Dassault Systemes SE

F:DSY

Earnings Call Transcript 2020-Q4

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Dassault Systèmes Fourth Quarter 2020 and 2020 Full Year Earnings Presentation. [Operator Instructions] I must advise you that this conference is being recorded today. I would now like to hand the conference over to François Bordonado. Please go ahead.

[François-José Bordonado]

Hello, and good morning to everybody. I'm François Bordonado, Dassault Systèmes Investor Relations. With me, I have Bernard Charlès, our Vice President and CEO; and Pascal Daloz, our COO and CFO. Please note that all Dassault Systèmes earnings announcement are made both in non-IFRS and IFRS. We will comment essentially on non-IFRS figures, unless otherwise mentioned. I would like you to refer please to our French document de reference. And I would like now to give back the floor to Bernard Charlès.

[Bernard S. Charlès, Vice Chairman & CEO]

Good morning, everyone, on -- even if it's a bit late. Happy New Year, and I hope I wish you good health, and all the best for all of you. I'm pleased to share this with Pascal toward the full year 2020 review. The revenue, as you can see in the presentation, is up 12% excluding exchange rate. Well, it's EUR 4.5 billion in Europe, but we passed the bar of $5 billion. So I'm happy with that one. This is -- there are pros and cons with the exchange rate. And I think the Board was happy with that yesterday. I hope soon, we will pass the bar of EUR 5 billion. Operating margin is at 30%-plus, 30.2%, and EPS is up 3%. So I think at this point in time, it shows at least a strong resilience for Dassault Systèmes. We committed early March last year to keep all employees. They were very happy with that. They really are considered that we walk the talk when it comes to corporate social responsibility. And by the way, we also increased the R&D account by 10%. On our sector view, you remember on Feb 6 last year, before we had this lockdown around the world on this pandemic panic, we presented -- I presented to you the horizon at 5, 10, 20 years, which basically is about looking at the economy with 3 sectors: what people are producing in the world, what we call manufacturing at large, any physical goods; what we do in life science and health care; and infrastructure. And I believe that 2020, aside of everything you know from the economic, industrial and social effect, I think for Dassault Systèmes is a milestone point because we are becoming mission-critical in these 3 sectors of the economy. I think in manufacturing industry and life science as well as Infrastructure & Cities, and I will come back on this topic. I think we have also strengthened our industrial -- our industrial innovation capacity. We are becoming a major player in life science. And we are accelerating innovation in mainstream market, which I think is a very exciting momentum. On the organization, we had, I think, a very powerful transition with new generation of leaders around Pascal Daloz, and Pascal himself representing that generation. And this is true across all structure of Dassault Systèmes. We don't publish, and we don't like to publish too much on the R&D organization, for example. But it's a very, very young organization with this capacity to innovate. And this is something which I think is very important. By the way, this is not a retirement announcement from my side. I plan to stay in the company for as long as I have a good -- I have a good example with [ Marcelle ] -- with [ Sir Dassault ] and with Charles Edelstenne, my Chairman. So a purpose-driven company, we really think we are contributing on the handprint side with the levers as well as committing for our footprint. I will come back on this in a moment, too. On the, I think, the long-term growth with the -- what we announced on February 6, we published a paper, 2 pages. At that time, I think we show when we prove that the addressable market potentially for us is about EUR 100 billion. So we should be able to find out the right path for growth for the future. The last point is very important, mission-critical for this year. We are adopting our platform for everything we do. It's already the case for R&D. We don't use external products to manage our R&D. It's our platform itself, and we are going to use the platform as our channel. Ultimately, Dassault Systèmes wants to have the 3DEXPERIENCE platform connected to all the users worldwide on all companies worldwide as well as all partners worldwide. We don't need CRM. The platform itself is the relationship with our clients. So that's for the highlight. We announced on Feb 6, what you know, moving from things to life, we said that we will be focusing our investment to create the virtual twin experience of human. We are in a good position to do that. As we did for a design for more cars, for PLM with basically the virtual twin of production systems on -- with even cities and infrastructure. So this is not a vapor statement. This is what we do. And we put science and technology to do it. So we are taking it seriously as we did for planes, cars, infrastructure, energy systems and so on. So this is what we call being the catalyst and enabler for industry renaissance. It's 14 years of work. It's structured the next 20. So that's what we do. Four things are driving what we do. I've said already from things to life. The second thing, you understood it now, the platform is the channel. So from connection from a way of interacting with users and customers now with a structured way, we call it the IFWE Loop. It's very interesting, there were a business school publication, where they presented the infinite loop. This is what we have been doing a year before in preparing our platform as a channel for those of you who might have seen this publication a year ago. And then making -- from the making to the growing, please read behind this, the fact that we are creating generative systems. So you don't design. You specify on the system design for you and from social to human because we believe that human-centric approach to the industry solution is a differentiator. There is a nice video, I think. If we launch the video, that shows you that we are touching many points of your life. [Presentation]

[Bernard S. Charlès, Vice Chairman & CEO]

