ANSS - Earnings call transcript Q1 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to ANSYS' First Quarter 2018 Earnings Conference Call. 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'd like to turn the call over to Ms. Arribas for some opening remarks.

Annette N. Arribas

Thank you, Brandon. everyone. morning, Good

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

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

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

Ajei S. Gopal

metrics, QX that ASC and both ACV start currency revenue and ongoing of I'm ASC momentum is growth we high is are increase. exceeded XXXX the a $XXX record also These revenue and our you, business. earnings of backlog an with guidance across a our performance increasing record of the XXX. the off XX% key guidance excellent to leading which for deferred range revenue, everyone. strong ASC Building the with especially our all indicators million, that XX% end from margin and of morning, on and I'm our last a XXX tightening and Thank pleased Annette, and for the with XXX strength good constant year-over-year great in year, delighted the of both are both metrics of our EPS. of for

the would strength themselves, outperformance QX of warrant revenue in organic and business, both sales EPS and Our guidance. and an of our the in increase of pipeline

of discussed customer operations our to sales acquisition in and And factors Simulation. OPTIS, now revenue closed guidance sales, the customers our to Pervasive how XX% also which from revenue addition, growth new of initiatives, annual the manufacturing. guidance We at territory simulation We In lifecycle. yesterday. we In in of further vision tens vehicle go-to-market multiple reflects the all our emerging increased currency the constant year, sum, to of use high-touch to including we intend Simulation, our you from the inside where motions our to to Last will we outlined about described to enterprise to M&A relationships. accounts global we with we critical large how the world are key sales, talked entire broader through channel vision midpoint. of details. of support autonomous becomes direct walk Maria Pervasive additive transforming product reach thousands around

our as and working. executing strategy is are promised We

sales. me with Let start

deals. from and quarter, products the million and In deepening to with $X which We our ANSYS we continuing over XX orders was $XX tend in of two had by broadening over buy of $X record-sized the over one portfolio. demonstrate customer million, multiple first resulting were leadership are million. our to customers customers relationships, These

quarters of class our previous deal QX, more XX% three-year announce these the $XX broke In ACV with a three lines. with deals in delighted was also agreement included our fact, customers large key three of million a of growth to longstanding I'm customer. record over quarter. or This that contributor we in a product our to

very liberty in are or customers. performance is the expected, at performance our moment licensing with in the have I'm various across coming strategy not to are this into let Pervasive Overall, customer the I'm pleased we're, resonating mix to of about me attributable a as indication and made prepared industry, to in regions. Details quarter. our the remarks. While and the timing the take that with yet the But countries another progress in we deals our that talk Europe. our is mention around differences Simulation The

growth, in of performance revenue growth XXXX. both of including the Germany, recall, you over in several in in in to I'm in XXXX, delighted improved response XXXX QX predicted, with in region, second currency. performance that Europe we year X% this of improvement changes half as did weakness we and with If saw continued first in had the the in XX% began important year-over-year half see this We constant Europe. subpar revenue we year-over-year

core strength multiphysics company, growth the reflects of accuracy to of of Let entire our and released solutions. the release our history extending become downloaded drive me the technology. ANSYS now The shift has most included products. continues business. and ANSYS In the commitment our of XX to our XX, suite advances products flagship of completeness on the our to the across we which QX,

automotive on and the new to we discuss ANSYS. physics thus make countries an including completed key impressive Honda, Ferrari, leaders presence solutions to our have BMW, acquisition the are and a flagship our Ford, and simulation have in this of call, business a technology However, as Sony, instead Nikon. OPTIS, industry customers, vision focusing adding we of companies physics-based and successfully extending the with brings Audi, in to OPTIS integrating and pervasive a long and strength quickly like a lifecycle. the of of we I'd hallmark OPTIS team few Philips, such of our and a portfolio. list history Yesterday, across product as scaling verticals leading a provider a technology simulation core in has high-tech ANSYS for manner. ANSYS' ANSYS' word-class human in light, like They is This disciplined multiphysics both world-class software visualization, how of financially the model. them strong

