ANSS - Earnings call transcript Q3 2017

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to ANSYS' Third Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. Please note, this event is being recorded. With us today are Ajei Gopal, Chief Executive Officer; Maria Shields, Chief Financial Officer; and Annette Arribas, Senior Director, Global Investor Relations. At this time, I would like to turn the call over to Ms. remarks. opening some for Arribas

Annette N. Arribas

Good morning, everyone.

all otherwise and noted, Our results rates to and constant everyone underlying we relative have of our filings available Unless website public to any at growth may outlook, course prepared financial and all contain document I that XXXX currency. SEC, our our QX third year-to-date update, related which posted earnings this the that uncertainties are with and on also factors financial assumptions. the and affect to data They discussed Relations business release our been in length revenue Investor of the remarks our future as fiscal provided key in key as be and the will year important website. homepage via supporting are all the the this addition would of our that quarter remind and like morning. information during of risks call, highlight in results well

forum. are Statements view of ANSYS on reported unless of undertakes our Additionally, indication update considered such business do an to could are any performance the and uncertainties as not information, of we there in the future. be business company's in results risks call impact our should today's and public the based today, future upon that made a as no obligation so

reconciliation release call the to for X-K. and would measures to CEO, call are now are the remarks. non-GAAP included like Gopal, that of earnings materials of related the and various During Form to turn financial of full I opening financial be Ajei and comparable this over our the discussion reference Ajei? to his a GAAP in excluded this non-GAAP remarks, A course in prepared we'll measures. making items morning's

Ajei S. Gopal

morning, and everyone. Annette, you, good Thank

center helps costs, engineering simulation decrease product simulation, is lower at of we lifecycle complexity. Simulation ideation, During innovation our Simulation, operated. products. We and entire and some actual manufacturing, platform, vision the I embedded do, reduce design, discussed in while our to engineering and manufactured of embedded quality from the times and and designed, in electronics mid-September, our our are multi-physics of transformation, solvers, scalability comprehensiveness described which to changing the the the solutions, and Pervasive our core our nature in digital to depth of customers. software the cycle in customers recent team strengths, our which a relationships way of We technical are accuracy of effectiveness discussed how what and of power and technologies in our Day risk, our and integrated products Investor the and managing profound drive the increase is my our portfolio, of the with operations

by of these and, helped customers a QX. will in All strengths are you contribute highly to as our successes in valued our moment, hear

the to access will market us growing our solutions. our existing with deepen a us give capabilities. digital will We also vision discuss of Pervasive including Internet in product our investment will twins to to broaden customers, to large opportunity, Things, broaden and manufacturing, will continue allow and relationships expand believe key propel Simulation additive We our adjacencies, which ANSYS continue core adoption and and the our and of of broad

growth double-digit growth strong succeeding. customers, outstanding by we quarter our point that growth, very that demand and of our with customer Driven exceeded revenue guidance execution both for this with for is products quarter the of end year-over-year excellent which excellent another QX and revenue strategy earnings. and quarter was an delivered strong. bookings high is also illustrates XX% large deepening relationships performance Our an is proof

months I'd like nine win strengths the we few how the are fact, maintaining revenue since in the In have and for a mentioned of months margins. year, helping quarter is first nine to grown minutes all in strongest digits industry-leading third I the first spend the while growth of in Pervasive the XXXX. This this earlier market. and Simulation us illustrating our the core strategy double

software of their our ANSYS used product of process physics, closed have ANSYS words, of physics tight who to using U.S. in in high deal allows They you its customers. nuclear strategic to of customer of in ANSYS' technology advanced in also fluids, as the use in scalability system detailed with The longstanding optimization management, more Design. to coupled giving Propulsion through Our of nature engineers. and and use it to to existing its ANSYS research ANSYS Bechtel the across structures, tools key Bechtel of Navy. new full-suite other of propulsion is increased collaboration will of verification. Fluid computing the Cummins to supplier cycle, in small Led Analysis capabilities. will as worldwide simulation innovate design Pervasive This our hands practice the multi-physics Cummins. propulsion acting drive relationships as has products bring Cummins, may robust accuracy adjacencies, technology to for automotive us be investment and from broad simulation and significantly extend applications. The agreement, provide In solutions the and leading strategy, designers on expand longtime in Dynamics our embedded initiatives performance Marine most around QX, Department simulation seven-figure the Energy, further them of In a deal with signed Simulation non-analysts, systems This The customer, of we ANSYS ANSYS design will development every development from to Corporation, in knowledge of part of a and agreement. access ideation, not used a ANSYS the QX, use with multi-year a solutions demanding technology with to calls functional use of embraced enterprise historically the through U.S. contractor, product software remember, ANSYS' a simulation, adoption well who behalf breadth systems products products. company and they access of portion agreement as Also will pervasively expand product help engineering will safety. emerging more and a electromagnetics, put a moved a new electrification Cummins' solutions. area its its

