducing program time lines to under 18 months in Transportation & Mobilities, delivering between 25% to 40% efficiency gains in Aerospace & Defense, cutting error to 1/3 to almost half in high-tech through prebuilt simulations.

That’s what we do. In Life Sciences, the pressure is still intense, tighter regulations, rising R&D costs and a shift towards personalized therapeutics or precision medicines. And the incremental improvement is not longer enough. I mean, the customer, they need a new operating model. With our end-to-end lab to manufacturing solutions, we are already helping them to reduce their operating costs by over 30%, while turning the compliance into a competitive advantage. Now in Infrastructure & Cities, demands for autonomous and resilient system is accelerating. Data center demand will double by 2030. The nuclear infrastructure requires safe decommissioning in many countries, cities need to be resilient by design, and I think our AI-powered Virtual Twins reduce the project time line by over 25%, while ensuring safety and compliances.

This is really how we are and we create new markets while addressing the most critical challenges of our time. Now across every sector, our customers, they prove one thing. We don’t just talk about AI, we deliver it. In Transportation & Mobility, as I was saying, innovation pressure has never been higher. Products are more complex, time lines are shorter. Competition is global. And value is a good example of this. You know Valeo, it’s a global leader in the automotive technology from ADAS to electrification systems. And I think together, we are pushing the boundaries of the generative experiences. Here, AI does not only assist, it co-creates. And how we do this? By training the virtual twin on our synthetic data, we generate thousands of design alternatives optimized for performances, cost, compliances before a single prototype is built.

This is really the new way of working, turning complexity into opportunity. In Life Sciences, our partnership with Catalyst, I think, show how an industry can be reinvented. By moving from static document to data-driven Virtual Twins, Catalyst is really redefining the CRO model. The clinical trial become agile, patient-centric, continuously optimized. And this is not about fixing the old model, it’s really about building a new one. In infrastructure, with Technique at Home, I think we are redefining how the next-generation nuclear systems are designed and operated. The Virtual Twins connect the entire ecosystem, ensuring the traceability, the compliance by designs and more importantly, closing the loop between the virtual and the real world.

So that year, we did also something extremely important. A year ago, if you remember, we introduced 3D UNIV+RSES. But what does it mean in practice? 3D UNIV+RSES are not applications, they are knowledge factories where knowledge is enriched, know how is scaled and the results are trusted. And AI is the engine, not a generic AI, not a surface AI, an AI which is grounded in science, engineering and industry. This is not about large language models. I insist on this because with LLM, you will never be able to build drones. You will never be able to design humanoids. You will never be able to discover cell therapeutics. And this is what our customers do. And this is really what we do for them to help them to certify what they do. o we are building what we call industry world model, which is the next generation of AI after the large language model.

And what is important is those models understand how the real world works and how to build it. That’s something extremely important. Why so? Because those model, they are built on physics. They are trained on decades of industrial knowledge with a continuously validated Virtual Twins. It’s explainable, it’s certifiable and it’s trusted. And there is one fundamental reasons because in the physical world, you cannot forgive the mistakes. This is the reason why our partnership with NVIDIA matters. I think together, we are combining the virtual twin with AI factories and accelerated computing. But maybe long — more than the long explanations, launch the video, please. [Presentation]

Pascal Daloz: So I hope you got it, and it’s not me telling this. Jensen, the founder and the CEO of NVIDIA. And I think what we do together, we are building the foundation for industrial AI. And as you said, it enables 3 things: First, in research and innovations to develop the models that simulate the casualty, not only the correlation from a statistic standpoint. Second, the factory of the future, which are software-defined. And why they are software defined? Because autonomous factories continuously optimize through simulation is the reality. And third, the new way of working, which is how you can have skilled virtual companions, not a simple chatbot, but industry trained experts who could help teams to design, comply and optimize everything you do.

So in 2026, now we turn this into reality with the 3 AI native solutions, the new categories. The first one, we call it the Virtual Companions. They are not assistants, they are experts. They scale the knowledge, they democratize the expertise. They turn the complexity into productivities. The second one, the Generative Experiences, AI that encodes the best practices, science and compliance by default, a faster innovation, lower risk, higher confidence. And third, the virtual twin as a service, we don’t sell the software we deliver outcomes. That’s why we are evolving our business model from seed-based licensing to value-based monetization for this new category of solutions because together, I think our AI-driven solutions unlock 3 powerful levers of value creation.

The first one is expanding the adoption with the Virtual Companions with usage-based. Keep in mind that right now, the real limitation we face is the number of people being skilled to use our software. Now if we have Virtual Companions being trained by design, they will take the benefit of what we deliver to them. The second one is monetizing the know-how with Generative Experiences. For 40 years, we have invested in many, many industries, aerospace, auto, now life sciences, high tech. And we have accumulated a lot of industry know-how, how to design things, how to produce them. With this knowledge, we can automatize many things. And what the gain we have in front of us, it’s a moon shot. It’s 10x. It’s not a 20% improvement. It’s not 30% improvement.

It’s really a radical change. Last but not least, we can sell the outcome with the virtual twin as a service. Why so? Because right now, how does it work? We provide the software. You have a lot of services, which is needed to implement the software on-premise to train the people, to change the processes. Now with AI, we can — rather than to sell the tool, we can automatically generate the end result, the virtual twin. It’s a way to reintegrate part of the value in our software. So that’s what we do, and this is how we are turning AI from a promise into a concrete sustainable value. And I think this is just at the beginning. Now that was the key question a week ago. I mean all of you, you were asking the question, which is AI is revolutionizing everything.

But there are 2 kind of companies, the one that compounds and the one who could be commoditized. I think Dassault Syst�mes is built to compound. We are not just participating to the AI revolution. We are really shaping it for the industry. And this November, at our Capital Market Day, we will come back on this, how these visions could — is translating into the financial impact. But before that, now it’s time for me to hand over to Rouven. Rouven, you have the floor.

Rouven Bergmann: Thank you, Pascal. And also a warm welcome from my side to all of you here in the room and joining us online for our Q4 2025 earnings conference call. Before reviewing the numbers, I would like to highlight 3 key themes that define 2025. First, to sustainable growth. Our core industrial business, I want to reemphasize that our core industrial business was resilient in 2025 with strategic client wins. However, we faced a backdrop of tough comps and complex macro, specifically in the fourth quarter. We are focused on further strengthening our growth model while we are looking at improving our operational excellence. We have identified the challenges, and we will now execute to deliver, as Pascal said. Second, AI at the core.