sales teams are simulation physics-based solutions across and cost across customers partners in slide experts to only increasing efficient but autonomous of in sales also and Our the OPTIS industries. not of manner, channel existing OPTIS The will worldwide products our vehicles. selling cross into increasing products to naturally discussion an Any go-to-market global motion, and sales. leads portfolio our our effectively seamlessly geographies the OPTIS solution

reliability reducing to ensure delivering market. simulation while As transformational imagine, accurate, the portfolio reliability delivers ANSYS performance enabling customers are technology vital to both you to The can and and time-to-market. high-fidelity, product this safety physics-based engineering

are sensors and eyes as capabilities ultrasonic include to our systems, an functional market, together infrared design also are ANSYS' ability and with components, products In visible critical Sensors cover the that autonomous the safety give in lights, most the the solutions such words, comprehensive coupled the sensor vehicle. existing electromagnetics software and solution bringing of in best-of-breed acoustics. that validate to our traffic. Our environment the all ears to autonomous target assess LIDAR, solutions vehicle other camera customers can an driving from and to and to autonomous radar vehicles. use and radar, the to OPTIS' ANSYS' solutions

of an testing thousands weather, safety with simulation traffic ANSYS for of Together will and believe OPTIS' reality-based a create virtual complicated streamline acquisition miles major platform and simulation physical ANSYS' both OPTIS, them that of environment. that simulations OPTIS' simulation prototypes road, roads with capability, and platform VR-based of combined In would tests in of hundreds require a existing have ANSYS of European number provides is task who now of help addition, validating night test. comprehensive virtual the autonomous the vehicles billions and A road photorealistic automotive industry-leading our simulation, efforts. and and and the customer otherwise accurate reduce safety with will of accurate a scenarios. their solution closed-loop reliability of manufacturer,

capabilities. bills Additive fail and our which adjacency an solutions a topology manufacturing print machine Last is we Space, very of to flagship fewer our company, manufacturing. solution additive all we began QX, with way a Additive launched the printing, manufacturing, new Relativity additive they operators simulation, of with process their key portfolio existing tools Live of particularly what optimization, integrated we use quarter, journey XX we powerful a latticing, Integrating of times week, solution manufacturing our and a error times develop ANSYS Print, and accelerate metal – And material printer, environment. our printer of products. manufacturing. technology ANSYS' Relativity Suite additive faster and metal ANSYS and the which additive all printed designs streamlined X.X ANSYS part standard is XDSIM, XXX fired manufacturing largest Another including software, Additive designers XDSIM's Discovery and Also manufactured. enable reach advanced their In Suite, acquisition new Space rockets, to additive believe reduce XD solution. designers, the additive in ANSYS' as ANSYS stand-alone, is manufacture, product ANSYS transforming next QX, adding a tuck-in could in easy-to-learn be simulation technologies, will to to product print are which a help and a audience trial QX, analysis flagship contains enables emerge existing launched world's ANSYS' for metal in parts. new additive and users. which full releasing additive into industry simulation workbench ANSYS will engine. successfully that to of to expanded Relativity the additive product products microstructure be ANSYS, as a leveraging formally technology XX.X, into to we announced iterate in This the built engine,

early product important year, interest has we're both seeing been While from revenue wins. significant and new this be customers, some ANSYS strong this very do long-time and new we to expect from not

manufacturing validate adopting product deliveries. design example, launches in effort and and Mercury product few world new has Marine, to is optimization. down simulation leader accelerate a and to For the Mercury marine to to streamlining related helping Discovery family hours, reduce engines designs Discovery four-day is a and three- product to new a exploration early equipment, helped

have we on about excited past remains that I excellent and I'm our delighted made I'm As of year. the and focus execution. by over very the think year, our the the proud rest of quarter, progress

Our Pervasive with resonating is Simulation customers. strategy

go-to-market successfully rolled have Our out. been changes

We our turn our continue Maria results and over will a in than ever our development. little to and products, I'm the our expanding strengthen team, in execute. detail. in discuss now to to organic in Maria? ability core through bit flagship confident in our markets, products, and our and are extending call to our we I more financial more acquisitions

