Operator: Ladies and gentlemen, thank you for standing by and welcome to the Atos Q3 2019 Revenue Conference Call. [Operator Instructions]. I must advise you that this conference is being recorded today, Thursday, 24th of October 2019. And I would now like to have the conference over to first speaker today, the Chairman and the CEO, Mr. Thierry Breton.

Thank you. Please go ahead.

Thierry Breton: Good morning, ladies and gentlemen. Thierry Breton speaking. Thank you for attending our conference call today.

Before commenting the group performance during the third quarter 2019, let me please comment on the announcement this morning from the presidency of the French Republic of his proposal to nominate myself as candidate for European Commissioner to govern the EU's internal markets, industrial policies and defense industry collaboration. I am very honored by the trust placed in me by the President of the French Republic and by the President-elect of the European Commission, Mrs. Ursula von der Leyen. I appreciate for Europe and all of our fellow European citizens the importance of the challenge associated with this portfolio for the future of our continent. In order to prepare hearings before the relevant committees of the European Parliament, I will resign from my position as Chairman and Chief Executive Officer of Atos with effect from October 31, 2019.

The Atos Board of Directors took yesterday all the necessary measures to ensure my succession. It was well prepared. In accordance with the governance set up for this purpose in the company, our Board of Directors intends to separate the offices of the Chairman of the Board and Chief Executive Officer. I am pleased with its decision to unanimously appoint Elie Girard on November 1 as Chief Executive Officer. And then it asked me to act as Nonexecutive Chairman of the Board until my appointment as the European Commissioner becomes effective.

I would then be replaced in that role by Mr. Bertrand Meunier who has been a very active board member of Atos in the past 11 years. You now know Elie for a long time, and I would like to emphasize that he has been carefully prepared, and especially by me, for the job over the past decade, as I indicated, because he has been working with me since more than 10 years. And he is, let me tell you, fully ready to embrace this role. Remember, by the way, that when I was his age, I have been asked to take the responsibility of Chairman and CEO of Thomson.

I would like to take this opportunity also to pay tribute to the group's employees for their extraordinary work accomplished in recent years in Europe and around the world. As such, this is, of course, my last investor and analyst call as the CEO and Chairman of Atos today, and I would like to thank each of you for your coverage of Atos and for all the constructive exchange I had and especially with each of you again over the last decade. Following this introduction, let's now comment with Elie our performance for the Q3 release of Atos. So moving on Slide 5, let's start with the highlight of Q3. During the third quarter, revenue organic growth continued to improve sequentially, reaching 1.8% after the Q1 at 0.4% and Q2 at 1.1% with infrastructure & Data Management back to growth as committed at the beginning of the year when we made our Investor Day.

The deeper organization we operated in the last 12 months in North America, and more particularly, in sales, reflected in a significant increase of the Net Promoter Score. This materialized in the large signatures of -- and solid insight for the next quarters. In Business & Platform Solutions, revenue was stable. Indeed, while we anticipated a decrease in health care in Q3 as in Q2, we faced in Q3 some tension in Financial Services in North America. One year after the acquisition, the synergies in sales as well as in costs with Syntel continued to materialize as planned, in particular, with new signatures on both customer bases and with new clients.

Big Data & Cybersecurity delivered strong revenue growth in all its business segments, and in particular, in Cybersecurity services and in High Performance Computing. The group recently acquired the company IDnomic to reinforce its capabilities in cybersecurity and to expand its offering in the field of digital identity management and PKI solutions. Commercial dynamics remained strong in Q3. We reached 100% book-to-bill ratio with large signatures in health care and in Unified Communication & Collaboration in North America and new contracts in Germany with large customers in chemical sector such as Bayer or in the oil and gas sector. The group has been particularly active in innovation, and you know that's extremely important for our company.

We implemented 3 new labs in artificial intelligence, 2 of them as part of our partnership with Google. We also beat new performance records on our HPC. And finally, I am particularly proud that the corporate social responsibility of Atos is, once again, highly recognized as DJSI world and Europe, ranked the group 1 worldwide in the digital industry. Let's move to the next slide on the key figures of Q3. I do not come back on the sales momentum, which led to a book-to-bill at 100% and on the revenue organic growth at 1.8%.

We already achieved a good step towards the acceleration we expect in H2 in line with our 1% to 2% full year objective. Total number of staff was 107,500. We increased the number of people on fast-growing segments such as Digital and Cybersecurity while we continued to decrease in these activities where we anticipate automation, robotization and artificial intelligence. On the next slide, our objectives for 2019. So after a first semester on track towards the full year objective and acceleration in revenue in Q3, we confirm today revenue organic growth between 1% and 2%, and operating margin rate at circa 10.5% of revenue and free cash flow between €0.6 billion and €0.7 billion.