world our the ANSYS successes workflow, reality, closed of early other compliant to This thermal completeness Asia than SCADE a development global the power them jet products. their considerations the be expand semiconductor to Solutions our digital systems, using the to in electrical Honeywell is a of And customer to adding was Multiphysics in networking next-generation semiconductor high-performance in millions addressing create largest cycle, By display in increased and to ANSYS, that board and SCADE embedded our as also signal long-term and next at faster will business solutions an use hardware market the predicting QX. landscape. data Honeywell's ANSYS' generation the remain their multi-year adopting and solutions critical Multiphysics are complex of of both deal strength coupled SCADE allow integrity, their in platform dollars. strategic will reliability technology thermal, next QX, This full ANSYS' challenges. and solution, North ARINC Internet integrity platform. performance portfolio A generation finally of integrity virtual in timing media decision their a seven-figure leader and electronics reliability design support XXX key design Honeywell, design upfront ANSYS many in four in and for able of FX display and model-based American companies. increasingly interaction with in cloud cockpit for management Path well analyze commitment quarter, processes. industries. share ANSYS' next optimize savings new develop solution, and times provider center, the current we the social antenna and Things, simulation networking issues deal to generation potential to and between includes enhance designs. a to analysis a one to of software flight cockpit leader The solution for solutions applications adopted invested computing power the RedHawk-SC the electronics regional cooling will of our as has

XX% months contract in revenue a QX in the to growth reflect QX, of revenue and three-year deal shift regions. perpetual Now, strong lease with and excess above with quarter QX the that XX% XX%, the the Taiwan team first include each of that revenue. let growth to North perpetual XX% sales company, growth, XX% also delighted of growth lease a in pleased maintenance growth largest and of XX%. third major the and am our performance our growth a revenue history signed XX% I of of for results America revenue deliver the Shifting lease of both performance, am in China America of $XX North over overall and to of million. continue me Asia-Pacific, in above growth revenue of the our year. the three I nine

making ongoing Our few have resulting Asia-Pacific over revenue that with been the the and indirect growth business strength past investments focus demonstrate from continues years. to double-digit we the

QX. in quarter was revenue delivering the in region growth slowest of X% Europe, growth Our

see XX% a UK XX% continue for The albeit to in a the in compare. up off year-to-date. row, significant and strength France improvement in revenue showed growth We in quarter third quarter, the the year-over-year quarter weak XX% with

strong, our business Germany business has be continues in Although Germany the our of lagged. in channels revenue to performance direct

as for Investor on As plan you previous a I at with shared Day, in we discussed we recovery place have and calls Europe. have

making rebuilding performance set progress XXXX in efforts are for will that confident stage good We and I our the in beyond. improved am Europe and

Europe. impact all and disruptive investment increased America innovation autonomous industries, around and across continue resurgence The aerospace to in and simulation ANSYS electronics companies leading costs and defense, performance for automotive, to remains steady geographies. disruptive sales our to technologies continue as In Space be X.X at North continued engines. of such continue simulation. especially drivers industrial of The across and of R&D systems defense defense, strong drive automotive, environmental we sector Looking QX, and initiatives to equipment through use as sector aerospace in electric and the the in in growth aircraft see space reducing in In are the semiconductors, vehicles.

continues Although, in oil weak, as energy oil its we and sector investment remains whole from the particularly America. customer increased QX, the recovery North in saw steady and crash a gas price

new event incorporated a which product engineers. Partner into simulation, users recognized industry and digital ANSYS vehicles, the autonomous XX,XXX the the products. feedback in methodology exciting and in Multiphysics ANSYS additive first We for in for ANSYS' At preview offer our me that breakthrough manufacturing, exploration Discovery Guide an innovation our in simulation Live. Also electronic and User TSMC the XX.X, Automotive in systems had a let solutions of automotive preview available provides Joint to to Reliability industry-first, preview from make machines, ANSYS giant heard QX, all we also the the which Also semiconductors the for the continue commercial more gave needs which alone. Day, smart about an market product, exclusive The and recently ease you new downloads expecting of as released high-reliability speed this than technology, units. a an being Year. largest ANSYS from coming electric move technology applications. month Investor engineering called we're technology ANSYS technology next history address connected Now, year. business QX, to to improve was announcement the of TSMC and published revolutionizes is of Live Discovery use to to

note we our for respective Sales, just closely beyond QX, to that have roles it Mahoney, together Rick Head As I and of over in our only important been look working is months. Maria, XX

refine our tighten our we guidance performance. the variance our can up between and operational actual we believe cadence, I As

We have expected QX. our in performance good visibility into

couple a in. of Our deals are pipeline already has large and considerably strengthened

since our such, Because midpoint. our raising the over-performance the are million As in XXXX $X confidence QX the $XX not since currency yen Please guidance. our strengthened increased XXXX at our and guidance million are we raise, our raising midpoint. guidance against has last the note third by the dollar QX a in by quarter, in that of at and QX slightly we factor the is