Maria T. Shields

revenue Ajei. assumptions quarter also everyone. for Thank as both our metrics. but provide and outlook add performance of recently a increased additional take on well updated additional the include highlights, closed acquisition. for which our I'll XXXX, financial our impact Good minutes the Ajei financial both outlook some OPTIS to and to few and the key morning, we've let first key as EPS, ANSYS perspective business, you, a around shared few stand-alone me some our and color for of QX

of XXX, financial this providing be during we under ASC first year communicated, and outlook will previously both results ASC XXX. adoption recognition XXX of under As ASC and revenue

an relative in even XXXX We to and any have financial believe standards, both QX solid across a we And of to what our be terms margin XXX, and end year ASC transition. key financial investors want ASC ASC QX results and yielded fairly all to our in growth state non-GAAP above results under consistent business in also standard The metrics level practice, this we under results rates models historical comparing XXX. analyst to under XXXX high unless record that I with be with QX reflect of our XXX. providing that and operating both I will I revenue, to comments I'll published under highlight will comparison my first additional will split a commentary make be execution XXX and solid and of relative this provide both of otherwise. ASC as of ASC EPS analysts the and demand guidance customer environment, XXX see comments

ASC growth XXXX for revenue EPS rates strong considering growth. ASC which in or total and recurring accounting strong All both the to encouraging maintenance totaled software predictability our revenue. ranges us of reported grew and total very representing revenue. in revenue constant metrics sales or totaled method, of in XX% combined were Under quarter over and double-digit respectively, revenue million ACV $XX within XXX a XX% quarter. last XXX, million. Key in our of to start Revenue performance. revenue backlog begin the that future and is of currency the we of a XXXX QX Deferred first backlog a positive XXX base financial our totaled currency we $XXX XXX when high provided and and $XXX with X%, balance. under in XX% $XXX.X deferred ASC increase of insight growth currency. ASC into with under $XX.X and to Under million for constant XX% $XXX year's of strong the X% total license comparable revenue million. million Our quarter includes impacts ASC million, total $XXX and record a gives under Recurring strong $XXX.X XXX increase The QX and ASC renewals revenue under good recurring of XXX currency building million revenue contributed million, either

end guidance, with to first for ranges margin as our The tax of to XXX. of was to under revenue XX% ASC previously portion slightly a were quarter. guidance the XX% strong XXX. the rate as the effective of yielded XX%. as above foreign reported deferred high respect During We coming impacted and was and we of meaningful slower of we the The hiring attributed $X.XX QX $X.XX to planned that had under reduction results well QX had operating of manage quarter, of a into in With below to EPS guided quarter ASC XXX our taxes, XX.X% difference the the which quarter. ASC a an revenue in subsidiaries that non-recognition positively largely gross was of we provided. Margins a that above income business substantial due result XX%, under discipline, by a revenue pace the finishing quarter the of continued first margin operating margin high our we end fiscal

nuances Going expect to we rate the reform. our XX% the to interpretation effective further be in and forward, of clarification tax tax U.S. range many XX.X%, subject to of of

our refine with work. transition as and will our We provide updates estimates we continue

program. flow current a during authorized million, $XXX.X have under in the cash allocation repurchased In shares cost we line for and million shares of cash totaled XXX,XXX priorities, available with of total we quarter and from X.X at investments. the we our $XXX with short-term operations total repurchase the a million, million Our quarter $XXX ended capital and

turn both the guidance of in summary, and year. the let initiating remainder for In the and QX, first our for positive our the with to outlook Now, EPS the for also business, strong stand-alone we full ANSYS in for combined guidance. the increasing momentum are quarter confidence business me year. continued the increase This topic reflects revenue performance of

throughout as to million the necessary and for updating incremental investments of impact capital to utilized reflect that OPTIS the as the This this also integration be remainder year. our acquisition. XXXX, includes the incremental $XX we're $XX an Additionally, the revenue in contribution in of will outlook the of million acquisition, well