On the next slide, let me present how the group is transforming its technological network towards artificial intelligence. In Q3, we have further expanded our strong network of R&D and innovation centers all around the world, moving towards artificial intelligence and reinforcing Atos' positioning as a technology leader. Indeed, we opened a new AI lab in Grenoble; and in partnership with Google, 2 new artificial intelligence labs, one in Dallas, the other one in Munich. In addition, we inaugurated the new Business Technology & Innovation Center in Munich with a specific focus on Industry 4.0 with certain innovations such as preintegrated IoT solutions, digital plant, artificial intelligence, of course, digital twin, IoT prescriptive Security Operations Center. With this center, we reinforced our partnership with Siemens to leverage our joint developments and you know that's extremely important for our company.

Let's move to the next slide. In the HPC area, the group targets 3 objectives in its innovation

road map: first, addressing the energy challenge; second, preparing the new scale generation -- exascale, sorry, generation; and last but not least, designing future platforms involved with cloud hybridization, edge computing and quantum evolution. In that context, Atos set what we called with this BullSequana S800, which has become the highest-performing server on the market for use in SAP environment. This demonstrates not only the ability of this powerful HPC to manage extremely large SAP installation but also its excellent scalability. Let's move to the next slide on corporate and social responsibility.

Atos has been recognized in September as the most sustainable company worldwide in digital industry by the Dow Jones Sustainability Index. As you may know, it is one of the most demanding CSR rating in terms of comprehensiveness on climate, social and economic dimensions covering 69 global digital industry players. This materialized our commitment to help our customers in their sustainability journey and along with our statement of purpose to make our employees contributing to the digital transformation in a responsible and sustainable way. Thank you for your attention. And now Elie, the floor is yours.

Elie Girard: Thank you, Thierry. If you allow me, I would like to say of very -- a few words before diving into the performance. I'm obviously really honored by the confidence and the trust from the Atos Board of Directors and from your trust, Thierry, for so many years now, as you reminded, and especially in this very moment and your constant support since I joined the group 5.5 years ago and for many more years. I love this company. I love our teams.

And as its new CEO, I can tell you that we will continue to work hard and accelerate to meet your commitments, Thierry, and our commitments and moreover to take the group to the next level, so we can -- we'll make you proud.

Thierry Breton: Thank you, Elie. And you know my

two words: always been demanding and always deliver our commitments.

Elie Girard: We will. We will.

Thank you, Thierry. So let me start the performance section with the main wins of last quarter. In Q3, we signed several transformation contracts, which cover all our industries, geographies and divisions and fully reflect the momentum of our strategy. Infrastructure & Data Management had a very dynamic quarter in terms of signings. I give you four major illustrations among many others.

For Bayer, we will deliver digital web page services across 91 countries and for 130,000 employees who will benefit from harmonized, simplified and omnichannel services underpinned by modern device management and automation. The deal is a renewal for the part in Germany, but a new win for the worldwide extension. Also, in Germany, we have signed with a leading European oil and gas company a multi-year contract to fully renew their IT infrastructure, operations and workplace environment. Then in partnership with Google, we will help a Fortune 50 health care company in North America to migrate to a cloud-first managed services model. This is a multi-hundred million dollar project fully leveraging our combined Infrastructure & Data Management and Atos Syntel capabilities.

In the Unified Communications field, we have been entrusted by the state of California to transform one of the world's most mission-critical environments, the state's 911 system, to a modern broadband communication platform. The purpose is to reduce response time, enhance situational awareness and ultimately improve the citizens' safety. Moving to Business & Platform Solutions. In Germany, we will help Die Autobahn in their first implementation of S/4HANA as part of their infrastructure reform journey. We also signed a 4-year contract in Italy with RAI to help them develop, integrate and run a new digital multi-format video player system.

In Cybersecurity, we also reinforced our partnership with Ooredoo in Italy to secure the cloud solutions that we bring together to the market. And finally, last but not least, Météo France renewed their trust in our HPC capabilities. On the next slide, the 100% book-to-bill reflected over the commercial performance particularly high in North America, in Germany, and to a lesser extent, in France. Book-to-bill was 101% in Infrastructure & Data Management fueled by new customers, 96% in Business & Platform Solutions led by project in digital and automation and 112% in Big Data & Cybersecurity, mainly in Cybersecurity and High-Performance Computing. The full backlog at the end of September 2019 amounted to €21.2 billion and represented 1.9 year of revenue.

The full pipeline remained strong at €7.2 billion at the end of September 2019, slightly above end of Q2. Now we move to the financial section and the reconciliation between statutory and organic figures for Q3 revenue. Exchange rates positively contributed to revenue for plus €19 million mainly coming from the appreciation of the American dollar versus the euro. Scope effect amounted to minus €181 million for revenue. This was mostly related to the deconsolidation of Worldline, the acquisition of Syntel and the disposal of some specific Unified Communication & Collaboration activities.

As a reminder, this scope effect amount does not include any figure for IDnomic. Next slide presents the performance by division. I am going to comment it on the next slides each of them. But just in a nutshell, revenue was €2.770 billion, up plus 1.8% organically. As a reminder, the group recorded plus 0.4% in Q1 and plus 1.1% organic growth in Q2.

