UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 0-20853

ANSYS, Inc.

(Exact name of registrant as specified in its charter)

Delaware

04-3219960

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

2600 ANSYS Drive,

Canonsburg,

15317

(Address of Principal Executive Offices)

(Zip Code)

844-462-6797

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

ANSS

Nasdaq Stock Market LLC

(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of the Registrant's Common Stock, $0.01 par value per share, outstanding as of October ~~28, 2022~~27, 2023 was ~~87,112,235~~86,872,803 shares.

ANSYS, INC. AND SUBSIDIARIES

INDEX



PART I	FINANCIAL INFORMATION	Page No.

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets – September 30, ~~2022~~2023 and December 31, ~~2021~~2022	3

	Condensed Consolidated Statements of Income – Three and Nine Months Ended ~~September~~S e ptember 30, ~~2022~~2023 and ~~2021~~2022	4

	Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended S e ptember 30, ~~2022~~2023 and ~~2021~~2022	5

	Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	6

	Condensed Consolidated Statements of Stockholders' Equity – Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021~~2022	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2019

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4243

Item 4.	Controls and Procedures	4445

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	4546

Item 1A.	Risk Factors	4546

Item 2.	Unregistered Sales of Equity Securities ~~and~~, Use of Proceeds , and Issuer Purchases of Equity Securities	4647

Item 3.	Defaults Upon Senior Securities	4647

Item 4.	Mine Safety Disclosures	4647

Item 5.	Other Information	4647

Item 6.	Exhibits	4748

	SIGNATURES	4849

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements:

ANSYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in thousands, except share and per share data)	(in thousands, except share and per share data)	September 30, 2022		December 31, 2021		(in thousands, except share and per share data)	September 30, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	632,509	$	667,667	Cash and cash equivalents	$	639,342	$	614,391
Short-term investments	Short-term investments	194		361		Short-term investments	171		183
Accounts receivable, less allowance for doubtful accounts of $14,600		602,607		645,891
Accounts receivable, less allowance for doubtful accounts of $20,700 and $18,300, respectively						Accounts receivable, less allowance for doubtful accounts of $20,700 and $18,300, respectively	673,973		760,287
Other receivables and current assets	Other receivables and current assets	214,566		324,655		Other receivables and current assets	229,013		289,261
Total current assets	Total current assets	1,449,876		1,638,574		Total current assets	1,542,499		1,664,122
Long-term assets:	Long-term assets:					Long-term assets:
Property and equipment, net	Property and equipment, net	77,748		87,914		Property and equipment, net	75,431		80,838
Operating lease right-of-use assets	Operating lease right-of-use assets	123,511		120,881		Operating lease right-of-use assets	116,187		129,140
Goodwill	Goodwill	3,532,459		3,409,271		Goodwill	3,769,321		3,658,267
Other intangible assets, net	Other intangible assets, net	739,202		763,119		Other intangible assets, net	849,205		809,183
Other long-term assets	Other long-term assets	214,648		279,676		Other long-term assets	174,289		261,880
Deferred income taxes	Deferred income taxes	24,196		24,879		Deferred income taxes	146,588		84,515
Total long-term assets	Total long-term assets	4,711,764		4,685,740		Total long-term assets	5,131,021		5,023,823
Total assets	Total assets	$	6,161,640	$	6,324,314	Total assets	$	6,673,520	$	6,687,945
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	17,353	$	10,863	Accounts payable	$	14,801	$	14,021
Accrued bonuses and commissions	Accrued bonuses and commissions	80,282		163,182		Accrued bonuses and commissions	89,327		160,908
Accrued income taxes	Accrued income taxes	16,461		8,410		Accrued income taxes	14,652		7,698

Other accrued expenses and liabilities	Other accrued expenses and liabilities	160,693		204,509		Other accrued expenses and liabilities	165,983		198,220
Deferred revenue	Deferred revenue	334,901		391,528		Deferred revenue	349,668		413,989
Total current liabilities	Total current liabilities	609,690		778,492		Total current liabilities	634,431		794,836
Long-term liabilities:	Long-term liabilities:					Long-term liabilities:
Deferred income taxes	Deferred income taxes	48,357		105,548		Deferred income taxes	70,360		58,126
Long-term operating lease liabilities	Long-term operating lease liabilities	109,706		104,378		Long-term operating lease liabilities	100,071		112,802
Long-term debt	Long-term debt	753,495		753,576		Long-term debt	753,812		753,574
Other long-term liabilities	Other long-term liabilities	96,707		98,272		Other long-term liabilities	108,046		102,756
Total long-term liabilities	Total long-term liabilities	1,008,265		1,061,774		Total long-term liabilities	1,032,289		1,027,258
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Preferred stock, $0.01 par value; 2,000,000 shares authorized; zero shares issued or outstanding	Preferred stock, $0.01 par value; 2,000,000 shares authorized; zero shares issued or outstanding	—		—		Preferred stock, $0.01 par value; 2,000,000 shares authorized; zero shares issued or outstanding	—		—
Common stock, $0.01 par value; 300,000,000 shares authorized; 95,267,307 shares issued	Common stock, $0.01 par value; 300,000,000 shares authorized; 95,267,307 shares issued	953		953		Common stock, $0.01 par value; 300,000,000 shares authorized; 95,267,307 shares issued	953		953
Additional paid-in capital	Additional paid-in capital	1,500,330		1,465,694		Additional paid-in capital	1,612,269		1,540,317
Retained earnings	Retained earnings	4,524,983		4,259,220		Retained earnings	5,008,580		4,782,930
Treasury stock, at cost: 8,178,940 and 8,188,331 shares, respectively		(1,294,098)		(1,185,707)
Treasury stock, at cost: 8,428,972 and 8,317,389 shares, respectively						Treasury stock, at cost: 8,428,972 and 8,317,389 shares, respectively	(1,480,733)		(1,335,627)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(188,483)		(56,112)		Accumulated other comprehensive loss	(134,269)		(122,722)
Total stockholders' equity	Total stockholders' equity	4,543,685		4,484,048		Total stockholders' equity	5,006,800		4,865,851
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	6,161,640	$	6,324,314	Total liabilities and stockholders' equity	$	6,673,520	$	6,687,945

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

ANSYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(in thousands, except per share data)	(in thousands, except per share data)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(in thousands, except per share data)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Revenue:	Revenue:									Revenue:
Software licenses	Software licenses	$	208,906	$	200,394	$	575,332	$	547,820	Software licenses	$	162,422	$	208,906	$	586,471	$	575,332
Maintenance and service	Maintenance and service	263,605		240,774		796,106		703,228		Maintenance and service	296,373		263,605		878,370		796,106
Total revenue	Total revenue	472,511		441,168		1,371,438		1,251,048		Total revenue	458,795		472,511		1,464,841		1,371,438
Cost of sales:	Cost of sales:									Cost of sales:
Software licenses	Software licenses	8,425		8,289		25,370		23,960		Software licenses	8,692		8,425		29,095		25,370
Amortization	Amortization	17,281		15,189		51,947		45,163		Amortization	20,707		17,281		60,404		51,947
Maintenance and service	Maintenance and service	36,261		39,268		111,897		119,884		Maintenance and service	35,858		36,261		111,750		111,897
Total cost of sales	Total cost of sales	61,967		62,746		189,214		189,007		Total cost of sales	65,257		61,967		201,249		189,214
Gross profit	Gross profit	410,544		378,422		1,182,224		1,062,041		Gross profit	393,538		410,544		1,263,592		1,182,224
Operating expenses:	Operating expenses:									Operating expenses:
Selling, general and administrative	Selling, general and administrative	175,283		165,368		515,421		471,993		Selling, general and administrative	194,552		175,283		585,278		515,421
Research and development	Research and development	108,056		102,023		322,271		303,381		Research and development	123,223		108,056		368,581		322,271
Amortization	Amortization	3,821		3,403		11,975		12,244		Amortization	5,947		3,821		16,598		11,975
Total operating expenses	Total operating expenses	287,160		270,794		849,667		787,618		Total operating expenses	323,722		287,160		970,457		849,667
Operating income	Operating income	123,384		107,628		332,557		274,423		Operating income	69,816		123,384		293,135		332,557
Interest income	Interest income	1,345		541		2,141		1,544		Interest income	4,909		1,345		12,389		2,141
Interest expense	Interest expense	(6,092)		(2,943)		(13,668)		(9,594)		Interest expense	(12,276)		(6,092)		(34,594)		(13,668)
Other (expense) income, net		(656)		(1,328)		(2,126)		14,008
Other income (expense), net										Other income (expense), net	96		(656)		(3,564)		(2,126)
Income before income tax provision	Income before income tax provision	117,981		103,898		318,904		280,381		Income before income tax provision	62,545		117,981		267,366		318,904
Income tax provision	Income tax provision	22,006		18,556		53,141		28,925		Income tax provision	7,043		22,006		41,716		53,141
Net income	Net income	$	95,975	$	85,342	$	265,763	$	251,456	Net income	$	55,502	$	95,975	$	225,650	$	265,763
Earnings per share – basic:	Earnings per share – basic:									Earnings per share – basic:
Earnings per share	Earnings per share	$	1.10	$	0.98	$	3.05	$	2.89	Earnings per share	$	0.64	$	1.10	$	2.60	$	3.05
Weighted average shares	Weighted average shares	87,063		87,239		87,062		87,072		Weighted average shares	86,817		87,063		86,814		87,062
Earnings per share – diluted:	Earnings per share – diluted:									Earnings per share – diluted:
Earnings per share	Earnings per share	$	1.10	$	0.97	$	3.04	$	2.86	Earnings per share	$	0.64	$	1.10	$	2.58	$	3.04
Weighted average shares	Weighted average shares	87,418		88,169		87,496		88,069		Weighted average shares	87,381		87,418		87,335		87,496

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

ANSYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(in thousands)	(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net income	Net income	$	95,975	$	85,342	$	265,763	$	251,456	Net income	$	55,502	$	95,975	$	225,650	$	265,763
Other comprehensive loss:	Other comprehensive loss:									Other comprehensive loss:
Foreign currency translation adjustments	Foreign currency translation adjustments	(61,636)		(16,304)		(132,371)		(31,351)		Foreign currency translation adjustments	(32,834)		(61,636)		(11,547)		(132,371)
Comprehensive income	Comprehensive income	$	34,339	$	69,038	$	133,392	$	220,105	Comprehensive income	$	22,668	$	34,339	$	214,103	$	133,392

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

ANSYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Nine Months Ended					Nine Months Ended
(in thousands)	(in thousands)	September 30, 2022		September 30, 2021		(in thousands)	September 30, 2023		September 30, 2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	265,763	$	251,456	Net income	$	225,650	$	265,763
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and intangible assets amortization	Depreciation and intangible assets amortization	86,239		80,500		Depreciation and intangible assets amortization	99,016		86,239
Operating lease right-of-use assets expense	Operating lease right-of-use assets expense	17,356		16,896		Operating lease right-of-use assets expense	17,625		17,356
Deferred income tax benefit	Deferred income tax benefit	(63,560)		(22,459)		Deferred income tax benefit	(74,426)		(63,560)
Provision for bad debts	Provision for bad debts	2,476		827		Provision for bad debts	2,442		2,476
Stock-based compensation expense	Stock-based compensation expense	122,119		122,148		Stock-based compensation expense	158,533		122,119
Gain on equity investment		—		(15,139)

Other	Other	4,986		1,940		Other	1,252		4,986
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	66,369		86,098		Accounts receivable	168,958		66,369
Other receivables and current assets	Other receivables and current assets	96,641		57,992		Other receivables and current assets	61,203		96,641
Other long-term assets	Other long-term assets	(3,121)		(2,548)		Other long-term assets	(5,897)		(3,121)
Accounts payable, accrued expenses and current liabilities	Accounts payable, accrued expenses and current liabilities	(111,039)		(58,520)		Accounts payable, accrued expenses and current liabilities	(105,197)		(111,039)
Accrued income taxes	Accrued income taxes	9,751		(18,997)		Accrued income taxes	6,327		9,751
Deferred revenue	Deferred revenue	(28,203)		(46,467)		Deferred revenue	(65,242)		(28,203)
Other long-term liabilities	Other long-term liabilities	(8,746)		(5,898)		Other long-term liabilities	(5,844)		(8,746)
Net cash provided by operating activities	Net cash provided by operating activities	457,031		447,829		Net cash provided by operating activities	484,400		457,031
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(242,613)		(105,141)		Acquisitions, net of cash acquired	(197,786)		(242,613)
Capital expenditures	Capital expenditures	(15,227)		(18,133)		Capital expenditures	(16,541)		(15,227)
Other investing activities	Other investing activities	(782)		(382)		Other investing activities	(5,839)		(782)
Net cash used in investing activities	Net cash used in investing activities	(258,622)		(123,656)		Net cash used in investing activities	(220,166)		(258,622)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Principal payments on long-term debt		—		(45,000)

Purchase of treasury stock	Purchase of treasury stock	(155,571)		(35,993)		Purchase of treasury stock	(196,494)		(155,571)
Restricted stock withholding taxes paid in lieu of issued shares	Restricted stock withholding taxes paid in lieu of issued shares	(62,035)		(92,143)		Restricted stock withholding taxes paid in lieu of issued shares	(60,827)		(62,035)
Proceeds from shares issued for stock-based compensation	Proceeds from shares issued for stock-based compensation	20,918		26,321		Proceeds from shares issued for stock-based compensation	26,015		20,918
Other financing activities	Other financing activities	(1,290)		(50)		Other financing activities	(1,294)		(1,290)
Net cash used in financing activities	Net cash used in financing activities	(197,978)		(146,865)		Net cash used in financing activities	(232,600)		(197,978)
Effect of exchange rate fluctuations on cash and cash equivalents	Effect of exchange rate fluctuations on cash and cash equivalents	(35,589)		(9,142)		Effect of exchange rate fluctuations on cash and cash equivalents	(6,683)		(35,589)
Net (decrease) increase in cash and cash equivalents		(35,158)		168,166
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	24,951		(35,158)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	667,667		912,672		Cash and cash equivalents, beginning of period	614,391		667,667
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	632,509	$	1,080,838	Cash and cash equivalents, end of period	$	639,342	$	632,509
Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Income taxes paid	Income taxes paid	$	42,055	$	59,973	Income taxes paid	$	100,135	$	42,055
Interest paid	Interest paid	$	12,192	$	8,721	Interest paid	$	33,795	$	12,192
Fair value of unpaid consideration in connection with acquisitions		$	3,391	$	—
Non-cash and unpaid consideration in connection with acquisitions						Non-cash and unpaid consideration in connection with acquisitions	$	5,056	$	3,391

The accompanying notes are an integral part of the condensed consolidated financial statements.

Table of Contents

ANSYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


		Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Total Stockholders' Equity			Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity
(in thousands)	(in thousands)	Shares	Amount						Shares	Amount						(in thousands)	Shares	Amount						Shares	Amount
Balance, January 1, 2022		95,267	$	953	$	1,465,694	$	4,259,220	8,188	$	(1,185,707)	$	(56,112)	$	4,484,048
Treasury shares acquired									500	(155,571)				(155,571)
Balance, January 1, 2023																Balance, January 1, 2023	95,267	$	953	$	1,540,317	$	4,782,930	8,317	$	(1,335,627)	$	(122,722)	$	4,865,851
Treasury shares acquired, including excise tax																Treasury shares acquired, including excise tax								650	(197,416)				(197,416)
Stock-based compensation activity																Stock-based compensation activity				(34,529)				(356)	34,350				(179)
Other comprehensive income																Other comprehensive income											13,284		13,284
Net income																Net income						100,622							100,622
Balance, March 31, 2023																Balance, March 31, 2023	95,267	$	953	$	1,505,788	$	4,883,552	8,611	$	(1,498,693)	$	(109,438)	$	4,782,162
Treasury shares acquired, including excise tax																Treasury shares acquired, including excise tax									343				343
Stock-based compensation activity																Stock-based compensation activity				44,365				(105)	10,013				54,378
Other comprehensive income																Other comprehensive income											8,003		8,003
Net income																Net income						69,526							69,526
Balance, June 30, 2023																Balance, June 30, 2023	95,267	$	953	$	1,550,153	$	4,953,078	8,506	$	(1,488,337)	$	(101,435)	$	4,914,412
Treasury shares acquired, including excise tax																Treasury shares acquired, including excise tax									264				264
Stock-based compensation activity	Stock-based compensation activity				(50,287)				(403)	36,865				(13,422)		Stock-based compensation activity				62,116				(77)	7,340				69,456
Other comprehensive loss	Other comprehensive loss											(22,092)		(22,092)		Other comprehensive loss											(32,834)		(32,834)
Net income	Net income						70,988							70,988		Net income						55,502							55,502
Balance, March 31, 2022		95,267	$	953	$	1,415,407	$	4,330,208	8,285	$	(1,304,413)	$	(78,204)	$	4,363,951
Acquisition of Analytical Graphics, Inc.					511				(3)	300				811
Stock-based compensation activity					34,631				(33)	3,205				37,836
Other comprehensive loss												(48,643)		(48,643)
Net income							98,800							98,800
Balance, June 30, 2022		95,267	$	953	$	1,450,549	$	4,429,008	8,249	$	(1,300,908)	$	(126,847)	$	4,452,755

Stock-based compensation activity					49,781				(70)	6,810				56,591
Other comprehensive loss												(61,636)		(61,636)
Net income							95,975							95,975
Balance, September 30, 2022		95,267	$	953	$	1,500,330	$	4,524,983	8,179	$	(1,294,098)	$	(188,483)	$	4,543,685
Balance, September 30, 2023																Balance, September 30, 2023	95,267	$	953	$	1,612,269	$	5,008,580	8,429	$	(1,480,733)	$	(134,269)	$	5,006,800

Common Stock Additional
Paid-In
Capital Retained
Earnings Treasury Stock Accumulated
Other
Comprehensive (Loss) Income Total
Stockholders'
Equity
(in thousands) Shares Amount Shares Amount
Balance, January 1, 2021 95,266 $ 953 $ 1,434,203 $ 3,804,593 8,694 $ (1,124,102) $ (17,775) $ 4,097,872
Stock-based compensation activity (87,602) (565) 48,565 (39,037)
Other comprehensive loss (19,264) (19,264)
Net income 72,398 72,398
Balance, March 31, 2021 95,266 $ 953 $ 1,346,601 $ 3,876,991 8,129 $ (1,075,537) $ (37,039) $ 4,111,969
Acquisition of Analytical Graphics, Inc. 1 328 328
Stock-based compensation activity 34,661 (63) 5,327 39,988
Other comprehensive income 4,217 4,217
Net income 93,716 93,716
Balance, June 30, 2021 95,267 $ 953 $ 1,381,590 $ 3,970,707 8,066 $ (1,070,210) $ (32,822) $ 4,250,218
Acquisition of Analytical Graphics, Inc. 454 (2) 152 606
Treasury shares acquired 97 (35,993) (35,993)
Stock-based compensation activity 46,375 (106) 9,000 55,375
Other comprehensive loss (16,304) (16,304)
Net income 85,342 85,342
Balance, September 30, 2021 95,267 $ 953 $ 1,428,419 $ 4,056,049 8,055 $ (1,097,051) $ (49,126) $ 4,339,244


	Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(in thousands)	Shares	Amount						Shares	Amount
Balance, January 1, 2022	95,267	$	953	$	1,465,694	$	4,259,220	8,188	$	(1,185,707)	$	(56,112)	$	4,484,048
Treasury shares acquired								500	(155,571)				(155,571)
Stock-based compensation activity				(50,287)				(403)	36,865				(13,422)
Other comprehensive loss											(22,092)		(22,092)
Net income						70,988							70,988
Balance, March 31, 2022	95,267	$	953	$	1,415,407	$	4,330,208	8,285	$	(1,304,413)	$	(78,204)	$	4,363,951
Acquisition of Analytical Graphics, Inc.				511				(3)	300				811
Stock-based compensation activity				34,631				(33)	3,205				37,836
Other comprehensive loss											(48,643)		(48,643)
Net income						98,800							98,800
Balance, June 30, 2022	95,267	$	953	$	1,450,549	$	4,429,008	8,249	$	(1,300,908)	$	(126,847)	$	4,452,755
Stock-based compensation activity				49,781				(70)	6,810				56,591
Other comprehensive loss											(61,636)		(61,636)
Net income						95,975							95,975
Balance, September 30, 2022	95,267	$	953	$	1,500,330	$	4,524,983	8,179	$	(1,294,098)	$	(188,483)	$	4,543,685

The accompanying notes are an integral part of the condensed consolidated financial statements.