The collaboration with NVIDIA reinforces our leadership position in industrial world models, and it supports the development of next-gen AI-driven solutions for engineering and manufacturing. And in 2026, our focus shifts from product launches to monetization. Third, business model evolution. The 3DEXPERIENCE platform continues to drive the transition towards cloud and subscription and our recurring revenue base. And as AI adoption accelerates, the business models are evolving beyond traditional seat-based pricing towards a usage and value-based model. And to better reflect this shift, we will begin to report an annual run rate or ARR, and I will talk about this in more detail later. So as Pascal said, 2026 will be a year of execution where we will strengthen our foundation and our full year guidance for the total — so our full year guidance for the total revenue growth of 3% to 5%, which is important to highlight.

It provides the room to navigate current challenges and to prepare the organization for the new era of growth. Now with this in mind, I will transition to the numbers in more detail. In Q4, total revenue rose 1% ex FX to EUR 1,682 million, with software revenues slightly up by 0.3%. We navigated a complex macro dynamics with weaknesses specifically in France and Germany, mainly in the auto sector. Plus, we also faced headwinds at MEDIDATA and Centric in the fourth quarter. Now we have taken the actions to address these issues, which I will discuss shortly. The recurring revenue rose 3% in Q4, with 4% subscription growth, while services was up 11%. The operating profit for the quarter was EUR 622 million with a healthy operating margin of 37%, it’s up 90 basis points ex FX, thanks to the productivity gains that we leveraged across the group, and we had initiated those already entering into the year of 2025.

EPS was EUR 0.40, up 9% ex FX. For full year 2025, we saw total revenue of EUR 6,240 million, along with software revenue growing at 4%. Recurring revenue grew 6%, and it’s making — it’s creating an 82% recurring revenue base as a percent of software revenue, while subscription revenue grew 11%. We delivered good profitability in ’25 with an operating profit of EUR 1,994 million and an operating margin of 32%, achieving 40 basis points of improvement versus last year with an EPS of EUR 1.31, up 7%. Now turning to the growth drivers. The 3DEXPERIENCE platform is at the core of our growth strategy and the foundation to review the power of AI for industry. 3DEXPERIENCE revenue grew 10% for the full year, and it’s now 40% of software revenue. As expected, the fourth quarter was impacted by a strong comparison base year-over-year.

And on top, we faced the weak auto sector in Europe. However, important to highlight, we signed several strategic 3DEXPERIENCE deals that have the potential to expand over the course of ’26 and ’27. This will generate future revenue and help build the momentum in ARR, which I will come back shortly. Cloud revenue at the group level grew 9% in Q4 and 8% for the full year with 3DEXPERIENCE Cloud growing 38% and 32%, respectively. This strong growth highlights the value of the platform for clients where the transformation is critical as is the need to leverage AI. Now looking at our geographies and product lines. The Americas rose 3% in Q4, with a good performance in high-tech and transportation mobility in the Americas. Full year ’25 was up 5%, and we faced year headwinds in Life Sciences as well as in Home & Lifestyle.

The core industries in the geo were strong and resilient with 10% growth. Europe declined minus 5% in Q4, but it was up 2% for the full year. The weakness in the quarter was against a strong base comparison, and it was also impacted by softness in France and Germany, and I mentioned that before, mainly driven by the challenges in the automotive sector in these countries. Meanwhile, Southern Europe was resilient and also Northern Europe gained momentum with a good performance in High Tech. Asia was robust. We grew 6% in the quarter. It was 5% for the year. Growth was driven by Transportation Mobility and High Tech. We had very good momentum in Korea as well as strong growth in India, while Japan delivered solid growth. China had a softer quarter on a backdrop of tough comparables in the quarter.

Now to the product lines. So industrial innovation was up 1% in Q4 and 6% for the full year. As noted, the quarter was impacted by the lower growth in 3DEXPERIENCE and in particular, the challenges we faced in Europe. But overall, for the full year, we saw a very positive momentum, which was led by solid traction in SIMULIA and ENOVIA, and continued solid growth with CATIA. We are confident on the resilience of our core business, which is led by the cycle of 3DEXPERIENCE adoption, while preparing for the next wave of growth with AI-based Virtual Twins and companions. On the mainstream side, growth was 1% in Q4, 2% for the full year. Growth was again driven by strong momentum of SOLIDWORKS, which was up high single digits in the fourth quarter and in the full year.

As expected, Centric was down double digits in the fourth quarter on a high comparison base. Two effects that played a role on Centric. First, we saw some renewals shifting and also we accelerate the move to cloud as we explained to you previously. And now we expect a marked recovery this year in ’26 with a new management in place and a robust pipeline that’s building going forward. Now to Life Sciences. Here, the growth was lower than expected. We were down minus 4% in Q4, while the full year was minus 2%, as we faced continued headwinds for MEDIDATA, which I will cover in more details shortly. Outside of this, MEDIDATA signed several strategic account win backs over the course of the year. This includes the likes of Novartis, Merck, AbbVie and Gilead.

It highlights our competitive advantage as we build strong foundation and expand our footprint with the large pharma companies. Now as we look ahead, we are convinced that the time has come to transform the biopharma industry from a document-based approach to virtual twin-based operations, as Pascal highlighted. This has been our vision for Life Sciences for long term. Therefore, let’s take a holistic view of our Life Sciences industry on software revenue that we are generating today. You see on this slide, this includes MEDIDATA as well as the 3D portfolio adopted by pharma and med tech. And in order to better highlight the growth dynamics, we are differentiating 2 elements, the direct business, the enterprise business as well as the indirect go-to-market model we have where we predominantly sell to our CRO partners.

Now to the direct enterprise business. It accounts for 70% of the total revenue in this industry, and it grew 3% in total in 2025. Now within that, the MEDIDATA Enterprise business grew 1%. However, this growth was impacted by one client, Moderna, that adjusted its run rate to reflect lower study volumes. And excluding that, our MEDIDATA Enterprise business was, in fact, up 6%. Meanwhile, 3DEXPERIENCE grew 7%. And now to the indirect business. And here, important to understand, this business is mainly focused on the biotech sector on the small — on the very small pharma companies. So selling — and here, we are selling through CROs, and this accounts for 30% of the Life Sciences industry, and this is declining by minus 5% year-over-year. Our market saw lower study starts, which were down minus 7% compared to minus 5% revenue decline.