You will notice that we tried -- in a way, we try to articulate to people as workers, people as patients, people as citizen that, in some way, we are behind many of the things they touch every day. And I think this will become more and more true when we did the simulation of airflow in an opera, people who are citizen, and citizens have considered it's an important topic, even when you take the train or the plane. And they want to fly again, like I want to fly again. I don't want to stay home. So connecting industry and economy, this is what we do. Manufacturing, Life Sciences & Healthcare and Infrastructure & Cities. Now proof points. Well, of course, the -- an astonishing situation is the move with Medidata in November 2019 and the fact that we became at the center of the trial for the COVID, the CoV-SARS-2, on the variant that are going on with over 500 clinical trials going on, hundred and thousands of -- to thousands of patients in this clinical trial, reducing by 50% to 60% the study start-up time and really increasing massively data intelligence and data science for real-world evidence. So there is something happening there. And I think if you take it from a little bit of distance, this sector is far behind in connecting research, R&D, lab, clinical trial on bioreactor or production systems. It's visible. Please notice the slow ramp-up of many plans. They don't have -- they do not have the virtual twin experience of the production system. The Toyota production system will not work today without the virtual twin experience of their production system. So there is a lot of things that can be done there. A few things where you can learn a lot from. With Novo Nordisk, a beautiful video, by the way, on YouTube that they have done, where they explain how they are using the 3DEXPERIENCE with a solution called Engineered to Cure. This is in for diabetes on serious clinical disease. And basically, it's not only about the treatment. It's about the packaging and making it easy to use in real life. And it's really about the syringe-ready therapeutics. Many people don't understand in the large public. Why? Many of the therapeutics are not syringe-ready. Well, because they cannot be produced at scale. Because it's complex in production system. But you know what, we can simulate everything and prove that it's possible. So I think that the connection between research, development, lab, packaging and the way the therapeutics are going to be applied is a new game changer in this sector, and we'll have to change in the years to come, and we want to make sure we enable this to happen. This is one example. There are many others, but I think it's a very practical illustration of what Dassault Systèmes is doing that no other players are doing. Now on the system for -- future smart systems in manufacturing industry. Of course, you might have seen the alliance we are doing with Renault. Luca de Meo has an amazing vision about the future and really transformational, moving really fully the company in a new situation. We don't only like to work with rich companies, companies who are transforming themselves. We did that with PSA, incredible results in the last 7 years, because that's a proof point that the levers for building up the future is strong. And here, in this case, we are working on smart, safe and connected vehicles. So clearly, new mobility experience, new value network, new ways of working. Again, those are not just slogans. It's the reality of what we are doing with them. Interesting enough, we grew in A&D last year. And I know many of you were questioning that possibility, we did. Because space is a need -- it's a one of a kind, and there is a lot of things going on in space, in defense, and really an example of that is Spirit. It's just one example. But at large, we demonstrated that despite the incredible pandemic hit on the air travel, there are a lot of things going on, driven by 3 factors: how to reduce OpEx. How do you -- when the demand is changing, reorganize production system in safe conditions? If you do not have the virtual twin experience of the plant, you cannot do it -- do it. I think, for example, for Airbus in Hamburg, we did an amazing job to be able to reorchestrate production based on demand in a few hours as opposed to months before. Thanks to the DELMIA portfolio and what we call planning. So former ERP systems don't address this well, and this is core to the future of our growth. This is one example. In the sector of consumer goods, consumer-packaged goods, and with ECCO, we continue to expand with Centric PLM, are doing a great job there to really connect products with the way e-commerce environment and the full life cycle of it. Another example is Lithium Valley. Really with science-based platform like the one we have with material science with BIOVIA to optimize the future of battery for electrical vehicle and others. This is making the difference. So we are putting science, technology on the platform to optimize not only the battery system but simulate it and optimize the way you produce them at scale. So this is another proof point about the adoption of the 3DEXPERIENCE platform to do that. You cannot solve this problem if you are connecting software which are not integrated. Strong momentum in China, in energy, transportation and health. China is not anymore about production only. They are inventing new portfolio. You have seen that in the EV mobility. You see that in space. You see that in many other sectors, like the new way of constructing, building at a lower cost. And I think the alliance we announced last year like Akila Care with Aden, with SMEDI Construction, with POWERCHINA, those are good illustrations. So to really summarize, we are putting our purpose in action to provide business and people 3DEXPERIENCE universe to imagine sustainable innovation, capable of harmonizing product, nature and life. This is the journey our investors wants to have, it's a good home. That's what we are doing. We are communicating that along the line of the UN goals. And each year, we will have a new act. We demonstrated the capacity to use experience as a way to connect with people. We are now focusing on the build for water in production system and supply chain. We look at the consumption aspect, the city aspect, the energy aspect, mobility, nature, health, the heritage and future, more to come in this. We try to illustrate how the impact of what we do with our clients can help. We published a quite interesting study with Accenture at the opening of Davos to where we made, with Accenture, a very precise study about the contribution, the critical role of virtual twin in accelerating sustainability. We don't use virtual by accident. We don't use experience by accident. Virtual means it's beyond digital. Digital is a means. The virtual is the capacity to represent a real phenomenon with accuracy based on science and technology. Experience is about simulating the unpredictable, evaluating the possibilities. So it's different from digital twin. Virtual twin experience is as profound as digital mockup. Most of our competitors were doing part assembly. We were doing an airplane or a car. It's different. Same here. And the factors are huge, gigantic, virtual twin to bring in USD 1.3 trillion of economic value and 7.5 gigaton of CO2 emission reduction between now and 2030. This is backed up with interesting data. So I think the virtual twin experience applied to everything can contribute massively to improve the sustainability of the world. Of course, on our site, to run the business, we also have a negative impact on the environment. And we need to continue to improve it, and we are committed to do it. First, we are committed to science-based targets initiatives, and we are building the framework, by the way, that we will offer also on our platform to our clients. And in our concrete terms, as Pascal set up with the Board, we set up the goal for EPS by 2024. CFO, Pascal, I'm sure you remember. We said that by 2025, it's going to be 5 tonnes per FTE. So minus 38% versus 2018. And we'll continue to work on those topics, but also provide the decision cockpit for our clients on the platform. Related to sustainability, we believe that women's representation is, I think, quite well-managed at Dassault Systèmes. 50% of the Board -- 40% of the executives are women. I have been, for the last 15 years, doing a lot in this area myself to coach those great women to have leadership at Dassault Systèmes. And I remind everyone that the Senior VP, managing all global R&D for Dassault Systèmes, is a woman. She is the Chief Architect, and she's managing all the R&D we do. And 30% at the manager level, we still can improve that. Before I give the floor to Pascal, I want to really insist on the fact that we are going to use the platform to interact real-time with all our users, clients and partners worldwide. We call it the IFWE Loop. We are going to implement 4 type of engagement: engagement for a large company, we call it industry solution engagement; engagement with partners, process engagement; engagement with volume, mainstream, we call it [ Role ], click and buy online for the cloud. This is why the platform with its architecture based on human centricity, capacity to represent the world, capacity to use data to reveal the visible and capacity to map a virtual simulation to the real-world evidence is unique. We are applying the healthcare real-world awareness discipline to manufacturing systems. And for us, IoT is an anecdote. IoT is a tool like TCP/IP. But the reality is how you compare data you acquire to the theoretical model you want to run. That's what we do at Dassault Systèmes. I think there is a video. Please run the video. [Presentation]

[Bernard S. Charlès, Vice Chairman & CEO]

Transform radically the way we reach, build value with our clients and users on a global basis. Briefly, I would like just to -- before Pascal, you take over, 2 anecdotes. We made a quite interesting pilot in France for the pandemic in 2 regions, what we call [ grand test ], which is on the [ S ], which is connected to Germany and also to southwest of France. And we provided to the president of those regions the 3DEXPERIENCE platform, indexing all data available from the pandemic, the health and the economics to give them dashboard to understand what was happening in the region. And this is valuable under mobile with a little customization, 2 weeks of customization of the platform, the 3DEXPERIENCE platform, and they can really have access to it, and they can use it under mobile because you saw in this video that their platform is running on mobile. The reason why I mentioned this is the platform, despite its name 3DEXPERIENCE, is centered on business experiences. And I think we are going to demonstrate that as a channel, it's really running a business operation for Dassault Systèmes. Back to you, Pascal.