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ANSYS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, ~~2022~~2023

(Unaudited)

1.Organization

ANSYS, Inc. (Ansys, we, us, our) develops and globally markets engineering simulation software and services widely used by engineers, designers, researchers and students across a broad spectrum of industries and academia, including high-tech, aerospace and defense, automotive, energy, industrial equipment, materials and chemicals, consumer products, healthcare and construction.

As defined by the accounting guidance for segment reporting, we operate as one segment.

Given the integrated approach to the multi-discipline problem-solving needs of our customers, a single sale ~~of software~~ may contain components from multiple product areas and include combined technologies. We also have a multi-year product and integration strategy that will result in new, combined products or changes to the historical product offerings. As a result, it is impracticable for us to provide accurate historical or current reporting among our various product lines.

2.Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information for commercial and industrial companies, the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) included in our Annual Report on Form 10-K for the year ended December 31, ~~2021 (2021~~2022 (2022 Form 10-K). The condensed consolidated December 31, ~~2021~~2022 balance sheet presented is derived from the audited December 31, ~~2021~~2022 balance sheet included in the ~~2021~~2022 Form 10-K. In our opinion, all adjustments considered necessary for a fair presentation of the financial statements have been included, and all adjustments are of a normal and recurring nature. Operating results for the three and nine months ended September 30, ~~2022~~2023 are not necessarily indicative of the results that may be expected for any future period.

~~Recently Adopted Accounting Guidance~~

~~Business combinations: In October 2021,~~ Certain items in the ~~Financial Accounting Standards Board issued ASU No. 2021-08,~~ ~~Business Combinations~~ ~~(Topic 805):~~ ~~Accounting for Contract Assets and Contract Liabilities from Contracts with Customers~~ ~~(ASU 2021-08). ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination~~notes to ~~be recognized and measured by~~ the ~~acquirer~~condensed consolidated financial statements of prior years have been reclassified to conform to the current year's presentation. These reclassifications had no effect on ~~the acquisition date in accordance with Accounting Standards Codification (ASC) 606,~~ ~~Revenue from Contracts with Customers~~, as if the acquirer had originated the contracts. We adopted the standard effective January 1, 2022. Under the prior guidance, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date. The standard does not impact acquired contractreported net income, comprehensive income, cash flows, total assets or total liabilities ~~from business combinations that occurred prior to the effective date of adoption,~~ and ~~the impact in current and future periods will depend on the contract assets and contract liabilities acquired in business combinations after the effective date of adoption.~~stockholders' equity.

Accounting Guidance Issued and Not Yet Adopted

~~It is not expected that the future adoption of any recently~~Recently issued accounting pronouncements ~~will~~are not expected to have a material impact on our financial position, results of operations or cash ~~flows.~~

~~Table of Contents~~

flows upon adoption.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of highly liquid investments such as deposits held at major banks and money market funds. Cash equivalents are carried at cost, which approximates fair value. Our cash and cash equivalents balances comprise the following:


		September 30, 2022			December 31, 2021				September 30, 2023			December 31, 2022
(in thousands, except percentages)	(in thousands, except percentages)	Amount		% of Total	Amount		% of Total	(in thousands, except percentages)	Amount		% of Total	Amount		% of Total
Cash accounts	Cash accounts	$	399,971	63.2	$	580,047	86.9	Cash accounts	$	530,839	83.0	$	503,733	82.0
Money market funds	Money market funds	232,538		36.8	87,620		13.1	Money market funds	108,503		17.0	110,658		18.0
Total	Total	$	632,509		$	667,667		Total	$	639,342		$	614,391

Our money market fund balances are held in various funds of ~~two issuers.~~ a single issuer at September 30, 2023.

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3.Revenue from Contracts with Customers

Disaggregation of Revenue

The following table summarizes revenue:


		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
(in thousands, except percentages)	(in thousands, except percentages)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			(in thousands, except percentages)	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Revenue:	Revenue:													Revenue:
Subscription lease licenses	Subscription lease licenses	$	136,489		$	120,516		$	362,977		$	315,387		Subscription lease licenses	$	103,573		$	136,489		$	386,494		$	362,977
Perpetual licenses	Perpetual licenses	72,417			79,878			212,355			232,433			Perpetual licenses	58,849			72,417			199,977			212,355
Software licenses	Software licenses	208,906			200,394			575,332			547,820			Software licenses	162,422			208,906			586,471			575,332
Maintenance	Maintenance	247,678			223,872			742,554			655,843			Maintenance	278,108			247,678			820,393			742,554
Service	Service	15,927			16,902			53,552			47,385			Service	18,265			15,927			57,977			53,552
Maintenance and service	Maintenance and service	263,605			240,774			796,106			703,228			Maintenance and service	296,373			263,605			878,370			796,106
Total revenue	Total revenue	$	472,511		$	441,168		$	1,371,438		$	1,251,048		Total revenue	$	458,795		$	472,511		$	1,464,841		$	1,371,438

Direct revenue, as a percentage of total revenue	Direct revenue, as a percentage of total revenue	74.8		%	74.4		%	73.7		%	74.0		%	Direct revenue, as a percentage of total revenue	73.5		%	74.8		%	73.7		%	73.7		%
Indirect revenue, as a percentage of total revenue	Indirect revenue, as a percentage of total revenue	25.2		%	25.6		%	26.3		%	26.0		%	Indirect revenue, as a percentage of total revenue	26.5		%	25.2		%	26.3		%	26.3		%

Our software license revenue is recognized up front, while maintenance and service revenue is ~~generally~~ recognized over the term of the contract.

~~Table of Contents~~

Deferred Revenue

Deferred revenue consists of billings made or payments received in advance of revenue recognition from customer agreements. The timing of revenue recognition may differ from the timing of billings to customers. Payment terms vary by the type and location of customer and the products or services offered. The time between invoicing and when payment is due is not significant.

The changes in deferred revenue, inclusive of both current and long-term deferred revenue, during the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Beginning balance – January 1	Beginning balance – January 1	$	412,781	$	388,810	Beginning balance – January 1	$	435,758	$	412,781
Acquired deferred revenue	Acquired deferred revenue	1,032		746		Acquired deferred revenue	7,910		1,032
Deferral of revenue	Deferral of revenue	1,343,122		1,202,547		Deferral of revenue	1,399,367		1,343,122
Recognition of revenue	Recognition of revenue	(1,371,438)		(1,251,048)		Recognition of revenue	(1,464,841)		(1,371,438)
Currency translation	Currency translation	(30,779)		(8,591)		Currency translation	(7,761)		(30,779)
Ending balance – September 30	Ending balance – September 30	$	354,718	$	332,464	Ending balance – September 30	$	370,433	$	354,718

Total revenue allocated to remaining performance obligations as of September 30, ~~2022~~2023 will be recognized as revenue as follows:


(in thousands)
Next 12 months	$	~~674,142~~774,215
Months 13-24	~~270,106~~306,571
Months 25-36	~~121,553~~95,311
Thereafter	~~43,087~~29,580
Total revenue allocated to remaining performance obligations	$	~~1,108,888~~1,205,677

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Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes both deferred revenue and backlog. Our backlog represents deferred revenue associated with installment billings for periods beyond the current quarterly billing ~~cycle.~~cycle and committed contracts with start dates beyond the end of the current period. Revenue recognized during the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 included amounts in deferred revenue and backlog at the beginning of the period of $706.2 million and $608.7 million, ~~and $507.0 million,~~ respectively.

4.Acquisitions

During the ~~nine months~~quarter ended ~~September~~June 30, ~~2022,~~2023, we completed ~~various strategic acquisitions~~the acquisition of Diakopto for a purchase price of $83.3 million, or $77.2 million net of cash acquired, to expand our ~~solution offerings and enhance our customers' experience.~~multiphysics simulation portfolio for semiconductor designers. The effects of the ~~acquisitions~~business combination were not material to our condensed consolidated results of ~~operations individually or in~~operations.

On January 3, 2023, we completed the ~~aggregate. The combined~~acquisition of DYNAmore for a purchase price of ~~the acquisitions completed during the nine months ended September 30, 2022 was approximately~~ ~~$251.5~~$139.2 million, o~~r $246.0~~or $126.4 million net of cash acquired. The acquisition expands our position as a simulation solution provider within the automotive industry. The effects of the acquisition were not material to our condensed consolidated results of operations.

During the three and nine months ended September 30, ~~2022,~~2023, we incurred acquisition-related expenses of ~~$1.2~~$1.5 million and ~~$5.4~~$5.8 million, respectively. Acquisition-related expenses are recognized as selling, general and administrative and research and development expenses on the condensed consolidated statements of income.

The assets acquired and liabilities assumed in connection with the acquisitions have been recorded based upon management's estimates of ~~their~~the fair market values as of each respective date of acquisition. The following tables summarize the fair value of consideration ~~transferred~~ and the fair values of identified assets acquired and liabilities assumed for the combined ~~2022~~ acquisitions at each respective date of acquisition:

~~Table of Contents~~

~~Fair Value of Consideration:~~


Fair Value of Consideration:
(in thousands)
Cash	$	~~248,102~~217,392
~~Consideration not yet paid~~Non-cash consideration	~~3,391~~5,056
Total consideration	$	~~251,493~~222,448

~~Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:~~


Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:
(in thousands)
Cash	$	~~5,540~~18,866
Accounts receivable and other tangible assets	~~2,873~~18,152
Developed software and core technologies	~~60,030~~25,594
Customer lists	~~126~~83,790
Trade names	~~1,304~~2,910
Accounts payable and other liabilities	~~(5,195)~~(8,742)
Deferred revenue	~~(1,032)~~(7,910)
Net deferred tax liabilities	~~(10,720)~~(31,272)
Total identifiable net assets	$	~~52,926~~101,388
Goodwill	$	~~198,567~~121,060

The goodwill, which is not tax-deductible, is attributed to intangible assets that do not qualify for separate recognition, including the assembled workforces of the acquired businesses and the synergies expected to arise as a result of the acquisitions.

The fair ~~values~~value of the assets acquired and liabilities assumed are based on preliminary calculations. The estimates and assumptions for these items are subject to change as additional information about what was known and knowable at each respective acquisition date is obtained during the measurement period (up to one year from the acquisition date).

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We determined the fair value of our intangible assets using various valuation techniques, including the relief-from-royalty method and the multi-period excess earnings method. These models utilize certain unobservable inputs classified as Level 3 measurements as defined by ASC 820, Fair Value Measurements and Disclosures. The determination of fair value requires considerable judgment and is sensitive to changes in underlying assumptions, estimates and market factors. Estimating fair value requires us to make assumptions and estimates regarding our future plans, as well as industry and economic conditions. These assumptions and estimates include, but are not limited to: selection of a valuation methodology, royalty rate, discount rate, attrition rate and ~~attrition~~obsolescence rate.

The weighted-average useful life, valuation method and assumptions used to determine the fair value of the intangible assets acquired in ~~2022~~2023 are as follows:

Intangible Asset

Weighted-Average Useful Life

Valuation Method

Assumptions

Developed software and core technologies

85 years

~~Multi-period~~Relief-from-royalty or multi-period excess earnings

Royalty rate: 20.0%

Obsolescence rate: 20.0% Discount rate: ~~9.5%~~15.5% - ~~10.0%~~22.0%

Trade names

95 years

Relief-from-royalty

Royalty rate: 1.0% - 2.0%

Discount rate: ~~10.0%~~15.5% - ~~10.5%~~22.0%

Customer lists

713 years

Multi-period excess earnings

Attrition rate: ~~10.0%~~5.0%

Discount rate: ~~9.5%~~15.5% - 22.0%

~~Table of Contents~~

2022 Acquisitions

~~On October 1, 2021, we acquired 100% of the shares of Zemax, a leader in high-performance optical imaging system simulation, for a purchase price of~~ ~~$411.5 million, paid in cash, or $399.1 million net of cash acquired from Zemax~~. The acquisition expanded the scope of our optical and photonics simulation portfolio by giving users comprehensive solutions that can drive innovation in healthcare, autonomy, consumer electronics and the industrial internet of things (IIoT).

~~Additionally, during~~During the year ended December 31, ~~2021,~~2022, we completed several ~~other~~ acquisitions to ~~expand our solution offerings and~~ enhance our customers' experience. ~~These acquisitions were not individually significant.~~ The combined purchase price of these acquisitions during the year ended December 31, ~~2021~~2022 was ~~$110.7~~$401.7 million,~~, which was paid in cash.~~ or $390.8 million net of cash acquired.

The operating results of each acquisition have been included in our condensed consolidated financial statements since each respective date of acquisition.

~~See Note 16, Subsequent Event, for information on our recent acquisition completed subsequent to the end~~ The effects of the ~~period covered by this report.~~acquisitions were not material to our condensed consolidated results of operations.

5.Other Receivables and Current Assets and Other Accrued Expenses and Liabilities

Our other receivables and current assets and other accrued expenses and liabilities comprise the following balances:


(in thousands)	(in thousands)	September 30, 2022		December 31, 2021		(in thousands)	September 30, 2023		December 31, 2022
Receivables related to unrecognized revenue	Receivables related to unrecognized revenue	$	129,721	$	200,888	Receivables related to unrecognized revenue	$	135,981	$	209,139
Income taxes receivable, including overpayments and refunds	Income taxes receivable, including overpayments and refunds	31,411		71,332		Income taxes receivable, including overpayments and refunds	37,097		28,963
Prepaid expenses and other current assets	Prepaid expenses and other current assets	53,434		52,435		Prepaid expenses and other current assets	55,935		51,159
Total other receivables and current assets	Total other receivables and current assets	$	214,566	$	324,655	Total other receivables and current assets	$	229,013	$	289,261

Accrued vacation	Accrued vacation	38,084		35,879		Accrued vacation	44,369		39,118

Consumption, VAT and sales tax liabilities	Consumption, VAT and sales tax liabilities	25,741		52,630		Consumption, VAT and sales tax liabilities	16,298		41,812
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	96,868		116,000		Accrued expenses and other current liabilities	105,316		117,290
Total other accrued expenses and liabilities	Total other accrued expenses and liabilities	$	160,693	$	204,509	Total other accrued expenses and liabilities	$	165,983	$	198,220

Receivables related to unrecognized revenue represent the current portion of billings made for customer contracts that have not yet been recognized as revenue.

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6.Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing earnings by the weighted average number of common shares outstanding during the period. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive equivalents outstanding. To the extent stock awards are anti-dilutive, they are excluded from the calculation of diluted EPS.

The details of basic and diluted EPS are as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(in thousands, except per share data)	(in thousands, except per share data)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(in thousands, except per share data)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net income	Net income	$	95,975	$	85,342	$	265,763	$	251,456	Net income	$	55,502	$	95,975	$	225,650	$	265,763
Weighted average shares outstanding – basic	Weighted average shares outstanding – basic	87,063		87,239		87,062		87,072		Weighted average shares outstanding – basic	86,817		87,063		86,814		87,062
Dilutive effect of stock plans	Dilutive effect of stock plans	355		930		434		997		Dilutive effect of stock plans	564		355		521		434
Weighted average shares outstanding – diluted	Weighted average shares outstanding – diluted	87,418		88,169		87,496		88,069		Weighted average shares outstanding – diluted	87,381		87,418		87,335		87,496
Basic earnings per share	Basic earnings per share	$	1.10	$	0.98	$	3.05	$	2.89	Basic earnings per share	$	0.64	$	1.10	$	2.60	$	3.05
Diluted earnings per share	Diluted earnings per share	$	1.10	$	0.97	$	3.04	$	2.86	Diluted earnings per share	$	0.64	$	1.10	$	2.58	$	3.04
Anti-dilutive shares	Anti-dilutive shares	54		32		366		30		Anti-dilutive shares	73		54		257		366

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7.Goodwill and Intangible Assets

Intangible assets are classified as follows:


		September 30, 2022				December 31, 2021					September 30, 2023				December 31, 2022
(in thousands)	(in thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		(in thousands)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Finite-lived intangible assets:	Finite-lived intangible assets:									Finite-lived intangible assets:
Developed software and core technologies	Developed software and core technologies	$	1,028,973	$	(464,227)	$	985,685	$	(422,797)	Developed software and core technologies	$	1,136,728	$	(536,643)	$	1,106,789	$	(483,033)
Customer lists	Customer lists	191,742		(65,705)		203,072		(57,175)		Customer lists	283,231		(82,267)		205,484		(71,618)
Trade names	Trade names	180,876		(132,814)		182,554		(128,577)		Trade names	189,203		(141,404)		186,424		(135,220)
Total	Total	$	1,401,591	$	(662,746)	$	1,371,311	$	(608,549)	Total	$	1,609,162	$	(760,314)	$	1,498,697	$	(689,871)
Indefinite-lived intangible asset:	Indefinite-lived intangible asset:									Indefinite-lived intangible asset:
Trade name	Trade name	$	357			$	357			Trade name	$	357			$	357

Finite-lived intangible assets are amortized over their estimated useful lives of two years to seventeen ~~years~~.years.

As of September 30, ~~2022,~~2023, estimated future amortization expense for the intangible assets reflected above was as follows:


(in thousands)	(in thousands)			(in thousands)
Remainder of 2022		$	20,702
2023		89,581
Remainder of 2023				Remainder of 2023	$	26,383
2024	2024	91,442		2024	111,049
2025	2025	90,950		2025	113,657
2026	2026	91,270		2026	114,451
2027	2027	93,004		2027	117,260
2028				2028	110,478
Thereafter	Thereafter	261,896		Thereafter	255,570
Total intangible assets subject to amortization	Total intangible assets subject to amortization	738,845		Total intangible assets subject to amortization	848,848
Indefinite-lived trade name	Indefinite-lived trade name	357		Indefinite-lived trade name	357
Other intangible assets, net	Other intangible assets, net	$	739,202	Other intangible assets, net	$	849,205

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The changes in goodwill during the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Beginning balance – January 1	Beginning balance – January 1	$	3,409,271	$	3,038,306	Beginning balance – January 1	$	3,658,267	$	3,409,271
Acquisitions and adjustments(1)	Acquisitions and adjustments(1)	197,173		79,905		Acquisitions and adjustments(1)	113,502		197,173

Currency translation	Currency translation	(73,985)		(16,588)		Currency translation	(2,448)		(73,985)
Ending balance – September 30	Ending balance – September 30	$	3,532,459	$	3,101,623	Ending balance – September 30	$	3,769,321	$	3,532,459

(1) In accordance with the accounting for business combinations, we recorded adjustments to goodwill for the effect of changes in the provisional fair values of the assets acquired and liabilities assumed during the measurement period (up to one year from the acquisition date) as we obtained new information about facts and circumstances that existed as of the acquisition date that, if known, would have ~~affected~~effected the measurement of the amounts recognized as of that date.

During the first quarter of ~~2022,~~2023, we completed the annual impairment test for goodwill and the indefinite-lived intangible asset and determined that these assets had not been impaired as of the test date, January 1, 2022. Given the adverse economic and market conditions in the third quarter, we considered a variety of qualitative factors to determine if an additional quantitative impairment test was required subsequent to our annual impairment test. Based on a variety of factors, including the excess of the fair value over the carrying amount in the most recent impairment test, we determined it was not more likely than not that an impairment existed as of September 30, 2022.2023. No ~~other~~ events or circumstances changed during the nine months ended September 30, ~~2022~~2023 that would indicate that the fair values of our reporting unit and indefinite-lived intangible asset are below their carrying amounts.