I'd to hand moment before Now, for a prospects. reflect our I over on to like long-term Maria,

revenue We year double-digit recall, by expected XXXX. performance growth. XXXX ended growth last to QX, to approximately under With at thus double results we As on Investor told we're you in at you for just Day, track we our that this year's far X% and achieve plan revenue growth sustainable rate. our XXXX strong

revenue validation our Our fiscal is is of exciting can to Day focus at get execution. implies you to X% guidance of that the to business testament indeed, employees mission on This Investor of our us It of we year strength what to the news, XX%. and our internal growth a told our to also and it's commitment double-digit growth. core

that still I of we our we of sustainable double-digit However, work believe can us have ahead achieve growth. before target

year-over-year in because first challenging. and with year-over-year of the XXXX. This which growth strong case explain, with me QX more performance, comparisons is Let become with suffers obviously, improved a QX comparison XXXX, the

it the disproportionately licenses XXXX, perpetual is strong aside, that is by our an affecting content perpetual growth for the QX in additionally QX QX primarily a of As XXXX comparable because XXXX. of high license comparison suffers way,

importantly, key core core and as the at The of of they adjacencies. into Day, Investor some and And our product to have investments fruition. we to expanded do, of investments and both we strengthened make business most these our take results the we when and time come infrastructure. will business engineering, in discussed must Second go-to-market will key

of have on in to put world, that sustained have to – created efficiently basis. a support sell have go-to-market us and predictable, short, well-architected ahead. will will all We deliver us the and place a customers that an multi-channel these are investments growth superior a will to to performance we infrastructure the across sizes motion needed infrastructure we In supports effectively strong allow allow

discuss I do the I than can ahead we looks best for problems by over that Maria have I that, the And in results future to that of work solve lot ANSYS. and will Maria? our prospects. bright some the more most of believe faced more best the bit with to challenging we I industry, ever While call am we a products have detail. of people financial us, now ANSYS' in little a the customer. The and confident in turn know our long-term

Maria T. Shields

of indirect the China, of currency the The hallmarks the Taiwan revenue, of has revenue base XX% both closed This business. strong with minutes $XXX.X or perpetual grew of North $X.X will with by us quarter. XX The to revenue quarter including for of quarter. the driven QX the a financial on excess maintain quarter, financial we $XXX.X orders significantly over-performance Good were customers growth outpaced execution a of The in of Also, which financial a for channel which including of year-over-year Recurring decades. Key driven QX. unless were quarter revenue to in been a million $X highlights QX by Ajei. was in as begin seven-figure performance. revenue one I highlights our morning, with The million, of across company's mix few three closed aspects and enabled a QX growth shared on third results combination Ajei everyone. well XXXX most comment to to two line of contributed deliver record above growth outlook model few This deals, of of and number earnings, earlier, recurring to XX%. three-year me a Ajei and our was the end positive was guidance. our total the totaled as note, a history, which million. deal higher-than-expected last in revenue largest top but in in strength mentioned and third operational take perspective solid out include bookings upper some million and revenue the factors, $XX our impact you, of The metric let of results the results, one Thank deal, performance, million; $XX a America, our of totaling of XX% Sales add over our additional to also lease year's be strong the total excess of its ability million. over fiscal reflect commenting XXXX. on just for QX company's in business terms and QX the of non-GAAP I otherwise. results year state also

We the sales largely $XXX.X In These deferred were plans third related we the what the $X.XX representing line end contributed software QX renewals, we representing provided any our not solid increases margin for the QX, also we company GAAP new a late realignment previously XXXX. achieved both that remainder over backlog and driven anticipate margin began XX% to reported revenue year, the continue which third XXXX XX.X%. reported ahead and EPS previously quarter quarter. our in of quarter, to activity. license $XXX,XXX In XX% of of last to earnings completed we had million, of over-performance QX's to have the gross of as maintenance we positions and a for We we communicated, for announced of of this that in the XXXX. growth as guidance by and an high, quarter, do charges the both and further workforce compared of to as approximately record included well with has had revenue XX.X% through realignment. and year's QX margin of the for and growth last related us earnings. slightly of initiative operating work This

with nine investments of respectively. ended million. cash quarter million the $XXX.X flow totaled months we XXXX $XX quarter operating the short-term the of million, for and And first and Our cash $XXX and

XXXX. year QX outlook turn let me fiscal Now, to current our for and

factor range our to both increasing we're With our million is million, billion, respect EPS for and outlook non-GAAP non-GAAP guidance non-GAAP in the in outlook guidance. the with range and $XXX of to XXXX, EPS over-performance to QX of This $X.XXX of to approximately to billion the revenue $X.XX. QX increase our $XXX to QX and to our $X.XX in increased in have We revenue $X.XXX translates in $X.XX. $X.XX an our range of non-GAAP

XXX we we to employees head into to are to hiring non-GAAP as underway. margin and our us of for financial commission on our QX, across and QX increased are of we operating will factored around for and operator, been discipline, and the in for additional backlog. everyone, allows I that be future our investing providing after This phone XX% quarter deliver portfolio highlight other quarter targets cash year. delivered for QX, of for on sales also And specific we fourth the earnings, XXXX, prepared hired annual top-line financial the it recently revenue XXXX as margins, not document. plans all and financial our the confidence the what us and better as and us our targeting strong announced of expense, the near communicating contained combined currently gives in impact remind have around results will for will key communicated gross with the just operating to questions. our profit a targets but to increase fast operating for to deferred September sales that outlook We metrics also that into our execution quarter details margin with Day, continued for recent of remarks non-GAAP approximately pipeline that XX% full us year strength focus throughout flows, we XXXX XXXX. XXXX that with position XX.X% I bookings process, with we our finalize would well performance Investor strong year, growth, only XXXX track like start and XX% fiscal strength with as XXXX targets. which and take QX, in margins the the and that, of the have a quarter line and lines we open provides the outlook when our currency term rates a to Further now assumptions XX% include and we I announce and is foundation our XXXX, a very , In outlook summary, another measure; February, planning in QX we for in we our solid at