[Pascal Daloz, COO, CFO & Director]

Thank you, Bernard. Good morning to all of you. Always a pleasure to be with you at this time of the year, and thank you for joining us today. So let's -- let me begin first with a quick overview of our financial performance in Q4. First, our financial results came in at the high end of -- above our guidance. Total revenue increased 5%, ahead of our 2% to 4% range at EUR 1.22 billion. Software revenue came in slightly ahead on a better licenses performance, and the recurring software was well in line. Importantly, on an organic basis, total revenue was stable year-over-year in Q4. Our operating margin came in at 36%, 50 basis points above the high end of our guidance range. Thanks to the revenue upside, of course, and also our operating expenses tracking to our guidance. EPS was EUR 1.22, ahead of our EUR 1.15 to EUR 1.20 guidance, including a negative EUR 0.02 currency impact. And EPS grew 6% at constant currency in Q4. Zooming in our revenue by cap in Q4. First, software revenue increased 8%, slightly ahead of our 6% to 7% expectation. To be noticed that the top 3DEXPERIENCE transactions were across multiple industries, Aerospace & Defense, Energy & Materials, Transportation & Mobility, to name only few. And also from a large deal perspective, we saw more geos contributing to the top 20 deals, thanks the time we did in Q4 when they were mostly coming from North America and China. Large deal activity benefited both on our license and subscriptions revenue. Zooming on license and other software revenue, it came in better than planned, decreasing 9% versus 12% to 15%. It's about EUR 10 million higher compared to our guidance. America was the best-performing region with licenses and other software growth positive in Q4. Our recurring software revenue grew 16% in total, and 9% on an organic basis. Our subscriptions performance benefited by the addition of Medidata, all-subscription SaaS software, with a double-digit subscription growth on our comparable basis. We are observing some acceleration in the adoption of the subscription on an organic basis. It's really up double-digit in Q4. And our support revenue was well in line with our expectations. We saw a solid performance for renewals, both regionally and across most of our brands' applications. For the full year, the recurring revenue represents 80% of the total software. Moving to the services. The services revenue decreased 19% at EUR 114 million, somewhat better than the range of what we had given. We saw an improvement in signing in Q4, helping bring more visibility for 2021. And on the margin side for the services, improvement came from the management of subcontractors, specifically. And more important, along the year, our focus has been on taking action in services to ensure the 2,700 3DEXPERIENCE go-lives we have accomplished. And also to advance our services work, benefiting in large and multiyear deployment on our software to secure 2021 and after. That's what we can say. Moving to the regional software review, a few comments. First, let's start with Asia. Asia software revenue was up 3% in Q4. China was the best-performing geo, up 20% in Q4 and 15% for the full year of 2020 with a good organic results as well as the addition of Medidata. Japan was stable and softness came from Korea and India, in particular, where the environment was still difficult in Q4. Support revenue growth was very solid across Asia in Q4, and we saw a strong uptick in growth for subscriptions in total and organically. In Europe, our software revenue was flat in Q4. We did see a significant number of large deals anyway, in Northern Europe, France, Germany and Southern Europe as well. But in 2020, the double-digit growth in Northern Europe has been partly offset by the Southern part of Europe. In the Americas, software revenue increased 23% in total, and 13% on an organic basis. So it's really a good performance. And from an industry perspective, we had a strong growth in life sciences with Medidata and in aerospace on an organic basis. That's what we could say for the regions. Moving to the product line. Let's start with industrial innovation software. The revenue decreased by 1% in Q4. Within that, 3DEXPERIENCE had a better performance with a number of deals, as I was saying, in Aerospace & Defense, Transportation & Mobility as well as multiple deals coming from Energy & Materials and Industrial Equipment as well. You can see that CATIA grew in Q4 and resisted well in 2020, demonstrating its leadership in some key industries, also specifically in the auto sector. It has seen a strong traction with its offer in cyber systems and the recent acquisitions -- or the minority stake, I should say, we took in AVSimulation is reinforcing this offer. SIMULIA continues also to grow -- to demonstrate a good momentum in both structural and electromagnetics and has remained the case in Q4. For the full year, industrial innovation software revenue amount of EUR 2.3 billion and represent 57% of the software revenue. Moving to life science product lines. In life science, Medidata total revenue was up 20% in the quarter on a comparable basis, with a solid operating margin performance and a strong cash flow from operations. BIOVIA also had a double-digit growth in both Americas and Asia, offset in part by the total comps we had in Europe last year. Looking much more carefully at Medidata. The progress over the last year, Rave EDC, the core products continue to demonstrate its strong market leadership. In addition, the attach rate of the other product solution is very strong, with a number of customers with 4 or more Medidata product up over 20% during 2020. It is also very important to notice that the run rate for Patient Cloud is up sharply, representing Medidata next 100 millionth product lines. BIOVIA saw also a strong traction with a product maybe you are not aware of, so-called BIOVIA Discoverant. This product is really aimed to support the entire manufacturing process life cycle, from process development's full scale-up and tech transfer to the final productions. For 2020, our life science product line software revenue amounts for EUR 797 million, accounting for 20% of the total software revenue. Finally, Mainstream Innovation. So Mainstream Innovation software revenue increased 10% in Q4 with SOLIDWORKS growing at 7%. We noticed that the early quarter looks also promising for 3DEXPERIENCE platform. And we look to see progressive traction with 3DEXPERIENCE WORKS, cloud-based family of solutions. We just introduced this product line less than a year ago, and now we are starting to see the tractions. For the full year 2020, Mainstream Innovation software revenue amount for EUR 938 million and represent 23% of the software revenue. As we outlined at the Capital Markets Day in Q4 2020, and I know it's a key topic for you, we have made significant investment in developing our cloud portfolio, which cover almost 100% of what we offer on-prem. We see cloud gaining accelerating tractions, and I have a few examples for that. The first one is a recent example, it's a company called Stevanato Group, a provider of packaging machine used in pharma industries. They have adopted the 3DEXPERIENCE platform and digital continuity industry solution on the cloud. And this industry solution is really helping them to speed time to market, significantly reduce the IT and the total cost of ownership but also enable them to create a virtual twin experience of the entire manufacturing lines. This is exactly the point mentioned by Bernard. Another example in the life science sectors is in America, Horizon, a pharmaceutical company, extended its multiyear agreement with Medidata using Rave EDC as well as a number of additional cloud products. Horizon is adding Medidata Intelligent Trials solutions to give them the flexibility and the agility to scale and to grow. I think this agreement is a good example of how we could expand our portfolio of existing customers, both in terms of number of products and value we deliver, thanks to the