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8.Fair Value Measurement

The valuation hierarchy for disclosure of assets and liabilities reported at fair value prioritizes the inputs for such valuations into three broad levels:

•Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

•Level 2: quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; or

•Level 3: unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.

A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Our debt is classified within Level 2 of the fair value hierarchy because these borrowings are not actively traded and have a variable interest rate structure based upon market rates. The carrying amount of our debt approximates the estimated fair value. See Note 10, "Debt", for additional information on our borrowings.

The following tables provide the assets carried at fair value and measured on a recurring basis:


				Fair Value Measurements at Reporting Date Using:									Fair Value Measurements at Reporting Date Using:
(in thousands)	(in thousands)	September 30, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		(in thousands)	September 30, 2023		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	232,538	$	232,538	$	—	$	—	Cash equivalents	$	108,503	$	108,503	$	—	$	—
Short-term investments	Short-term investments	$	194	$	—	$	194	$	—	Short-term investments	$	171	$	—	$	171	$	—
Deferred compensation plan investments	Deferred compensation plan investments	$	1,599	$	1,599	$	—	$	—	Deferred compensation plan investments	$	2,302	$	2,302	$	—	$	—
Equity securities	Equity securities	$	1,309	$	1,309	$	—	$	—	Equity securities	$	761	$	761	$	—	$	—


				Fair Value Measurements at Reporting Date Using:									Fair Value Measurements at Reporting Date Using:
(in thousands)	(in thousands)	December 31, 2021		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		(in thousands)	December 31, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets	Assets									Assets
Cash equivalents	Cash equivalents	$	87,620	$	87,620	$	—	$	—	Cash equivalents	$	110,658	$	110,658	$	—	$	—
Short-term investments	Short-term investments	$	361	$	—	$	361	$	—	Short-term investments	$	183	$	—	$	183	$	—
Deferred compensation plan investments	Deferred compensation plan investments	$	1,602	$	1,602	$	—	$	—	Deferred compensation plan investments	$	1,618	$	1,618	$	—	$	—
Equity securities	Equity securities	$	2,500	$	2,500	$	—	$	—	Equity securities	$	892	$	892	$	—	$	—

The cash equivalents in the preceding tables represent money market funds, valued at net asset value, with carrying values which approximate their fair values because of their short-term nature.

The short-term investments in the preceding tables represent deposits held by certain foreign subsidiaries. The deposits have fixed interest rates with original maturities ranging from three months to one year.

The deferred compensation plan investments in the preceding tables represent trading securities held in a rabbi trust for the benefit of non-employee directors. These securities consist of mutual funds traded in an active market with quoted prices. As a result, the plan assets are classified as Level 1 in the fair value hierarchy. The plan assets are recorded within other long-term assets on our condensed consolidated balance sheets.

The equity securities represent our investment in a publicly traded company. These securities are traded in an active market with quoted prices. As a result, the securities are classified as Level 1 in the fair value hierarchy. The securities are recorded within other long-term assets on our condensed consolidated balance sheets.

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9.Leases

Our right-of-use assets and lease liabilities primarily include operating leases for office space. Our executive offices and those related to certain domestic product development, marketing, production and administration are located in a 186,000 square foot office facility in Canonsburg, Pennsylvania. The term of the lease is 183 months, which began on October 1, 2014 and expires on December 31, 2029. The lease agreement includes options to renew the contract through August 2044, an option to lease additional space in January 2025 and an option to terminate the lease in December 2025. No options are included in the lease ~~liability as renewal is not reasonably certain. In addition, we are reasonably certain we will not terminate the lease agreement.~~liability. Absent the exercise of options in the lease, our remaining base rent (inclusive of property taxes and certain operating costs) is $4.5 million per annum through 2024 and $4.7 million per annum for 2025 - 2029.

The components of our global lease cost reflected in the condensed consolidated statements of income are as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(in thousands)	(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Lease liability cost	Lease liability cost	$	6,960	$	7,139	$	20,886	$	21,278	Lease liability cost	$	7,097	$	6,960	$	21,207	$	20,886
Variable lease cost not included in the lease liability(1)	Variable lease cost not included in the lease liability(1)	1,015		1,017		3,202		3,203		Variable lease cost not included in the lease liability(1)	1,523		1,015		4,134		3,202
Total lease cost	Total lease cost	$	7,975	$	8,156	$	24,088	$	24,481	Total lease cost	$	8,620	$	7,975	$	25,341	$	24,088

(1) Variable lease cost includes common area maintenance, property taxes, utilities and fluctuations in rent due to a change in an index or rate.

Other information related to operating leases is as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(in thousands)	(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Cash paid for amounts included in the measurement of the lease liability:	Cash paid for amounts included in the measurement of the lease liability:									Cash paid for amounts included in the measurement of the lease liability:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	(6,720)	$	(7,217)	$	(20,309)	$	(21,183)	Operating cash flows from operating leases	$	(7,288)	$	(6,720)	$	(20,993)	$	(20,309)
Right-of-use assets obtained in exchange for new operating lease liabilities	Right-of-use assets obtained in exchange for new operating lease liabilities	8,131		1,301		$	28,806	$	6,895	Right-of-use assets obtained in exchange for new operating lease liabilities	$	2,192	$	8,131	$	7,508	$	28,806


		As of September 30,					As of September 30,
		2022		2021			2023		2022
Weighted-average remaining lease term of operating leases	Weighted-average remaining lease term of operating leases	7.3 years		6.7 years		Weighted-average remaining lease term of operating leases	6.5 years		7.3 years
Weighted-average discount rate of operating leases	Weighted-average discount rate of operating leases	3.2	%	3.0	%	Weighted-average discount rate of operating leases	3.4	%	3.2	%

The maturity schedule of the operating lease liabilities as of September 30, ~~2022~~2023 is as follows:


(in thousands)	(in thousands)			(in thousands)
Remainder of 2022		$	6,241
2023		23,009
Remainder of 2023				Remainder of 2023	$	7,097
2024	2024	20,857		2024	25,268
2025	2025	18,907		2025	21,558
2026	2026	17,436		2026	19,446
2027				2027	18,038
Thereafter	Thereafter	59,040		Thereafter	45,236
Total future lease payments	Total future lease payments	145,490		Total future lease payments	136,643
Less: Present value adjustment	Less: Present value adjustment	(15,928)		Less: Present value adjustment	(13,930)
Present value of future lease payments(1)	Present value of future lease payments(1)	$	129,562	Present value of future lease payments(1)	$	122,713

(1) Includes the current portion of operating lease liabilities of ~~$19.9~~$22.6 million, which is reflected in other accrued expenses and liabilities in the condensed consolidated balance sheets.

There were no material leases that have been signed but not yet commenced as of September 30, ~~2022.~~2023.

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10.Debt

On June 30, 2022, we entered into a credit agreement ~~(2022~~(as amended, the 2022 Credit Agreement) with PNC Bank, National Association, as administrative agent, swing line lender, and an L/C issuer, the lenders party thereto, and the other L/C issuers party thereto. The 2022 Credit Agreement refinanced our previous credit agreements in their entirety. Terms used in this description of the 2022 Credit Agreement with initial capital letters that are not otherwise defined herein are as defined in the 2022 Credit Agreement.

The term loan facility was advanced by the lenders thereunder to refinance and replace our (i) Credit Agreement, dated as of February 22, 2019, as amended, among us, as borrower, Bank of America, N.A., as administrative agent, swing line lender and an L/C issuer, the lenders party thereto, and the other L/C issuers party thereto and (ii) Credit Agreement, dated as of November 9, 2020, among us, as borrower, Bank of America, N.A., as administrative agent, and the lenders party thereto (together, the “Prior Credit Agreements”).

The 2022 Credit Agreement provides for a $755.0 million unsecured term loan facility and a $500.0 million unsecured revolving loan facility, which includes a $50.0 million sublimit for the issuance of letters of credit. The revolving loan facility is available for working capital and general corporate purposes. Each of the term loan facility and the revolving loan facility matures on June 30, 2027.

Borrowings under the term loan and revolving loan facilities accrue interest at a rate that is based on the Term SOFR plus an applicable margin or at the base rate plus an applicable margin, at our election. The base rate is the highest of (i) the Overnight Bank Funding Rate, plus 0.500%, (ii) the PNC Bank, National Association prime rate, and (iii) Daily Simple SOFR plus an adjustment for SOFR plus 1.00%. The applicable margin for the borrowings is a percentage per annum based on the lower of (1) a pricing level determined by our then-current consolidated net leverage ratio and (2) a pricing level determined by our public debt rating (if available).

On September 29, 2023, the 2022 Credit Agreement was amended to provide for an interest rate adjustment (Sustainability Rate Adjustment) based upon the achievement of certain environmental, social and governance key performance indicators (KPIs). The Sustainability Rate Adjustment range is +/- 0.05% and will go into effect in the first quarter of 2024 based on the 2023 KPIs and will be adjusted annually based on the KPIs of the preceding year.

The 2022 Credit Agreement also provides for the option to add certain foreign subsidiaries as borrowers and to borrow in Euros, Sterling, Yen and Swiss Francs under the revolving loan facility, up to a sublimit of $150.0 million. Borrowings under the revolving loan facility denominated in these currencies will accrue interest at a rate that is based on (a) for Euros, €STR, (b) for Sterling, SONIA, (c) for Yen, TONAR and (d) for Swiss Francs, SARON, plus an applicable margin calculated as described above.

Under the 2022 Credit Agreement, the weighted average interest rate in effect ~~during the three months ended September 30, 2022 was 3.05%.~~ ~~Under the 2022 Credit Agreement and Prior Credit Agreements,~~ ~~the weighted average interest rate in effect during nine months ended September 30, 2022 was 2.11%.Under the Prior Credit Agreements, the weighted average interest rate in effect during~~for the three and nine months ended September 30, ~~2021~~2023 was ~~1.33%~~6.22% and ~~1.41%~~5.89%, ~~respectively~~respectively. ~~. The~~Under the prior credit agreements and the 2022 Credit Agreement, the weighted average interest rate in effect for the three and nine months ended September 30, 2022 was 3.05% and 2.11%, respectively. The rate in effect as of September 30, 2023 and for the fourth quarter of 2023 under the 2022 Credit Agreement is ~~4.53%~~6.37%.

The 2022 Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events of default. The 2022 Credit Agreement also contains a financial covenant requiring us and our subsidiaries to maintain a consolidated net leverage ratio not in excess of 3.50 to 1.00 as of the end of any fiscal quarter (for the four-quarter period ending on such date) with an opportunity for a temporary increase in such consolidated net leverage ratio to 4.00 to 1.00 upon the consummation of certain qualified acquisitions for which the aggregate consideration is at least $250.0 million.

As of September 30, ~~2022,~~2023, we had $755.0 million of borrowings outstanding under the term loan, with a carrying value of ~~$753.5~~$753.8 million, which is net of ~~$1.5~~ $1.2 million of unamortized debt discounts and issuance costs. The total amount was included in long-term debt. As of September 30, ~~2022,~~ 2023, no borrowings were outstanding under the revolving loan facility.

As of December 31, ~~2021,~~2022, we had $755.0 million of borrowings outstanding under the ~~Prior Credit Agreements,~~term loan, with a carrying value of $753.6 million, which is net of $1.4 million of unamortized debt discounts and issuance costs. The total amount was included in long-term debt. As of December 31, ~~2021,~~2022, no borrowings were outstanding under the revolving loan facility.

We were in compliance with all covenants under the 2022 Credit Agreement ~~and the Prior Credit Agreements~~ as of September 30, ~~2022~~2023 and December 31, ~~2021, respectively.~~

2022.

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11.Income Taxes

Our income before income tax provision, income tax provision and effective tax rates were as follows:


		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
(in thousands, except percentages)	(in thousands, except percentages)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			(in thousands, except percentages)	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Income before income tax provision	Income before income tax provision	$	117,981		$	103,898		$	318,904		$	280,381		Income before income tax provision	$	62,545		$	117,981		$	267,366		$	318,904
Income tax provision	Income tax provision	22,006			18,556			$	53,141		$	28,925		Income tax provision	$	7,043		$	22,006		$	41,716		$	53,141
Effective tax rate	Effective tax rate	18.7		%	17.9		%	16.7		%	10.3		%	Effective tax rate	11.3		%	18.7		%	15.6		%	16.7		%

~~The increase in the effective tax rate from the prior year was primarily due to decreased benefits related to stock-based compensation.~~

Tax expense for the nine months ended September 30, 2022 and 2021 benefited from deductions related to stock-based compensation, many of which were recognized discretely. These benefits were partially offset by non-deductible compensation.

12.Stock Repurchase Program

Under our stock repurchase program, we repurchased shares as follows:


		Nine Months Ended					Nine Months Ended
(in thousands, except per share data)	(in thousands, except per share data)	September 30, 2022		September 30, 2021		(in thousands, except per share data)	September 30, 2023		September 30, 2022
Number of shares repurchased	Number of shares repurchased	500		97		Number of shares repurchased	650		500
Average price paid per share	Average price paid per share	$	311.14	$	371.83	Average price paid per share	$	302.34	$	311.14
Total cost	Total cost	$	155,571	$	35,993	Total cost	$	196,494	$	155,571

All of the shares repurchased during the nine months ended September 30, ~~2022~~2023 were repurchased during the first quarter. As of September 30, ~~2022, 2.0~~2023, 1.1 million shares remained available for repurchase under the program. Average price paid per share excludes excise tax. As of January 1, 2023, our share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act. Any excise tax incurred is recognized and reflected as part of the cost basis of the shares acquired in the Condensed Consolidated Statements of Stockholders' Equity.

13.Stock-Based Compensation

On May 12, 2022, our stockholders approved the ANSYS, Inc. 2022 Employee Stock Purchase Plan (2022 ESPP) and the reservation by our board of directors of 750,000 shares of common stock for issuance under the 2022 ESPP. The 2022 ESPP allows our employees and employees of our designated subsidiaries to purchase shares of our common stock at a discount to fair market value of 10% in accordance with the terms and conditions of the 2022 ESPP.

Total stock-based compensation expense and its net impact on basic and diluted earnings per share are as follows:

Three Months Ended Nine Months Ended
(in thousands, except per share data) September 30,
2022 September 30,
2021 September 30,
2022 September 30,
2021
Cost of sales:
Maintenance and service $ 2,621 $ 2,753 $ 7,448 $ 9,834
Operating expenses:
Selling, general and administrative 27,077 25,420 67,117 66,158
Research and development 17,272 15,971 47,554 46,156
Stock-based compensation expense before taxes 46,970 44,144 122,119 122,148
Related income tax benefits (9,984) (10,743) (42,037) (62,151)
Stock-based compensation expense, net of taxes $ 36,986 $ 33,401�� $ 80,082 $ 59,997
Net impact on earnings per share:
Basic earnings per share $ (0.42) $ (0.38) $ (0.92) $ (0.69)
Diluted earnings per share $ (0.42) $ (0.38) $ (0.92) $ (0.68)


	Three Months Ended				Nine Months Ended
(in thousands, except per share data)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Cost of sales:
Maintenance and service	$	3,568	$	2,621	$	9,924	$	7,448
Operating expenses:
Selling, general and administrative	32,907		27,077		89,006		67,117
Research and development	21,586		17,272		59,603		47,554
Stock-based compensation expense before taxes	58,061		46,970		158,533		122,119
Related income tax benefits	(12,993)		(9,984)		(41,848)		(42,037)
Stock-based compensation expense, net of taxes	$	45,068	$	36,986	$	116,685	$	80,082
Net impact on earnings per share:
Basic earnings per share	$	(0.52)	$	(0.42)	$	(1.34)	$	(0.92)
Diluted earnings per share	$	(0.52)	$	(0.42)	$	(1.34)	$	(0.92)

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14.Geographic Information

Revenue to external customers is attributed to individual countries based upon the location of the customer. Revenue by geographic area is as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended				Nine Months Ended
(in thousands)	(in thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(in thousands)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
United States	United States	$	201,263	$	208,998	$	586,063	$	570,101	United States	$	204,824	$	201,263	$	661,953	$	586,063
Japan	Japan	38,586		45,298		133,562		147,511		Japan	40,956		38,586		141,770		133,562
Germany	Germany	48,115		27,826		111,888		89,781		Germany	37,901		48,115		117,240		111,888
China										China	19,548		28,265		91,128		83,924
South Korea	South Korea	49,581		22,364		104,950		67,853		South Korea	27,928		49,581		75,868		104,950
China		26,474		26,677		76,412		62,934

Other Europe, Middle East and Africa (EMEA)	Other Europe, Middle East and Africa (EMEA)	72,058		73,806		236,250		220,083		Other Europe, Middle East and Africa (EMEA)	83,719		72,058		251,696		236,250
Other international	Other international	36,434		36,199		122,313		92,785		Other international	43,919		34,643		125,186		114,801
Total revenue	Total revenue	$	472,511	$	441,168	$	1,371,438	$	1,251,048	Total revenue	$	458,795	$	472,511	$	1,464,841	$	1,371,438

Property and equipment by geographic area is as follows:


(in thousands)	(in thousands)	September 30, 2022		December 31, 2021		(in thousands)	September 30, 2023		December 31, 2022
United States	United States	$	58,734	$	62,880	United States	$	55,589	$	58,258
India	India	5,219		6,144		India	5,244		5,978
Germany		2,564		4,434

Other EMEA		7,031		9,215

EMEA						EMEA	10,063		11,043
Other international	Other international	4,200		5,241		Other international	4,535		5,559
Total property and equipment, net	Total property and equipment, net	$	77,748	$	87,914	Total property and equipment, net	$	75,431	$	80,838

15.Contingencies and Commitments

We are subject to various claims, investigations, and legal and regulatory proceedings that arise in the ordinary course of business, including, but not limited to, commercial disputes, labor and employment matters, tax audits, alleged infringement of third parties' intellectual property rights and other matters. In our opinion, the resolution of pending matters is not expected to have a material adverse effect on our consolidated results of operations, cash flows or financial position. However, each of these matters is subject to various uncertainties and it is possible that an unfavorable resolution of one or more of these proceedings could materially affect our consolidated results of operations, cash flows or financial position.

Our Indian subsidiary has several service tax audits pending that have resulted in formal inquiries being received on transactions through mid-2012. We could incur tax charges and related liabilities of ~~$7.0~~$7.1 million. As such charges are not probable at this time, a reserve has not been recorded on the condensed consolidated balance sheet as of September 30, ~~2022.~~2023. The service tax issues raised in our notices and inquiries are very similar to the case, M/s Microsoft Corporation (I) (P) Ltd. Vs. Commissioner of Service Tax, New Delhi, wherein the Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT) issued a favorable ruling to Microsoft. The Microsoft ruling was subsequently challenged in the Supreme Court by the Indian tax authority and a decision is still pending. We can provide no assurances on the impact that the present Microsoft case's decision will have on our cases, however, an unfavorable ruling in the Microsoft case may impact our assessment of probability and result in the recording of a ~~$7.0~~$7.1 million reserve. We are uncertain as to when these service tax matters will be concluded.

We sell software licenses and services to our customers under contractual agreements. Such agreements generally include certain provisions indemnifying the customer against claims, by third parties, of infringement or misappropriation of their intellectual property rights arising from such customer's usage of our products or services. To date, payments related to these indemnification provisions have been immaterial. For several reasons, including the lack of prior material indemnification claims, we cannot determine the maximum amount of potential future payments, if any, related to such indemnification provisions.