to expect XXXX. accretive acquisition in EPS OPTIS the We to be

revenue of million, to non-GAAP we non-GAAP and the increasing $X.XX $XXX of the $XXX in $XXX of of XXX And $X.XX to ASC to to XXX range revenue of EPS to to EPS For outlook year, Non-GAAP $X.XX under range million $X,XXX non-GAAP constant under $X,XXX the $X.XX. growth million to EPS is $X.XX. are and the $X,XXX of in range $X,XXX ASC at Non-GAAP we revenue revenue of and the million range ASC XX% to $XXX the in $X.XX. range and the the million and quarter, in revenue currency is of the EPS to range XXX range ASC in or XXX the in EPS the $X.XX under non-GAAP full both $X.XX. under in for expect second million non-GAAP midpoint, of million, in million, range the

make our acquisition represents XXXX $X,XXX $XXX ACV currency related ASC operating to estimated approximately XXXX to of for to million. like that clear or outlook midpoint. statements. $XXX earnings of to the to from increasing I'd million our $XX a $X,XXX and includes to OPTIS to million. our for flows is to revenue backlog outlook range contribution that in approximately cash We're that XX% revenue the under over Our current income operating XXXX the acceleration XXX This flow XX% credited retained will increasing also recognized XXXX in adverse associated is growth cash impact million our constant of with payments ACV tax of baseline financial for outlook to at be X% deferred million the also million to never $XX the for as reflect

In drive business, for XXXX XXX, our OPTIS This for of acquisitions over XX% XX% XXXX increased under guidance our and XX% the our XXX. under targets. year, can of our of near-term is aligns in ASC continue currency from rates under around including acquisition contribution XX% our the in as the to margin OPTIS in with been growth, and our expecting short-term have remarks document. returns XXXX and early revenue expecting give and operating the as focus the we albeit scale continue This strength with XX% full factored the decades. integrate impact we on the two details impact the drive modeling we summary, positive that to across us flows, and reflects record to and XX% of contained with other from to demonstrated a are quarter the cash we're results growth many incremental all The business and we're XXX, under ASC strategy in into margins, ACV, that Further lower Now, specific that operating a impact operating XXXX from our nearly line There second for margins and of EPS, the XXXX revenue key coupled reflected financial and metrics are core and OPTIS our delivered top the XX% over long we incremental prepared expectations business. run. the investments XXX. increased backlog. purposes, the profitability with at business: first that we technology ASC outlook QX acquisition And quarter managing same margins revenue, operating growth to revenue margins, into to confidence growth ASC deferred assumptions, are

to repurchases. investing share M&A, continued to stockholder pursuing the and capital additional long-term drive through strategic deploy business, also in core We value

confidence focus well relationships, longer-term quarter technology, OPTIS please. to solid performance continue with line growing XXXX on of us XXXX opportunity of business, as a and financial the questions, platform in we'll goals, business distribution And the investing global take our Another of incredible combined foundation customer our model broad with operator, and strong provide strong targets. give customer execution portfolio, to now, pipeline unite with the open that deliver our sales the relationships our exciting to and combined product business, as recurring our continued to on and strength talent our the

Operator

Thank you.

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

Securities. Our Please first from ahead. go Jay Vleeschhouwer comes Griffin question with

Jay Vleeschhouwer

With AEs you talk about and more to let Thank you. constrained you. as doing, services I these, quarter, of large words, those are but instance, for or obligations that with the and do start that kinds quarter the just deployments, you able talk filled to meaning, of in and could additions order the morning. digital called to commitments about you respect And referred be that do to Ajei, support achieved of kinds that exploration, the being the to need in then how in third of other understand you're your in that that what now, in to Discovery commitments Analyst in did you included you you two to you XDSIM R&D Good to quarters infrastructure record autonomous me your it, have in extent customers? you respect? of there ago the Have to or would or support think, fifth you additive. your devoting and for kinds OPTIS four Live, now pieces secondly, meaning OPTIS, at for said those you more large priorities with is Meeting Thanks. about you next-generation and respect similar R&D do to next-generation within that as the you you other a