data-centric approach. And finally, another illustration with simulation on the cloud in the mainstream innovations, Tiniko, a Korea-based materials company, a SOLIDWORKS customers. They are expanding its relationship. We are expanding their relationship with them with the adoption of 3DEXPERIENCE platform and the simulations capability coming from SIMULIA as part of 3DEXPERIENCE WORKS again on the cloud. A quick update on Centric PLM. Centric PLM, the world leader PLM solution for fashion, retail and consumer goods. As you remember, it was a tough time for them in 2020, but we had a very strong finish, where the results were up sharply in Q4, and we had a strong catch-up from prior quarters. We are also seeing a trend towards subscription model in conjunction with the adoption of the cloud. During 2020, Centric PLM continued to increase its market presence with the customer acquisition up 11%, which is, I think, a good result because many of those companies, they have their stores being closed. And the ability to continue to expand is a very good sign about resiliency of the solutions. So they have also -- they are also extending their reach with diversification into food and beverage. And this is, again, a very large market. And we do expect to -- you see the collection of logo on the slide, and we do expect to build almost the same footprint with Centric in food and beverage. Okay. A few words related to the acquisitions. As you know, we will continue to invest in some key specific domains. In 2020, the focus was really related to the technology, as you can see. So with respect to data science, last July, we acquired Proxem, bringing a strong artificial intelligence capability to complement our capability within NETVIBES. In November last year, we acquired NuoDB, a cloud-native distributed SQL database leader. We were previously -- we had a previously an equity stake in this company, and we decided to move forward because this is becoming so critical, and it's unique. Because NuoDB is really the only technology you can use to do 3 things: to ensure the data integrity because we are still transactional. So this is what's usually the SQL database are doing. To scale, like you do SQL database, this is what the players coming from the web, they bring in terms of new technology. And us, we also have to manage the cybersecurity and the ability to be distributed is super critical. So that's the reason why we have decided to take the full control of this company, and we are using extensively NuoDB in our cloud infrastructure for -- to support our 3DEXPERIENCE platform on the cloud but also our data science strategy. We have also taken an equity position in AVSimulation in January of this year. It is a provider of ultra-realistic virtual world for virtual driving simulations, specifically to enable automotive driving certifications, which is very critical considering 2024 regulations constraint. As you may know, at that time, the vast majority of the cars will have some assistance in terms of driving, and they have to be certified. That's the reason why we took this minority stake in order to complement what we have. Moving to the operating margin and EPS. So zooming first on the operating margin. Our full year operating margin was 32.2% versus 30 -- sorry, 30.2% versus 32% in 2019. I think it's a good result, because the -- at the same time, we have to offset the dilutions coming from Medidata, which is roughly 210 basis points. Even if Medidata sticked to the plan to improve the profitability by improving their operating margin by 200 basis points, but nevertheless, still diluting. And also, we have to offset the softness coming from the services activity. And thanks to the savings plan, we have been able to counterbalance this headwind. This translates into the bottom line. With an EPS growth of 3%. 5%, if you exclude the currency effect at the EUR 3.73 in 2020. It's EUR 0.02 above the high end of the guidance for Q4. And again, despite EUR 0.02 negative currency effect. Finally, a few words on the cash flow and balance sheet. So we had a solid growth for the year, up 5% to EUR 1.240 billion. We also used a EUR 382 million of cash to improve our leverage ratio. And as you can see, now we are at 1.8, coming from 2.5 a year ago. We are a little bit advanced compared to our initial plan because we were targeting 2 at the end of this year. Contract liability amount EUR 1.170 billion, up about 14% in constant currencies. Now let's move to the financial objective for the full year. There are 4 takeaways. The first one, we are initiating a constant currency revenue growth objective of 9% to 10% for 2021, to reach EUR 4.750 billion to EUR 4.765 billion. And this is essentially an organic growth because the contribution of the acquisitions are very modest in 2021, given the size of the company we just -- we acquired. We anticipate a recurring software revenue to increase about 8% to 9% and for the license revenue to grow 13% to 15%. And finally, services by 9% to 12%. We are very progressively transitioning to the subscription model, as you know, but not at the expense of the growth. That's very important for you to keep it in mind. And the cloud represent today a little bit more than 20% of our revenue. And as highlighted in the Capital Market Day, the goal for us is to have 1/3 of our revenue coming from the cloud in 2025, which is more than EUR 2 billion at that time. Second, we are assuming a gradual recovery in business. So this is also key for you to understand. And I was looking at the consensus. The consensus is relatively aligned with a normal profile of the year. And here, we are more than ever backloaded so this is also important for you to take this into account. Third, with respect to Medidata, we are expecting a strong growth and a high visibility. We anticipate total revenue to increase about 14% at constant currency for 2021, entering the year with a 94% coverage ratio, which is almost more than 3, if not 4 points, more compared to last year. Fourth, we are targeting an operating margin of about 30.8%. This includes, obviously, continued operating margin growth at Medidata. And the plan is, as I told you, is to improve -- to continue to improve by 200 basis points in 2021. And finally, our EPS range is EUR 4.10 to EUR 4.15. Growth of about 8% to 10%, with several hundred basis points of currency headwind embedded in our currency exchange rate assumptions. We estimate also a lower tax rate for 2021, about 23.7% versus 25.1% in 2020, largely reflecting some benefit in our French taxes. And for the exchange rate versus the euro, we are using a 1.22 for U.S. dollar and 126 for the yen. For Q1, we are targeting a revenue growth objective of 9% to 10%, ex FX; to reach EUR 1.145 billion to EUR 1.170 billion; with software revenue increased 7% to 9% driven by the license growth expected between flat to 5%; and a recurring software revenue growth, 8% to 10%; and services by minus 2% and plus 2%; the operating margin of 30.4% to 31.1%; and finally, an EPS range of EUR 0.98 to EUR 1.03; and a growth of about 3% to 8%. To summarize, I think we opened this past year beginning our new horizons, as Bernard said, setting the stage for the coming decades. And with the pandemic impact, we have to reset our objective outlook for 2020 and postponed by 1 year our 2023, 5 years EPS objectives now in 2024. Looking forward, we see a year of solid organic revenue growth for 2021. And we are confident in our midterm growth drivers with Industrial Innovations, Mainstream Innovation and Life Sciences. Thanks to many things, in fact, but specifically to the talented team across the globe and our partners. And none of us could have imagined 2020 in advance. But despite the increased distances, we became closer as a company. And I want to do a very specific full thanks to all of our employees, partners and customers. And I should not forget the trust and support we receive from you, my friends, analysts and investors. I think Bernard and I would like now to take and answer your questions. Thank you.