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~~16.Subsequent Event~~

In November 2022, we had a $70.0 million cash outflow (net of cash acquired) associated with a strategic acquisition. The acquisition was funded with our existing cash balance. Due to the limited time since the acquisition date, the initial accounting for the business combination is incomplete. As a result, we are unable to provide the amount recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed. The preliminary allocation of purchase price will be included in our Annual Report on Form 10-K for the year ended December 31, 2022. We do not expect the operation to contribute meaningfully to our financial results.

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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto for the nine months ended September 30, ~~2022,~~2023, and with our audited consolidated financial statements and notes thereto for the year ended December 31, ~~2021~~2022 included in the ~~2021~~2022 Form 10-K filed with the Securities and Exchange Commission (SEC). The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles (GAAP).

~~Business:~~Business

Ansys, a corporation formed in 1994, develops and globally markets engineering simulation software and services widely used by engineers, designers, researchers and students across a broad spectrum of industries and academia, including high-tech, aerospace and defense, automotive, energy, industrial equipment, materials and chemicals, consumer products, healthcare and construction. Headquartered south of Pittsburgh, Pennsylvania, we employed ~~5,500~~6,100 and 5,600 people as of September 30, ~~2022.~~2023 and December 31, 2022, respectively. We focus on the development of open and flexible solutions that enable users to analyze designs ~~directly on the desktop~~on-premises and/or via the cloud, providing a common platform for fast, efficient and cost-conscious product development, from design concept to final-stage testing, validation and ~~validation.~~deployment. We distribute our suite of simulation technologies through direct sales offices in strategic, global locations and a global network of independent resellers and distributors (collectively, channel partners). It is our intention to continue to maintain this hybrid sales and distribution model. We operate and report as one segment.

When visionary companies need to know how their world-changing ideas will perform, they close the gap between design and reality using Ansys simulation. For more than 50 years, Ansys software has enabled innovators across industries to push the boundaries of product design by using the predictive power of simulation. From sustainable transportation and advanced satellite systems to life-saving medical devices, Ansys powers innovation that drives human advancement.

Our strategy of Pervasive Insights seeks to deepen the use of simulation in our core market, to inject simulation throughout the product lifecycle and to extend the accessibility to a broader set of users and use cases. Our business has three vectors of growth:

•More products. Our broad and deep multiphysics portfolio enables us to grow with ~~customers’ increasing adoption~~customers as they use simulation to solve more complex problems across a broad set of ~~simulation across broad sets of product development disciplines.~~industries.

•More users. Investments in simulation education and user experience simplification has made simulation more accessible to a broader ~~classes of simulation users.~~user base.

•More ~~computation. As customers' problems become~~computations. Larger and more complex simulations ~~increase~~drive more computation, requiring customers to use more Ansys licenses to complete their simulations.

Through decades of investments in ~~complexity which drives more computation.~~

~~We develop easy-to-use~~the academic community and enhanced user experiences, our solutions ~~that are intuitive for more than just engineers, allowing us~~have become accessible and relevant beyond our core "engineering" end user, to reach more users upstream and ~~downstream.~~downstream from our core, which is the product validation process. Our multiphysics solutions enable our customers to address increasingly complex ~~R&D~~research and development (R&D) challenges from the component through the system and mission level of analysis. Our products seamlessly enable access to high performance compute capacity ~~on premise~~to run simulations, on-premises or in the cloud, which means our customers' R&D teams are unencumbered by compute capacity limitations that can hinder R&D cycle times.

The engineering simulation software ~~simulation~~ market is strong and growing. The market growth is driven by customers' need for rapid, quality innovation in a cost efficient manner, enabling faster time to market offor new products and lower warranty costs. ~~Product~~Increasing product complexity is driving sustained demand for simulations. Key industry trends fueling customers' increasing needs for simulation include:

•~~Electrification, including electric vehicles;~~Electrification;

•~~Autonomy, including self-driving vehicles;~~Autonomy;

•Connectivity;

•~~Industrial Internet~~The industrial internet of ~~Things;~~things; and

•Sustainability, including minimizing waste and physical prototyping, and improving circularity and development time.

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We have been investing and ~~will be continuing~~intend to continue to invest in our portfolio to broaden the range of physics and enable customers to analyze the interactions among physics at the component, system and mission level. Our strategy of Pervasive Insights is aligned with the near-term market growth opportunities and is laying the foundation for a future where simulation can be further democratized to ~~ever~~ broader classes of end users and end-use cases.

To ~~further support~~augment our ~~strategy of Pervasive Insights,~~organic development roadmaps, we ~~will~~intend to continue ~~to pursue a highly selective~~our strategic and ~~strategic~~disciplined acquisition strategy to grow our business. ~~We will also~~Our strategy is to partner with industry leaders to ~~broaden pervasive~~extend simulation into other ecosystems and customer R&D workflows. ~~Importantly, we will continue to win in the right way,~~Our business is built on a culture of high ethical standards and commitment to diversity, equity, inclusion and belonging.

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We license our technology to businesses in a diverse set of industries, educational institutions and governmental agencies. We believe that the features, functionality and integrated multiphysics capabilities of our software products are as strong as they have ever been. ~~However, the~~The software business is generally characterized by long sales ~~cycles. These long sales~~ cycles which increase the difficulty of predicting sales for any particular quarter. We make many operational and strategic decisions based upon short- and long-term sales forecasts that are impacted not only by these long sales cycles, but also by current global economic conditions. As a result, we believe that our overall performance is best measured by fiscal year results rather than by quarterly results.

~~Management addresses~~

We address the competition and price pressure that ~~it faces~~we face in the short- and long-term by focusing on expanding the breadth, depth, ease of use and quality of the technologies, features, functionality and integrated multiphysics capabilities of our software products as compared to our competitors; investing in research and development to develop new and innovative products and increasing the capabilities of our existing products; maintaining a diverse industry footprint and focusing on customer needs, training, consulting and support; and enhancing our distribution channels. We also evaluate and execute strategic acquisitions to supplement our global engineering talent, product offerings and distribution channels.

Overview:

Overall GAAP and Non-GAAP Results

This section includes a discussion of GAAP and non-GAAP results. For reconciliations of non-GAAP results to GAAP results, see the section titled "Non-GAAP Results" herein.

The 2023 period non-GAAP results exclude the income statement effects of ~~the acquisition accounting adjustments to deferred revenue from business combinations closed prior to 2022,~~ stock-based compensation, excess payroll taxes related to stock-based compensation, amortization of acquired intangible assets, expenses related to business combinations and adjustments for the income tax effect of the excluded items. The 2022 period non-GAAP results also exclude the income statement effects of acquisition accounting adjustments to deferred revenue from business combinations closed prior to 2022. There is no adjustment in 2023 as the impact is not material.

Our GAAP and non-GAAP results for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022 reflected the following variances:


	Three Months Ended September 30, 2023				Nine Months Ended September 30, 2023
	GAAP		Non-GAAP		GAAP		Non-GAAP
Revenue	(2.9)	%	(3.1)	%	6.8	%	6.3	%
Operating income	(43.4)	%	(19.5)	%	(11.9)	%	0.6	%
Diluted earnings per share	(41.8)	%	(20.3)	%	(15.1)	%	(1.0)	%

Our results reflect a decline in revenue during the three months ended September 30, 2023 due to reductions in subscription lease license and perpetual license revenue, partially offset by an increase in maintenance revenue. Our results reflect an increase in revenue during the nine months ended September 30, 2023 due to growth in maintenance and subscription lease license revenue, partially offset by a decline in perpetual license revenue. We also experienced increased operating expenses during the three and nine months ended September 30, 2023, primarily due to increased personnel costs.

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In the context of broader U.S. foreign policy shifts, the U.S. Department of Commerce is continuing to apply controls to the export to China of certain technologies. Ansys maintains a robust global compliance program. Compliance and cooperation with the U.S. government’s evolving requirements are paramount to Ansys. Ansys has and will continue to align our internal processes to comply with U.S. export laws and regulations and any changes to those laws and regulations. During the third quarter, the U.S. Department of Commerce informed Ansys of additional restrictions on sales to certain Chinese entities, and incremental approval processes and export restrictions on the sale of certain Ansys products and services to entities performing research & development and certain controlled activities in China. The incremental export restrictions and processes took effect during the third quarter and initially included a broad export license requirement for certain China sales, which was later replaced by an enhanced Ansys screening process that was approved by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) on the final business day of the quarter. The new restrictions and processes have led to an elongated transaction cycle with certain prospects, which, in turn, is expected to lead to a delay in certain fourth quarter transactions and in some situations, could result in a loss of business. Ansys will continue to work collaboratively with the U.S. Department of Commerce to adhere to the new requirements, and we have internally aligned our business operations to adjust to these requirements. The requirements negatively impacted revenue and annual contract value (ACV) by $20.0 million in the current quarter and we expect a headwind for fiscal year 2023 of $25.0 million.

The third quarter's operating results also reflect a structural timing dynamic in the renewal base this quarter in which fewer lease contracts were up for renewal, resulting in comparatively lower up-front lease license revenue recognition. Quarterly dynamics may not be representative of the momentum in our business given the shifting mix of license types and renewal cycles that can be volatile quarter to quarter. While this timing dynamic leads to revenue volatility, it does not represent changes in customers' software usage or cash flows. This further highlights the importance of measuring our results based on our fiscal year rather than individual quarters.

This section also includes a discussion of constant currency results, which we use for financial and operational decision-making and as a means to evaluate period-to-period comparisons by excluding the effects of foreign currency fluctuations on the reported results. All constant currency results presented in this Item 2 exclude the effects of foreign currency fluctuations on the reported results. To present this information, the ~~2022~~2023 period results for entities whose functional currency is a currency other than the U.S. Dollar were converted to U.S. Dollars at rates that were in effect for the ~~2021~~2022 comparable period, rather than the actual exchange rates in effect for ~~2022.~~the 2023 period. Constant currency growth rates are calculated by adjusting the ~~2022~~2023 period reported ~~revenue and operating income~~ amounts by the ~~2022~~2023 period currency fluctuation impacts and comparing to the ~~2021~~2022 comparable period reported ~~revenue and operating income~~ amounts.

~~Our GAAP and non-GAAP results for the three and nine months ended September 30, 2022 as compared to the three and nine months ended September 30, 2021 reflected the following variances:~~

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022
GAAP Non-GAAP GAAP Non-GAAP
Revenue 7.1 % 6.3 % 9.6 % 8.5 %
Operating income 14.6 % 9.7 % 21.2 % 9.4 %
Diluted earnings per share 13.4 % 11.3 % 6.3 % 7.5 %

Our results reflect an increase in revenue during the three and nine months ended September 30, 2022 due to growth in subscription lease licenses and maintenance revenue, partially offset by a reduction in perpetual license revenue. We also experienced increased operating expenses during the three and nine months ended September 30, 2022, primarily due to increased personnel costs. The actual U.S. Dollar reported results were significantly impacted by a stronger U.S. Dollar.

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Impact of Foreign Currency

Our comparative financial results were impacted by fluctuations in the U.S. Dollar during the three and nine months ended September 30, ~~2022~~2023 as compared to the three and nine months ended September 30, ~~2021.~~2022. The impacts on our ~~GAAP and non-GAAP~~ revenue and operating income as a result of the fluctuations of the U.S. Dollar when measured against our foreign currencies based on ~~2021~~2022 period exchange rates are reflected in the table below. Amounts in brackets indicate an adverse impact from currency fluctuations.


		Three Months Ended September 30, 2022				Nine Months Ended September 30, 2022					Three Months Ended September 30, 2023				Nine Months Ended September 30, 2023
(in thousands)	(in thousands)	GAAP		Non-GAAP		GAAP		Non-GAAP		(in thousands)	GAAP		Non-GAAP		GAAP		Non-GAAP
Revenue	Revenue	$	(38,237)	$	(38,293)	$	(78,347)	$	(78,560)	Revenue	$	6,163	$	6,163	$	(11,180)	$	(11,180)
Operating income	Operating income	$	(23,146)	$	(24,003)	$	(44,986)	$	(47,151)	Operating income	$	2,505	$	2,990	$	(3,138)	$	(3,041)

In constant currency, our ~~growth was~~variances were as follows:


		Three Months Ended September 30, 2022				Nine Months Ended September 30, 2022					Three Months Ended September 30, 2023				Nine Months Ended September 30, 2023
		GAAP		Non-GAAP		GAAP		Non-GAAP			GAAP		Non-GAAP		GAAP		Non-GAAP
Revenue	Revenue	15.8	%	14.9	%	15.9	%	14.7	%	Revenue	(4.2)	%	(4.4)	%	7.6	%	7.1	%
Operating income	Operating income	36.1	%	23.2	%	37.6	%	19.0	%	Operating income	(45.4)	%	(21.0)	%	(10.9)	%	1.2	%

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Other Key Business Metric

~~Annual Contract Value (ACV)~~

ACV is ~~one of our~~a key performance ~~metrics~~metric and is useful to investors in assessing the strength and trajectory of our business. ~~Given that revenue~~ACV is ~~more volatile due to the upfront revenue recognition of perpetual licenses and multi-year subscription lease license sales, we provide ACV as~~ a supplemental metric to help evaluate the annual performance of the business. ~~Summed over~~Over the ~~long term,~~life of the contract, ACV ~~and~~equals the total value realized from a customer. ACV is not impacted by the timing of license revenue ~~are equal. However, there will be years in which~~recognition. ACV ~~growth lags revenue growth and other years in which ACV growth leads revenue growth. It~~ is used by management in financial and operational decision-making and in setting sales targets used for compensation. ACV is not a replacement for, and should be viewed independently of, GAAP revenue and deferred revenue as ACV is a performance metric and is not intended to be combined with any of these items. There is no GAAP measure comparable to ACV. ACV is composed of the following:

•the annualized value of maintenance and subscription lease contracts with start dates or anniversary dates during the period, plus

•the value of perpetual license contracts with start dates during the period, plus

•the annualized value of fixed-term services contracts with start dates or anniversary dates during the period, plus

•the value of work performed during the period on fixed-deliverable services contracts.

~~Our~~

When we refer to the anniversary dates in the definition of ACV above, we are referencing the date of the beginning of the next twelve-month period in a contractually committed multi-year contract. If a contract is three years in duration, with a start date of July 1, 2023, the anniversary dates would be July 1, 2024 and July 1, 2025. We label these anniversary dates as they are contractually committed. While this contract would be up for renewal on July 1, 2026, our ACV performance metric does not assume any contract renewals.

Example 1: For purposes of calculating ACV, a $100,000 subscription lease contract or a $100,000 maintenance contract with a term of July 1, 2023 – June 30, 2024, would each contribute $100,000 to ACV for fiscal year 2023 with no contribution to ACV for fiscal year 2024.

Example 2: For purposes of calculating ACV, a $300,000 subscription lease contract or a $300,000 maintenance contract with a term of July 1, 2023 – June 30, 2026, would each contribute $100,000 to ACV in each of fiscal years 2023, 2024 and 2025. There would be no contribution to ACV for fiscal year 2026 as each period captures the full annual value upon the anniversary date.

Example 3: A perpetual license valued at $200,000 with a contract start date of March 1, 2023 would contribute $200,000 to ACV in fiscal year 2023.

During the three and nine months ended September 30, 2023 and 2022 our ACV was as follows:


		Three Months Ended September 30,													Three Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2022				2021		Change						(in thousands, except percentages)	2023				2022		Change
		Actual		Constant Currency		Actual		Actual			Constant Currency				Actual		Constant Currency		Actual		Actual			Constant Currency
		Amount						Amount		%	Amount		%		Amount						Amount		%	Amount		%
ACV	ACV	$	409,317	$	439,341	$	365,444	$	43,873	12.0	$	73,897	20.2	ACV	$	457,549	$	451,779	$	409,317	$	48,232	11.8	$	42,462	10.4


		Nine Months Ended September 30,													Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2022				2021		Change						(in thousands, except percentages)	2023				2022		Change
		Actual		Constant Currency		Actual		Actual			Constant Currency				Actual		Constant Currency		Actual		Actual			Constant Currency
		Amount						Amount		%	Amount		%		Amount						Amount		%	Amount		%
ACV	ACV	$	1,213,735	$	1,280,355	$	1,115,365	$	98,370	8.8	$	164,990	14.8	ACV	$	1,345,305	$	1,355,529	$	1,213,735	$	131,570	10.8	$	141,794	11.7

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Our trailing twelve-month recurring ACV, converted from the functional currency to U.S. Dollars at the ~~2021~~2022 period monthly average exchange rates, was as follows:


		Twelve Months Ended September 30,				Change				Twelve Months Ended September 30,				Change
(in thousands, except percentages)	(in thousands, except percentages)	2022		2021		Amount		%	(in thousands, except percentages)	2023		2022		Amount		%
Recurring ACV at 2021 monthly average exchange rates		$	1,642,325	$	1,420,800	$	221,525	15.6
Recurring ACV at 2022 monthly average exchange rates									Recurring ACV at 2022 monthly average exchange rates	$	1,804,517	$	1,560,140	$	244,377	15.7

Recurring ACV includes both subscription lease license and maintenance ACV and excludes perpetual license and service ACV.

Industry Commentary:

High-tech, aerospace & defense, and automotive remained strong as digital transformation efforts increased the use cases and users of simulation, driving demand for solutions across our portfolio. The predictive accuracy of our multiphysics solutions has been key to our growth in high-tech as our customers seek to understand the interaction of thermal, mechanical and electronic stresses exacerbated by increasing product complexity. Customer focus on digital transformation and model-based engineering initiatives remains a driver of our growth in aerospace & defense. Automotive companies continue to reorient themselves around virtual product development and electrification, supporting our growth in the industry. The healthcare industry also had strong growth as weWe continue to see ~~companies mature~~our customers expand their digital engineering ~~efforts~~capabilities in support of digital transformation endeavors. Competitive pressures to reduce costs and shorten design cycles remain steady drivers of demand for our solutions. During the third quarter, our high-tech customers continued to invest in our simulation solutions to deliver more advanced chips, enhanced 5G and 6G technology, and next-generation automotive components. Within the aerospace and defense (A&D) industry, digital transformation remains a high-level priority for customers as they ~~expand engineering staff~~bolster defense and ~~Digital Twin/Digital Engineering initiatives~~space programs. Our value proposition also remains attractive to automotive companies as major automotive companies seek to reduce product development costs, particularly for electric vehicles. Traditional original equipment manufacturers and suppliers continued to invest in ~~areas such as surgery~~simulation to drive electrification, advanced driver assistance systems, safety, and ~~implantable devices.~~cybersecurity innovation. Additionally, electrification remains a key priority and investment driver among our industrial equipment customer base.