Operator

Thank you.

now our will We begin session. question-and-answer

from The come first Wong Please will ahead. question Ken Citigroup. with go

Kenneth Hoi Fung Wong

little Could were some terms that a a lot, Ajei, Thanks maybe ask us the to you, there. some about in components of guys. that record $XX the high territory? push expansion wanted million into great. color deal I Hey, were to bit able perhaps, deal give what of

Ajei S. Gopal

Yeah.

who this that broad and a deal firstly, ANSYS a far all the portfolio longtime the their customer the the is physics. ANSYS are reflected a of driving opportunity So, and with success was expansion so customer with across of they

essentially across an of all broadening it our of a and represented physics their capabilities. of usage So, expansion significant our

Kenneth Hoi Fung Wong

that you trying in of move the than get guess customer talked to you of able they able strategy guys were the think were down down I get you sense that able how kind applications was, you may have to for just I differently how I is using I'm push what kind into one about of have a to operational designers, to of the past? be in guys of Pervasive sense to Simulation, that wanted some about much of IoT? to their terms into you when – were of push kind

Ajei S. Gopal

Yeah.

as So, right, firstly, discussed. process absolutely said, as it is, the secondly, they earlier Multiphysics. we broadening usage And are design you're in I up the

in it's about what coy details are sharing So, us moving of earlier doing, actually process. in they that The they're design the exactly somewhat public.

little have can't be careful to who a I I can't about. are mention applications. they bit exactly I and mention the So,

Operator

ISI. with Talanian Ken Please ahead. will Evercore The next question go come from

Ken Talanian

Thanks taking guys. the question. for Hi,

I came that been think be color know heads wondering growth I around going about quarter would flat typically some how count you the it's So, forward. off, and could talk should we head this was helpful. acquisition, first from about additional but

Maria T. Shields

I'll take Ken, that. Yeah.

Investor but of added, in that on the continuing not particularly that adjacencies acquisition, infrastructure, what of prepared relative heads in which additional almost burn areas are Day, at aggressively only as the focus we talked company, for in all we expanding we of and our will in about while now hired had communicated go-to-markets, hire some rate So, that across as Europe QX. in in XXXX. also we full is and the net, initially Ajei mentioned the the did people core channel some we of exit at as in and go-to-market, technology, also the investment our Day, in changes globe, have his the the making also focus from in we Asia-Pac areas And the where XXXX to parts that impact we're on to the focus we and increasing we particularly other remarks, to line we enter with the Investor QX, is the XXX CEI

Ken Talanian

but should guess, impacting the deals large with of Great. mega-sized traction continued you deal your large deals, the not could magnitude these assumptions? And general, saw frame with I following about that we of only how growth long-term those And on double-digit potential think in this and we that the impact growth? the deals your quarter

Maria T. Shields

for customers Absolutely. those double-digit at and over to have these enterprise have I'll electrification, for of our XXXX, new the of trends expansion customers continued within continue, to past opportunity customers they Multiphysics play definitely them us targets IoT, and we a all to that customers. of we've of role. deeper think these largest across it, is ANSYS And important from autonomous, sustainable larger that decades. we And this significant seen the many about in problem for beauty align challenges the, We these the to are with been penetration looking these five call years, opportunities drive are for growth as all that to deals to see as these literally –

strong partnership strong built built these to trust that us been and customers. a we've that that allow will have foundation with foundation we So, and leverage that's

Ajei S. Gopal

our those What And Day, that, value is also have relationships. investing these they we completeness making technical in with We're relationship relationships our at the nature as the with investments Rick They Investor the we're of them. customers. that offerings. value and in large in certainly mentioned

within to the we these we market us have new customers, And and with show able allows bring one right have conversations these depth so, that to you as Day, certainly, that portfolio, to up no capabilities the with and And Investor one's our on in approach, going Rick day organizational be and having when and see a board. sign happen a will with go customer in expansion to customers. isn't What typically been relevant That come have mentioned customer will experts double-digit-million-dollar the to happen. a – is deal. They'll never to of some success prove that going instead on ANSYS set some and years some activity out for multi project customers. these some with going of frankly, a and ourselves with in technologies capabilities, been we'll has on, our

additional their respond electrification, approach It's this about as for pressures sign to that example, take multi-physics the they're to are now to participating entire digital broader of historically where address to these not necessarily about have off. it may lifecycle product. I earlier, have said product technologies, they to they in, Now being they're just having areas, seeing businesses lifecycle. now recognizing as And isn't the able been

very ultimately, able And be and a allows from them to them I top-line helping marketplace. map growth have as in conversations so, a we're Because and engage with we're work competitive what and helping successful. be a said, perspective long-term driving is compete in doing to and on challenging them customers these then that

obviously, And translates that into, deeper deals so, and relationships. larger

Operator

ahead. next The will Oliver Rob from Please be question Baird. go with Robert W.