[Operator]

[Operator Instructions] And our first question comes from the line of Michael Briest from UBS.

[Michael Briest]

Congratulations on the recovery in Q4. Two for me. Bernard, can you talk a bit about some of the sort of transformational projects you've won in the last 12, 18 months? So Boeing, Toyota, BHP, what the status is and whether there's been any delays or even acceleration in deployment? And then Pascal, thanks for the additional data on the cloud exposure. Just in terms of the EUR 2 billion in 2025, can you go into a bit more detail on which product lines will primarily drive the non-Medidata component? So is this more of a SOLIDWORKS catalyst or CATIA? And I think at the Capital Markets Day, you started talking about yearly subscription fees and primary and annual servicing charges but didn't have much chance to go into detail. What is the driver of what's going to create a sort of purely ratable revenue as opposed to one where there's an upfront element, and how will that play out in the P&L, do you think?

[Bernard S. Charlès, Vice Chairman & CEO]

Thank you, Michael. Related to relationship basically with our customers in terms of the deployment, I think the -- first of all, 2020, we have strengthened our relationship with all of them. And that's -- for us, that's important because at the end, it accounts for the trust when we face difficulties. So in some way, it has slowed down the deployment, but it has also reframed the deployment sequence. To be concrete, we saw a lot of attention in accelerating the use of the virtual twin for the connection between demand on the way the production system works, and we believe that this is a very positive factor for midterm, long term, adapting with the pending capacity and the readjustment. That's the first, one thing. The second thing, as I said, is that many companies are rethinking right now their portfolio horizon. And we are at the core of that. Yes, it's -- you mentioned Toyota and others. By the way, in the case of Toyota, I think my first comment is related to the practicality of Toyota, the thinking about that -- how they want to manage their production system to worldwide, and we are a core system for them in that area. But on the portfolio standpoint, we have also, in mobility, many companies announcing new type of product portfolio for the years to come with hybridation. It was a topic on the agenda before, in 2019. But it's becoming a very sensitive topic for them now in terms of speed to deploy, to deliver those platforms and provide new mobility service. On the last, what we saw in A&D at large, where all people were focusing on our activity on civil airplane, we saw an acceleration in space, telecommunication and defense. So that's the kind of dynamic going on. So in some way, without accelerating the speed of deployment because it was a very hard year for them, we have demonstrated solidarity. And we have supported customer without billing them to help them work from home, for example. And we did not bill for that because when you have those loyal customers, you want to create solidarity. And we think that will pay off on midterm or long term. But we have changed the footprint on the understanding of them of using the platform end-to-end as opposed to only specialized environment. So I think it's good for -- a good lever for the future to come. The second aspect, Pascal, I think you want to put some additional remarks on the cloud.

[Pascal Daloz, COO, CFO & Director]

So first of all, Michael, thank you for your congratulations. I appreciate, especially coming from you. But I will answer to your questions related to the cloud. The best way for me to answer to it is by -- before to move to zoom on the product line, I want to give you the answer by the 3 sectors. So first of all, in the Life Sciences, obviously, Medidata is a SaaS-based approach. And we want to almost standardize on the subscription and the cloud for everything we do. So that's the reason why you remember, I told you, I'm really pushing hardly for BIOVIA also to move to the cloud and on subscriptions. Related to Infrastructure & Cities, the cloud solutions are already well-adopted by this sector, and there is a simple reason for that because they are project-based for the vast majority of them. And the cloud is giving to them the agility and the flexibility to connect on the fly all the stakeholders. So that's the reason why the vast majority of, at least, the incremental revenue we have from these sectors is coming from cloud solutions. Specifically, you are coming from CATIA, the 3DEXPERIENCE platform, and also the simulation, SIMULIA. Related to the manufacturing sectors, there are a few things. First of all, all the consumer-centric industries are also moving progressively to the cloud. And the best proof point, what I'm seeing is Centric PLM. You noticed that subscriptions model is really taking off and it's driven also by the cloud. So you could expect at some point of time, that the vast majority of Centric PLM revenue will also come from this. And the mainstream is also adopting the cloud, and we are seeing it. We had, for example, a good traction with a product we are not usually spending too much time to speak about it but DraftSight. DraftSight, as you know, it's a product line competing against AutoCAD. And we have a significant large installed base now using DraftSight. And the vast majority of them are using DraftSight on the cloud with the subscription model. And in the traditional sectors like auto, aerospace, I would say the traction is coming from the newcomers. If you take all the EV guys, they -- the vast majority of them are starting directly with the cloud solutions, which is specifically CATIA and the 3DEXPERIENCE platform as well as SIMULIA for the vast majority of what we do. That's where the drivers are coming from. And you could expect that if you combine Centric PLM, obviously, BIOVIA, CATIA and SOLIDWORKS, and for sure, the 3DEXPERIENCE platform and also simulation, this is where the -- from a product line standpoint, it will come.

[Michael Briest]

And the distinction between yearly subscription fees and primary servicing charges, what was this one's drop in one form or the other?

[Pascal Daloz, COO, CFO & Director]

Again, you remember, we still have some -- the reality, we have to comply with the business model of our customers. And the subscription is sometimes a good model for some of them. But for the EV industry, which is really CapEx-based, sometimes, it's a difficult sell. That's the reason why we have innovating because we find a way to almost still have a subscription model, which ensures the recurring revenue you are looking for, but with an upfront payment. That's what is behind. And this is a good model for some of our customers. And this is also potentially a good model for the partners as well because it's easier for them when they recognize some revenue upfront. Now if I look at the statistics, because this is probably the questions behind, I still have the vast majority of the subscriptions coming from a yearly fee more than a yearly primary charge. So it's 2/3, 1/3, to answer to your questions.

[Operator]

Our next question comes from the line of Adam Wood from Morgan Stanley.

[Adam Dennis Wood, European Technology Equity Analyst]

Congrats from me on the strong end to the year as well. I've got 2, please. Maybe just first of all, if aerospace grew in 2020, I guess that probably means that automotive was weaker. Could you talk a little bit about the cyclicality in that business? I think some of the peers, people like Hexagon and Siemens, have been talking about actually quite a strong potential pickup in that market. What are you seeing in your pipeline? What are you seeing customers doing? That was the first one. And then secondly, just thinking about the platform and data. Clearly, getting insights from data is going to be increasingly important for your customers. We appreciate the discussion around IoT, but then there's also companies like C3i and the hyperscalers trying to use artificial intelligence and machine learning to give customers insights into data. How do you think you stack up and compete against those? Are they going to be successful where data goes into the cloud and you work purely on the edge? Or do you think there's a way that you can be competitive for them around how data is analyzed in a broader sense?