Geographic Trends:

The following ~~tables present~~table presents our ~~GAAP and non-GAAP~~ geographic revenue variances using actual and constant currency rates during the three and nine months ended September 30, ~~2022~~2023 as compared to the three and nine months ended September 30, ~~2021:~~2022:


		GAAP									GAAP
		Three Months Ended September 30, 2022				Nine Months Ended September 30, 2022					Three Months Ended September 30, 2023				Nine Months Ended September 30, 2023
		Actual		Constant Currency		Actual		Constant Currency			Actual		Constant Currency		Actual		Constant Currency
Americas	Americas	(4.9)	%	(4.7)	%	2.4	%	2.5	%	Americas	4.2	%	4.2	%	14.0	%	14.1	%
EMEA	EMEA	18.2	%	36.2	%	12.4	%	24.2	%	EMEA	1.2	%	(5.2)	%	6.0	%	4.8	%
Asia-Pacific	Asia-Pacific	19.7	%	36.1	%	19.7	%	31.5	%	Asia-Pacific	(16.8)	%	(15.6)	%	(3.1)	%	0.5	%
Total	Total	7.1	%	15.8	%	9.6	%	15.9	%	Total	(2.9)	%	(4.2)	%	6.8	%	7.6	%


		Non-GAAP									Non-GAAP
		Three Months Ended September 30, 2022				Nine Months Ended September 30, 2022					Three Months Ended September 30, 2023				Nine Months Ended September 30, 2023
		Actual		Constant Currency		Actual		Constant Currency			Actual		Constant Currency		Actual		Constant Currency
Americas	Americas	(6.0)	%	(5.8)	%	0.2	%	0.3	%	Americas	4.0	%	3.9	%	13.4	%	13.5	%
EMEA	EMEA	18.1	%	36.0	%	12.5	%	24.3	%	EMEA	1.0	%	(5.4)	%	5.5	%	4.2	%
Asia-Pacific	Asia-Pacific	19.4	%	35.7	%	19.6	%	31.4	%	Asia-Pacific	(17.0)	%	(15.9)	%	(3.6)	%	—	%
Total	Total	6.3	%	14.9	%	8.5	%	14.7	%	Total	(3.1)	%	(4.4)	%	6.3	%	7.1	%

The value and duration of multi-year subscription lease contracts executed during the period significantly impact the recognition of revenue. As a result, revenue may fluctuate, ~~significantly,~~ particularly on a quarterly basis, due to the timing of such contracts, relative differences in duration of long-term contracts from quarter to quarter and changes in the mix of license types sold compared to the prior year. Large swings in revenue growth rates are not necessarily indicative of customers' software usage changes or cash flows during the periods presented.

To drive growth, we continue to focus on a number of sales improvement activities across our geographic regions, including sales hiring, pipeline building, ~~customer engagement activities,~~ productivity initiatives and ~~sales hiring.~~

During the nine months ended September 30, 2022, trade restrictions limited our ability to deliver products and services to customers in Russia and Belarus and certain entities in China. For context, the combined 2021 revenue for all customers in Russia and Belarus was $15.1 million, less than 1% of our total 2021 revenue.customer engagement activities.

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On October 7, 2022, the U.S. Department of Commerce, Bureau of Industry and Security announced new restrictions targeting the sales of semiconductor products into China. We expect the impact of those restrictions to be immaterial on our business. As a reference, our semiconductor business in China over the last twelve months represented less than 1% of our consolidated revenue and China's total contribution to revenue for the same period was 4.7%.

Additional restrictions or a further deterioration in the global trade environment could have a material adverse impact on our business, results of operations or financial condition. Refer to additional details in Part II, Item 1A herein, Part I, "Item 1A. Risk Factors" in our 2021 Form 10-K and Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 for a discussion of additional business risks, including those associated with the conflict between Russia and Ukraine.

Use of Estimates:

The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to contract revenue, standalone selling prices of our products and services, allowance for doubtful accounts receivable, valuation of goodwill and other intangible assets, useful lives for depreciation and amortization, acquired deferred revenue, operating lease assets and liabilities, fair values of stock awards, deferred compensation, income taxes, uncertain tax positions, tax valuation reserves, and contingencies and litigation. We base our estimates on historical experience, market experience, estimated future cash flows and various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Forward-Looking ~~Information:~~Information

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the ~~Private~~ Securities ~~Litigation Reform~~ Act of ~~1995.~~1933 and Section 21E of the Securities Exchange Act of 1934 (the Exchange Act). Forward-looking statements are statements that provide current expectations or forecasts of future events based on certain assumptions. Forward-looking statements are subject to risks, uncertainties, and factors relating to our business which could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements.

Forward-looking statements use words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "likely," "may," "outlook," "plan," "predict," "project," "should," "target," or other words of similar meaning. Forward-looking statements include those about market opportunity, including our total addressable market. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise.

The risks associated with the following, among others, could cause actual results to differ materially from those described in any forward-looking statements:

•adverse conditions in the macroeconomic environment, including high inflation, recessionary conditions and volatility in equity and foreign exchange markets; political, economic and regulatory uncertainties in the countries and regions in which we ~~operate (including as a result of the conflict between Russia and Ukraine);~~

•~~our ability to timely recruit and retain key personnel in a highly competitive labor market for skilled personnel, including potential financial impacts of wage inflation;~~operate;

•impacts from tariffs, trade sanctions, export controls or other trade barriers, including export control restrictions and licensing requirements for exports to ~~China,~~China;

•impacts resulting from the conflict between Israel and Hamas, including impacts from changes to diplomatic relations and trade policy between the United States and other countries resulting from the conflict; impacts from changes to diplomatic relations and trade policy between the United States and Russia or the United States and other countries that may support Russia or take similar actions due to the conflict between Russia and Ukraine;

•constrained credit and liquidity due to disruptions in the global economy and financial markets, which may limit or delay availability of credit under our existing or new credit facilities, or which may limit our ability to obtain credit or financing on acceptable terms or at all;

•~~current~~our ability to timely recruit and retain key personnel in a highly competitive labor market for skilled personnel, including potential ~~future~~financial impacts of a global health crisis, natural disaster or catastrophe, including the COVID-19 pandemic and actions taken to address the pandemic by our customers, suppliers, regulatory authorities, and our business, on the global economy and our business and consolidated financial statements, and other public health and safety risks; and government actions or mandates surrounding the COVID-19 pandemic;wage inflation;

•declines in our customers’ businesses resulting in adverse changes in procurement patterns; disruptions in accounts receivable and cash flow due to customers’ liquidity challenges and commercial deterioration; uncertainties regarding

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demand for our products and services in the future and our customers’ acceptance of new products; delays or declines in anticipated sales due to reduced or altered sales and marketing interactions with customers; and potential variations in our sales forecast compared to actual sales;

•increased volatility in our revenue due to the timing, duration and value of multi-year subscription lease contracts; and our reliance on high renewal rates for annual subscription lease and maintenance contracts;

•our ability to protect our proprietary technology; cybersecurity threats or other security breaches, including in relation to breaches occurring through our products and an increased level of our activity that is occurring from remote global off-site locations; and disclosure and misuse of employee or customer data whether as a result of a cybersecurity incident or otherwise;

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•our ability and our channel partners’ ability to comply with laws and regulations in relevant jurisdictions; and the outcome of contingencies, including legal proceedings, government or regulatory investigations and tax audit cases;

•uncertainty regarding income tax estimates in the jurisdictions in which we operate; and the effect of changes in tax laws and regulations in the jurisdictions in which we operate;

•the quality of our products, including the strength of features, functionality and integrated multiphysics capabilities; our ability to develop and market new products to address the industry’s rapidly changing technology; failures or errors in our products and services; and increased pricing pressure as a result of the competitive environment in which we operate;

•investments in complementary companies, products, services and technologies; our ability to complete and successfully integrate our acquisitions and realize the financial and business benefits of the transactions; and the impact indebtedness incurred in connection with any acquisition could have on our operations;

•investments in global sales and marketing organizations and global business infrastructure; and dependence on our channel partners for the distribution of our products;

•current and potential future impacts of a global health crisis, natural disaster or catastrophe, and the actions taken to address these events by our customers, suppliers, regulatory authorities and our business, on the global economy and consolidated financial statements, and other public health and safety risks; and government actions or mandates;

•operational disruptions generally or specifically in connection with transitions to and from remote work environments; and the failure of our technological infrastructure or those of the service providers upon whom we rely including for infrastructure and cloud services;

•~~our~~ intention to repatriate previously taxed earnings ~~in excess of working capital needs~~ and to reinvest all other earnings of our non-U.S. subsidiaries;

•plans for future capital spending; the extent of corporate benefits from such spending including with respect to customer relationship management; and higher than anticipated costs for research and development or a slowdown in our research and development activities;

•~~uncertainty regarding income tax estimates in the jurisdictions in which we operate; and the effect of changes in tax laws and regulations in the jurisdictions in which we operate;~~

•our ability to execute on our strategies related to environmental, social, and governance matters, and ~~achieve related~~meet evolving and varied expectations, including as a result of evolving regulatory and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs and the availability of requisite financing, and changes in carbon markets; and

•other risks and uncertainties described in our reports filed from time to time with the SEC.

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Results of Operations

The results of operations discussed below are on a GAAP basis unless otherwise stated.

Three Months Ended September 30, ~~2022~~2023 Compared to Three Months Ended September 30, ~~2021~~2022

Revenue:


		Three Months Ended September 30,													Three Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2022				2021		Change						(in thousands, except percentages)	2023				2022		Change
		GAAP		Constant Currency		GAAP		GAAP			Constant Currency				GAAP		Constant Currency		GAAP		GAAP			Constant Currency
		Amount						Amount		%	Amount		%		Amount						Amount		%	Amount		%
Revenue:	Revenue:													Revenue:
Subscription lease licenses	Subscription lease licenses	$	136,489	$	151,322	$	120,516	$	15,973	13.3	$	30,806	25.6	Subscription lease licenses	$	103,573	$	102,316	$	136,489	$	(32,916)	(24.1)	$	(34,173)	(25.0)
Perpetual licenses	Perpetual licenses	72,417		76,560		79,878		(7,461)		(9.3)	(3,318)		(4.2)	Perpetual licenses	58,849		58,074		72,417		(13,568)		(18.7)	(14,343)		(19.8)
Software licenses	Software licenses	208,906		227,882		200,394		8,512		4.2	27,488		13.7	Software licenses	162,422		160,390		208,906		(46,484)		(22.3)	(48,516)		(23.2)
Maintenance	Maintenance	247,678		266,167		223,872		23,806		10.6	42,295		18.9	Maintenance	278,108		274,284		247,678		30,430		12.3	26,606		10.7
Service	Service	15,927		16,699		16,902		(975)		(5.8)	(203)		(1.2)	Service	18,265		17,958		15,927		2,338		14.7	2,031		12.8
Maintenance and service	Maintenance and service	263,605		282,866		240,774		22,831		9.5	42,092		17.5	Maintenance and service	296,373		292,242		263,605		32,768		12.4	28,637		10.9
Total revenue	Total revenue	$	472,511	$	510,748	$	441,168	$	31,343	7.1	$	69,580	15.8	Total revenue	$	458,795	$	452,632	$	472,511	$	(13,716)	(2.9)	$	(19,879)	(4.2)

Revenue for the quarter ended September 30, ~~2022 increased 7.1%~~2023 decreased 2.9% compared to the quarter ended September 30, ~~2021,~~2022, or ~~15.8%~~4.2% in constant currency. ~~Our revenue was favorably impacted by our continued investment~~The reported $32.9 million decrease in our global sales, support and marketing organizations, and the timing and duration of our multi-year subscription lease contracts. Annual maintenance contracts that were sold with new perpetual licenses, maintenance contracts for new perpetual licenses sold in previous quarters, maintenance renewals and the maintenance portion of subscription lease license contracts collectively contributed to maintenance revenue growth of 10.6%, or 18.9% in constant currency. Subscription lease license revenue ~~increased 13.3%, or 25.6%~~was attributable to a $35.6 million decrease in ~~constant currency, as compared to the prior-year quarter.~~value from multi-year licenses, partially offset by a $2.7 million increase in value from annual licenses. Perpetual license revenue, which is derived from new sales during the ~~quarter,~~three months ended September 30, 2023, decreased ~~9.3%~~18.7%, or ~~4.2%~~19.8% in constant currency, as compared to the ~~prior-year~~three months ended September 30, 2022. Driving the decrease in perpetual license revenue was a 17.6% decrease in average deal size and a 1.1% decrease in the volume of deals. Multi-year lease license revenue and perpetual license revenue were negatively impacted in the current quarter ~~primarily due~~by $20.0 million related to ~~customers' preference shifting to subscription lease licenses. Service~~incremental China export restrictions and enhanced approval processes. Maintenance revenue ~~decreased 5.8%~~growth of 12.3%, or ~~1.2%~~10.7% in constant currency, ~~as compared~~is correlated with previous license sales and is driven substantially by our existing customer base. The reported $30.4 million growth in maintenance revenue was attributable to ~~the prior-year quarter.~~a $28.9 million increase in maintenance associated with lease licenses and a $1.5 million increase in maintenance associated with perpetual sales.

We continue to experience ~~increased~~strong demand from our customers for contracts that often include longer-term, subscription ~~lease licenses~~leases involving a larger number of our software products. These arrangements typically involve a higher overall transaction price. The upfront recognition of license revenue related to these larger transactions can result in significant subscription lease ~~license~~ revenue volatility. Software products, across a large variety of applications and industries, are increasingly distributed in software-as-a-service, cloud and other subscription environments in which the licensing approach is time-based rather than perpetual. This preference could result in a shift from perpetual licenses to time-based licenses, such as subscription leases, over the long term.

With respect to revenue, on average for the quarter ended September 30, ~~2022,~~2023, the U.S. Dollar was ~~15.3% stronger,~~3.1% weaker, when measured against our foreign currencies, than for the quarter ended September 30, ~~2021.~~2022. The table below presents the net impacts of currency fluctuations on revenue for the quarter ended September 30, ~~2022.~~2023. Amounts in brackets indicate an adverse impact from currency fluctuations.


(in thousands)	Three Months Ended September 30, ~~2022~~2023
Euro	$	~~(15,924)~~7,315
~~Japanese Yen~~	~~(9,724)~~
South Korean Won	~~(8,633)~~765
~~British Pound~~	~~(2,320)~~
Taiwan Dollar	~~(546)~~(339)
Indian Rupee	~~(661)~~(352)
Japanese Yen	(1,757)
Other	~~(429)~~531
Total	$	~~(38,237)~~6,163

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As a percentage of revenue, our international and domestic revenues, and our direct and indirect revenues, were as follows:

Three Months Ended September 30,
2022 2021
International 57.4 % 52.6 %
Domestic 42.6 % 47.4 %
Direct 74.8 % 74.4 %
Indirect 25.2 % 25.6 %

In valuing deferred revenue on the balance sheets of our acquisitions that closed prior to 2022, we applied the fair value provisions applicable to the accounting for business combinations, resulting in a reduction of deferred revenue as compared to the historical carrying amount. As a result, our post-acquisition revenue will be less than the sum of what would have otherwise been reported by us and each acquiree absent the acquisitions. The impacts on reported revenue were $1.2 million and $4.3 million for the quarters ended September 30, 2022 and 2021, respectively. The expected impacts on reported revenue are $0.5 million and $7.3 million for the quarter and the year ending December 31, 2022, respectively.


	Three Months Ended September 30,
	2023		2022
International	55.4	%	57.4	%
Domestic	44.6	%	42.6	%

Direct	73.5	%	74.8	%
Indirect	26.5	%	25.2	%

Deferred Revenue and Backlog:

Deferred revenue consists of billings made or payments received in advance of revenue recognition from customer agreements. The deferred revenue on our condensed consolidated balance sheet does not represent the total value of annual or multi-year, noncancellable agreements. Our backlog represents deferred revenue associated with installment billings for periods beyond the current quarterly billing cycle and committed contracts with start dates beyond the end of the current period. Our deferred revenue and backlog as of September 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following:


		Balance at September 30, 2022							Balance at September 30, 2023
(in thousands)	(in thousands)	Total		Current		Long-Term		(in thousands)	Total		Current		Long-Term
Deferred revenue	Deferred revenue	$	354,718	$	334,901	$	19,817	Deferred revenue	$	370,433	$	349,668	$	20,765
Backlog	Backlog	754,170		339,241		414,929		Backlog	835,244		424,547		410,697
Total	Total	$	1,108,888	$	674,142	$	434,746	Total	$	1,205,677	$	774,215	$	431,462


		Balance at December 31, 2021							Balance at December 31, 2022
(in thousands)	(in thousands)	Total		Current		Long-Term		(in thousands)	Total		Current		Long-Term
Deferred revenue	Deferred revenue	$	412,781	$	391,528	$	21,253	Deferred revenue	$	435,758	$	413,989	$	21,769
Backlog	Backlog	845,079		373,334		471,745		Backlog	981,088		432,323		548,765
Total	Total	$	1,257,860	$	764,862	$	492,998	Total	$	1,416,846	$	846,312	$	570,534

Revenue associated with deferred revenue and backlog that will be recognized in the subsequent twelve months is classified as current in the tables above.

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Cost of Sales and Operating Expenses:

The tables below reflect our operating results on both a GAAP and constant currency basis. Amounts included in the discussions that follow each table are provided in constant currency and are inclusive of costs related to our acquisitions. The impact of foreign exchange translation is discussed separately, where material.


		Three Months Ended September 30,															Three Months Ended September 30,
		2022					2021			Change							2023						2022			Change
		GAAP			Constant Currency		GAAP			GAAP			Constant Currency				GAAP			Constant Currency			GAAP			GAAP			Constant Currency
(in thousands, except percentages)	(in thousands, except percentages)	Amount		% of Revenue	Amount	% of Revenue	Amount		% of Revenue	Amount		%	Amount		%	(in thousands, except percentages)	Amount		% of Revenue	Amount		% of Revenue	Amount		% of Revenue	Amount		%	Amount		%
Cost of sales:	Cost of sales:															Cost of sales:
Software licenses	Software licenses	$	8,425	1.8	8,540	1.7	$	8,289	1.9	$	136	1.6	$	251	3.0	Software licenses	$	8,692	1.9	$	8,564	1.9	$	8,425	1.8	$	267	3.2	$	139	1.6
Amortization	Amortization	17,281		3.7	17,762	3.5	15,189		3.4	2,092		13.8	2,573		16.9	Amortization	20,707		4.5	20,442		4.5	17,281		3.7	3,426		19.8	3,161		18.3
Maintenance and service	Maintenance and service	36,261		7.7	38,547	7.5	39,268		8.9	(3,007)		(7.7)	(721)		(1.8)	Maintenance and service	35,858		7.8	35,485		7.8	36,261		7.7	(403)		(1.1)	(776)		(2.1)
Total cost of sales	Total cost of sales	61,967		13.1	64,849	12.7	62,746		14.2	(779)		(1.2)	2,103		3.4	Total cost of sales	65,257		14.2	64,491		14.2	61,967		13.1	3,290		5.3	2,524		4.1
Gross profit	Gross profit	$	410,544	86.9	445,899	87.3	$	378,422	85.8	$	32,122	8.5	$	67,477	17.8	Gross profit	$	393,538	85.8	$	388,141	85.8	$	410,544	86.9	$	(17,006)	(4.1)	$	(22,403)	(5.5)

Amortization: The increase in amortization expense was primarily due to the amortization of newly acquired intangible assets.

Maintenance and Service: The net decrease in maintenance and service costs was ~~primarily due to the following:~~

•~~Decreased costs related to foreign exchange translation of $2.3 million due to a stronger U.S. Dollar.~~

•~~Decreased salaries~~driven by lower consulting and ~~incentive compensation of $1.1 million.~~professional fees.

The ~~improvement~~reduction in gross profit was a result of the ~~increase~~decrease in revenue and ~~the decrease~~increase in the cost of sales.

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		Three Months Ended September 30,																Three Months Ended September 30,
		2022						2021			Change							2023						2022			Change
		GAAP			Constant Currency			GAAP			GAAP			Constant Currency				GAAP			Constant Currency			GAAP			GAAP			Constant Currency
(in thousands, except percentages)	(in thousands, except percentages)	Amount		% of Revenue	Amount		% of Revenue	Amount		% of Revenue	Amount		%	Amount		%	(in thousands, except percentages)	Amount		% of Revenue	Amount		% of Revenue	Amount		% of Revenue	Amount		%	Amount		%
Operating expenses:	Operating expenses:																Operating expenses:
Selling, general and administrative	Selling, general and administrative	$	175,283	37.1	$	183,682	36.0	$	165,368	37.5	$	9,915	6.0	$	18,314	11.1	Selling, general and administrative	$	194,552	42.4	$	193,092	42.7	$	175,283	37.1	$	19,269	11.0	$	17,809	10.2
Research and development	Research and development	108,056		22.9	111,575		21.8	102,023		23.1	6,033		5.9	9,552		9.4	Research and development	123,223		26.9	122,003		27.0	108,056		22.9	15,167		14.0	13,947		12.9
Amortization	Amortization	3,821		0.8	4,112		0.8	3,403		0.8	418		12.3	709		20.8	Amortization	5,947		1.3	5,735		1.3	3,821		0.8	2,126		55.6	1,914		50.1
Total operating expenses	Total operating expenses	287,160		60.8	299,369		58.6	270,794		61.4	16,366		6.0	28,575		10.6	Total operating expenses	323,722		70.6	320,830		70.9	287,160		60.8	36,562		12.7	33,670		11.7
Operating income	Operating income	$	123,384	26.1	$	146,530	28.7	$	107,628	24.4	$	15,756	14.6	$	38,902	36.1	Operating income	$	69,816	15.2	$	67,311	14.9	$	123,384	26.1	$	(53,568)	(43.4)	$	(56,073)	(45.4)

Selling, General and Administrative: The net increase in selling, general and administrative costs was primarily due to the following:

•Increased salaries, incentive compensation and other headcount-related costs of ~~$9.3~~$11.7 million.