Matt S. Lemenager

in pulled Rob QX morning. in thought extra Matt wondering bookings perhaps on any in had bookings, previously to implications is what land how Lemenager around, Hey. quarter drove guess or have given deals is, just that pipeline for were were I this this strong or Question of QX some the strong and QX. QX do that morning. Good the upside I'm third in QX This you perhaps might there landed any was?

Maria T. Shields

Yeah.

process we in and given any improving the the transactions what forecasting are way The and in I'll quarter. news have to there year that is mix reality visibility we from is, quarter. really through good our deals the focused our So, past understanding move the is that on say that our number make of we quarter quarter, as the

as early. wouldn't was no will as we're coming QX I probably balance deferred also huge So, I bookings around QX, opportunity higher with And QX us there number because what on of growth a visibility the things we out confidence in headed will the to a perhaps, is, and did we And very robust QX. the strength close, for not given sales the expecting into bookings that and the QX strong but see we in built in we quite why doubt, have trend that definitely as increased say of backlog business. not strong quite gives that are be side strong in revenue commissions of anticipation salespeople to the improved that's of a also say year, expecting as close the

Matt S. Lemenager

update Maria, helpful. cash year that's flow and is there very to full the And any Great, guidance?

Maria T. Shields

strength full of mostly $XXX to line our cash now guidance the in We've saw bookings Yes. flow with that we million, in year QX. updated million to $XXX

Operator

Anil from go be will question ahead. William Please Blair. Doradla next The with

Anil Kumar Doradla

my of Congrats questions. Yes. end, too. from Couple

maybe top that, So, some very more is demand space But view. I executing. the Ajei, your this, Clearly, of tough decouple versus, a point execution environment? little to are can but on the it's of results, trends and you benign positive you look perhaps, seeing from some try, when guys answer tech demand at a I'll

you how us can separate kind So, of the you two? could help understand

Ajei S. Gopal

the of valuable. we're the our because what offering industry say it of offerings percent to to because we for Anil, this that. is to at valuable, need bring the it. this mean, I the ideal there time not what of there. do if portfolio. were of digitization end customers didn't be If wouldn't day, really is this market, with I They At with and we Obviously, we we clearly hard happen when quantitatively in from sell was demand we what the anything. well-positioned We the and it's percent building incredibly and look able very of to market were have to starts and – be is well-positioned then and change is this

I number singular We're they're And not of customers. by being focused able think We're value across a variety simulation. chasing all do. into basket a have provide see benefit that wide translates after we of to goods different elements. We're areas. They of and and comfort selling a simulation. We distracted on the value focus of to a what incredibly what on we of from not our get

have In course, execution. improved addition, of our we

reach customers. to I that our capability impact. We have improved And has a think and support huge also our

both synergistically. percentage So, position, an a I it you great all from from execution perspective. feel together couldn't market tell But I a works specifically from we're what. as in as comes like what well perspective

Anil Kumar Doradla

XXXX guys term you that targets of there margins, near everything. couple those next Day, Maria, follow-up. a a recent back. you years as terms of potential the the Analyst you is some over that about And guidance when of talked growth providing in come laid out may guys given But and of blow you've our in the February in targets given out on

guys So, playing I what out, which have potential there the targets, is, based to three-year near-term on your are you you question is revisit two- gave targets, to guys for the and out? margin trends back a come

Maria T. Shields

metrics are comfortable XXXX targets plan to are all that we Day. since our we that around into we what now, at and to we're Investor communicate targets, communicated right towards out. working will that we very with we details head will our nothing as going and and XXXX outlook But that and XXXX changed that we've relative I the Anil, things the laid our have key the metrics has exit the XXXX. finalizing is, still be We're would measure the and say

Operator

next from question Valera Our ahead. with comes Needham. Please Rich go

Richard Valera

on little sort give color color I history? feedback you've of was that the the the that comments could in Appreciate more a seen of you've and the really years I that confidence far democratization product of you. if that looking that so Thanks. potential gives when this been for, Thank give any you a of might on in number terms you the sort guess the that be you of in is production company's for wondering timing Live. more release Discovery would

Ajei S. Gopal

technology I call, the in is And mentioned free. can Discovery anyone available And free download who've also this in the people we've downloaded the and as So, preview. preview, call, mentioned as mean during multiple currently technology I've Live a software use as for I had it.

I month in first the think we have downloads XX,XXX alone.

avid of now are through and us we look would can and the exactly to people very who of release version working we're a the the lot commercial imagine, They're our as when giving users. feedback have that plans right you like. many As would what software downloaded

made. software is currently that's being (XX:XX) So,

We through will, product now. way through of we're but course, XXXX, the working right have that planning a in our

Richard Valera

you follow it. can XQ say Got any had or computational up. Maria, material in engineering XQ that revenue quick a And guidance? just

Maria T. Shields

million, nothing was It $X about so material.

Operator

Jay go Please Our Vleeschhouwer will next with be Griffin question from ahead. Securities.