This sequential improvement mainly came from the recovery of the Infrastructure & Data Management, which returned to growth, as anticipated, notably in North America. The division Big Data & Cybersecurity performed a very strong quarter led by Cybersecurity services and High-Performance Computing. In Business & Platform Solutions, while synergies with Syntel continued to materialize as planned, the revenue was stable in Q3 due to health care activities and to Financial Services in North America. Let's move to the next slide precisely to focus on Infrastructure & Data Management. Revenue was €1.533 billion, plus 0.8% organically, with a good performance recorded in North America, United Kingdom and other business units.

Indeed, North America benefited from the base effect compared to Q3 last year, but more importantly, from all the actions implemented in the last 12 months, which drove a new approach, energy and spirit. We have hired new leaders to accelerate growth on the installed customer base. All market leaders have been changed since the beginning of the year as well as the majority of client executives. In the other geographies, the division also benefited from new logos and the ramp-up of several large contracts. It pursued its business model transformation by increasing the revenue in Hybrid Cloud Orchestration and in technology Transformation Services project.

We also continue the digital transformation of our main clients where we develop more and more automation and robotization. Growth materialized in Financial Services mainly fueled by the ramp-up of the contract with CNA Financial Corporation in North America and with National Savings & Investments, Aegon and Aviva in the United Kingdom & Ireland. Telcos, Media & Utilities benefited from the ramp-up of the contract with Scottish Water as well as additional sales with BBC and a major electricity provider in the U.K., new logos such as National Grid and Entergy Corporation in North America and finally by a strong activity recorded in Unified Communication & Collaboration in Benelux & The Nordics. In Manufacturing, Retail & Transportation, revenue was impacted by less volumes in Unified Communication in Germany. Public sector continued to be impacted by less volumes and Transition & Transformation phases completed last year in the U.K.

As presented to you end of January, IDM is executing on all key levers of its back-to-growth strategies, as explained on the next slide. The strategy first rely on the fundamentals of outsourcing in securing renewables of its largest contracts. Year-to-date September 2019, 10 out of 11 contracts above €30 million total contract value have been renewed. The division also registered several new wins with new logos or new incremental scope with 14 new signatures above €30 million total contract value. In these 14 signatures, 4 are above €180 million total contract value each including state of California, Bayer and a large new U.S.

customer in the pharmaceutical sector, thanks to the partnership with Google. Both Hybrid Cloud with the year-to-date organic growth at 23% and ahead of plan and Digital Workspace solutions gathered more momentum in the first 3 quarters. Finally, while continuing to grow year-to-date at more than 5% organic growth in the other geographies with significant new successes in Switzerland, Spain and Middle East, the division was also significantly helped in its trajectory with North America IDM back to growth in the third quarter. On the next slide, let's focus on North America for IDM. First, the team led by Simon Walsh drove a strong increase in customer satisfaction and Net Promoter Score, resulting from bringing more innovation to clients as well as a further increase in quality of services.

This obviously creates a platform to increase fertilization and upselling as well as recurring -- securing renewal of contracts. Moreover, we reassigned and enhanced our go-to-market teams to be much closer to clients and we also hired more client architects directly dedicated to specific customers, thus contributing to greater innovation and the enablement of more digital projects in IoT, ServiceNow, cloud and modernization projects fully leveraging the group capabilities. Regarding Unified Communication. North America clearly built a strong momentum in public safety services, well illustrated by the next-generation 911 contract signed with the state of California. Finally, North America also benefited in IDM from the Google partnership with, for example, that new large customer won in the pharmaceutical sector I already mentioned.

On the next slide, Business & Platform Solutions revenue was €1.10 billion, up plus 0.2% at constant scope and exchange rates. In this division, revenue was stable due to the combination of 3 effects. First, as anticipated, the division was impacted by less volumes in health care activities in North America after the large migration wave of Epic and Cerner software. Second, at the occasion of the transfer legacy contracts to Syntel, the reduction of the number of low-margin contracts implemented in H1 2019 impacted the organic revenue growth of the division. Third, and this is mostly why Business & Platform Solutions recorded a lower organic growth in Q3 than in Q2, the division actually faced tensions in Financial Services in North America.

Indeed, several customers within this sector are impacted by macro trends and spent less or postponed discretionary expenses including IT projects. In Manufacturing, Retail & Transportation, the division recorded a strong performance driven by new contracts in Benelux & The Nordics and SAP implementation in Central and Eastern Europe while Telcos, Media & Utilities was flat over the period. Finally, the division continued during the quarter to leverage on digitalization project implementation in all geographies, and more particularly, thanks to the Syntel portfolio offerings. In Q4, Business & Platform Solutions is expected to slightly improve, taking into account the reduction of health care negative impact. We expect Financial Services to remain tight in Q4.

While talking about Business & Platform Solutions, let's turn to the status of Syntel integration on the next two slides. Customer retention remained particularly high, and we made good progress on the offerings to Syntel customer base in Cloud and Cybersecurity. In Q3, order entry on Syntel synergies was $255 million, and we have a full pipeline of opportunities over $1 billion. We signed, during last quarter, 21 deals in synergy. The two most important ones are a new customer in health care and an Atos customer in aircraft manufacturing.