•~~Increased business travel of $3.8 million as in-person meetings and live attendance at trade events have continued to expand.~~

•Increased stock-based compensation of ~~$1.7~~$5.8 million.

•~~Increased consulting and professional fees of $1.3 million.~~

•~~Decreased costs related to foreign exchange translation of $8.4 million due to a stronger U.S. Dollar.~~

We anticipate that we will continue to make targeted investments in our global sales and marketing organizations and our global business infrastructure to enhance and support our revenue-generating activities.

Research and Development: The ~~net~~ increase in research and development costs was primarily due to the following:

•Increased salaries ~~incentive compensation~~ and other headcount-related costs of ~~$5.6~~$10.1 million.

•Increased stock-based compensation of ~~$1.3~~$4.3 million.

•Amortization:~~Increased business travel of $0.9 million as in-person meetings and live attendance at trade events have continued to expand.~~

•~~Decreased costs related to foreign exchange translation of $3.5 million~~ The increase in amortization expense was primarily due to ~~a stronger U.S. Dollar.~~the amortization of newly acquired intangible assets.

We have traditionally invested significant resources in research and development activities and expect to continue to make investments in expanding the ease of use and capabilities of our broad portfolio of simulation software products.

The impacts from currency fluctuations resulted in ~~decreased~~increased operating income of ~~$23.1~~$2.5 million for the quarter ended September 30, ~~2022~~2023 as compared to the quarter ended September 30, ~~2021.~~2022.

Interest Income: Interest income for the three months ended September 30, ~~2022~~2023 was ~~$1.3~~$4.9 million as compared to ~~$0.5~~$1.3 million for the three months ended September 30, ~~2021. The~~2022. Interest income increased as a result of a higher interest rate environment and the related increase in the average rate of return on invested cash ~~balances was partially offset by the lower invested cash balance, as a result of investments in acquisitions and share repurchases.~~balances.

Interest Expense: Interest expense for the quarter ended September 30, ~~2022~~2023 was ~~$6.1~~$12.3 million as compared to ~~$2.9~~$6.1 million for the quarter ended September 30, ~~2021~~2022 due to a higher interest rate environment.

Other ~~Expense,~~Income (Expense), net: Other ~~expense for~~income (expense) consisted primarily of net foreign currency gains during the ~~quarter~~three months ended September 30, ~~2022 was $0.7 million as compared to other expense of $1.3 million for the quarter ended September 30, 2021. Other expense consisted primarily of~~2023 and losses on equity investments and net foreign currency losses during the ~~third quarter of 2022 and 2021, respectively.~~three months ended September 30, 2022.

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Income Tax Provision: Our income before income tax provision, income tax provision and effective tax rates were as follows:


		Three Months Ended September 30,							Three Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2022			2021			(in thousands, except percentages)	2023			2022
Income before income tax provision	Income before income tax provision	$	117,981		$	103,898		Income before income tax provision	$	62,545		$	117,981
Income tax provision	Income tax provision	$	22,006		$	18,556		Income tax provision	$	7,043		$	22,006
Effective tax rate	Effective tax rate	18.7		%	17.9		%	Effective tax rate	11.3		%	18.7		%

The ~~increase~~decrease in the effective tax rate ~~from~~for the ~~third quarter~~three months ended September 30, 2023 was a result of ~~2021 was primarily due to~~ a decrease in U.S. federal tax expense on foreign earnings and increased benefits related to ~~tax planning in a foreign jurisdiction, offset by change in the net reserve for uncertain tax positions.~~research and development credits.

When compared to the federal and state combined statutory rate for each respective period, the effective tax rates for the quarters ended September 30, ~~2022~~2023 and ~~2021~~September 30, 2022 were favorably impacted by ~~tax benefits from~~ the foreign-derived intangible income (FDII) deduction and research and development credits.

Net Income: Our net income, diluted earnings per share and weighted average shares used in computing diluted earnings per share were as follows:


		Three Months Ended September 30,					Three Months Ended September 30,
(in thousands, except per share data)	(in thousands, except per share data)	2022		2021		(in thousands, except per share data)	2023		2022
Net income	Net income	$	95,975	$	85,342	Net income	$	55,502	$	95,975
Diluted earnings per share	Diluted earnings per share	$	1.10	$	0.97	Diluted earnings per share	$	0.64	$	1.10
Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	87,418		88,169		Weighted average shares outstanding - diluted	87,381		87,418

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Nine Months Ended September 30, ~~2022~~2023 Compared to Nine Months Ended September 30, ~~2021~~2022

Revenue:


		Nine Months Ended September 30,													Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2022				2021		Change						(in thousands, except percentages)	2023				2022		Change
		GAAP		Constant Currency		GAAP		GAAP			Constant Currency				GAAP		Constant Currency		GAAP		GAAP			Constant Currency
		Amount						Amount		%	Amount		%		Amount						Amount		%	Amount		%
Revenue:	Revenue:													Revenue:
Subscription lease licenses	Subscription lease licenses	$	362,977	$	390,455	$	315,387	$	47,590	15.1	$	75,068	23.8	Subscription lease licenses	$	386,494	$	389,366	$	362,977	$	23,517	6.5	$	26,389	7.3
Perpetual licenses	Perpetual licenses	212,355		221,273		232,433		(20,078)		(8.6)	(11,160)		(4.8)	Perpetual licenses	199,977		201,299		212,355		(12,378)		(5.8)	(11,056)		(5.2)
Software licenses	Software licenses	575,332		611,728		547,820		27,512		5.0	63,908		11.7	Software licenses	586,471		590,665		575,332		11,139		1.9	15,333		2.7
Maintenance	Maintenance	742,554		782,457		655,843		86,711		13.2	126,614		19.3	Maintenance	820,393		827,158		742,554		77,839		10.5	84,604		11.4
Service	Service	53,552		55,600		47,385		6,167		13.0	8,215		17.3	Service	57,977		58,198		53,552		4,425		8.3	4,646		8.7
Maintenance and service	Maintenance and service	796,106		838,057		703,228		92,878		13.2	134,829		19.2	Maintenance and service	878,370		885,356		796,106		82,264		10.3	89,250		11.2
Total revenue	Total revenue	$	1,371,438	$	1,449,785	$	1,251,048	$	120,390	9.6	$	198,737	15.9	Total revenue	$	1,464,841	$	1,476,021	$	1,371,438	$	93,403	6.8	$	104,583	7.6

Revenue for the nine months ended September 30, ~~2022~~2023 increased ~~9.6%~~6.8% compared to the nine months ended September 30, ~~2021,~~2022, or ~~15.9%~~7.6% in constant currency. Our revenue was favorably impacted by our continued investment in our global sales, support and marketing organizations and the timing and duration of our multi-year lease contracts. Annual maintenance contracts that were sold with new perpetual licenses, maintenance contracts for new perpetual licenses sold in previous quarters, maintenance renewals and the maintenance portion of subscription lease license contracts collectively contributed to maintenanceMaintenance revenue growth of ~~13.2%~~10.5%, or ~~19.3%~~11.4% in constant ~~currency.~~currency, is correlated with previous license sales and is driven substantially by our existing customer base. The reported $77.8 million growth in maintenance revenue was attributable to a $68.1 million increase in maintenance associated with lease licenses and a $9.7 million increase in maintenance associated with perpetual sales. Subscription lease license revenue increased ~~15.1%~~6.5%, or ~~23.8%~~7.3% in constant currency, as compared to the nine months ended September 30, ~~2021. Service~~2022, with substantially all of the increase attributable to incremental sales to our existing customers. The reported $23.5 million increase in lease license revenue ~~increased 13.0%, or 17.3%~~was attributable to a $13.7 million increase in ~~constant currency, as compared to the nine months ended September 30, 2021.~~value from annual licenses and a $9.8 million increase in value from multi-year licenses. Perpetual license revenue, which is derived from new sales during the nine months ended September 30, ~~2022,~~2023, decreased ~~8.6%~~5.8%, or ~~4.8%~~5.2% in constant currency, as compared to the nine months ended September 30, ~~2021 primarily due to customers' preference shifting to subscription lease licenses.~~2022. Driving the decrease in perpetual license revenue was a 4.6% decrease in average deal size and a 1.2% decrease in the volume of deals.

With respect to revenue, on average for the nine months ended September 30, ~~2022,~~2023, the U.S. Dollar was ~~11.8%~~1.8% stronger, when measured against our foreign currencies, than for the nine months ended September 30, ~~2021.~~2022. The table below presents the net impacts of currency fluctuations on revenue for the nine months ended September 30, ~~2022.~~2023. Amounts in brackets indicate an adverse impact from currency fluctuations.


(in thousands)	Nine Months Ended September 30, ~~2022~~2023
~~Euro~~	$	~~(32,897)~~
Japanese Yen	~~(23,618)~~$	(10,256)
Indian Rupee	(1,828)
South Korean Won	~~(14,463)~~
~~British Pound~~	~~(3,993)~~(1,500)
Taiwan Dollar	~~(1,395)~~(1,413)
~~Indian Rupee~~Euro	~~(1,322)~~5,611
Other	~~(659)~~(1,794)
Total	$	~~(78,347)~~(11,180)

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As a percentage of revenue, our international and domestic revenues, and our direct and indirect revenues, were as follows:

Nine Months Ended September 30,
2022 2021
International 57.3 % 54.4 %
Domestic 42.7 % 45.6 %
Direct 73.7 % 74.0 %
Indirect 26.3 % 26.0 %

In valuing deferred revenue on the balance sheets of our acquisitions that closed prior to 2022, we applied the fair value provisions applicable to the accounting for business combinations, resulting in a reduction of deferred revenue as compared to the historical carrying amount. As a result, our post-acquisition revenue will be less than the sum of what would have otherwise been reported by us and each acquiree absent the acquisitions. The impacts on reported revenue were $6.8 million and $19.1 million for the nine months ended September 30, 2022 and 2021, respectively.


	Nine Months Ended September 30,
	2023		2022
International	54.8	%	57.3	%
Domestic	45.2	%	42.7	%

Direct	73.7	%	73.7	%
Indirect	26.3	%	26.3	%

Cost of Sales and Operating Expenses:


		Nine Months Ended September 30,																Nine Months Ended September 30,
		2022						2021			Change							2023						2022			Change
		GAAP			Constant Currency			GAAP			GAAP			Constant Currency				GAAP			Constant Currency			GAAP			GAAP			Constant Currency
(in thousands, except percentages)	(in thousands, except percentages)	Amount		% of Revenue	Amount		% of Revenue	Amount		% of Revenue	Amount		%	Amount		%	(in thousands, except percentages)	Amount		% of Revenue	Amount		% of Revenue	Amount		% of Revenue	Amount		%	Amount		%
Cost of sales:	Cost of sales:																Cost of sales:
Software licenses	Software licenses	$	25,370	1.8	$	25,609	1.8	$	23,960	1.9	$	1,410	5.9	$	1,649	6.9	Software licenses	$	29,095	2.0	$	29,206	2.0	$	25,370	1.8	$	3,725	14.7	$	3,836	15.1
Amortization	Amortization	51,947		3.8	53,004		3.7	45,163		3.6	6,784		15.0	7,841		17.4	Amortization	60,404		4.1	60,331		4.1	51,947		3.8	8,457		16.3	8,384		16.1
Maintenance and service	Maintenance and service	111,897		8.2	117,141		8.1	119,884		9.6	(7,987)		(6.7)	(2,743)		(2.3)	Maintenance and service	111,750		7.6	113,044		7.7	111,897		8.2	(147)		(0.1)	1,147		1.0
Total cost of sales	Total cost of sales	189,214		13.8	195,754		13.5	189,007		15.1	207		0.1	6,747		3.6	Total cost of sales	201,249		13.7	202,581		13.7	189,214		13.8	12,035		6.4	13,367		7.1
Gross profit	Gross profit	$	1,182,224	86.2	$	1,254,031	86.5	$	1,062,041	84.9	$	120,183	11.3	$	191,990	18.1	Gross profit	$	1,263,592	86.3	$	1,273,440	86.3	$	1,182,224	86.2	$	81,368	6.9	$	91,216	7.7

Software Licenses: The increase in the cost of software licenses was primarily due to increased third-party royalties of ~~$1.4~~$3.8 million.

Amortization: The increase in amortization expense was primarily due to the amortization of newly acquired intangible ~~assets acquired within the last year.~~assets.

Maintenance and Service: The net decrease in maintenance and service costs was primarily due to the following:

•Decreased salaries of $1.6 million.

•Decreased costs related to foreign exchange translation of ~~$5.2~~$1.3 million due to a stronger U.S. Dollar.

•~~Decreased~~Increased stock-based compensation of ~~$2.4~~$2.5 million.

The improvement in gross profit was a result of the increase in revenue, partially offset by the increase in the cost of sales.

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		Nine Months Ended September 30,																Nine Months Ended September 30,
		2022						2021			Change							2023						2022			Change
		GAAP			Constant Currency			GAAP			GAAP			Constant Currency				GAAP			Constant Currency			GAAP			GAAP			Constant Currency
(in thousands, except percentages)	(in thousands, except percentages)	Amount		% of Revenue	Amount		% of Revenue	Amount		% of Revenue	Amount		%	Amount		%	(in thousands, except percentages)	Amount		% of Revenue	Amount		% of Revenue	Amount		% of Revenue	Amount		%	Amount		%
Operating expenses:	Operating expenses:																Operating expenses:
Selling, general and administrative	Selling, general and administrative	$	515,421	37.6	$	533,378	36.8	$	471,993	37.7	$	43,428	9.2	$	61,385	13.0	Selling, general and administrative	$	585,278	40.0	$	590,565	40.0	$	515,421	37.6	$	69,857	13.6	$	75,144	14.6
Research and development	Research and development	322,271		23.5	330,495		22.8	303,381		24.3	18,890		6.2	27,114		8.9	Research and development	368,581		25.2	370,128		25.1	322,271		23.5	46,310		14.4	47,857		14.8
Amortization	Amortization	11,975		0.9	12,615		0.9	12,244		1.0	(269)		(2.2)	371		3.0	Amortization	16,598		1.1	16,474		1.1	11,975		0.9	4,623		38.6	4,499		37.6
Total operating expenses	Total operating expenses	849,667		62.0	876,488		60.5	787,618		63.0	62,049		7.9	88,870		11.3	Total operating expenses	970,457		66.2	977,167		66.2	849,667		62.0	120,790		14.2	127,500		15.0
Operating income	Operating income	$	332,557	24.2	$	377,543	26.0	$	274,423	21.9	$	58,134	21.2	$	103,120	37.6	Operating income	$	293,135	20.0	$	296,273	20.1	$	332,557	24.2	$	(39,422)	(11.9)	$	(36,284)	(10.9)

Selling, General and Administrative: The net increase in selling, general and administrative costs was primarily due to the following:

•Increased salaries, incentive compensation and other headcount-related costs of ~~$33.4~~$41.2 million.

•Increased stock-based compensation of $21.9 million.

•Increased business travel of ~~$8.5~~$8.0 million as in-person meetings and live attendance at trade events have continued to expand.

•Increased ~~consulting and professional fees~~marketing expenses of ~~$5.0~~$3.1 million.

•Increased ~~marketing expenses of $4.5 million.~~

•~~Increased IT~~information technology (IT) maintenance and software hosting costs of ~~$3.5~~$2.4 million.

•Increased ~~bad debt expense~~facilities costs of ~~$1.7 million due to the write-off of receivables due from Russian customers as a result of sanctions imposed related to Russia's invasion of Ukraine.~~$1.9 million.

•Decreased costs related to foreign exchange translation of ~~$18.0~~$5.3 million due to a stronger U.S. Dollar.

•Decreased third-party commissions of $2.7 million.

Research and Development: The net increase in research and development costs was primarily due to the following:

•Increased salaries, incentive compensation and other headcount-related costs of ~~$17.2~~$31.6 million.

•Increased stock-based compensation of $12.0 million.

•Increased IT maintenance and software hosting costs of ~~$2.6~~$2.4 million.

•Amortization:~~Increased business travel of $2.3 million as in-person meetings and live attendance at trade events have continued to expand.~~

•~~Increased stock-based compensation of $1.4 million.~~

•~~Decreased costs related to foreign exchange translation of $8.2 million~~ The increase in amortization expense was primarily due to ~~a stronger U.S. Dollar.~~the amortization of newly acquired intangible assets.

The impacts from currency fluctuations resulted in decreased operating income of ~~$45.0~~$3.1 million for the nine months ended

September 30, ~~2022~~2023 as compared to the nine months ended September 30, ~~2021.~~2022.

Interest Income: Interest income for the nine months ended September 30, ~~2022~~2023 was ~~$2.1~~$12.4 million as compared to ~~$1.5~~$2.1 million for the nine months ended September 30, ~~2021.~~2022. The higher interest rate environment and the related increase in the average rate of return on invested cash balances was partially offset by ~~the~~a lower invested cash balance as a result of investments in acquisitions and share repurchases.

Interest Expense: Interest expense for the nine months ended September 30, ~~2022~~2023 was ~~$13.7~~$34.6 million as compared to ~~$9.6~~$13.7 million for the nine months ended September 30, ~~2021.~~2022. Interest expense increased as a result of a higher interest rate ~~environment, partially offset by lower principal balances~~environment.

Other Expense, net: Other expense for the nine months ended September 30, 2023 was $3.6 million as compared to other expense of $2.1 million for the nine months ended September 30, 2022. Other expense consisted primarily of losses on ~~our outstanding debt.~~equity investments and net foreign currency losses.

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~~Other (Expense) Income, net:~~ Other expense for the nine months ended September 30, 2022 was $2.1 million as compared to other income of $14.0 million for the nine months ended September 30, 2021. Other (expense) income consisted primarily of losses on equity investments and net foreign currency losses during the nine months ended September 30, 2022 and gains on equity investments during the nine months ended September 30, 2021.

Income Tax Provision: Our income before income tax provision, income tax provision and effective tax rates were as follows:


		Nine Months Ended September 30,							Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2022			2021			(in thousands, except percentages)	2023			2022
Income before income tax provision	Income before income tax provision	$	318,904		$	280,381		Income before income tax provision	$	267,366		$	318,904
Income tax provision	Income tax provision	$	53,141		$	28,925		Income tax provision	$	41,716		$	53,141
Effective tax rate	Effective tax rate	16.7		%	10.3		%	Effective tax rate	15.6		%	16.7		%

The ~~increase~~decrease in the effective tax rate ~~from~~for the ~~prior year~~nine months ended September 30, 2023 was primarily due to ~~decreased~~increased benefits related to research and development credits and an increase in benefits related to tax planning in a foreign jurisdiction, partially offset by a decrease in benefits related to stock-based compensation.

When compared to the federal and state combined statutory rate for each respective period, the effective tax rates for the nine months ended September 30, ~~2022~~2023 and ~~2021~~September 30, 2022 were favorably impacted by tax benefits from stock-based compensation, the FDII deduction and research and development credits, partially offset by the impact of non-deductible compensation.