Jay Vleeschhouwer

Meeting, like I'd things the following. to Good prepared back remarks, of the you in a your couple at you. to as talked Thank morning. Ajei, Analyst about refer you did specifically,

that the as you of terms of their per of couple on wondering, in rep progress go for made things which up? I'm there plan, contemplate as over in think your relationships. relatedly, to you account on And or that as getting R&D; us R&D mentioned on spend have Rick, how your to forth. R&D XXXX? update core, spread of meeting talked give in regard part of the particular, refocus do You And objectives Can about you've AEs in in those at so about the and investments thin then an the the on a of too core, of XX% you been with into ratio the sales a Rick's question ratio And and AEs, details in follow head have Altair, your five high about that you count industry. your showed kinds investments, thinking those there Thanks. that they how a the through thinking a fairly per investing is, you is part yourselves financial are that seems breakdown, newly AEs when public we they competitor, or

Ajei S. Gopal

Sure.

with the we the little to respect just, in a a So over discussion R&D, I place. investments ago in that month remains think firstly, had

mind. about in That's talked exactly we have XX/XX. what we So, the

ratio, articulated, is certainly fantastic that's relationship our talked QX, year see we've increasing part really ratio it's put at but X-to-X through into take focus going future. the respect customers have our our respect think R&D your actual our And been number to think don't of we next certainly in the technology. of that to to that with conversation our to plan With to it to of a we QX have AEs organization. about. these necessary. our X-to-X obviously, salespeople year. not are we for that definitely in the priorities and We on Investor be a we as next and question with operating we has you relationships we final with to had hiring about are our But and nothing we're mentioned AEs, take obviously, And we Rick that technical we We customer that advantage need products to them, a continuing of the deviated don't So from able going salespeople. planning deep built Day for do

Operator

Monika Garg come go KeyBanc. Please ahead. will next from with The question

Monika Garg

my taking question. Thanks Hi. for

And call. what understand it in a to you'll than be guidance talk can, Ajei, provided, that. little First the of is, on are the growth just about next coming the to bit beginning, could to lower if comments I wanted you all, XXXX reasons provide XXXX understand your just But XXXX? you back think

Maria T. Shields

just midst I'll the finalizing XXXX say, Monika, in plans. of we're Yeah.

we would in. for when the confidence rather we've commentary best visibility activity save have that numbers to completed and that that February we've I So, got provide

Monika Garg

is, I'm than What could XXXX? lower to think is any understand reason to there growth trying be that

Maria T. Shields

need that I but at is before suggest out time with confidence. reality I the this we opine on can that, finish would to you shouldn't XXXX think

Operator

The go you. question ahead. MacMillan with from Ross come next Please Thank will RBC.

Ross MacMillan

Thank much, as deal, was of of scheduled congratulations the prior had consistent deal, you two that had that from the in and well. with And then line on term? renewal I with very large I renew Did term a deal follow-up. the date? couple one And me three-year just the million specifically. the questions $XX

Maria T. Shields

of specifics get of us script. in Yeah, remarks outside and we've not asked to the prepared Ross, customer into the deal that document talked particular that already has what in about

So out of around at request, that. details not further give professional courtesy we're going to their

Ross MacMillan

terms get semi-related other elongation though, electromagnetic Okay. terms products of as been term general, Maybe follow-up, and seeing in TCV length of because your And because just your think, other broader for extended for historically, contract longer as as that portfolio. usage, value have and of the sense products consumption, deeper going you your I'm a deal whether, to into the going – dynamic. customers. words, get I of is as duration you're lease more traditional cetera? trying to trying a in users, than, up Just up contract well In et understand your broader

Maria T. Shields

and the Yes, get we I and our have seeing from these they've third and that second now the first of we cycles are success the value of relationships into, measure the the expansion they've with because will would and proven say, second call, derived as both, I customers, been Ross, definitely to able deals.

their now, rises. so, level confidence And

and expanding are across they across So, their portfolio the enterprise.

XXXX in of deal as size is a willingness to to well take is, from if the part up customers' So, the that the now to XXXX. we're at you up you I'll other that $XXX on It a a expand indicator to One $XX seeing XXXX long-term point as million both, longer do million to and it look was deferred revenue, in XXXX. it's deal.

that that will $X for believe, your previous So, I last say, $XX your was million to of that's deal, that I'll thing, an we're is, asked I one Ross QX other on million. you trends the impact tell The the question revenue you indicator seeing, about on point.

Operator

Thank ahead. you. Wedbush from next Please Securities. The go question will Koenig be with Steve

Steve R. Koenig

Europe. I questions. If taking my start Hi. with for Thanks start, let could me

this? to just needs underway maybe the The again change color, more terms more much of here in that's in it's is different what's Why pretty remind to the regions? happen or bit what's or So, new going than a other stark. us Ajei, little execution us Europe. I is Europe contrast the outperformance in understand so Germany. tell What

Ajei S. Gopal

Sure.

and that calls, me I you let alluded material might I've and in just discussed – we if earlier. think quickly, this but mind, summarize, this don't prior So be

of he since was our structure. certainly to two a European changes, We I for sales within the was of of head it a me has get little the to make up to leaders now I've year time with looking the to we came Mahoney, have place – sales, of and at Rick with of necessary have view in of did one in you new about of I the our year not the personally felt period been was Europe, one when the Sales. year. now. did. a things he that than last – leader recall, who and a – a now, at And for involved sales is regions. with bit has particular, who with new Head company of of we European almost them a how Europe QX The think And we have early been the been for some And As spend working organization, now in that individual a point less about did year,

the than region rather we the a countries, the and France, structure. a that region. Southwest Germany, we then have German-speaking Switzerland and Northeast structure we And We – went rationalized Austria the UK, have to previous have, So DACH. we

Europe couple alignment We misaligned were addition, by supported marketing Europe. level positions as normalized was made our And so We forth, doing at So, of between that in the some across across within it. the a which in we changes we and worldwide to management previously country European placing in regions. team drove and went five organization we which regions way sales well.