So the study starts were lower by minus 7%. Importantly, we continue to expand our market share also here in Phase 2 and Phase 3 by about 1 point in 2025. And now also, we don’t want to anticipate this too early. We did see some green shoots in Q4 as its large CROs are starting to increase the number of new studies on our platform. So what are the actions we are taking to reinvigorate growth? You see them here on the bottom of the slide. First, on the enterprise side. What we are doing is we are setting in motion a dedicated account teams to focus on overall pharma transformation with our platform and leveraging AI. These teams are formed and in action across all the geos. Now to the indirect business, the goal is to reduce our exposure to volatility in the volume business.

And to this end, we are evolving our pricing model and terms and conditions to monetize continued data access, which will be critical in the times of AI because this is the way the models will evolve and will help and support our pharma customers to improve the efficiency of clinical trials. Now turning to the cash flow and balance sheet items. Let’s start with the operating cash flow. We generated EUR 1,630 million in operating cash flow year-to-date, and this was up 1% compared to last year on a constant currency basis. Indeed, despite a challenging environment marked by FX headwinds and new tax regulations, we demonstrated resilience and cash generation. As previously discussed, we absorbed about a EUR 40 million hit in, which was driven equally by the hike in employer contributions on share-based compensation and new exceptional tax for large companies in France.

Excluding this, operating cash flow grew 3% ex FX. In the first half of 2026, we expect the working capital to be positively impacted by the collection from large subscription deals we signed in 2025. Now to free cash flow. It was up 2%, also excluding currency. CapEx investments were lower approximately by EUR 30 million due to lower investments in leasehold improvements versus 2024, while investments in cloud and IT infrastructure were stable. The cash conversion remains a top priority. We reached 82% for 2025 versus 84% in 2024. And this is ahead of our previous estimates, mainly due to better collections. In 2026, we expect cash conversion rate to improve driven by cash collections and better alignment of billing to revenue. Now to complete the picture.

Cash and cash equivalents totaled EUR 4,125 million at the end of 2025, and it compares to EUR 3,953 billion at the end of ’24. This increase of EUR 173 million includes a negative full year currency impact of EUR 263 million, mainly to the weakening of the U.S. dollar over the period. The net cash position reached EUR 1,530 million at the end of Q4. Any additional information, you will find in the operating cash flow reconciliation in our presentation that we published this morning. Now I want to transition to a new topic. Pascal already introduced it the annual recurring revenue run rate, which we are introducing in 2026 for now. And it is already previewed that with you at our Capital Market Day in June last year. It’s a key metric to reflect our continued transition towards a subscription and cloud-based business model.

We believe that ARR provides a consistent view of the underlying run rate and the health of our recurring revenue base, while it’s also eliminating the volatility from revenue recognition. As such, the ARR is a snapshot, which reflects the 12 months recurring value derived from all active contracts at period end. And it includes software subscriptions, cloud, SaaS hosting as well as support. It excludes future commitments. In the appendix, you will find a detailed definition of ARR on how the methodology is applied, and we also are giving you 3 illustrative examples. Now if you look at the numbers, growing at an average of 6% over the last 2 years, the ARR highlights the consistent execution in core and subscriptions and cloud and is driving the growth of our recurring business.

It is also more closely tied to the invoicing and cash flows from those deals. In Q4 2025, the ARR reached almost EUR 4.5 billion with an increase of around EUR 100 million of net ARR in the quarter. This highlights the consistent performance in signing new cloud and subscription contracts, while revenue is highly dependent on the timing of revenue recognition. In 2026, we are establishing this new metric in our reporting, and the plan is to guide starting 2027. Now during the Capital Market Day in November, we will outline the steps in the context of our 2029 financial plan. Now as we look ahead, the trajectory to accelerate growth is, of course, linked to the shift in our business model. Now let me discuss very briefly the levels of ARR growth.

First, the mix is driven by faster growth of subscription versus maintenance ARR. I think we see that already clearly in our numbers. It’s happening. Second, the growth in 3DEXPERIENCE and cloud as AI-powered Virtual Twins and Virtual Companions boost our 3D UNIV+RSES portfolio. The third, within Life Sciences, we are expanding our footprint, and we are creating and preparing the next generation of growth with new clinical — with a new clinical trial platform powered by AI. And finally, with Centric, the ARR growth has a long runway. Now with this, let me turn to our financial objectives for ’26. We expect total revenue and software revenue growth of 3% to 5% ex FX for the full year of 2026. Importantly, this guidance marks a tipping point.

In 2026, the share of subscription revenue will surpass the maintenance revenue, and that’s also why we are providing an ARR to better reflect the growth dynamics, not yet as a guidance, but to show the momentum and the progress. The operating margin is expected to achieve 40 to 80 basis points improvement ex FX, which takes us to the range of 32.2% to 32.6%. As we continue to balance investments and margin expansion, leveraging our operating productivity gains. We see the EPS growing at 3% to 6% ex FX to EUR 1.30 to EUR 1.34. Now this is all based on our FX assumption and our full year average rate for the U.S. dollar to euro at 1.18 in yen to euro of 170. Now quickly to Q1, we expect 1% to 5% growth for both total revenue and software revenue.

Operating margin is expected to be in the range of 29.2% and 30.7%, and EPS at EUR 0.28 to EUR 0.31. Finally, I would like to share some key assumptions underlying this guidance framework for 2026. So first, we expect 3DEXPERIENCE and Cloud momentum to remain broadly in line with last year. It’s driven by continued expansion with our — within our installed base and ongoing market share gains. We are focused on entering new markets and accelerating the monetization of our AI portfolio. Now from a geographical standpoNow from a geographical standpoint and industry standpoint, the demand in the Americas remains healthy, while Asia continues to show resilience. In Europe, we see solid pipeline development in Southern and Northern regions, which is partially offset by continued expected weakness in the automotive sector, mainly in Germany and France.

Potentially, this is impacting the timing of decision-making within quarters. The defense sector represents a potential upside. Within our mainstream business, SOLIDWORKS continues to deliver mid- to high single-digit growth in both revenues and users. For Centric, we expect a return to low teens growth, supported by execution against a strong pipeline and a higher mix of cloud revenues. Now Life Sciences is facing a transition year with actions underway to position the business for a return to growth from 2027. On the margins, we expect continued improvement driven by productivity gains from AI initiatives and operational excellence. So these initiatives are focused on increasing our flexibility and reallocating investment towards top line growth.

Now in conclusion, 2025 and 2026, we are laying the foundations for our next phase of growth. I want you to remember 3 things. First, the 3DEXPERIENCE platform is at the core of our industry transformation, and it’s creating a long runway of growth. On AI, we are introducing new categories of solutions, those go beyond productivity gains, it’s about creating new possibilities. And we are taking actions to scale our operations with one single goal in mind: to generate sustainable growth. Now with this, Pascal and I look forward to taking your questions.