Indeed, we were able to expand on top of the renewal of our contract with a large aircraft company by integrating Atos Syntel in our proprietary IP SyntBots. In health care, we won a new customer in North America to provide end-to-end cloud transformation on both their infrastructure and applications, which we could not have won without the strength of Syntel. On the next slide, let's move to cost synergies. We have completed the third and last wave of transition to Atos Syntel in Q3 and have transferred now €1.1 billion contract to Atos Syntel teams through the three waves. Our integrated delivery platform, KI NxT, was piloted in 32 projects in Q3 and has now been fully launched as of October 1.

The KI NxT platform has already reduced our cost of quality and resulted in increased customer satisfaction, CSAT, rate on the pilot project for the last quarter. The Syntel resource management methodology implementation in India has improved our speed of fulfillment by bringing down the turnaround time, TAT, turnaround time, by 5 days. Overall, we expect €30 million margin synergies in full year 2019, both in gross margin and SG&A actions. This is fully in line with our 3-year program to generate $120 million by the third year. On the next slide, revenue in Big Data & Cybersecurity recorded a high organic growth of 17.6% leading to €227 million in the third quarter of 2019.

Growth was driven by a particularly strong activity in High Performance Computing activity, largely led by deliveries in Germany and the renewal with Météo France, combined with good performance in Benelux & The Nordics and in Middle East and Africa. Cybersecurity activities were also strong with a double-digit growth further to contracts won during the first semester in North America and Germany. Moving to the next slide. Let's have a deeper look on the division. As a reminder, we cover three main segments, each of them is going fast or very fast with large deals or partnerships signed.

In Cybersecurity, revenue growth is focusing on the international expansion and the cybersecurity of cloud environments, and I should say, on multi-cloud environments. In Big Data, HPC, Artificial Intelligence where we process on behalf of our clients, revenue is supported by HPC sales, high-speed service and cloud infrastructure environment. Finally, in Mission Critical Systems, the main drivers of the demand for next-generation command and control systems, together with communication monitoring and intelligence platforms. I move now to the next slide. During the third quarter 2019, revenue grew in most business units.

I don't come back to North America as I already covered the improvement in IDM and the effect of health care and Financial Services in B&PS. In Germany, Big Data & Cybersecurity recorded a solid growth, in particular, in High Performance Computing, which has more than compensated lower volumes in Unified Communication & Collaboration. The rest of the business within Infrastructure & Data Management and Business & Platform Solutions boasted a positive growth over the period. France grew by plus 1.2%, fueled in particular by the strong performance in Big Data & Cybersecurity, and to a lesser extent, in Business & Platform Solutions, both in Public & Health. Infrastructure & Data Management benefited from the ramp-up of several contracts to hybrid cloud, but was impacted by some contract ramp-down and less sales in UCC.

United Kingdom & Ireland moved back to growth through new contracts being onboarded and completing transitions. Infrastructural grew led by Financial Services, thanks to National Savings & Investments, Aegon and Aviva contracts, while the situation was tougher in Public & Health due to less volumes and the level of Transition & Transformation phases completed in Q3 last year. Benelux & The Nordics recorded a growth at plus 5.9% driven by HPC deliveries with two large institutions in the Nordics as well as a strong activity in security services within the European Union. The quarter was also strong in Business & Platform Solutions with several projects performed in Manufacturing, Retail & Transportation as well as increased volumes with Dutch ministries. Infrastructure & Data Management posted a slight growth.

Other business units performed a solid plus 5.3% organically, thanks to a strong performance in the three divisions, particularly in Infrastructure & Data Management and in all geographies, especially in Central and Eastern Europe, South America, Asia Pacific and Iberia. On the last slide, the total head count of the group was 107,500 at the end of September 2019 compared to 108,900 at the end of June 2019, a decrease of 1.1% over the period excluding scope effect due to the continuous deployment of automation and robotization programs. Attrition was 15.8% in the quarter with 21% in offshore countries, and the group hired 4,200 staff. A key priority in our people strategy is the digital upscaling of our engineers to help our customers in their own digital transformation. As of today, we delivered 37,000 new digital certifications to our employees, massively powered by our Atos University.

As a major player in cybersecurity, we continuously strengthen our expertise. Out of 1,200 new cybersecurity experts, 40% were trained by our internal skilling program. The recent acquisition of IDnomic further empowers our security capabilities with 110 new security experts. As a reminder, Atos was recognized as Breakthrough Partner of the Year for Google Cloud in April. We have now 600 Google Cloud-certified employees, representing an increase by 30% certifications compared to June 2019.

Finally, more than 4,400 employees were trained in Atos Codex since the beginning of the year as well as 7,000 project managers on Agile methodology in our core strength such as IoT or big data. All in all, we are clearly ahead of schedule with our digital transformation plan. Thank you all for your attention, and it is now back to you, Thierry, for the conclusion.

Thierry Breton: Thank you very much, Elie. So before starting the Q&A, let me remind you our priority this year as part of our three year plan.

First, growth in H2 for both North America and IDM. In this context, Q3 performance is in the right direction towards all these objectives. Second, integration of Syntel and accelerating the improvement of B&PS profitability. Third, rolling out the ongoing RACE transformation and performance program to accelerate the optimization of the cost base. And fourth, position Big Data & Cybersecurity as a leading player in the consolidation of this fragmented market going forward, and you know that we have fantastic or tremendous opportunities in this field.