There his as He example, investment areas, in as change the head in that personnel. relationships. within strong the Germany really head tone of of in ground other very some geos, the brings we hire offices, in brings organization. these in for only also an And performing in the enterprise worldwide changes you'll clear the some the have winning. But out of we is examples have channel and that our accounts, channels. on of So is level a individuals the I based see, Germany, making don't of is of the structure in the accounts a on who as well. a we here. but on or of in major We're organizational culture, company. national, sort I is new mentioned is translating have largest channels and Germany certainly talked necessarily accounts accounts. just of replicate that so focus major we the German investments Europe Munich can The He's relationships. And are focus channels elsewhere. around network success our into on his channel is accordingly the not the about of German of earlier world The also early a focused companies evidence some on of a large also major based to individuals. to the the is our is network now in There table And well think, of I

We orders over million which in customers was in have $X our QX, seven remarks. with prepared of

of a mean I this. as comments, recent This this of lot handle good said go with feel review very in have – expecting and point one sales chapter confident a during I my XXXX eyes on amount the of things, so, at had on beyond. on a each that And subject I can these And to We see I organization. discussion the versed team was we're can but the improvement the see we has it. in you fair to of

Steve R. Koenig

Great.

Ajei. Maybe surface an It's much it will about, largely area earnings you at I to least is work calls you cloud. is you move you are on on? still then. in have that, this earnings habitual say us these simulation I hear do on But can't is important because and before how give earnings that call. that cloud of on almost I'll that still don't vendors update going second guys because in just need that activity a that, times Is desktop about number what's or calls. that it really? something you to Thanks the on unusual Okay. question days my for count talk

Ajei S. Gopal

they remember, market. if from for customers is And had areas talked a lags adoption cloud we in what CIMdata, essentially, cloud other simulation. seeing Investor Day, also and by that at adoption the Sure. of it that, about simulation, you commentary a And we're

concerns So, broad-based cloud what a number the the advantage public they've this HPC application security, seeing. adoption the lags it's of time. That's perfectly for of fact. And reasons a done that's to of are of the there's long clouds, simulation complexity their why, is it's something just we're in for it's part but take Customers reality private willing workflow, to other maybe about areas. But problems, environment. due

with of ahead of in whatever an choose few could we perfectly whatever certainly our advantage and do are run that don't or that to customers. to a just have, few we offer we have our capable the partners Licensing our world customers the Open have their can do a compute front can of partners, the some same for get mean, to help We and of of resources. need advantage more cloud our even cloud Elastic more for Cloud burst project customers may looking in project who prem. just longer-term around XX take capabilities however situations. we've and can as we and know, or customers get offerings licenses capability the cloud, of technology Strategy, on to can over you be to got for for they They public network And them. Now, to take running have who force I And who capacity the be for capacity, both customers it licenses that. XX are short-term-burst

it's you've it's Obviously, the and application continue that will take these a embrace but to will advantage seeing the and cloud about. factor, not talked some continue other usage of bigger transformative for is there. be big yet really activity in bigger this a of areas So, that that you're that combination isn't we're trend. We capable, and industry and simulation a industry the but see long-term yes, to of, quite certainly

Operator

Auty will go from The JPMorgan. next question with ahead. be Please Sterling

Sterling Auty

lead the meaning sense us in those guys. large much to at a of tie the I remarks, commonality in product, solve, the want industry Hi, in saw to trying that Thanks. they're some deal you large give of the or together, thing you the activity looking can how Yeah. terms prepared in U.S., deals?

Ajei S. Gopal

Yeah.

terms pretty industrial it's the the certainly – that of automotive, much line with and defense, mentioned It's industry, and I in I industries ones electronics. In mentioned. already aerospace

some represent of industries. those So, the

while we're fluids the an In the a portfolio. with customer can seeing Multiphysics. a the – it terms offerings. with certainly of and electronification, structures functional seeing in some long area, to cases, cases, our be into customer, may may a demand the lead product, time They long goes and also a Multiphysics. area move SCADE increased different offerings by for customer. safety way, We're the our discussion in they time one start it's obviously, it's electronics particular with But about other really And

at organization looking our capable to safety play. as smarter to trying And are embedded they're That's products, people where some work software in so, do comes of analysis. our

business So, vector a new that's also customers. within a driving existing growth both and it's

vehicle. pretty a automotive, are driving this, it's strong. trends. So, again, things the in obviously once companies, electric think, The you'll see is of X.X that talked these vehicles aerospace, megatrends, really Space autonomous forward I But about in I couple

when trends it's a chip about to of products integrity, offerings, electronics because thermal particular way play. and it offering, think with electronics, analysis, you about transfer, from talk also tend a the example, dealing pull that when number it products. into of that we variety a semiconductor realize even that take in just like, to electronics, it's package we industry even go our the these you're board, journey heat physics important when about But integrity, signal of – but all these offerings, the for all brings after isn't you So, address structural electronics come

entire they're to with gamut And have that of because physics able primarily so, customers, the robust in. our a interested pretty and conversation across we we're representation it's presence have that