[Bernard S. Charlès, Vice Chairman & CEO]

Thank you, Adam. I think that on the first part of the question, what is becoming very visible to us is the higher level of comprehension by customer that -- of the platform phenomenon, not the connection only between software services, software solutions, but the platformization of them. What I can say today, as I am engaged personally with our top CEOs around the world about the way to organize the transformation of the company, I can tell you that more and more, they see the 3DEXPERIENCE platform as an enterprise platform, not an engineering or manufacturing but an enterprise platform, which has the consequence -- significant consequences, on the second part of your question, because they want to connect the data, supply chain data, sustainability data, cost data, purchasing data and do data science on it. And we do have those data. Not only we do have them, but we can index any system, including a existing ERP in place, and that's what we have in the cockpit functionalities of the 3DEXPERIENCE platform. And the reason why I mentioned the interesting showcase in the region to follow the COVID pandemic is exactly because it's data science usage of the platform if we source data which have never been generated by Dassault Systèmes software. They are coming from the health ministry. They are coming from traffic. And we do the synthesis on that and show how -- what is really happening. We see this as a significant growth for the platform itself, usage of it. And I think we have significant component for it. We can do now also semantic analysis with Proxem. Pascal mentioned this acquisition. It means that the system can do AI on the text, on a PDF text and understand the semantic of it. I don't think Palantir can do that, for example. I don't see why we -- the platform will not be used for data science, connecting all the dots. It's a big playground. There is a room for a lot of players because we cannot reach all. But I think when it comes to our clients, more and more, they will keep a consistency in the way they use the platform from that standpoint. We mentioned last year the evolution with Gulfstream, I think, with the massive adoption of data science for maintenance predictability, cost analytics and so on. But this is also happening in many other domains, for example, for what we call maintenance in operation of extremely complex equipment. Yes, we are a player there, and we are going to be a big player because the data are in the platform, and we can index what is outside. Do you want to add something, Pascal?

[Pascal Daloz, COO, CFO & Director]

Yes. And so I think Bernard give you a lot of reasons to believe. And also, there is one thing you should keep in mind and Bernard say it. You connect with the data that you integrate with the processes. And if you do not have the industry solutions to make it happen, you do almost nothing. That's really what is unique in what we do. And the platform is data-centric and model-based at the same time. So you connect with the data and you integrate with the virtual twin. That's our unique positioning, I think. Related to the cycle in aerospace. Yes, you're right. I mean we grew by 5% for the full year and plus 12% for Q4. So when I was telling you, some large deals are back. Now you have the proof. The reasons behind, there are several. I mean this industry is a long cycle anyway. They have a long cycle, and they have to project themselves over 2021 and 2022. So they cannot stop everything. Two, we were relatively well engaged with the vast majority of them, and they decided to accelerate our projects because we are the solutions. We are not the problem for them. And last but not least, I would say the government stimulus package is also helping this industry and especially the supply chain. So I do expect to continue to see some tractions coming from there.

[Operator]

And your next question comes from the line of Julian Serafini from Jefferies.

[Julian Alexander Serafini, Equity Analyst]

I have 2 questions. The first for Pascal. In your prepared remarks, you talked about protecting profitability when you were mentioning the cloud transition, if I remember correctly. I mean, I guess the bigger question is, is there a point at which the cloud revenue model is more advantageous for Dassault, right? Because usually for many companies, after 3 or 5 years, it is more advantageous to switch to a cloud model for many software companies. Is there such a cost or a point for Dassault? And if so, why not accelerate the move to the cloud? And then second question, just on Medidata. You guided to 14% growth on Medidata for 2021. I mean if I remember in the past, you were talking about 20% upsell upon renewal. It seems like the business is doing good. I guess I'm struggling with the 14% number given that's roughly what Medidata was growing at when we bought the company 2 years ago, right? So can you help us just understand what's going on in that growth rate there?

[Bernard S. Charlès, Vice Chairman & CEO]

Okay. So let's take the first question related to the profitability of the cloud. There are a few things I want you to keep in mind. First of all, the revenue for us is increasing 10x faster than the cost. So when some of our competitors are explaining that their profitability is under pressure when they are transitioning, I told you it's a question of architecture of your solutions. And us, this is the productivity ratio we have. It's point number one. Point number two, related to the subscription model. It's not new again for us. We have the subscription model for a long time, and we know that the curve are crossing after 3 years. So it's something we have already in place with some large accounts like Boeing. And -- but again, I want you to keep in mind that what is the difference compared to what we -- compared to some of our peers, we are moving progressively to subscriptions because I -- again, I'm repeating myself, but you need to take into account the fact that for certain industry, the CapEx-based approach is the only way to go. They cannot be OpEx-based, simple as that. And offering this flexibility still has a value for us. One example I could give you. Take all the Chinese-owned state company. They are a large company, and some of them are starting to conquest the rest of the world. Those guys, if you come with a recurrent model, they will tell you, they do not want this at all. Why so? Because they are negotiating with the government of funding 1 year, and they are not sure they're going to have it the year after. So the only way is to have a CapEx-based approach to secure this. This is a real example. And believe me, we are fighting against the competitions. And just taking this example, I know some of our competitors are out of the game for this reason. Now the second question related to Medidata. 14% growth for this year. Yes. I was expecting these questions, by the way. You tell me, I'm too cautious. But there are a few points I want you to take into account. First of all, you remember, it's a SaaS model. So clearly, the bookings are increasing much faster but it's a multiyear engagement. So the time to have this being reflecting into the revenue, you have a lag time. So it's -- at least it's a minimum of 1 point additional growth compared to 2020 for Medidata. The second thing I want you to keep in mind, we don't know the profile of the year. We know that it's a progressive recovery. We know that the pipeline looks good for the license, and we have a relatively good coverage but we still have some volatility. So that's the reason why to do my CFO role, I also, to a certain extent, derisk a little bit the license by start focusing on the low hand for Medidata. That's probably the best answer I can give to you.

[Operator]

And our next question comes from the line of Neil Steer from Redburn.

[Neil Steer, Partner of Software and IT Services Research]

And once again, congratulations on the good end of the year. In the past, you've talked about the investments effectively that you're making in the services side of the business. And I just want to clarify something. Have you already begun to see the benefits of that in terms of some of the new or larger aerospace deals that you referred to as having been signed in the latter part of last year? And the reason I ask the question is, in your guidance, it does look as though you're looking for quite a strong acceleration of new licenses as we go through the year, particularly given the fact that the comp is obviously a lot easier in the first part of the year in any case. And I'm just wondering to what extent that investment that you've made in the services side of the business is baked into the strong acceleration in new licenses you're expecting to see come through in the latter half of this year?

[Pascal Daloz, COO, CFO & Director]

Okay. So yes, you are -- first of all, thank you, Neil, for your congratulations. Yes, you're right. I mean, we did it on purpose last year. I told you, we have -- we have put more than 2,700 customers live with 3DEXPERIENCE platform last year. So by doing so, the purpose of the 3DEXPERIENCE platform being live is, obviously, you are giving the foundations to continue to expand by connecting the different domain starting from engineering, going to manufacturing, simulation and so on. So this was very -- I mean it was key for us to secure this. Then we had some large deployment, and I mentioned Boeing explicitly. And by doing so, we have secured the growth in 2021 with them. So -- and this is a significant growth. I mean it's not only $100,000. It's a few millions. And last but not least, I think Bernard made a very interesting comment. When it's a tough time, people, they figure out if you are a real partner or not. And it's not because -- and we say very explicitly that we are not working only with rich company. We are also working with company having sometimes difficulties, And we are ready to invest at that time. And if you look at the 2 area investments we did last year, one was in research and development. We have been -- increased by 10%, the number of head count, which is significant because we know that in this time, this is where we should focus because we will create the next generation of solutions for our customers to help them to adapt what they have to do. And two, we had those people anyway, and we committed to keep all the people. And in our industry, the most difficult thing is to hire qualified people. So when you have it, it's much better for you to keep it. So to keep them with you. So rather than to have them sitting at home and doing nothing, I think it was a good choice to have them to accelerate some of the deployments, even if they were not fully charged. It was 2020. And you -- you can count on me that 2021, we do not have any more free services. We are back to normal things. And the proof of what I'm saying here, we had very good signing in Q4. And that's the reason why we are giving some confidence on the recovery for the services, starting much more Q2 than Q1 because Q1, usually between the signing and the time to set up the project, it's a quarter.