Marie Dumas: We will start taking questions from the room.

Unknown Analyst: This is [indiscernible] from [ ING. ] So I allow myself to start with asking a question maybe with everybody’s mind. Your guidance seems quite cautious for 2026, right? So I can understand there are headwinds. There are some things we are in the beginning of the long runway. But what could go wrong? I mean, what do you think will be the major headwinds in the year to come?

Pascal Daloz: Rouven, I start, and then after you will add whatever you want. What’s the difference between the 2026 guidance and the 2025 guidance? 2025, we were running quarter-after-quarter after the top line guidance. And you have seen, we have been able to deliver the EPS as initially planned, but we have to adjust in the middle of the year, the top line. So I do not want this for 2026. Let’s be clear. So maybe you will see this as a very conservative guidance, and I accept the point. But from a dynamic standpoint, I really want to build on the good momentum and again, keep the company focused on what matters, which is in this AI stories. I mean, it’s time for us to invest massively. It’s time for us to take the positions.

It’s time for us to accelerate the transition to subscriptions, and this is the game plan we are doing. And that’s the reason why, to be direct with you, I think we are relatively conservative in our guidance. Now what could be wrong? I think we have factored many, many things already. And I think you have seen in the — Rouven’s presentations, compared to 2025, there are certain things which are moving in a good direction. Centric is moving and back to growth. It was really a headwind last year. MEDIDATA, we are cautious, even if we have early signs of improvements, but we did not factor improvement in the guidance. And on the mainstream, you see H1 last year was growing mix single digit. H2 last year is growing high single digit, and we have a better perspective for year ’26.

And on Industrial Innovation, I think we are taking some cautiousness on the auto sector, especially for Europe, which was, in a way, the bad surprise of Q4 last year. That’s what’s in it. I don’t know if you want to add a few things, Rouven?

Rouven Bergmann: For the top line, that’s the situation. I think for — I think the other point that’s really important to highlight is we are creating the room also to make investments to support our growth because it’s very critical at this point in time. We are at an inflection point to accelerate growth. We’re transitioning the business model. We are focused on accelerating our growth in subscriptions to build the ARR for acceleration. I think that’s the upside we have. And that’s how we constructed the 2026 outlook for growth acceleration to come.

Derric Marcon: Derric Marcon, Bernstein. So one remark, Rouven. You told us in June 2025 that you will give us ARR or subscription annual recurring revenue without removing any guidance or projection, but we don’t have — we no longer have the split of your recurring revenue target between subscription and support, something you gave before. So maybe you will continue in that way. And so first question, can you help us to reconcile the guidance, plus 3% plus 5%, with the ARR growth that you project for 2026? And if you have an acceleration at the end of 2025 on ARR, why we don’t see that on the revenue guidance for 2026? And the second question is about the remaining performance obligation that you gave at the end of the year.

Can you help us to reconcile or bridge what is in the RPO next 12 months and ARR, please because the RPO was growing nicely at the end of 2024. We don’t see that in the 2025 numbers. So I’m wondering if we will have the same picture at the end of 2025 when we try to extrapolate the RPO numbers for 2026 and reconcile that with the guidance. Sorry, it’s pure figure, Pascal.

Pascal Daloz: No problem. And I will start, by the way, and Rouven, feel free to add whatever you. So first of all, on the split between subscription license, if you go to the appendix, we are providing the details. So we did not change the way to guide the market, and we definitively do not want to hide something. Now as you know, the annual recurring run rate cannot be fully translated into the revenue the following year because you have the revenue recognitions mechanisms. And I will let Rouven to elaborate. Nevertheless, if you look at the last 2 years, it’s a good proxy to approximate the recurring revenue anyway. Now how to bridge with the guidance, which is your questions because you have 6% on one hand and you have 3% to 5%, right?

So remember, in the recurring part of the revenue, half is subscription, half is maintenance. The maintenance support is growing at 1%. So which basically means, the rest, the other 50% should, at minimum, grow to 11% to 12%. You do the math. That’s point number one. Point number two, why 3% to 5%? Because if you are at 5%, it means the license are flat. If you are at 3%, it means the license are decreasing by 10%, as simple as that. This is how you will be able to reconciliate the guidance we are providing with the ARR. Maybe, Rouven, you could explain a little bit more some specificity?

Rouven Bergmann: Yes. We gave the 3 examples that I think are illustrating the methodology. What you really need to keep in mind, what is really the challenge of Q4 also is a tough comparison of Q4 2024, where we had very high subscription growth in parts also because our on-premise subscription are also including some in-quarter revenue, which when you look at an ARR, it’s all allocated over a 12 months period, right? We really only look at the run rate. We don’t consider any revenue in point in time. It’s really over time. And now as you straight line all of our bookings into this methodology, you will see the true growth of our business activity outside of the revenue recognition noise, so to say, that’s in the numbers. So that, I think, creates a clear metric of year-over-year comparison.

Now over the last 2.5 years, it grew consistently 6%. As Pascal said, you have to understand the underlying, I think, growth drivers and momentum because the subscription is growing 10-plus percent, also keep in mind, we are still facing inside that the MEDIDATA headwind, so the core business of Dassault Syst�mes, 3DEXPERIENCE is growing much, much faster in the subscription revenue, which is important to understand. And as the MEDIDATA business is expected to improve, we will see the upside of that as well in this number. One other comparison I would like to share with you is the recurring revenue growth was 6% over the last 2 years, and it’s very consistent with the ARR. Now we’re talking about an ARR of EUR 4.5 billion, growing at 6% with the potential to accelerate because of the mix effect as well as subscription becomes — is getting to the threshold of 50% plus, and then you have a base effect where that growth is starting really to become meaningful.

Maybe a last point on — you mentioned the remaining performance obligation. And I think the coverage that we have in our visibility for the next 12-month subscription revenue growth, that is very comparable to 2020 when we enter 2025 as it is in 2026. We are forecasting 8% to 10% subscription revenue growth for which we have good visibility to achieve that.

Pascal Daloz: Now maybe I should add one additional topic, which is an interesting one. If you look at the performance of Q4, 1% growth, flat for the software. If you look at the ARR, it’s EUR 105 million incremental, overall EUR 1.5 billion software revenue, which is 7%. So again, I’m insisting on this because we are really transitioning to the subscriptions and to the cloud. Now if you look at the way many of our peers did it, they were decreasing for many years. We are not. We are slowing down the growth for sure, but we are really transitioning. And that’s the reason why this metric is extremely important for you because it’s a way to see the momentum we are building. It’s a way to see the ramp-up we are creating with those long-term contracts. This is what is behind. I think there are another question related to — Derric, you had the last question?