Ajei S. Gopal

Sure. the Jay, for question. thanks

cases, customer broadening we into different So, a or or portfolio. footprint using different by and the in across closed areas to more getting of many existing our advantage frankly customers, firstly, large lot of success your just In having that in to people technology. projects point technology take about is order the of and going deepening QX, we're this our the

So, interact with of doesn't it the level we way increase customers. model. doesn't doesn't business change services. those the It It fundamentally change the

that's enterprise accounts, And additional what's manner these it's for that's we're point we that the these and we've presales, we're accounts. portfolio as Day, selling some been driving more. historically during continuing a at are year. looking accounts that the – activity able – enterprise consistent talked we're customers, investment successes. is the of presales mentioned about we have bit And resources little or that's a in a we these the allocating way to in engineering So, engaging field territory accounts about with that differently within our there and we Obviously, from cross Investor last we're the sell an just with

model had. the we've are is with paying what we and we're we that making but identified that business very – historically investments off, the made So, consistent have

piece it. of So, first that's the

in have absolutely. talked progress The was across about talked acquisitions terms progress was your the twins second space, I Live, of XDSIM, make call of question part certainly – I of them. – made priorities have about in these along to talked Discovery I made equally across – one I the R&D across we We our with in and we've essentially those. in second about these talked about talk the that call, all didn't digital but continued these And autonomous, – adjacencies, the we've progress

those in opportunities, right adjacencies feel So, confident we to for we the the our those our growth right is them, us reflect core business. and that invest now. approach see approach We're continuing to as the market in

Operator

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

Richard Valera

the Ajei, morning. Thank region. Good you. question on EMEA

terms great those of you with been a that kind much can undertook sense year? that's to sort you there, think much on get that longtime region are of Europe basis quarter macro-recovery regions revamp par region how sort certainly sort of give do where and the that recovery a in your other performance initiatives last how it has and up relative with to a in do in laggard, from of the initiatives you broader So, And a guys that of structurally? of you to

Ajei S. Gopal

down, this the engagement, things that his customer and seeing reviews, performance is which at look saw leadership relative I to terms as the when better to down when those Rick what at and we level obviously, had and we you that like you we leaders, year. was look essentially Look, made last customer from structuring in we look – way And little engagement Europe. the down significantly perspective. sit bit last and Obviously, of also a weaker And we start but European significant team, I a deal within pipeline, – with year performance engagements, sit we year to region. see when were settle systemically see of Sure. with this see large increasing we we're changes last changes a can take at we while both when

year. that say, a the that I So, to benefit had capturing pent-up we we're we year-over-year not position last seeing would a from effectively demand some, in were or fact

to So, is I'm hard this executing very me in percentage have, percentage we are improvements, economic getting our better. solution. this well. market. excited about The All customers execution about our improved opinion, from for It's say, I best solutions really The And can is comes the definitely excited the teams the frankly my say comes from in our execution. performance. are

As mean, far is journey. as a are, where we I this

that should to you region we're is well was – track And transforming improvement the know, on latter that last As earlier time, but takes mentioned year a of into recovery the bit had XXXX what along we're XXXX any beyond, way. I it we part the expected, expect see we in and perhaps at and little ahead.

Richard Valera

That's great. Appreciate Thanks for that it. Ajei. color,

Operator

with ahead. go Auty Sterling from JPMorgan. comes question next Please Our

Sterling Auty

million? year excess are well guidance guidance look asked on one you in gave. you these included that But that the guys. as what's more appreciate terms at when to guess of deals of Hi, $XX the Thanks. deals that of Jay color June follow-up specifically, as around that questions full and guidance, large the in quarter I Yeah. the the wanted I in

Maria T. Shields

So what I I'd what XXXX. skewed on say, talked about line call, and half for back the guidance, with of Sterling, XXXX deals is in is towards larger last of the renewals largely pipeline the quarter's is the

we would we I certainly that QX. deal on for like about not and say, being QX nothing significant have, is right based now, So, the deals driven any by talked everything that

to we've driven lot a QX pipeline, strong being is not work but a have by of we got So, do, large deals.