[Neil Steer, Partner of Software and IT Services Research]

Okay. And just to clarify, your visibility on the new license trajectory this year as a result of that investment, is you seem to be implying it's clear that's a greater level of visibility than you would have had in previous years. Is that fair?

[Pascal Daloz, COO, CFO & Director]

Yes. I mean, again, the pipeline coverage is good, but we are much more backloaded. And you still have a region of the world where confinement is still the reality. So it's -- we want to give certain flexibility on this. What we learned anyway is the largest customers, whatever is happening, they are relatively sticking to their decision process, which was not the case a year ago when the crisis started. They were almost postponing all the decisions. So that's the only thing I can say at this stage. It's only 1 month within the year.

[Operator]

Your next question comes from the line of Stacy Pollard from JPMorgan.

[Stacy Elizabeth Pollard, Head of Software and IT Equity Research]

Two questions from me then. Just around Proxem. Why do you think [ SIMULIA ] was a bit weaker? You think that was market environment or higher competition? And then maybe kind of on the flip side, SOLIDWORKS, up 7%, very strong. What does the pipeline look for you as you go look at the outlook -- sorry, as you go into 2021? And then again, on the product-centric, really nice recovery in Q4. And so how do you expect that to go into 2021? Can I have a second question since I hit 3 product lines in one?

[Bernard S. Charlès, Vice Chairman & CEO]

Yes. Thank you, Stacy. Give us a second because the line was breaking, and I want to consolidate if we've got your question well. Pascal, are we -- because the -- it breaks several times.

[Stacy Elizabeth Pollard, Head of Software and IT Equity Research]

Sorry. ENOVIA, SOLIDWORKS, Centric.

[Pascal Daloz, COO, CFO & Director]

Yes, the first question was related to SOLIDWORKS and the competitive environment and how we see 2021, right? And the second question was related to Centric PLM.

[Stacy Elizabeth Pollard, Head of Software and IT Equity Research]

It was 3 products: ENOVIA, SOLIDWORKS, Centric.

[Bernard S. Charlès, Vice Chairman & CEO]

Okay. Yes. Very good. Thank you, Stacy. First, on the SOLIDWORKS side. We have SOLIDWORKS lovers, a large community, and they love the desktop. And they do love the desktop. So I think what we have seen, fourth quarter, Pascal mentioned that, is that now they are discovering that the power -- powering the desktop they love with the platform gives the value. There are 2 drivers where this is being revealed. One is on project management, which basically connects to your second question, ENOVIA, because it's coming from the ENOVIA portfolio. It's called project management, [ Role ]. And we see a quite interesting traction there for a SOLIDWORKS user that typically was doing design. The second thing we have seen is data analysts, which surprised us a lot. And of course, though, you remember, cloud -- 3DEXPERIENCE platform for SOLIDWORKS, it's only cloud. There is no on-premise solution delivered for them. And so it's only cloud. We saw data analysts, which is a surprise for this type of customers. And I think we are going to put a lot of attention on that. So ENOVIA and [ Role ] for project management, data analysts. And the third thing is they like the way analysis is accessible through subscription. And we must admit, and I think we mentioned that, that we left the plate open for others on the SOLIDWORKS base, which is a gigantic base in the past years to do analysis because we were focusing on large and complex process. But now with, I think, cloud-based, this is a dynamic where Gian Paolo and team, they believe that the profiling of usage of the roles of the SOLIDWORKS community is going to evolve quickly. In fact, the upcoming next week 3DEXPERIENCE World is really showing high interest in that. So that's -- those are the phenomenons happening. And last but not least, by the end of this year, we will have native 100% SOLIDWORKS desktop functionality available through a browser, native, so any mobile device. This is a discovery for them. It's a discovery for the partners. But I think the mood is positive from -- on the visibility, and the Q4 confirmed that dynamic. Pascal, do you want to add something?

[Pascal Daloz, COO, CFO & Director]

No. The question was also related to Centric PLM.

[Bernard S. Charlès, Vice Chairman & CEO]

Yes. On Centric PLM, I think, first of all, the Q4 was a good sign of evolution. And we see now Centric PLM clients asking for extension of the 3DEXPERIENCE platform. It's quite interesting to see that. It's a large space that they are building, a great reference and great logos. And I think we can supplement Centric PLM with 3DEXPERIENCE in many of the sectors, especially in food and beverage, for packaging and many others that we have been serving in certain sectors, especially in the beauty sector. So -- but we still need to make this replicable process. I think the team is a great team. They are super committed. And we are going to change the frontiers of what this offer as we move on, but we need to finalize the 100% acquisition, so we can put this in operation in a more direct way.

[Stacy Elizabeth Pollard, Head of Software and IT Equity Research]

And a second quick follow-up. Your midterm intentions on the database and cloud hosting side. You've done NuoDB acquisition recently, Outscale are before. You're doing more hosting of the medical solutions. So what is kind of the midterm plan there?

[Bernard S. Charlès, Vice Chairman & CEO]

We -- what is important? There is a lot of comparison with companies doing consumer-based services. This is for the time being, not our market. So we are going to provide 3 types of solutions for clients. A shared cloud, so cloud that are shared between customers. This is what is happening in the consumer industry today. Private cloud, so those are dedicated like what we are doing today for Europe aerospace network. And -- so this is what we call dedicated. And then sovereign cloud, and sovereign cloud is really highly sensitive for many of our clients. And this is -- we have demonstrated, we can do it. Of course, it has to be countries by countries because we want to be aligned fiscally and legally to the laws of the countries, which, frankly speaking, is not the case of consumer infrastructure. But I think at some point in time, they will have to fix that. So those are the 3 types of clouds. And we have the 3 -- those 3 types of clouds in operation as we speak. The last point is that we also, I think, have done a good job with cloud in China. And it's quite accepted. And we have the license to operate our environment there, which is not easy for all companies in the world. So it's a very precise plan. Shared, dedicated, sovereign. And we think when it comes to health data or also highly sensitive data, we will have to offer the 3 categories with consistent management of the upgrades on the cloud online, what we call DevOps processes.

[Operator]

And your next question comes from the line of James Goodman from Barclays.