Derric Marcon: Just on the remaining performance obligation. I think the next 12 months figure for remaining performance obligation last year. So at the end of 2024, if I remember well, was growing in the low 20s, so 23% or 24%. Why we don’t see that appearing in the numbers of 2025? And when we will look at the figure at the end of 2025, how can we extrapolate that number and bridge that with your guidance for 2026?

Rouven Bergmann: We are not — Derric, we are not guiding in the remaining performance obligation because we — the way the revenue recognition is, we’re not fully ratable as it relates to that. The remaining performance obligation is a value aggregated for the next 12 months of bookings value, not revenue. So it’s always depending on the timing of renewals, right? In a year where there is upcoming larger renewals, it is less because then it will be back to the growth after the renewal. So there can be time-to-time variances. I think what’s important to understand for you is that the visibility we have into subscription growth is the same in ’26 as it was entering ’25.

Derric Marcon: At the same time, if I compare the guidance for subscription in 2025 at the beginning of the year and the end results.

Rouven Bergmann: I understand. I understand your point. Not — you don’t — you never have 100% coverage, of course, right? The coverage is typically around 85%, 84% for subscription. So depending on the timing of signing and this can impact at the end of your achievement, and this is what happened.

Laurent Daure: It’s Laurent Daure from Kepler Cheuvreux. I also have three questions. The first is on the 3D UNIV+RSES and your plan for the next 2 or 3 years. I was wondering if you were planning to invest mostly organic adding staff or if you were considering partnership or even M&A, so the way you will build it. My second question is on Centric. You had a very strong decline in the fourth quarter. What can you give us to make us comfortable, the fact that you will renew with double-digit growth and probably, hopefully in the first part of the year, maybe the pipeline or whatever? And my last question, even if I don’t want to preempt the Capital Market Day, from ’26 to ’27, what could be on top of maybe MEDIDATA, the additional growth? Is it AI related or any other things?

Pascal Daloz: You start with the first.

Rouven Bergmann: I can start with Centric. Yes. So you’re right. Q4 was — we faced the decline. The visibility for the first quarter is already there. What is also important to highlight is not only the SaaS transition, but also the diversification. So we are going really from the apparels, shoes, the traditional business, the apparels, the consumer-centric industries also to food and beverage and retail. So we are really expanding our scope. And the new leadership team is embracing that as well as the opportunity to expand really enterprise-wide from the front end also to the back end with 3DEXPERIENCE. So we have multiple growth levers on Centric that we are building and that are contributing to the business going forward, and that gives us confidence.

And the last point I would say that when you look at it geographically for Centric, the Centric business has a strong momentum in Europe. Asia is building. And in Americas, we see a strong reinforcement. And that is, I think, another very important element that we really see that business on a global basis diversified, and that has strengthened as we enter in ’26. We continue to invest. You remember, last year, we made the ContentServ acquisition. We are now through the full integration of that. And this really expands the domain and the platform for Centric to expand within the current customer base and brands, which is creating the next — another potential points of growth.

Pascal Daloz: And maybe above all of this, Laurent, the problem came from the management, the previous management, who did an acceleration of the revenue. And we are — this is clean. I mean, now it’s behind us. Coming back to 3D UNIV+RSES, I think the way you should look at it, it’s not an extension of the current portfolio. I mean it’s really a redefinition of our offerings, the same way we did when we came with 3DEXPERIENCE almost now 15 years ago. So why I’m saying this? It’s because it’s requesting a new ecosystem. So in a way, you have seen new partnership, and NVIDIA is a good example of this. You need a new computing — accelerated computing capabilities. At the same time, NVIDIA, they need to — I mean, computing without knowledge is blind.

So we are the one providing the knowledge with our Industry World Model. So the combination is extremely meaningful. And we will continue to partner with basically people having or leading this game. The real question, I think, is the M&A behind your questions. Yes, if we look at the landscape, I think it’s not a bad time to consider M&A. MEDIDATA reimbursement is behind us. The cash flow is relatively significant, even if you are challenging a little bit the cash conversion. But at the end, it’s a lot of money every year we are generating. The exchange rate is helping us to consider certain acquisition in the U.S. And the software landscape is under pressure. So I remember having exactly the same question 2 years ago, and I was telling you, it’s not the right time.

I think now it’s the time. I will not say more, but at least you understand the way we think. And the last part, which is related to the ’26, ’27 ARR, what are the growth drivers. I think maybe, Rouven, you just started to mention it in your presentation.

Rouven Bergmann: Yes, yes, yes. I think 2026, we have the guidance, Laurent, right? So let’s look at ’27 and beyond. What are the potential upsides we have and how we can accelerate. First of all, keep in mind, our large, large client base and the long runway we have to penetrate that client base with 3DEXPERIENCE cloud and our AI portfolio. That’s really the strongest engine we have and it’s — and the acceleration potential. Now this, together with the transition to the subscription and cloud, which creates the recurring revenue building on top of that and creating the base effect of the faster-growing subscription growth. That’s to me the first thing that is important, and you see we are focused on that to build this to reach this inflection point where we will see the acceleration.

You’re right to mention Life Sciences. We are — you see that we are taking the investments. We have a lot of good things going already. You see the enterprise business is growing when you exclude some special effects. So there is a lot of good things that are happening, and we will continue to double down to strengthen them. And as it relates to the volume business, once we retain that exposure to churn, we will also see the benefits here. The expansion on the 3DEXPERIENCE portfolio for the industry, Pascal highlighted that as a massive opportunity. Centric, we discussed, I outlined this before is another growth driver that is not — that is material. So — and then there is the last point, you mentioned it, which is potential M&A, which is not factored into this model, creating an upside that we have.

So that’s the situation as we are transitioning from ’26 to ’27, and this is what I will focus to explain and outline in the Capital Market Day in November this year, where it’s about translating that into an ARR model to give you confidence and understanding of the path ahead.

Marie Dumas: So we’ll take one more question in the room and we’ll go online.

Gregory Ramirez: Yes. Gregory Ramirez, GR20 Research. I have one question on the Healthcare business for ’26. Trying to do the math, it seems to imply something low to mid-single-digit decline. What is the implied impact of the Moderna contract? Does that mean that if the impact for ’25 is just on 1 quarter, that will have some — still some headwinds for the first 3 quarters of ’26? And regarding the enterprise business excluding Moderna, does that mean that it will be growing? So when we exclude the Moderna effect, that means that maybe in Q4 ’26, this will drive the growth for ’27?