Net Income: Our net income, diluted earnings per share and weighted average shares used in computing diluted earnings per share were as follows:


		Nine Months Ended September 30,					Nine Months Ended September 30,
(in thousands, except per share data)	(in thousands, except per share data)	2022		2021		(in thousands, except per share data)	2023		2022
Net income	Net income	$	265,763	$	251,456	Net income	$	225,650	$	265,763
Diluted earnings per share	Diluted earnings per share	$	3.04	$	2.86	Diluted earnings per share	$	2.58	$	3.04
Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	87,496		88,069		Weighted average shares outstanding - diluted	87,335		87,496

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Non-GAAP Results

We provide non-GAAP revenue, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating income, non-GAAP operating profit margin, non-GAAP net income and non-GAAP diluted earnings per share as supplemental measures to GAAP regarding our operational performance. These financial measures exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. A detailed explanation and a reconciliation of each non-GAAP financial measure to its most comparable GAAP financial measure are included ~~below.~~below, as applicable.


ANSYS, INC. AND SUBSIDIARIES	ANSYS, INC. AND SUBSIDIARIES															ANSYS, INC. AND SUBSIDIARIES
Reconciliations of GAAP to Non-GAAP Measures	Reconciliations of GAAP to Non-GAAP Measures															Reconciliations of GAAP to Non-GAAP Measures
(Unaudited)	(Unaudited)															(Unaudited)
		Three Months Ended															Three Months Ended
		September 30, 2022															September 30, 2023
(in thousands, except percentages and per share data)	(in thousands, except percentages and per share data)	Revenue		Gross Profit		%		Operating Income		%		Net Income		EPS - Diluted1		(in thousands, except percentages and per share data)	Revenue		Gross Profit		%		Operating Income		%		Net Income		EPS - Diluted1
Total GAAP	Total GAAP	$	472,511	$	410,544	86.9	%	$	123,384	26.1	%	$	95,975	$	1.10	Total GAAP	$	458,795	$	393,538	85.8	%	$	69,816	15.2	%	$	55,502	$	0.64
Acquisition accounting for deferred revenue		1,162		1,162		—	%	1,162		0.2	%	1,162		0.01

Stock-based compensation expense	Stock-based compensation expense	—		2,621		0.5	%	46,970		9.9	%	46,970		0.55		Stock-based compensation expense	—		3,568		0.8	%	58,061		12.7	%	58,061		0.66
Excess payroll taxes related to stock-based awards	Excess payroll taxes related to stock-based awards	—		37		—	%	260		0.1	%	260		—		Excess payroll taxes related to stock-based awards	—		3		—	%	241		0.1	%	241		—
Amortization of intangible assets from acquisitions	Amortization of intangible assets from acquisitions	—		17,281		3.7	%	21,102		4.4	%	21,102		0.24		Amortization of intangible assets from acquisitions	—		20,707		4.5	%	26,654		5.8	%	26,654		0.31
Expenses related to business combinations	Expenses related to business combinations	—		—		—	%	1,210		0.3	%	1,210		0.01		Expenses related to business combinations	—		—		—	%	1,465		0.3	%	1,465		0.02

Adjustment for income tax effect	Adjustment for income tax effect	—		—		—	%	—		—	%	(11,958)		(0.14)		Adjustment for income tax effect	—		—		—	%	—		—	%	(19,026)		(0.22)
Total non-GAAP	Total non-GAAP	$	473,673	$	431,645	91.1	%	$	194,088	41.0	%	$	154,721	$	1.77	Total non-GAAP	$	458,795	$	417,816	91.1	%	$	156,237	34.1	%	$	122,897	$	1.41

1 Diluted weighted average shares were 87,381.





	Three Months Ended
	September 30, 2022
(in thousands, except percentages and per share data)	Revenue		Gross Profit		%		Operating Income		%		Net Income		EPS - Diluted1
Total GAAP	$	472,511	$	410,544	86.9	%	$	123,384	26.1	%	$	95,975	$	1.10
Acquisition accounting for deferred revenue	1,162		1,162		—	%	1,162		0.2	%	1,162		0.01
Stock-based compensation expense	—		2,621		0.5	%	46,970		9.9	%	46,970		0.55
Excess payroll taxes related to stock-based awards	—		37		—	%	260		0.1	%	260		—
Amortization of intangible assets from acquisitions	—		17,281		3.7	%	21,102		4.4	%	21,102		0.24
Expenses related to business combinations	—		—		—	%	1,210		0.3	%	1,210		0.01


Adjustment for income tax effect	—		—		—	%	—		—	%	(11,958)		(0.14)
Total non-GAAP	$	473,673	$	431,645	91.1	%	$	194,088	41.0	%	$	154,721	$	1.77

1 Diluted weighted average shares were 87,418.

Three Months Ended
September 30, 2021
(in thousands, except percentages and per share data) Revenue Gross Profit % Operating Income % Net Income
EPS - Diluted1
Total GAAP $ 441,168 $ 378,422 85.8 % $ 107,628 24.4 % $ 85,342 $ 0.97
Acquisition accounting for deferred revenue 4,256 4,256 0.1 % 4,256 0.7 % 4,256 0.05
Stock-based compensation expense — 2,753 0.6 % 44,144 9.9 % 44,144 0.49
Excess payroll taxes related to stock-based awards — 38 — % 626 0.1 % 626 0.01
Amortization of intangible assets from acquisitions — 15,189 3.4 % 18,592 4.2 % 18,592 0.21
Expenses related to business combinations — — — % 1,716 0.4 % 1,716 0.02
Adjustment for income tax effect — — — % — — % (14,358) (0.16)
Total non-GAAP $ 445,424 $ 400,658 89.9 % $ 176,962 39.7 % $ 140,318 $ 1.59

1 ~~Diluted weighted average shares were 88,169.~~

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ANSYS, INC. AND SUBSIDIARIES
Reconciliations of GAAP to Non-GAAP Measures
(Unaudited)
Nine Months Ended
September 30, 2022
(in thousands, except percentages and per share data) Revenue Gross Profit % Operating Income % Net Income
EPS - Diluted1
Total GAAP $ 1,371,438 $ 1,182,224 86.2 % $ 332,557 24.2 % $ 265,763 $ 3.04
Acquisition accounting for deferred revenue 6,758 6,758 0.1 % 6,758 0.3 % 6,758 0.08
Stock-based compensation expense — 7,448 0.5 % 122,119 8.9 % 122,119 1.40
Excess payroll taxes related to stock-based awards — 481 — % 5,530 0.5 % 5,530 0.06
Amortization of intangible assets from acquisitions — 51,947 3.8 % 63,922 4.6 % 63,922 0.73
Expenses related to business combinations — — — % 5,376 0.4 % 5,376 0.06
Adjustment for income tax effect — — — % — — % (40,929) (0.47)
Total non-GAAP $ 1,378,196 $ 1,248,858 90.6 % $ 536,262 38.9 % $ 428,539 $ 4.90


ANSYS, INC. AND SUBSIDIARIES
Reconciliations of GAAP to Non-GAAP Measures
(Unaudited)
	Nine Months Ended
	September 30, 2023
(in thousands, except percentages and per share data)	Revenue		Gross Profit		%		Operating Income		%		Net Income		EPS - Diluted1
Total GAAP	$	1,464,841	$	1,263,592	86.3	%	$	293,135	20.0	%	$	225,650	$	2.58

Stock-based compensation expense	—		9,924		0.6	%	158,533		10.7	%	158,533		1.81
Excess payroll taxes related to stock-based awards	—		303		—	%	5,270		0.4	%	5,270		0.06
Amortization of intangible assets from acquisitions	—		60,404		4.2	%	77,002		5.3	%	77,002		0.88
Expenses related to business combinations	—		—		—	%	5,758		0.4	%	5,758		0.07

Adjustment for income tax effect	—		—		—	%	—		—	%	(48,222)		(0.55)
Total non-GAAP	$	1,464,841	$	1,334,223	91.1	%	$	539,698	36.8	%	$	423,991	$	4.85

1 Diluted weighted average shares were 87,335.





	Nine Months Ended
	September 30, 2022
(in thousands, except percentages and per share data)	Revenue		Gross Profit		%		Operating Income		%		Net Income		EPS - Diluted1
Total GAAP	$	1,371,438	$	1,182,224	86.2	%	$	332,557	24.2	%	$	265,763	$	3.04
Acquisition accounting for deferred revenue	6,758		6,758		0.1	%	6,758		0.3	%	6,758		0.08
Stock-based compensation expense	—		7,448		0.5	%	122,119		8.9	%	122,119		1.40
Excess payroll taxes related to stock-based awards	—		481		—	%	5,530		0.5	%	5,530		0.06
Amortization of intangible assets from acquisitions	—		51,947		3.8	%	63,922		4.6	%	63,922		0.73
Expenses related to business combinations	—		—		—	%	5,376		0.4	%	5,376		0.06


Adjustment for income tax effect	—		—		—	%	—		—	%	(40,929)		(0.47)
Total non-GAAP	$	1,378,196	$	1,248,858	90.6	%	$	536,262	38.9	%	$	428,539	$	4.90

1 Diluted weighted average shares were 87,496.

Nine Months Ended
September 30, 2021
(in thousands, except percentages and per share data) Revenue Gross Profit % Operating Income % Net Income
EPS - Diluted1
Total GAAP $ 1,251,048 $ 1,062,041 84.9 % $ 274,423 21.9 % $ 251,456 $ 2.86
Acquisition accounting for deferred revenue 19,075 19,075 0.2 % 19,075 1.1 % 19,075 0.22
Stock-based compensation expense — 9,834 0.8 % 122,148 9.7 % 122,148 1.38
Excess payroll taxes related to stock-based awards — 1,085 0.1 % 12,080 1.0 % 12,080 0.14
Amortization of intangible assets from acquisitions — 45,163 3.5 % 57,407 4.5 % 57,407 0.65
Expenses related to business combinations — — — % 5,007 0.4 % 5,007 0.06
Adjustment for income tax effect — — — % — — % (65,334) (0.75)
Total non-GAAP $ 1,270,123 $ 1,137,198 89.5 % $ 490,140 38.6 % $ 401,839 $ 4.56

1 ~~Diluted weighted average shares were 88,069.~~

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We use non-GAAP financial measures (a) to evaluate our historical and prospective financial performance as well as our performance relative to our competitors, (b) to set internal sales targets and spending budgets, (c) to allocate resources, (d) to measure operational profitability and the accuracy of forecasting, (e) to assess financial discipline over operational expenditures and (f) as an important factor in determining variable compensation for management and employees. In addition, many financial analysts that follow us focus on and publish both historical results and future projections based on non-GAAP financial measures. We believe that it is in the best interest of our investors to provide this information to analysts so that they accurately report the non-GAAP financial information. Moreover, investors have historically requested, and we have historically reported, these non-GAAP financial measures as a means of providing consistent and comparable information with past reports of financial results.

While we believe that these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all our competitors and may not be directly comparable to similarly titled measures of our competitors due to potential differences in the exact method of calculation. We compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures.

The adjustments to these non-GAAP financial measures, and the basis for such adjustments, are outlined below:

Acquisition accounting for deferred revenue. Historically, we have consummated acquisitions in order to support our strategic and other business objectives. Under prior accounting guidance, a fair value provision resulted in acquired deferred revenue that was often recorded on the opening balance sheet at an amount that was lower than the historical carrying value. Although this fair value provision has no impact on our business or cash flow, it adversely impacts our reported GAAP revenue in the reporting periods following an acquisition. In 2022, we adopted accounting guidance which eliminates the fair value provision that resulted in the deferred revenue adjustment on a prospective basis. In order to provide investors with financial information that facilitates comparison of both historical and future results, we ~~provide~~have historically provided non-GAAP financial measures which exclude the impact of the acquisition accounting adjustment for acquisitions prior to the adoption of the new guidance in 2022. ~~We believe that this~~The 2022 non-GAAP financial measures presented in this document include the adjustment to exclude the income statement effects of acquisition accounting adjustments to deferred revenue from business combinations closed prior to 2022. There is useful to investors because it allows investors to (a) evaluate the effectiveness of the methodology and information used by us in our financial and operational decision-making, and (b) compare our past and future reports of financial resultsno adjustment included for 2023 as the ~~revenue reduction related to acquired deferred revenue will~~impact is not ~~recur when related subscription lease licenses and software maintenance contracts are renewed in future periods.~~material.

Amortization of intangible assets from acquisitions. We incur amortization of intangible assets, included in our GAAP presentation of amortization expense, related to various acquisitions we have made. We exclude these expenses for the purpose of calculating non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating income, non-GAAP operating profit margin, non-GAAP net income and non-GAAP diluted earnings per share when we evaluate our continuing operational performance because these costs are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by us after the acquisition. Accordingly, we do not consider these expenses for purposes of evaluating our performance during the applicable time period after the acquisition, and we exclude such expenses when making decisions to allocate resources. We believe that these non-GAAP financial measures are useful to investors because they allow investors to (a) evaluate the effectiveness of the methodology and information used by us in our financial and operational decision-making, and (b) compare our past reports of financial results as we have historically reported these non-GAAP financial measures.

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Stock-based compensation expense. We incur expense related to stock-based compensation included in our GAAP presentation of cost of maintenance and service; research and development expense; and selling, general and administrative expense. This non-GAAP adjustment also includes excess payroll tax expense related to stock-based compensation. Although stock-based compensation is an expense and viewed as a form of compensation, we exclude these expenses for the purpose of calculating non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP operating income, non-GAAP operating profit margin, non-GAAP net income and non-GAAP diluted earnings per share when we evaluate our continuing operational performance. Specifically, we exclude stock-based compensation during our annual budgeting process and our quarterly and annual assessments of our performance. The annual budgeting process is the primary mechanism whereby we allocate resources to various initiatives and operational requirements. Additionally, the annual review by our board of directors during which it compares our historical business model and profitability to the planned business model and profitability for the forthcoming year excludes the impact of stock-based compensation. In evaluating the performance of our senior management and department managers, charges related to stock-based compensation are excluded from expenditure and profitability results. In fact, we record stock-based compensation expense into a stand-alone cost center for which no single operational manager is responsible or accountable. In this way, we can review, on a period-to-period basis, each manager's performance and assess financial discipline over operational expenditures without the effect of stock-based compensation. We believe that these non-GAAP financial measures are useful to investors because they allow investors to (a) evaluate our operating results and the

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effectiveness of the methodology used by us to review our operating results, and (b) review historical comparability in our financial reporting as well as comparability with competitors' operating results.

Expenses related to business combinations. We incur expenses for professional services rendered in connection with business combinations, which are included in our GAAP presentation of selling, general and administrative expense. ~~Beginning in the second quarter of 2022, we have updated this non-GAAP measure to include, in addition to professional services rendered in connection with business combinations,~~We also incur other expenses directly related to business combinations, including compensation expenses and concurrent restructuring activities, such as employee severances and other exit costs. These costs are included in our GAAP presentation of selling, general and administrative and research and development expenses. ~~The additional expenses were not material in the current or comparable period.~~ We exclude these acquisition-related expenses for the purpose of calculating non-GAAP operating income, non-GAAP operating profit margin, non-GAAP net income and non-GAAP diluted earnings per share when we evaluate our continuing operational performance, as we generally would not have otherwise incurred these expenses in the periods presented as a part of our operations. We believe that these non-GAAP financial measures are useful to investors because they allow investors to (a) evaluate our operating results and the effectiveness of the methodology used by us to review our operating results, and (b) review historical comparability in our financial reporting as well as comparability with competitors' operating results.

Non-GAAP tax provision. We utilize a normalized non-GAAP annual effective tax rate (AETR) to calculate non-GAAP measures. This methodology provides better consistency across interim reporting periods by eliminating the effects of non-recurring items and aligning the non-GAAP tax rate with our expected geographic earnings mix. To project this rate, we analyzed our historic and projected non-GAAP earnings mix by geography along with other factors such as our current tax structure, recurring tax credits and incentives, and expected tax positions. On an annual basis we ~~will~~ re-evaluate and update this rate for significant items that may materially affect our projections.

Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

We have provided a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures as listed below:


GAAP Reporting Measure			Non-GAAP Reporting Measure
Revenue			Non-GAAP Revenue
Gross Profit			Non-GAAP Gross Profit
Gross Profit Margin			Non-GAAP Gross Profit Margin
Operating Income			Non-GAAP Operating Income
Operating Profit Margin			Non-GAAP Operating Profit Margin
Net Income			Non-GAAP Net Income
Diluted Earnings Per Share			Non-GAAP Diluted Earnings Per Share

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Constant currency. In addition to the non-GAAP financial measures detailed above, we use constant currency results for financial and operational decision-making and as a means to evaluate period-to-period comparisons by excluding the effects of foreign currency fluctuations on the reported results. To present this information, the ~~2022~~2023 results for entities whose functional currency is a currency other than the U.S. Dollar were converted to U.S. Dollars at rates that were in effect for the ~~2021~~2022 comparable period, rather than the actual exchange rates in effect for ~~2022.~~the 2023 period. Constant currency growth rates are calculated by adjusting the ~~2022~~2023 reported amounts by the ~~2022~~2023 currency fluctuation impacts and comparing the adjusted amounts to the ~~2021~~2022 comparable period reported amounts. We believe that these non-GAAP financial measures are useful to investors because they allow investors to (a) evaluate the effectiveness of the methodology and information used by us in our financial and operational decision-making, and (b) compare our reported results to our past reports of financial results without the effects of foreign currency fluctuations.

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Liquidity and Capital Resources


(in thousands)		September 30, 2022		December 31, 2021		Change
													Change
(in thousands, except percentages)								(in thousands, except percentages)	September 30, 2023		December 31, 2022		Amount		%
Cash, cash equivalents and short-term investments	Cash, cash equivalents and short-term investments	$	632,703	$	668,028	$	(35,325)	Cash, cash equivalents and short-term investments	$	639,513	$	614,574	$	24,939	4.1
Working capital	Working capital	$	840,186	$	860,082	$	(19,896)	Working capital	$	908,068	$	869,286	$	38,782	4.5

Cash, Cash Equivalents and Short-Term Investments

Cash and cash equivalents consist primarily of highly liquid investments such as money market funds and deposits held at major banks. Short-term investments consist primarily of deposits held by certain of our foreign subsidiaries with original maturities of three months to one ~~year~~.year. The following table presents our foreign and domestic holdings of cash, cash equivalents and short-term investments as of September 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


(in thousands, except percentages)	(in thousands, except percentages)	September 30, 2022		% of Total	December 31, 2021		% of Total	(in thousands, except percentages)	September 30, 2023		% of Total	December 31, 2022		% of Total
Domestic	Domestic	$	359,619	56.8	$	365,390	54.7	Domestic	$	326,877	51.1	$	326,784	53.2
Foreign	Foreign	273,084		43.2	302,638		45.3	Foreign	312,636		48.9	287,790		46.8
Total	Total	$	632,703		$	668,028		Total	$	639,513		$	614,574

In general, it is our intention to permanently reinvest all earnings in excess of previously taxed amounts. Substantially all of the pre-2018 earnings of our non-U.S. subsidiaries were taxed through the transition tax and post-2018 current earnings are taxed as part of global intangible low-taxed income tax expense. These taxes increase our previously taxed earnings and allow for the repatriation of the majority of our foreign earnings without any residual U.S. federal tax. Unrecognized provisions for taxes on indefinitely reinvested undistributed earnings of foreign subsidiaries would not be significant.

The amount of cash, cash equivalents and short-term investments held by foreign subsidiaries is subject to translation adjustments caused by changes in foreign currency exchange rates as of the end of each respective reporting period, the offset to which is recorded in accumulated other comprehensive loss on our condensed consolidated balance sheet.