Sterling Auty

and terms slower that the quarter. June to anticipated in Which Got to plan areas than a of little it. with in able then, come catch And hiring up so hirings did been far you up the in mentioned have bit you the not quarter? hiring,

Maria T. Shields

Yeah.

of what accounts, last only on in about, team our to change not field one what the investments, to AEs I'd call, the but larger around go-to-market. the engineering earlier Sterling, Ajei's areas of and – whole is our disproportionate incremental we support So, say when talked comment, XXXX is in

companies other right challenging talent now, many like – not a environment. So, very it's

plan QX, And stage to bit our plan and important So, behind are an but we continue for We down beyond. that not in it's activity. we aggressive towards hire. will recruiting have because set little a we in XXXX of any certainly march were XXXX, for to to plan the hiring slowing our

Operator

from Oliver comes Rob Baird. question Please next with ahead. go Our

Rob Oliver

taking you Hi, question. Thank guys. my for

of couple just a earlier. So, to follow-up a questions the

us the like like Going I Day, you're of the to satisfaction of – to back you're I the and kind guys then a could level relative go-to-market off. still Analyst around early, at some where the his where pay outlined have Rick early Thanks. Day. to that do feel curious just more was planting progress of you making make, quick when seems that blossom to a here mentioned work those to starting are know color some you you what seeds with starting guys Ajei, incremental some investments give to team. little guys you follow-up. stated to And get getting have I of you to you just it looking were that if Analyst you the is of are

Ajei S. Gopal

Sure.

for days traction, of In as still these adjacencies. some I early said, terms early of it's

$X individual line start we've example, And we've that an interest have Discovery to said, I and at zero-dollar you're purchased look a and Live billion-plus and that's one important we've But call. it being had when product customer them of you of on customer lot that an engagement, some mentioned about who product company, think off that's you had material had we've If as the a downloads, coming a the as new. base. brand isn't had customers

still So, we're about the it's but early in excited process. very it, relatively

in a customers now I additive, a quarter active relatively every opportunities. autonomous customer relying We're also really that's conversations in going our about additive, exciting. our in with The the camera autonomous, market, a about would because, sensor in technology of LIDAR acquisition get well who's our space, we to pretty new a our say With right technologies from maybe next-generation particular We improvement conversations again, customers, evaluations we I be think number it. are still releasing are OPTIS customers. we relying existing for but OPTIS ultrasound. very again very we're an coming capability at autonomous there automotive, in the onboard, know, and and customers with support overall automotive usable is well. holistic and frankly a space, solutions. although We just excited vehicles positive get our look the radar, as business you as We're this in additive autonomous been can the not If But customers time And frankly, solutions to space, with solution. And important as some not of mentioned other to in on to makes engaged lot engaged now you're of automotive in as feedback the electromagnetics have we on to you're strong actually using both – that the you here around offering incremental bring that. and new. just we and talk it's

As we comprehensive I have that these all solution my script, in different across goes sensor modalities. of now said a

customers many why one reasons engagement. routes. have the more go-to-market have fill and in already fits is straight discussions, We I'm expecting The And in around the so excited prospects. cases will about OPTIS into acquisition it technology in with we'll place we're ANSYS well of cases have some have sales, this some drive early conversations some we we it taking So, so forward. advanced autonomous, cases we

have are you channel partners well is are as about The directions terms in some of other additive excited terms in our both the of we with to that that the And have are as go-to-market thing individual focus around trying as cases very of well. up going, interesting partners we course, spun in who on autonomous. find Discovery Discovery, organizations channel some of

is in So, powering lot of that. business it's more as next business, driving activity, our more A through, a these more but incremental but lot year the will some after is But core and making year Investor I investments it's the this and areas the business year, after our in here forward, investments we're driving stages. would our growth. these it's year are I kick our and last Day still year, have idea of say core whole early action, said we

and success building we're long-term long company. and So, – the of franchise we're growing the the expanding the

Rob Oliver

follow-up. should and whether keep basis, helpful, was much. much. go-to-market, just there's wondering addition That's just a know very of on a it seasonality very really if little then, chance in Thank around a and Ajei. with mind we I you business in increase just constant below coterminous Maria, wondering there. guys Thank revenue the anything And be different our quick was buyers any the for expanding there's you if I or estimate, very the an new currency products renewals.