Rouven Bergmann: Yes. Maybe first, I want to clarify that we are not expecting decline in the Life Sciences business overall in 2026. We’re expecting flat in 2026.

Pascal Daloz: With everything we do.

Rouven Bergmann: With everything we do in Life Sciences, from an industry standpoint, we expect to be flat. As it relates to the impact of Moderna, this is a 2025 impact. It was not only related to Q4, but it’s really for 2025. But the aggregate of this impact is now behind us. Moderna reduced their contract by more than half to reflect their new business level activity. We’re still the prime partner for Moderna. We have not given that or losing that to anybody else. It’s our client. But their business realities have changed, and we have adjusted to that, which was — it had a big impact on the performance. So now with that behind, as we look at the enterprise business going forward with — I gave you some names and large enterprise clients that we have signed, where we are expanding our footprint.

And beyond that, we will do even more. By the way, in March, we have MEDIDATA NEXT, where we have many of those clients coming with us on stage to explain what they do with us to expand across our portfolio to transform what clinical development is today. And that will translate, and we’re confident about that, that will translate into growth in the enterprise segment going forward. Where we have less control is on the part of the volume business with the CROs. And this is where we are, to some extent, exposed to funding environment on the biotech sector, which can be volatile, and we know it has not been great over the last 2 years. But also there, we see some green shoots coming. And if that materializes, it will stabilize the business.

Pascal Daloz: Maybe one additional thing. So if you look at the enterprise segment, and Rouven showed the number to you. The structural growth of MEDIDATA, excluding Moderna, it’s 6%. And the growth of the rest of what we do is 7%. So we have 2 legs, if you want, which are solid. And we do not see a reason why it will not continue to be the case in 2026, right? The part where we are extremely cautious because we have been burned last year with this.

Rouven Bergmann: That’s only last year.

Pascal Daloz: We were getting a recovery of the CRO to be back to at least being flat, and we landed at minus 5%. So that’s what is not factored in the guidance. We do not take any improvement in the guidance of the CRO business. Despite the fact that some of them, they have published a better result in Q4 compared to Q4 2024.

Marie Dumas: Thank you. We will now take questions online, please? Operator, could you start the online Q&A?

Operator: [Operator Instructions] And it comes from line of Moawalla from Goldman Sachs.

Mohammed Moawalla: Yes. Great. My first question was just to sort of understand the 2026 outlook a bit better. Can you help us understand at both the low end and the high end of the range kind of the assumptions, particularly around what you’re incorporating for some of the larger deals as well as the kind of mega deals, what’s in there and what isn’t? And then again, coming back to sort of bridging the kind of ARR to the revenue growth guidance you’ve given, you sort of mentioned that we’re kind of getting close to parity between subscription and maintenance. But obviously, in there is the MEDIDATA and Life Sciences recurring revenue. So could you give us a better feel for what the underlying subscription growth rates in kind of the core or when the business ex MEDIDATA has given?

We’re doing a transition both in the enterprise business but also SOLIDWORKS and Centric. Just to sort of better understand the moving dynamics of growth. And then lastly, you sort of touched a bit on more consumption outcome-based revenue as you drive kind of the AI applications or use cases. How does this sort of change the kind of the visibility going forward? Because I think because of conventional business is there’s going to be more variability. But when does this become kind of more meaningful to your midterm growth rate? And is that going to be — and how is that going to be captured?

Rouven Bergmann: Okay. Mo, thank you for your questions. I’ll start with the first one on how to position the guidance of 3% to 5% revenue growth. As I said, at the beginning of my prepared remarks, I just want to reemphasize this point that this guidance provides us room to navigate. It’s derisked. It’s derisked for mega deals. We do not include any mega deals into that. Of course, we always have large and chunky deals that are important to happen, but not mega transactions. I think what we need to do to overperform this guidance is I mentioned that there are certain areas that are introducing upside into what we do. We have not included significant growth in the defense sector, for example, simply because we have not yet seen this sector to contribute incrementally strong to our demand.

But there are opportunities, of course, in this market that we are very focused to tackle and to get involved and to take benefit of it. We are building a very powerful AI portfolio, transforming our industries and building that to expand what we do with our current clients. And Pascal gave the examples and discussed that. This has, of course, a huge potential for us to accelerate the growth in 3DEXPERIENCE and AI. For now, as you see in the guidance, we have taken a more prudent approach to — and this was what I shared with you as well, we consider the momentum in 3DEXPERIENCE growth to be consistent with 2025 and 2026. So of course, now as we enter in 2026, we are a significant step further in making these use cases and scaling them and replicating them.

So there is, from that perspective, clearly, an opportunity for us to improve and grow and accelerate from there. Now we have to keep in mind that we have to offset also some potential softness in the auto sector. Now there is 2 sites to look at, 2 ways to look at that. While there is maybe softness in the fourth quarter, but still it represents significant opportunities for us also in 2026 because we have — I want to remind you, Mo, and everyone here that we have signed significant deals in this sector over the last 2 years that are building the foundation to bring these clients onto 3DEXPERIENCE now with the potential to expand, and we are expanding with them in AI, and we are changing the game with that and creating significant opportunities that we couldn’t do years before because we simply weren’t in this position to do it.

So that is all in front of us. And now in this context, I think we wanted to position the guidance from 2026 that is consistent with 2025. We ended at 4%. The midpoint of this guidance is at 4% with the potential to do better than that, but also to have the room to make the right choices for the mid- to long term to accelerate growth. On the low side, what can happen on the low side more? We — there are macro factors that can always impact us and make things even more difficult and the timing of decisions more difficult. That can be a factor that we need — we took into account on our guidance to be at the low end of 3%, but that’s not what we are targeting. So going to the ARR. You’re asking for a lot of additional information, Mo. And for sure, I will be prepared to disclose some of that at the Capital Markets Day.

So please bear with me that I will be a little bit more high level, but I will give you the directions on where the ARR, what are the elements of the ARR and the different growth dynamics inside the AR. You’re right when you call out MEDIDATA as part of the ARR, of course, that has been a headwind on the 6%, very clear on our subscription ARR. I mentioned subscription ARR is growing more than 10%. And now when you exclude MEDIDATA on core industrials, subscription ARR is growing mid- to high teens. It’s a strong resilient cost driver for a long time. And we have, as I said, we have some potential to further accelerate that as more and more of our business transitions to cloud and 3DEXPERIENCE. Now that also — you know the size of MEDIDATA.