Thank you again, all of you, for your attention. And of course, we are now going to take your questions.

Operator: [Operator Instructions]. Your first question comes from the line of James Goodman from Barclays.

James Goodman: Yes.

First of all, while I haven't had a chance, I guess, to work with you guys at all this summer, I think it is appropriate to offer my congratulations to both Thierry and Elie on your appointments. So moving to my question. I was wondering if you could help me a little bit more with specifically what's driving the acceleration in security versus Q2 and comment on the sustainability of this. And I think you talked at the last quarter about potentially some M&A in this space. Maybe you can comment on how that's progressed in light of your sort of plans, I guess, longer term to fully commercialize this business.

Thierry Breton: Thank you. Of course, I will let Elie to answer, but I would like to tell you first that I am extremely proud and confident of what I see in this division. It is just amazing. We reported an extremely solid 17.6% growth in Q3. Let me tell you that not only it is, I think, sustainable, but I think it should be bigger than this.

This is what we have in our hands. And of course, Elie, I don't put any pressure on you. But this is really what I think we have now. We'll not be surprised to run this on a going forward perspective over 20% growth. But still, yes, we have tremendous opportunities.

We see a lot of things. We are active here. And I know that Elie, you will be active because, guess what, thanks to our performance this year, a lot of potential partners are going to see us now and you will probably see some M&A movement in the coming months. Thank you. Elie, maybe what is driving, of course, several HPC and Cybersecurity services everywhere.

Everything is booming.

Elie Girard: Yes. Just to say that very shortly that the balance between HPC or supercomputers including Bullions, of course, in memory servers on one side and cybersecurity, the growth is equally shared within the division. It's booming really on both sides of the house. And the second point is on the M&A question.

I just want to underline again, IDnomic acquisition of the third quarter, small, bite-sized but important strategically as it really boosts our capabilities in identity management and PKI and identity and access management. This is really an important acquisition. Again, small, bite-sized, but important.

Thierry Breton: And James, I would like to add with one comment, which is related to, of course, the extremely good performance of this entity, which is, by the way, really linked to all our activities. It is Pierre Bernabe.

Pierre Bernabe is the CEO of this entity. You just need to remember and to follow his name. He's doing an extraordinary job.

Operator: And your next question comes from the line of Michael Briest from UBS.

Michael Briest: Great.

Of course, I offer my congratulations, Thierry. It's a great honor and I'm sure you'll be an excellent commissioner, and Elie as well. Just a couple. Coming back to Financial Services, can you give us some more sort of detail on where the weakness is? I think we all know Syntel was quite heavily overweight in its exposure to Financial Services. But is it Europe or the U.S.

where the problems are? And then following on from that. I think last quarter, you talked about Syntel growing around 4% to 5%. Maybe you can comment on the Q3 performance. And then more broadly, looking out to 2021, your ambition was to grow Business & Platform Solutions to over 5%. We're sort of tracking at below 2% year-to-date, and I appreciate it's still early.

But is that something you still feel comfortable with? Or is it very much dependent on Financial Services coming back?

Elie Girard: Michael, thank you. On Financial Services, what we see is still a little bit diffused or not precise yet, but we see some fragility and softness obviously. It's quite localized. I should say, it's Financial Services more on the banking side, not reinsurance if we put we insurance and Financial Services, more on the banking side in the U.S. and in the U.K.

But our exposure is bigger in the U.S. than in the U.K. on that area. And it's really in Business & Platform Solutions, meaning in more shorter-cycle, discretionary IT project. When I say soft, it's not a massive hit at all.

It's just a little bit of softness at this stage. We expect it to continue in Q4. We cannot say more than that because it's not -- it doesn't look structural to us, at least at this stage. To your more midterm question regarding Business & Platform Solutions, we expect to go back to the 4% to 5% range in this activity of Business & Platform Solutions. In the course of 2020, I think we will be more specific at the time of the annual guidance beginning with 2020 and more precise on the timing that we expect.

Michael Briest: But it's also quite a high-margin business, isn't it? So often, these discretionary short-term projects are very beneficial to margin. Does that make you feel more or less confident about where you'll be on the full year range?

Elie Girard: Yes. I'm confident on the full year range because we have strong cost synergies in that area, as you know, with the acquisition of Syntel, which is feeding the margin, and I should say, the -- below the substandard margin that we have on the Business & Platform Solutions legacy Atos. And the synergy -- the cost synergy plan, thanks to Syntel methodologies that I explained in my presentation are delivering. So I'm fully confident not only on the full year guidance of the overall group but on the contribution of the specific Business & Platform Solutions division.

Thierry Breton: And I would like to add that and we discussed this again last -- yesterday as the Board of Director, we are extremely, extremely pleased with this acquisition that we made with Syntel. It was really something that a piece that we were missing. And I'm extremely happy with the quality. The quality of the team is just amazing. So I know that we have here in our answers definitely what is needed to achieve our goal towards 4% to 5% in the division, definitely.