Sterling Auty

Maria. then And on follow-up, the

have was renewals? Was jump though at much a up even paid it's than particular, those strong. through increase larger what performance, there expected quarter-over-quarter, Looking in maintenance the something given would did that I price on revenue the you pass in

Maria T. Shields

(XX:XX). to Sterling. upside activity. did came some the customers price that We normal on No outside tucks No, increase have of back

also annual they imagine, not maintenance want can renewal And for in then quarter. the the in to to lapse remarks, part be – also a my cadence, we may certain had they strong as their you get As version, natural to in for maintenance. but current commented geographies, I may on in rate we have when of maintenance very the pay

So to usual – but relative nothing outside of the pricing.

Operator

next The Capital from Please go with Frankiewicz Markets. Alex question will be ahead. Berenberg

Alexander Frankiewicz

Hi. just Thanks looking the seeing? question. for many situation? at more I or they for regular years, are is how more was next Will one-off taking wondering, this my the become couple deals you mega a pipeline just of

Ajei S. Gopal

opportunity We very what have being focus strong. industry we a with we're the our relationships see said, the there on increasing I As doing in for customers. out

where on our see robust solutions. for our working And strong demand of with so, advantage we're them suddenly, customers, taking we

absolutely, size. So, seeing future as well to we're and the excited of in looking forward deals

XXXX. metric, just for the If the announcing you been as one example, deals we've since look deals, seven-figure at seven-figure

So you to going forward been we with – And continue what deals seven-figure we number increase year-over-year. can have the have XX is, as we see years of history. of

address capabilities deals. those we're so, our deal large to very And about pipeline our excited and

Alexander Frankiewicz

pricing expecting, you and What expansion of offering? then with one on rather engineers Live. designers Okay. that traditional of TAM based expecting simulation your on And type are Discovery Thanks. than product just what follow-up are you for addressing type

Ajei S. Gopal

on through addressing different that. market. still obviously, a But a We're pricing it's that's our working product

a the is different because price going product, it level price it significantly are flagship and use different provides would real-time of accurate, the on significantly that so, focuses point features case. points, different flagship it lower ease The different from the opposed they course, represent to of provides use expect of a to more products. it's gives a And insight, be the It than you of kind people simulation. as other but flagships capabilities,

as understand So, we different we way throughout, do look within penetration the actually because our community that's our like see to after. would And users, this we're we're as of exactly it's expansion, something what going but working a cadre TAM working through user that we're speak. trying

Operator

with Our question from Eric go ahead. comes Please next IBP Karlsson (XX:XX).

Unknown Speaker

country it's Thanks question. to (XX:XX) the shaved of and some you. moment? hear Hi. of very love taking and teams We'd you how little would subparts think looking different bit IBP more to different the et how now looking at of you the turnover love management, I cetera. a It's quality Erik your Karlsson for alignments my talked in sales That in (XX:XX). helpful. you Europe would region be terms of about hear where Thank is also management about force

Ajei S. Gopal

Well, I in Europe. have think, the firstly, that leadership with pleased team say to I I'm

done I has and a there handle think they're on that we the want drive. good I that needs focused think team on be to the what to results

near-term Obviously, the performance a the was in excited quarter. good in in had from we've UK. it the about for improvements few example, saw weak short-term So, I'm the remarks, management a in in we've for Europe, off a said compare that if as that improvements quarters. in last some at QX team. Obviously, had had France, relatively But performance my looked we've you I you

So, sales we cases, some numbers, revenue, of within but certainly is are we trailing the with early said, the of in is course, revenue Germany, seeing improvement. strength partners. indicator channel have And activity direct signs with many our a I of as what our we challenges have region.

Europe. with with focus I'm pretty success XXXX I'm I as pleased in And looking in and the demonstrating pleased improvement, said, I'm So, their beyond. forward to management. on

Unknown Speaker

and said you you QX up When your either can a QX, time improve at Europe for it there. faster time will changed this a to now? that Would follow talked as you happen or bit view take the take say some that and on. so a longer has about Maybe that bit it

Ajei S. Gopal

No.

bring I think come people had people in up to we had speed. it's – there, to to

our a XXXX year is expecting we're see changes, in improvements which stick So, earlier, the the I and and transition we demonstrated beyond, I results. was business for – a being what and of European said – to in of by when with lot to be see XXXX that's continue

Operator

back Ladies for to over session. conference would Ajei question-and-answer and closing our the any turn to gentlemen, Gopal I this like concludes remarks.

Ajei S. Gopal

am all So, customers I'd ANSYS to and And to we proud partners. team, the I call like our another Thank as one our efforts my to you joining gratitude close all look by sincere for thank great for expressing our you to you to and what quarter. of for I so forward your next achieved have today. ANSYS. Thank call. the

Operator

Thank concluded. The conference attending has now today's for you presentation.

now disconnect. may You

ANSYS (ANSS) 2 Nov 172017 Q3 Earnings call transcript