MEDIDATA in total is about a EUR 1 billion business. Now we have been — in the way we’ve defined the ARR, we have some business in MEDIDATA as it relates to the volume business where we have churn effect, that’s not renewable. It’s not included in our ARR. So we have not factored in the 100% of Medidata subscription business because not everything is renewable. But nevertheless, it’s a very large number inside the subscription ARR that has been facing a lot of headwind. Once we are removing this headwind, and you see we are already doing it for the enterprise part. Now the CRO part is still what is the challenge. But as we are removing that and increase and essentially generate a net increase in ARR quarter-over-quarter for MEDIDATA, that will then contribute to also increase the subscription ARR from what today is plus 10% to the next level.

And I would say to go from plus 10% to gradually up point by point to reach 15-plus percent in the subscription ARR in aggregate. So — but again, I will be prepared to outline those components at the Capital Market Day in more detail. Here today for me is to introduce this concept to you, explain the growth drivers. And with that, build the foundation on the levers that we are focusing on for growth acceleration to come.

Pascal Daloz: Now the last part of the question, Mo, is related to the new business model for the new AI solutions. If you look at the story of Dassault Syst�mes, we changed almost everything, except one, the business model because it has always been an equation of the number of users, the number of seats. Now what’s the problem? With the AI, you have virtual users now. We call it virtual companion. Some of our peers, they call it agent. So the model cannot be anymore the same. That’s point number one. Point number two, I think the software are really selling the capabilities. Now we have an ability by combining the capabilities with the knowledge to sell the end result. Whatever the virtual twins of the improvement. So that’s the reason why we are coming with new units.

And let me explain to you what the units are about. The first one, we have the unit of works. When a Virtual Companion is working, in a way, it’s working like a human. And the same way you have a cost for a human, you should have a cost for the companion. So we are not inventing anything on this one because this is what ChatGPT, Entropy, this is exactly what they do. It’s a fraction of the cost of the people. More importantly, when we have a Virtual Companion, it could be a mechanical engineer. This one could be a mechanical engineer and an electrical engineer. It could be also, in addition, a specialist to do the simulation. So we have what we call the unit of knowledge. And the more knowledge the companion they have, the more we price for this because it’s a way to capture the value of what we bring, right?

If you have to hire someone right now, who has graduated from the best mechanical school, graduated from the best IT or computing school, it will be difficult. With a companion, we have an ability to enable this. Last but not least, what — there is a third unit, we call it the unit of knowledge. And again, I insist on this for 4 decades, we have accumulated a lot of industry knowledge. We know how to design a car. We know how to produce it. We know how to certify them. We know how to scale the production systems. And this is true in every industry we serve. Now what can we do with AI? We can automatize those processes. And I can tell you, this is a significant value we are creating. In many cases, it’s a 10x. It’s really a moonshot. So that’s the reason why we need also to have dozen units if you want to price in order to capture this value.

And last but not least, I make this in my comments. But the entire industry is pushing to do Software as a Service. I present, we should do Service as a Software because you have so much money being spent in services just to make the technology enable that there is a chance not to use artificial intelligence to produce automatically the end results. So — and that’s what’s the virtual twin as a Service is about, it’s how we can mix the capabilities with basically what used to be human driven, and now it could be a virtual companion in order to deliver the end results. That’s the new lever we have in our hands to create additional value. It’s tangible, it’s concrete, it’s not science fiction, it’s fiction with science. And it works because it’s a way — I mean, I have enough experiences the last year with many engagement to tell you.

We know how to objectivize the value discussion with many of our customers. Now this will come on top of what we do because, again, I repeat myself, if you have a Virtual Companion, you still need CATIA. The Virtual Companion is the one using CATIA. It’s not substituting CATIA. You still need to use CATIA SIMULIA, DELMIA in order to produce the end result. So that’s an additional lever we are creating. And if you remember what I say, with the companion, we are accelerating the adoption. It’s taking too much time to train the people. It’s taking too much time for many of our customers to hire people. Now we have the way we master in a much better way the cycle of adoption. We have a better way to monetize the knowledge and the know-how we have put in our software because usually, people, they are comparing the capabilities, but they forget that we have put a lot of industry knowledge in our software.

And again, we have the way to monetize the end result of what we do. That’s the entire purpose. Now given the visibility, it’s a little bit early to speak about this. The only thing I can tell you is just last year, in 6 months because we released those products, the first initial drop was midyear last year. We have been able to build to basically create a EUR 50 million backlog, right? That’s what we have been able to do. And this is growing extremely fast. But again, same story, we will come back with more insight at the Capital Market Day in November.

Marie Dumas: We can take the next question online, please.

Operator: And the question comes from the line of Adam Wood from Morgan Stanley.

Adam Wood: I’ve got 2, please. Just first of all, thinking about more traditional kind of metrics of visibility in the business. Could you maybe help us with pipeline coverage as it stands today? And I guess, particularly given the comments around automotive and investor fears around that, have there been any notable shifts in terms of where the pipeline is by industry that might reassure? And then secondly, I think we’ve seen in software a lot where there’s been deceleration in revenue growth and particularly where companies have a lot of things changing and opportunities. You’ve obviously mentioned AI, the subscription transition for you. Can you just help us understand the balance that you’re trying to strike between making sure you’re reinvesting at the right level in the company to drive that revenue acceleration and maybe protecting margins in the short term? And are you comfortable you’re getting that kind of split rate?

Pascal Daloz: Thank you, Adam. I will start with the first part of the question, and Rouven will take the second one. So related to the pipeline, the coverage right now is 2.5x. So if I look at it, we have the pipeline to cover 2.5x the sales plan for the full year, which is good, which is good. The idea is to create 0.5 more during the year because we are creating also the pipeline over the time. So as a starting point, it’s a good ratio. What’s the difference compared to last year is the mix. Last year, we were relatively overweight with a lot of opportunity in the auto sector. And if I remember well, the pipeline in the auto sector was around 35%, 37% last year, right, Rouven?

Rouven Bergmann: Yes.

Pascal Daloz: This year, we are below 30%, which is, I think, better given what is happening, I mean, the volatility we have, especially in Europe on this topic. Where we see a share, which is increasing is in the aerospace and defense, which is, I think, more than — close to 17%, 18% for this year. It was a little bit, let’s say, last year, it was around 12%, if I remember well. What’s the difference? We still have the backlog because as you may know, this industry still have a lot of planes to produce, and they still struggle to deliver the backlog. And we have a lot of demands coming from the manufacturing part. You remember the large deal we signed with Lockheed Martin a year ago, it was on this topic. But also, we have new segments.