Operator: Next question comes from the line of Toby Ogg from JPMorgan.

Toby Ogg: Congratulations, sorry, Thierry, and Elie. Firstly, just on -- just going back on the Big Data & Cybersecurity portion of the business. Elie, 17.6% in the quarter, which is a big step-up versus the kind of low double-digit run rate. To what extent has that been driven by those incremental investments that we saw in the first half? And I guess if this sort of range of growth is to be expected on a continuous basis, would we expect sort of a lower margin in this business going forward?

Elie Girard: Toby, we're not at all expecting lower margin in this business.

It's -- sorry, there is some echo on the line. So we confirm 15% or circa 15% operating margin in the Big Data & Cybersecurity business. So the increased level of growth that you see is not done at all at the expense of margin.

Thierry Breton: And I said that not only it is sustainable, but I think that we have definitely in our hands everything even to increase this margin and also to increase the -- probably the sustainable growth in this division. And this has nothing to do with acquisitions.

I mean it's just on a standalone basis the way we have it here today.

Operator: Your next question comes from the line of Mohammed Moawalla from Goldman Sachs.

Mohammed Moawalla: Many congratulations, Thierry and also Elie, on your new appointments. I have...

Thierry Breton: I will miss our discussions, Mo, but anyway, we will be able to continue to have it under -- with other circumstances.

Mohammed Moawalla: Yes. And wishing you all the best, Thierry. Just -- so my questions were twofold. One, obviously, you sort of talked about potentially a bit more M&A activity in Cybersecurity. But given the growth is accelerating, would you consider some of the strategic options? I think you've talked about in the past such as spinning out the business in the form of sort of maybe a listing or a more -- bigger strategic integration to kind of extract the value if you think that we're at this point of acceleration.

And then, secondly, I know in the guidance, you've reiterated the free cash flow guidance of €600 million to €700 million for the year. I'm just curious, given the free cash flow is very second half-loaded this year, anything you can comment to sort of say where we are in terms of delivering this guidance based on Q3 developments? And are you seeing any signs in the free cash flow, particularly around DSOs, given sort of the more challenging environment that you're seeing in Financial Services and in the B&PS business? So maybe what the puts and takes are on sort of free cash flow would be great.

Thierry Breton: Okay. Thank you, Mo. Mo, I would love to answer myself to the first question, but I think it's more appropriate to let Elie to answer it.

And by the way, this way, we'll be able to check for the last time if he's fully in line with me, but I know he is.

Elie Girard: Thank you. So on the first question, I think what we are pursuing very strongly is the development, both organic and inorganic, of our Big Data & Cybersecurity division. So we want -- and the direction is extremely clear and we're working on it to make it much bigger including through acquisitions. But we need to give it the means of maneuver in that space, which comes with higher multiples than the overall group has.

So there is a collection of options to achieve this, of which a listing, which was so true already for some time. There are some other options. The most important is to manage to deliver on an expansion plan. The rest is about modalities and in instruments, of course. But the day we will be more specific on this, we will get back to you immediately, of course.

But we will continue this path of acquisitions. On your second question on the free cash flow, I want to be very precise. In H1, we delivered a disappointing free cash flow, and we explained the reasons for that. There were 3 reasons, and we explained that all 3 reasons were timing reasons between H1 and H2. What I can tell you today is that we are perfectly on track to the reversal of those root causes for that weak free cash flow of H1.

One of the reasons, for example, was the mix of billing -- of invoicing in the last 2 months of H1, May and June, which was stronger in countries with shorter payment terms and weaker in countries with shorter payment terms. That unwound in the summer, and we collected what we said we would collect, okay? So what I can tell you -- we're not publishing the free cash flow, as you know, in Q3. What I can tell you that we are perfectly in line with what we said at the end of H1 on the root causes and the reduction of those root causes. So we are in line with the full year free cash flow target. On the DSO, you asked do we see any macro impact on the DSO.

The answer is no. We see no reports here or there of specific behaviors of customers. No change. No pattern here coming from macro trends.

Operator: Your next question comes from the line of Laurent Daure from Kepler.

Laurent Daure: Congratulations, both of you, as well. I have three questions today. First one is on update -- if we can have an update, one on the ramp-up of the last deals you've signed in the third quarter and the timing of the ramp-up and as well as a quick update on the renewals you have to do for next year. My second question is on the settlement you achieved in Germany, to have an idea of maybe the losses and the cash burn that the contract had that will come to an end. And the last point is going back on the Cybersecurity.

I understand the financing and the solution that you have. But I was one more wondering about the targets. I mean you booked a small M&A deal. But do you really have several large opportunities? Or you think it will be more an addition of several small- to medium-sized deals? Any color on that would be useful.

Thierry Breton: Thank you, Laurent.

And I will miss also our discussion, but again my telephone will be open for all of you. I believe Elie is number 1 -- first and second question, the ramp-up and the settlement. For the third one, we see a lot of opportunities. And you remember than when we were building together the fantastic success of Worldline, it's a little bit the same. We were looking at each -- almost each Board of Director looking for more opportunities and large ones, more than large ones.