Maria T. Shields

of under where pipeline – XXX, Yeah. have than I you the some timing I as strength on earlier, main were in deals you in and would ASC in these will of change multiyear seasonality under QX because, the of historically lot mentioned would impact these of more all large ASC you'll QX a given spread. the will XXX some say under see deals, XXX, see ASC revenue it the be

in bookings it seen have would the You old metric.

will ASC you revenue in didn't only under show perspective. a we change now Now, a up see That's that the historically see XXX. seasonality from that right portion

Operator

Gabriela comes go Please question next Our from Sachs. ahead. Goldman with Borges

Gabriela Borges

taking question. Hi. morning. for Thanks my Good

having a can talked little bit more us. broadening about customers. deepening I'm that So, for you and the hoping a you're that Ajei, in make conversation little with you tangible

you cycle change? changing Thanks. you those the sales technical more And ROI? does customer that salespeople about solving involved level, problems able to discussions talk being and about before? more is it the add Are customer either how you at to at maybe to As the all, that you in Are short consultative more or longer? talk able weren't conversation

Ajei S. Gopal

Yeah.

with a to our think to and you we when thoughtful – expanding taken about that's the approach So, very we've have engagement go-to-market. go-to-market customers, consider our

We have tend transactional very some tens these to customers nature. the world, of customers be thousands around of small in of and

and customers of These world. are tend in them spend largest and deep money. enormous of the to be require amounts Some – the very

of partners. deal Investor many address we as to in mentioned, taken and a an we have never have and approach enterprise sell-through don't accounts, regions. team have territory and them a course, work that we've we've a so, we our inside but – the we have And regional include Day, some and that channel the cases, footprint. includes – and In relationship our includes thoughtful some – would with we we enterprise partners way we we they then they go-to-market. a taken And with an a were – who which work strategic have global address sales then, teams cases, going That and organization accounts. segmented to extend of on – partners with engage customers never to In channel we relationship, talked channel in

a nuance as relationship channel with partners we have well. So, our

just not been most our broad we would highest physics. in So, to customers Whereas around customers. a anymore multiphysics customers, fluids their sales the have is challenging of are or electronics to and multiphysics we go-to-market. a organization cases, the around some problems. single be just our the there's thinking a level to in able may pretty some technology how solving can solutions how many with to to customers, cases, just mechanical, with be many the of, previous in In presales need the sale are it's or around technical at just activity question investing we cases, many explain strategic Gabriela, it's relevant about deployed. In enterprise the largest Where largest explain engage customers of the are customers, where a

In with us how are cases, that provide mentoring experts. are buying that's many comes to or contracting customers So, in.

help So, at level and their on site they that's place pay problems detail, a to so us – greater their process. and solve of selling solution a we someone of them sort

not because in see see historically lengthening. change essentially elongated, product sales the to because technology cycles and which any lifecycle, doing. of of with our is we of don't their existing what's the customers in flows happening product what or product cycles have natural sales sales we taking The be It's building sales they've cycles, are flow the their don't there's So, in like short – ebbs the fundamental they're lifecycle. been way we cycles and aren't their consistent advantage

historically deal. year, engage in $XX different no as historically I million course, same we've It's done. been the see we've of what the that's from done, even what some we've enterprise these results. to talked larger and sort about Last you talk to and customers, way So, of of we able a

over year. about million This talked about this $XX We $XX quarter, deal. deals a million we of talked a couple

engaging. the is see So, organization that sales the way results you that I the hope helps. certainly in and