Defense is one of them, but also you have the new space. New space is in this industry what the EV was, let’s say, 10 years ago for the car industry. People developing drones, low orbit satellites, the new launcher, I mean, the new space station as well. And they are the one basically equipping themselves very rapidly, and they are raising and growing fast their engineering departments. So this is also something important. We’ll see also more demand in the high-tech sector. It’s something I did not mention, but we spoke a lot about NVIDIA as a partner. But NVIDIA is also a customer, right? And for the one we have, I mean, we look at what Jensen said last week on stage. NVIDIA is using our technology. In fact, we have built the virtual twin of their future AI factories.

And if you look at this entire sector, this is where the money flow right now. I mean, every morning, you open the newspaper, you see all the hyperscalers, all nations committing themselves to invest billions to create these AI factories. It’s a very complex object. I mean, you cannot imagine the complexity of it. It’s much more complex than a nuclear plant. And by the way, as I comment, do not make the confusion between the data center and the AI factories. The data center is to make an analogy, the warehouse. This is where you store the data. The AI factory, it’s a real factory. This is how you transform the data into insight, knowledge, value added. So the complexity and the requirements, it’s — I mean, there is nothing comparable to what we know currently with the data center.

So where I want to go, they need a virtual twin. And that’s what we do. We are building the virtual twin of the AI factories of the future. This is a tremendous opportunity where we’re expanding a lot. And to come back to the initial questions, that’s the reason why the share also in the high-tech sector is increasing significantly in the pipeline, and we are around 15%. So long story, a short one, good coverage, mix difference. I think the mix is probably more resilient compared to last year, less exposure to the auto sector, much more distributed. The rest, industrial equipment, the consumer goods and packaged goods is almost the same than what we had last year.

Rouven Bergmann: Okay. And then to your second question on the investment policy, how is this reflected? And really, we are looking at the different parts of the organization, starting with R&D. And here, the focus is on allocating our resources to accelerate the AI portfolio and also help to prepare the go-to-market with our brands because the R&D and the go-to-market, as you can imagine, as we are now bringing these next-generation applications to our clients, where R&D brands and go-to-market are extremely connected with our industries. So when I look at the opportunities and where we are investing on the go-to-market side, Pascal mentioned high-tech data centers, that’s a growth opportunity, but also related to that, the energy sector, the energy transition, which is a massive opportunity for us.

And we have had already in ’25 some great wins here. And — but we know the energy shortage and the pressure on the energy market will further open opportunities for us to virtualize and to improve and help this industry. Aero and space is a very resilient industry for us, where we are doubling down our focus on the go-to-market as well. And of course, industrial equipment. We have seen very resilient results in SOLIDWORKS, and we expect that momentum to be also in 2026. And last but not least, I mentioned that before, Adam, but just to complete the list here, the auto sector remains a critical industry for us with a lot of opportunities. And we are focusing also our go-to-market on that because we have a large footprint and the opportunity to expand.

Now we talked about the life sciences go-to-market where we are investing with dedicated integrated account teams. We are really reallocating our resources to address that industry more holistically and open up new pockets of growth and budgets that we didn’t systematically addressed in the past, which we have an opportunity to do, and we will. And then the last part, I think Pascal mentioned that also before, we are focusing on scaling the indirect channel, where just through the value network, the suppliers serving the OEMs, we have a lot of opportunity in this market as well, where we are enabling our partners with our new AI solutions to transform these suppliers. Now on G&A, we have initiated a large transformation project here as well to leverage AI and cloud in our back office to streamline the operation.

Marie Dumas: We will take one more question online.

Operator: And it comes from the line of Michael Briest from UBS.

Michael Briest: Just thinking about the CMD in November, are you currently reiterating your 2029 financial ambition? Should we expect that to be updated at that event? Because I’m looking at subscription and you’re expecting it to be 55% of software by then, and it was 40% last year, maybe 42% this year. That looks like a steep ramp. And then I appreciate the comments on M&A opportunities. But given the share price, what is your view? Is there any shift in the view on potential buybacks given the valuation of the data?

Rouven Bergmann: All right. Thank you, Michael. On the Capital Market Day, regarding the 2029 financial ambition, there’s 2 things. First, the introduction of the ARR will allow to have a more focused discussion on the growth levers and our path to accelerate top line growth, which is really around subscription, recurring cloud. And now with AI, we are in a different point than compared to last year where we have very concrete monetization examples on how they will build on top of our existing model. The second point I would reemphasize is that our financial commitment is on the EPS to — and that also has a lever of the operational efficiency that we are implementing. That’s why we reemphasize that today that we are taking the actions to improve the EPS and margin, which then, of course, will have a stronger effect as the top line comes back.

So we will discuss that at the Capital Market Day and how we are going to bridge to reach our financial ambition by 2029 as we outlined last year.

Pascal Daloz: The second part of your question, Michael, is related to the capital allocation. So again, there is no — I mean, I have nothing against the share buyback. But if you step back a little bit, let’s assume I’m spending EUR 0.5 billion to do this. the levers on the EPS will be relatively limited. And the same EUR 0.5 billion invested to acquire new AI start-up will deliver a better level. So that’s the reason why right now, I’m really directing the capital much more to the external growth than to the share buyback. The share buyback for us, you remember our policies is only to offset the dilution coming from the LTI. That’s what we do. But again, I have no dogmatic positions. I’m not against. I’m with you on the value creation, but I think we have a better road to create value by investing on the new AI domain than rather than to buy the shares.

I think it’s time to conclude. Again, thank you, all of you for your engagement today. But I want to leave you with one clear message. I think Dassault Syst�mes is really undergoing a profound and deep transformation of its business model. It’s obvious that we are transitioning decisively to subscription-driven future. And it’s not only coming from the acceleration of the cloud platform strategy, but above all of this is the evolution of our offerings. AI is at the core of the platform. This will enable our customers to create, simulate, operate virtual twin at scale to bring the virtual in the real world together and to manage the — for the entire industry. And I think this transformation is not incremental. It’s really a fundamental transformation.

So — and we do all of this with a certain resilience. Whatever you say we continue to grow, maybe at a moderate pace, yes, I accept this. But we sustained the momentum when if you look at in our industry, many of our peers, they struggle when they did this transition. And they did the transition before the AI came. So I think I hope you get a better sense of what we do, how we are executing, how we are innovating and how we are advancing to deliver the next phase of growth. I think Rouven and the Investor Relations team are looking forward to seeing you in the coming weeks because they will do road shows and see you no later than next quarter for me. Thank you.