And this is exactly the same. And I could tell you that the Board is totally focused on the execution and these opportunities. Of course, we have a few potential smaller acquisitions. We look at it. We will not probably, and I'm sure the Board will not take everything because we have, of course, our rules and we have also our financial discipline, which is embedded in the DNA of the company.

But yes, we are looking also at large deals. But as Elie mentioned, we are totally open on the way we can do to structure the deals as long as, of course, we control for the entity the resulting part because, again, this is core for our business. So the way we will do, we are open. We have all the flexibility. We try to build the company with all the flexibility it will need.

Elie, maybe the question of Laurent on the ramp-up?

Elie Girard: Absolutely. Laurent, thank you. So the contracts -- the big contracts that we mentioned all ramp up mostly in 2020. For all of them, we may have a bit of revenue in Q4, but it's mostly a ramp-up in 2020. And there is always -- as you know, which is a competitive standard.

As you know, we sign a contract and then there is a time for preparation. And in these preparations, sometimes there are some work, which are billed, which creates a little bit of revenue at the beginning. But really the ramp-up of the actual delivery will be mostly 2020. Second question on the settlement with a telco operator in Germany, we think it's a very good news actually because that was, and we disclosed that a year ago, that was clearly a risk that we had. We are cleaning that risk.

And to your question, more than cleaning the risk, we are, I think, rebuilding the relationship with that customer, which is a very big customer, part of a very big group. And on top of that, what I can tell you is that going forward now, this contract is no more loss-making. So I think it's a very good news for this Q3 in Germany.

Laurent Daure: And on the renewals you have to do for next year on the infra side, any news?

Elie Girard: Yes. So the only thing I can tell you, I cannot be specific customer-by-customer as you can imagine.

But I think I can tell you that we are working since the beginning of the semester, at the beginning of the summer, on all 2020 renewals, so in advance. I hope -- I cannot commit because, of course, it's the timing of the customers. But I hope I'm reasonably confident that we could announce by the end of the year some of those renewals in advance, which should secure the trajectory for the next years.

Operator: Your next question comes from the line of Nicolas David from ODDO BHF.

Nicolas David: Congrats also on my side to both of you for your new positions.

Yes, my first question, I think, is for you, Thierry, is really what convinced you that was the right time to leave Atos and to take up a new challenge as the EU Commissioner? And my second is regarding the trend of growth. You had good commercial momentum in IDM. I know also that you expect easier comps maybe on B&PS in the U.S. in the health care sector. So can we hope -- can we expect a slight acceleration in Q4 again versus Q3?

Thierry Breton: Thank you, Nicolas, for your question.

The first one is a little bit personal, but since you're asking me say, I will, of course, answer. If you may -- if I may say, I will rephrase a bit your question. It's not what convinced me to leave Atos because I was not planning to leave Atos. What I was planning to do, to tell you the truth, is, together with the Board, we had -- we decided, for many months already, that it was time in the following months to propose -- to Elie to become the CEO and to split our responsibilities and for me to become, sometime next year after turning 65, to become the Nonexecutive Chairman. So it was already planned.

This is why it was a little bit, let's say, easy already to react fast not to my decision but to the request I received from the President of France and from the President-elect for the EU. And I thought it was because we were ready here with the transition plan. Because also, in the succession plan, in any company, a well-managed company, we have a full succession plan for CEO and Chairman. And Bertrand Meunier, probably all of you know Bertrand because he's well-known in the industry as leading all that at CVC, as you know. But he was extremely instrumental in Atos for more than 15 years because when he was heading PAI, he is the one who put everything together.

So not only he knows the company, but he loves the company, which is why we proposed Bertrand just yesterday that if he accepted to be on the succession plan if something happened to me as Chairman and he accepted. And this is why it was, let's say, easy, if I could say. Of course, it's emotional so it's not easy when it's emotional. But in terms of governance, it was easy to react at the proposal of the President of France and the President-elect. And of course, it was my decision.

I thought it was my responsibility to accept the decision and if I took it, it is because, again, everything was ready in terms of governance with Elie being fully prepared for being the CEO and Bertrand being, of course, also be prepared to be the Nonexecutive Chairman. Maybe the other question there, Elie?

Elie Girard: Nicolas, thank you. So on your other question on the next quarters, what I can tell you that we expect Q4 to be above Q3 in terms of organic growth, at 2%. And in terms of divisions, we expect slight improvement in Business & Platform Solutions, as you rightly said, thanks to the end of the negative base effect on health care in North America. And we could also continue to improve the organic growth trend in IDM.

Thierry Breton: Yes. That's really the good surprise, I should say, of this release. And we're very happy and pleased with the job that Eric Grall did. By the way, Nicolas, I just wanted to remind you, I know time flies, but I'm already the Chairman and CEO of the company for 11 years now. And in terms of governance, I taught governance at HBS, Harvard.

I always say that being the CEO, I mean, more than 10 years, you start to question. But when I turned 10 years of being the CEO, I said to myself, it's really ready -- it is the time to think a little bit who could be my successor and to give room for him to do what he has to do. Thank you for the question.