[James Arthur Goodman, Research Analyst]

A couple, please. Just firstly, on the share-based payments, non-IFRS adjustment guidance that you've given for the year, down significantly year-on-year. I know we've got the maturity of some of the pre-existing Medidata plans, I think, within that. But is there anything else going on there? Anything else we should consider in terms of how that might look for the year? And just secondly, on services, another exceptionally well-managed cost of services this quarter. And Pascal, I think you mentioned the strong subcontractor management. But clearly, we're entering next year with pretty healthy services top line and a significantly lower run rate on the services cost. So I just wondered if you had a sort of gross profitability in mind next year for the services business, whether we start heading back towards the sort of slightly higher margins we saw a couple of years ago in that business?

[Bernard S. Charlès, Vice Chairman & CEO]

Okay. So the first question, you remember the policy for us is to almost offset the dilutions coming from the performance shares, and we are doing the share buyback to make it happen. Last year, we covered most of the plan, including the Medidata one, which was a significant one. But we did not cover fully. And I'm doing it in advance. I'm not waiting the year to distribute the shares to make it. Usually, I'm doing it in the year when we decide to for the attribution of the plan. So clearly, if you take 2021, it's probably a little bit higher compared to last year because I did not fully cover the plan last year. But that's probably the same order of magnitude anyway. Coming back to the services. Your question is always the same is -- it's a good balance we should find between the profitability of the services and the capacity. So this year, the capacity was quite limited. That's the reason why we have re-insourced most of the capacity to fulfill our own resources because when they work, they learn. And they are improving their skills. That's the goal in this industry. For 2021, I do not expect to do -- to continue with the same model. I do expect to again partner with the large SI because we have common engagements, and it's also a lever for us in order to accelerate some of the projects. So you should expect to be in the typical gross margin, usually, we are achieving for the services for 2021. That's my answer to your questions, James.

[Operator]

And our final question comes from the line of Mohammed Moawalla from Goldman Sachs.

[Mohammed Essaji Moawalla, Equity Analyst]

Great. Two questions. First, one was really -- I remember, Bernard, when you sort of announced Medidata, you sort of talked about the bigger opportunity in Life Sciences from digitizing to be as big as manufacturing. And if you sort of -- you thought that it would take up to a decade to kind of execute on that vision. Clearly, post pandemic, those time lines have shifted. Is there a way to sort of quantify that -- what you perhaps you thought you would achieve over a decade, how much has that sort of time spend shrunk as you speak to customers? But more importantly, as customers change and embrace this sort of digitization more aggressively? Secondly, on the sort of the core industrial business, the platform has become a -- 3DEX has been a big differentiator for you. A lot of the kind of larger standardization contract discussions, I guess, paused during the pandemic. Where are you on that? And how much opportunities are still left? And how do you see that sort of developing, particularly as those customers also start to think about the kind of more platform approach out of the pandemic?

[Bernard S. Charlès, Vice Chairman & CEO]

Thank you, Mo. On the first aspect, which is related to connecting on, as Pascal said, the data connection for the life science and health care, especially big pharma, for example. We are going through a discovery ourself. And to tell you the truth, I was astonished to see how little digitized is the production system. I was even shocked in some way. And I think maybe, we are guilty ourselves, but they -- many of those companies did not know us at all. And now interacting with them through the Medidata footprint is opening up a new dialogue to be simple. When you look at the number -- so it's difficult to put a quantification, but let me tell you my thinking, the framework here. If you look at the big pharma, the number of plants is very similar to a big auto OEM in terms of numbers. The second thing is they duplicate everything in each plant. There is no global collaborative share processes or platform to make sure -- they don't know virtual commissioning. Most of them stopped the line to update the equipment, which does not happen anymore in auto sector, with what we have done. So it's clear today that the dialogue we have is expanding in this area to educate and showcase what's possible, the new possibility. I think from that standpoint, we have good things to offer. And some of them, when you see the slow ramp-up of some of the vaccine production related to packaging issues on many other things, there is a lot that needs to be done there. So the dialogue in less than a year has changed. And I would say we are now considered as opposed to a year ago where we were unknown. That's my -- so I think the pandemic, from that standpoint, is a lever -- is really ready for us to be in that sector. So I think there is a lot to be done there. They have been acting as like rich companies, and I don't want this to be negatively understood by them, but they have been acting like rich companies. And there is a lot of savings that can be done in those environment. Related to the second part of your question. I think the dialogue with -- in the manufacturing sector now, people understood that Dassault Systèmes is providing far beyond engineering, manufacturing and simulation, that it's becoming a business platform to drive the business, drive portfolio, drive cost, drive supply chain, new speed of work. Because you know the speed of work in the -- in all those industries between supply and OEMs is changing at the speed of light. And they need to rebuild their business model from that standpoint. We look at EV, but you can look at smart intelligent mobility, and the nature of the service are different. And being considered as a business platform for those clients for me is essential, so you're right. I think we are beefing up the proof points that the 3DEXPERIENCE platform is mission-critical for those industries. Now on last point on infrastructure construction, we continue to do -- we leave the space open to traditional clients, traditional competitors, players, some of them still dominate that sector. But I think the game is going to change. It takes a bit of time. But what I stated a year ago, about our commitment to the sector, has not changed at all. And I hope we'll be able to bring tangible, highly interesting news flow this year. And China is showing the way to the rest of the world with modular construction, virtual twin-based design to delivery. I think -- and we are pleased with progress in China on that side. So that's -- of course, they are a midterm indication, but I hope we'll be able to grow the proof points this year. You want to add something, Pascal?

[Pascal Daloz, COO, CFO & Director]

Yes. I mainly want to complement what you say on the first questions related to manufacturing in life sciences. Why so? Because if you look at the pipelines under development right now, you will discover that half of the new therapeutics are biologics.

[Bernard S. Charlès, Vice Chairman & CEO]

Yes. Big molecule.

[Pascal Daloz, COO, CFO & Director]

Okay. And as you may know, for the biologics, the process is the product because it's living spaces. So it's really from making to growing. Bernard, it's your words. And my convictions, more -- it's much more conviction than a demonstration at this stage. But on the long run, I'm convinced that the manufacturing space could become as big as the research and the lab space in Life Sciences. That's -- it's an evidence for me. And again, if you look at all the indicators we have, everything is going along these directions. When it will happen, it's starting, but that's probably the unknown at this stage.

[Bernard S. Charlès, Vice Chairman & CEO]

Great. With that -- thank you very much for participating to this call. And as you know, we'll be hosting a call this afternoon for our friends in America that have not been able to connect this morning. Thank you very much. Of course, we are always there. We are really highly motivated to continue to execute and walk the talk. What we said on Feb 6 last year is what we're going to do. Thank you, and see you soon.

[Operator]

Ladies and gentlemen, this concludes your conference for today. Thank you for participating. You may now all disconnect. Thank you.