Cash Flows from Operating Activities


		Nine Months Ended September 30,							Nine Months Ended September 30,				Change
(in thousands)		2022		2021		Change
(in thousands, except percentages)								(in thousands, except percentages)	2023		2022		Amount		%
Net cash provided by operating activities	Net cash provided by operating activities	$	457,031	$	447,829	$	9,202	Net cash provided by operating activities	$	484,400	$	457,031	$	27,369	6.0

Net cash provided by operating activities increased during the nine months ended September 30, ~~2022~~2023 compared to the nine months ended September 30, ~~2021 due to increased net cash flows from operating assets and liabilities of $10.0 million, partially offset by decreased net income (net of non-cash operating adjustments) of $0.8 million.~~2022. The ~~growth~~increase in net cash provided by operating activities was a result of increased customer receipts driven primarily by ACV growth, ~~and lower~~partially offset by increased payments related to higher operating expenses, income tax payments, ~~partially offset by additional cash outflows related~~and interest payments due to ~~increased operating expenses~~the higher interest rate environment as compared to the nine months ended September 30, ~~2021.~~2022.

Cash Flows from Investing Activities


		Nine Months Ended September 30,							Nine Months Ended September 30,				Change
(in thousands)		2022		2021		Change
(in thousands, except percentages)								(in thousands, except percentages)	2023		2022		Amount		%
Net cash used in investing activities	Net cash used in investing activities	$	(258,622)	$	(123,656)	$	(134,966)	Net cash used in investing activities	$	(220,166)	$	(258,622)	$	38,456	14.9

Net cash used in investing activities ~~increased~~decreased by ~~$135.0~~$38.5 million during the nine months ended September 30, ~~2022~~2023 compared to the nine months ended September 30, ~~2021~~2022 due to ~~increased~~decreased acquisition-related net cash outlays of ~~$137.5~~$44.8 million. We currently plan capital spending of ~~$20.0~~$25.0 million to ~~$25.0~~$30.0 million during fiscal year ~~2022~~2023 as compared to the ~~$23.0~~$24.4 million that was spent in fiscal year ~~2021.~~2022. The level of spending will depend on various factors, including the growth of the business and general economic conditions.

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Cash Flows from Financing Activities


		Nine Months Ended September 30,							Nine Months Ended September 30,				Change
(in thousands)		2022		2021		Change
(in thousands, except percentages)								(in thousands, except percentages)	2023		2022		Amount		%
Net cash used in financing activities	Net cash used in financing activities	$	(197,978)	$	(146,865)	$	(51,113)	Net cash used in financing activities	$	(232,600)	$	(197,978)	$	(34,622)	(17.5)

Net cash used in financing activities increased during the nine months ended September 30, ~~2022~~2023 compared to the nine months ended September 30, ~~2021~~2022 due to increased stock repurchases of ~~$119.6 million, partially offset by decreased principal payments on long-term debt of $45.0 million and decreased restricted stock withholding taxes paid in lieu of issued shares of $30.1~~$40.9 million.

Other Cash Flow Information

On June 30, 2022, we entered into a credit agreement (as amended, the 2022 Credit ~~Agreement~~Agreement) with PNC Bank, National Association as administrative agent, swing line lender, and an L/C issuer, the lenders party thereto, and the other L/C issuers party thereto. The 2022 Credit Agreement refinanced our previous credit agreements in their entirety. The 2022 Credit Agreement provides for a $755.0 million unsecured term loan facility and a $500.0 million unsecured revolving loan facility, which includes a $50.0 million sublimit for the issuance of letters of credit. Terms used in this description of the 2022 Credit Agreement with initial capital letters that are not otherwise defined herein are as defined in the 2022 Credit Agreement.

~~The term loan facility was advanced by the lenders thereunder to refinance and replace the Prior Credit Agreements.~~

As of September 30, ~~2022,~~2023, the carrying value of our term loan was ~~$753.5~~$753.8 million, with no principal payments due in the next twelve months. Borrowings under the term loan and revolving loan facilities accrue interest at a rate that is based on the Term SOFR plus an applicable margin or at the base rate plus an applicable margin, at our election. The base rate is the highest of (i) the Overnight Bank Funding Rate, plus 0.500%, (ii) the PNC Bank, National Association prime rate, and (iii) Daily Simple SOFR plus an adjustment for SOFR plus 1.00%. The applicable margin for the borrowings is a percentage per annum based on the lower of (1) a pricing level determined by our then-current consolidated net leverage ratio and (2) a pricing level determined by our public debt rating (if available).

The rate in effect for the fourth quarter under the 2022 Credit Agreement is ~~4.53%~~6.37%.

We previously entered into operating lease commitments, primarily for our domestic and international offices. The commitments related to these operating leases is ~~$145.5~~$136.6 million, of which ~~$23.6~~$26.2 million is due in the next twelve months.

~~In November 2022, we had a $70.0 million cash outflow (net of cash acquired) associated with a strategic acquisition.~~

We believe that existing cash and cash equivalent balances, together with cash generated from operations and access to our $500.0 million revolving loan facility, will be sufficient to meet our working capital and capital expenditure requirements through the next twelve months. Our cash requirements in the future may also be financed through additional equity or debt financings. However, future disruptions in the capital markets could make financing more challenging, and there can be no assurance that such financing can be obtained on commercially reasonable terms, or at all.

Under our stock repurchase program, we repurchased shares as follows:


		Nine Months Ended					Nine Months Ended
(in thousands, except per share data)	(in thousands, except per share data)	September 30, 2022		September 30, 2021		(in thousands, except per share data)	September 30, 2023		September 30, 2022
Number of shares repurchased	Number of shares repurchased	500		97		Number of shares repurchased	650		500
Average price paid per share	Average price paid per share	$	311.14	$	371.83	Average price paid per share	$	302.34	$	311.14
Total cost	Total cost	$	155,571	$	35,993	Total cost	$	196,494	$	155,571

~~All of the shares repurchased during the nine months ended September 30, 2022 were repurchased in the first quarter.~~ As of September 30, ~~2022, 2.0~~2023, 1.1 million shares remained available for repurchase under the program. Average price paid per share excludes excise tax. As of January 1, 2023, our share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act. Any excise tax incurred is recognized and reflected as part of the cost basis of the shares acquired in the Condensed Consolidated Statements of Stockholders' Equity.

The authorized repurchase program does not have an expiration date, and the pace of the repurchase activity will depend on factors such as working capital needs, cash requirements for acquisitions, our stock price, and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases including pursuant to a Rule 10b5-1 plan.

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We continue to generate positive cash flows from operating activities and believe that the best uses of our excess cash are to invest in the business; acquire or make investments in complementary companies, products, services and technologies; and make payments on our outstanding debt balances. Any future acquisitions may be funded by available cash and investments, cash generated from operations, debt financing or the issuance of additional securities. Additionally, we have in the past, and expect in the future, to repurchase stock in order to both offset dilution and return capital, in excess of our requirements, to stockholders with the goal of increasing stockholder value.

We believe that existing cash and cash equivalent balances, together with cash generated from operations and access to our $500.0 million revolving loan facility, will be sufficient to meet our working capital and capital expenditure requirements and contractual obligations through at least the next twelve months and the foreseeable future thereafter. Our cash requirements in the future may also be financed through additional equity or debt financings. However, future disruptions in the capital markets could make financing more challenging, and there can be no assurance that such financing can be obtained on commercially reasonable terms, or at all.

Contractual and Other Obligations

There were no material changes to our significant contractual and other obligations during the nine months ended September 30, ~~2022~~2023 as compared to those previously reported within "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our ~~2021~~2022 Form 10-K.

Critical Accounting Estimates

No significant changes have occurred to our critical accounting estimates as previously reported within "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our ~~2021~~2022 Form 10-K.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Risk. As we operate in international regions, a portion of our revenue, expenses, cash, accounts receivable and payment obligations are denominated in foreign currencies. As a result, changes in currency exchange rates will affect our financial position, results of operations and cash flows. We seek to reduce our currency exchange transaction risks primarily through our normal operating and treasury activities, including the use of derivative instruments.

With respect to revenue, on average for the quarter ended September 30, ~~2022,~~2023, the U.S. Dollar was ~~15.3% stronger,~~3.1% weaker, when measured against our foreign currencies, than for the quarter ended September 30, ~~2021.~~2022. With respect to revenue, on average for the nine months ended September 30, ~~2022,~~2023, the U.S. Dollar was ~~11.8%~~1.8% stronger, when measured against our foreign currencies, than for the nine months ended September 30, ~~2021.~~2022. The table below presents the net impacts of currency fluctuations on revenue for the three and nine months ended September 30, ~~2022.~~2023. Amounts in brackets indicate a net adverse impact from currency fluctuations.


(in thousands)	(in thousands)	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022		(in thousands)	Three Months Ended September 30, 2023		Nine Months Ended September 30, 2023
Japanese Yen						Japanese Yen	$	(1,757)	$	(10,256)
Indian Rupee						Indian Rupee	(352)		(1,828)
South Korean Won						South Korean Won	765		(1,500)
Taiwan Dollar						Taiwan Dollar	(339)		(1,413)
Euro	Euro	$	(15,924)	$	(32,897)	Euro	7,315		5,611
Japanese Yen		(9,724)		(23,618)
South Korean Won		(8,633)		(14,463)
British Pound		(2,320)		(3,993)
Taiwan Dollar		(546)		(1,395)
Indian Rupee		(661)		(1,322)
Other	Other	(429)		(659)		Other	531		(1,794)
Total	Total	$	(38,237)	$	(78,347)	Total	$	6,163	$	(11,180)

The impacts from currency fluctuations resulted in increased operating income of $2.5 million and decreased operating income of ~~$23.1 million and $45.0~~$3.1 million for the three and nine months ended September 30, ~~2022,~~2023, respectively, as compared to the three and nine months ended September 30, ~~2021.~~2022, respectively.

A hypothetical 10% strengthening in the U.S. Dollar against other currencies would have decreased our revenue by ~~$25.0~~$19.8 million and ~~$66.7~~$63.6 million for the three and nine months ended September 30, ~~2022,~~2023, respectively, and decreased our operating income by ~~$13.1~~$7.4 million and ~~$29.5~~$22.6 million for the three and nine months ended September 30, ~~2022,~~2023, respectively.

The most meaningful currency impacts on revenue and operating income are typically attributable to U.S. Dollar exchange rate changes against the Euro and Japanese Yen. Historical exchange rates for these currency pairs are reflected in the charts below:


		Period-End Exchange Rates			Period-End Exchange Rates
As of	As of	EUR/USD	USD/JPY	As of		EUR/USD	USD/JPY
September 30, 2023				September 30, 2023		1.06	149
December 31, 2022				December 31, 2022		1.07	131
September 30, 2022	September 30, 2022	0.98	144.78	September 30, 2022		0.98	145
December 31, 2021		1.14	115.11
September 30, 2021		1.16	111.30

Average Exchange Rates

Three Months Ended

EUR/USD

USD/JPY

Three Months Ended

EUR/USD

USD/JPY

September 30, 2023

1.09

145

September 30, 2022

1.01

138.32

September 30, 2022

1.01

138

September 30, 2021

1.18

110.09

Average Exchange Rates

Nine Months Ended

EUR/USD

USD/JPY

Nine Months Ended

EUR/USD

USD/JPY

September 30, 2023

1.08

138

September 30, 2022

1.06

127.42

September 30, 2022

1.06

127

September 30, 2021

1.20

108.45

Interest Rate Risk. Changes in the overall level of interest rates affect the interest income that is generated from our cash, cash equivalents and short-term investments and the interest expense that is generated from our outstanding borrowings. For the three and nine months ended September 30, ~~2022,~~2023, interest income was ~~$1.3~~$4.9 million and ~~$2.1~~$12.4 million, respectively, and interest expense was ~~$6.1~~$12.3 million and ~~$13.7~~$34.6 million, respectively.

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of three months to one ~~year~~.year. A hypothetical 100 basis point change in interest rates on these holdings would have an immaterial impact on our financial results.

Our outstanding term loan borrowings of $755.0 million as of September 30, ~~2022~~2023 accrue interest at a rate that is based on the Term SOFR plus an applicable margin or at the base rate plus an applicable margin, at our election. The base rate is the highest of (i) the Overnight Bank Funding Rate, plus 0.500%, (ii) the PNC Bank, National Association prime rate, and (iii) Daily Simple SOFR plus an adjustment for SOFR plus 1.00%. The applicable margin for the borrowings is a percentage per annum based on the lower of (1) a pricing level determined by our then-current consolidated net leverage ratio and (2) a pricing level determined by our public debt rating (if available).

Because interest rates applicable to the outstanding borrowings are variable, we are exposed to interest rate risk from changes in the underlying index rates, which affects our interest expense. A hypothetical increase of 100 basis points in interest rates would result in an increase in interest expense and a corresponding decrease in cash flows of ~~$7.6~~$7.7 million over the next twelve months, based on outstanding borrowings at September 30, ~~2022.~~2023.

No other material change has occurred in our market risk subsequent to December 31, ~~2021.~~2022.

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Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As required by Rules 13a-15 and 15d-15 of the Exchange Act, we have evaluated, with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures are effective, as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act.

We have not yet included our 2022 acquisitions in our assessment of the effectiveness of our internal control over financial reporting. Accordingly, pursuant to the SEC's general guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our disclosure controls and procedures does not include our 2022 acquisitions. As of and for the three and nine months ended September 30, 2022, our 2022 acquisitions represented 4.0% of our consolidated assets and accounted for less than 1% of our consolidated revenues.

We believe, based on our knowledge, that the financial statements and other financial information included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in this report. We are committed to both a sound internal control environment and to good corporate governance.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

From time to time, we review the disclosure controls and procedures, and may periodically make changes to enhance their effectiveness and to ensure that our systems evolve with our business.

Changes in Internal Control. There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, ~~2022~~2023 that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.Legal Proceedings

We are subject to various claims, investigations and legal and regulatory proceedings that arise in the ordinary course of business, including, but not limited to, commercial disputes, labor and employment matters, tax audits, alleged infringement of third parties' intellectual property rights and other matters. Use or distribution of our products could generate product liability, regulatory infraction, or claims by our customers, end users, channel partners, government entities or third parties. Sales and marketing activities that impact processing of personal data, as well as measures taken to ~~ensure~~promote license compliance against pirated or unauthorized usage of our commercial ~~product,~~products, may also result in claims by customers and individual employees of customers or by non-customers using pirated versions of our products. Each of these matters is subject to various uncertainties, and it is possible that an unfavorable resolution of one or more of these matters could have a significant adverse effect on our condensed consolidated financial statements as well as cause reputational damage. In our opinion, the resolution of pending matters is not expected to have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors

We face a number of risks that could materially and adversely affect our business, prospects, financial ~~position,~~condition, results of operations and cash flows. A discussion of our risk factors can be found in Part I, Item 1A "Risk Factors" in our ~~2021~~2022 Form ~~10-K and Part II, Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022.~~10-K. The risk factor set forth below includes additional information relating to trade restrictions and should be read together with the risk factors disclosed in our ~~2021~~2022 Form 10-K ~~and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022.~~.

We are subject to trade restrictions that ~~could~~have impacted, and may continue to impact, our ability to sell to customers and could result in ~~liability~~liabilities for violations.

Due to the global nature of our business, we are subject to domestic and international trade protection laws, policies, sanctions and other regulatory requirements affecting trade and investment. For example, we are subject to import and export restrictions and regulations that prohibit the shipment or provision of certain products and services to certain countries, regions and persons targeted by the U.S. and certain end uses identified by the U.S., including the Export Administration Regulations administered by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), economic and trade sanctions administered by the U.S. ~~Treasury Department's~~Department of Treasury's Office of Foreign Assets Control (OFAC), and International Traffic in Arms Regulations (ITAR) administered by the Department of State’s Directorate of Defense Trade Controls (DDTC).

BIS continues to expand its export control restrictions, ~~and~~including with respect to the export to China of certain technologies, impose new export licensing ~~requirements. The~~requirements, and require enhanced denied party screening processes. These additional restrictions have limited and could continue to limit our ability to sell and deliver products and services to certain customers, including to entities performing research and development and certain controlled activities in China. Export control restrictions have led to, and, in the future may continue to lead to, elongated transaction cycles with certain customers. In addition, export control restrictions have resulted, and may continue to result, in reduced sales and/or delays in our ability to deliver products and services to certain prospects, adversely affecting our business and consolidated financial statements. In certain cases, when an export license may be required to deliver products and services to certain customers, the receipt of licenses to export to certain countries, including China, is not guaranteed and, in the absence of a license ~~these export control restrictions could limit~~or applicable license exception, our ability to sell and deliver products and services to ~~our~~certain customers ~~and our ability to sell products and services to customers in the future.~~may be negatively impacted. Additionally, BIS continues to add more companies, including existing customers, to its Entity ~~List and Unverified~~ List, and OFAC continues to increase the number of companies subject to its sanctions, which continues to limit the companies with which we can do business. ~~In addition, restrictions implemented by OFAC limit our ability to sell to, or transact with, restricted individuals, entities, or countries.~~

Adding companies as restricted parties and subjecting companies to heightened export control restrictions may additionally encourage those companies to seek substitute products from competitors whose products are not subject to these restrictions or to develop their own products. ~~We cannot predict whether or when any changes will be made that eliminate or decrease these limitations on our ability to sell products and provide services to these customers.~~

Additionally, ~~other~~ existing and prospective customers have been and may continue to be added as restricted parties and/or be subjected to trade restrictions and additional end uses, products or services have been and may continue to be identified for further restrictions. Such actions have resulted in, ~~the future,~~ and ~~such actions~~ may continue to result in, ~~other indirect impacts that cannot be quantified, including the imposition~~increases to our cost of ~~additional~~sales and time to market. Additional trade restrictions on our business by the U.S., China or other ~~countries.~~countries may also result in other indirect impacts that cannot be quantified. Restrictions on our ability to sell and ship to customers could have a significant adverse effect on our business and consolidated financial statements.

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Our products could also be delivered to restricted parties by third parties, including our channel partners. We take measures to confirm that our channel partners comply with all applicable trade ~~restrictions; however,~~restrictions, but any failure by channel partners to comply with such restrictions could have negative consequences for us.

Violators of trade restrictions or restricted end uses may be subject to significant penalties, which may include considerable monetary fines, criminal proceedings against them and their officers and employees, a denial of export privileges and suspension or debarment from selling products or services to the federal government. Any such penalties could have a significant adverse effect on our business and consolidated financial statements. In addition, the political and media scrutiny surrounding any governmental investigation could cause significant expense and reputational harm and distract senior executives from managing normal day-to-day operations.

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Item 2.Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities

None.

Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

~~None.~~Trading Arrangements

None of the directors or "officers" of ANSYS, Inc. (as defined in Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended) adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K, during the fiscal quarter ended September 30, 2023.

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Item 6.Exhibits


Exhibit No.						Exhibit

10.1*						Amendment No. 1 to Credit Agreement, dated as of September 29, 2023, among ANSYS, Inc., as Borrower, PNC Bank, National Association, as Administrative Agent, and the lenders party thereto.
31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH						Inline XBRL Taxonomy Extension Schema

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*						~~Indicates management contract or compensatory plan, contract or arrangement.~~

*Certain schedules, exhibits, and appendices have been omitted pursuant to Item 601(a)(5) of Regulation S-K.The Company hereby undertakes to furnish copies of any omitted schedule, exhibit, or appendix to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		ANSYS, Inc.

Date:	November ~~2, 2022~~1, 2023	By:	/s/ Ajei S. Gopal
			Ajei S. Gopal
			President and Chief Executive Officer
			(Principal Executive Officer)

Date:	November ~~2, 2022~~1, 2023	By:	/s/ Nicole Anasenes
			Nicole Anasenes
			Chief Financial Officer and Senior Vice President, Finance
			(Principal Financial Officer and Principal Accounting Officer)

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