Operator: Your next question comes from the line of Neil Steer from Redburn.

Neil Steer: Once again, congratulations to you both.

The first question is just on the settlement in Germany. Sorry to delve into that, but can you just explain why there's no cash impact as a result of the settlement? And then an unrelated question is can you just go back a year or so ago. What was the staff attrition in the offshore countries? And has that changed or varied at all over the last 4 or 5 quarters?

Elie Girard: Neil, thank you. So on your first question on the settlement in Germany, it's quite simple. As part of the settlement, there was some part of revenues that had been booked in the past years -- some part of the work actually done in the past years since 2016 that had to be written off.

So as you know, and we explained that a year ago, we had stopped booking part of the work. There is another part, which is going to be paid to us because it hadn't been paid yet. And there's another part, which had been written off in exchange of suppression of any loss going forward, and as I said, complete rebuilding of the relationship with additional opportunities. And your second question was on the attrition in offshore countries. I mentioned 21% in my presentation.

A year ago, it was roughly the same. Philippe Mareine is with us, our HR Director, 21%. So quite stable. And as we're talking about attrition, I would like to mention another figure which is important, which is the retention rate of our key people, which has -- which is now, Philippe, above 95%. So it's of big -- top experts.

And when you see key people, it's not necessarily only management, but it is also our express in cybersecurity, data analysts, data scientists, et cetera.

Operator: Your next question comes from the line of John King from Bank of America.

John King: Yes. Can you hear me this time?

Thierry Breton: Of course, we hear you. We are waiting for your question, John.

John King: Great. Congratulations to you both, I must add that as well.

Thierry Breton: Thank you, John.

John King: Just I guess it would be remiss of me to miss the opportunity on your last conference call to ask you about the infrastructure industry and the business. Clearly, you are performing very well there relative to your peer group.

You have recovered from last year's issue. What do you think is going on there competitively? We obviously see DXC having some issues, IBM potentially also talking of some issues in Europe. You're obviously a lot more upbeat about the outlook for that business. So perhaps you could just delve into that competitive dynamic discussion?

Thierry Breton: John, I will leave Elie to answer. But thinking to my new position, potential new position, maybe start to think, John, that you may see some European company performing better than U.S.

companies. You need to get used to it. At least I will work for this where I will be. Elie, your answer?

Elie Girard: John, thank you. Look, it's rather, I was going to say simple.

The explanation is simple. The work behind that is not simple at all. It's very hard work led by Eric Grall, as you know. So two key drivers for being far ahead of competition in Infrastructure & Data Management including the competitors you mentioned or you alluded to. The first one is just the quality of the service, the reduction of incidents on infrastructures including workplace.

This is an enormous work of all the 30,000 engineers working in Atos in this division, every day work, and reducing any incident, increasing the day-to-day quality of services, the availability of those infrastructures both in the data center and cloud core infrastructure and in the space of workplace is the key differentiator. You know that in this business, before signing a contract, you've got -- it's an enormous step forward for customers. They don't take it in 2 days, it's RFP tenders lasting 6, 9 months. They do due diligences. And they ask to talk to current customers of ours, and Robert know this very well.

And when we increase and improve vastly the quality of services on our deliveries, it helps winning new contracts because the new customers are talking to the current customers. And the second driver for this is innovation, of course. And I know, I'm not talking about you, John, but some people in the market think that this business is not the most innovative one. It's wrong. It may be probably the area where we have the most innovation in IT and digital services.

The robotization and automation has started there for the cloud has started there. The edge is starting there. We've got the full-fledged portfolio of innovation and that makes a big difference as well versus competition.

Thierry Breton: And if I may add something to end this. John, I made a presentation in VivaTech and I had two slides.

And I think you need to think about it. My two slides were 80-20, 20-80. Today, 80% of the data produced by our customers are stored, processed in data center or cloud; 20% outside, IoT or connected car, everything. In five years, it's gotten no prediction. So this number we moved from 80-20 to 20-80.

20% of the data of our customers will be produced in cloud and stored in cloud; 80% outside. Yes, John, we are entering into the post-cloud era. And guess what, and the post-cloud era is behind us. I don't say that the cloud will disappear, but it will be less and less important. What will be more and more important is running infrastructure of infrastructure with data everywhere.

Of course, it's the edge. Of course, it's IoT. This is a fantastic and tremendous opportunity for us. And this is how you probably should see the evolution of IDM where we need engineers, specialists being able to run -- manage process infrastructure but on a very large scale. This ends the presentation.

Thank you to all of you. Of course, it's my last -- as I said, it's my last discussion with you. I will have a personal request for each of you. First, you know that I'm absolutely convinced that, first, Atos is really underpriced. We have tremendous opportunities in the evolution of our share, I know that.

Huge. But please maybe don't do it too much today. I think it will be a little bit obliging to me. So could you wait tomorrow because I know that some of you may see the market celebrate the leave of Thierry Breton or let's say something differently, the market may say, welcome the nomination of Elie and this will be the best news for me. Thank you all.

Operator: Thank you. And this does conclude our conference for today. Thank you all for participating. You may now disconnect.