Gabriela Borges

follow-up Yes. Maria. That sense. makes And is the for

the of of outperform the any rest on if where about how you're the the you dropping in line, revenue bottom merits through thinking look you As to the it? Thanks. versus outperformance you reinvesting through scenario the line year, are

Maria T. Shields

targets set in but Because to something and business. on to disproportionately recruit is as the the on line we That So, time this foundation a that that top Gabriela, is our line, we is a invest QX. importantly our reality continue, well to The is if according extent being to that to the but at us the would the is hire our help right to to outperform want in Investor given what side. as the we drop going likelihood will tremendous franchise. continue bottom mentioned, Day, that committed we earnings continuing there we I'd to leverage the to just plans, in said, growth extent so high see get see time to more XXXX, for incredible our model people, enable is to to right. drive you now to say and our that probably we The similar is, around to spend are aggressively I –

results at long-term opportunity, it at growth So, the it's for expense the just worth of short-term – us. driving the disproportionately just not for

Operator

Our next ISI. question go Please comes ahead. Ken with from Evercore Talanian

Ken Talanian

a for growth was question. sense for geography I quarter. your Thanks view the relative by wondering us the last pipeline guys. taking could Hi, you give if to

Ajei S. Gopal

isn't pipeline any other very really and year, we what talk that's than Obviously, Maria this this add Certainly, that there about business pipeline about and is pipeline our public. expect America really the base, tend for the positively European geography. in to in don't Those about by the of We as strength nature deals. color don't said, which this strong on more the of – the of total and it's the deal. because we that's that some larger larger the of to the deals of that's well, to half be talk in to see larger electronics semiconductor is year, of some them North and in of tend but sort second the sort feel you'll be when

right And how now, so, see total – QX – pipeline deals monster the any to any QX tends as of it we that's be looks. but have doesn't place, kind in

Ken Talanian

desire heard you? the OEMs discuss models And how Curious great. might produce. Okay, impact they the purchases of the some OEM of the their variety that world, reduce to that we've automotive in from

Ajei S. Gopal

car. course, sector to is Well, most see industry, the automotive that by automotive, our being The see driven we've breakdown we've which, continued strength to growth by the in important frankly is continued a and electronification the from you of in as number of the factors. can of of see

traditional we now now of analysis areas Those the as in optical chain been We're capabilities space. solutions. the automotive think so, and new engagement forth, were And we of chip of package about semiconductors on automotive supplemented in antenna we we're And autonomous for and things for historically, add in comprehensively engagement We're you system. now software simulation about our supply safety our in functional existing We're about have – We with generating engaged space. talk placement OPTIS, talk doing and working the engaged dynamics have fluid so to and the aerodynamics. course, like simulation onboard portfolio. electronics. embedded on with with areas medini with that and combustion and getting structures vehicle

have, a from and if some So, just engaging they the go, have suite to that that reflected technologies challenges of the these then the we way companies broader structures that history address of will, new that's you or our and with in us, offerings. automotive structures full and moving continue now of are fluid, to

Operator

next Monika Please ahead. KeyBanc. go with from Our question Garg comes

Monika Garg

taking for my Thanks Hi. question.

what million, the seven OPTIS you probably you that's about accounting competition only talk gave And much also, growing? XXXX? but for was I increasing, about space? could might us on Also months just and like OPTIS impact. talk maybe deferred know be in for revenue you much will there for some yearly be the $XX First how are is OPTIS, the how expectation revenue

expected So, OPTIS? was for what the total,

Maria T. Shields

Yeah.

So, Monika, here's relative to I'll what OPTIS, say.

not Let's just XXXX. revenue is It due about to synergies for be results. we're costs. any consolidated on impact integration its going largely assuming got to dilutive talk upfront XXXX, in We've some

U.S. have a imagine, were you They accounting. not private GAAP they can As did company.

I'm So, methods speaking would GAAP. to might what their be translates revenue it's of not – to under how confidence because which it inappropriate, I U.S. been growth have can't completely have any

is with we've basis net. acquisitions years that discipline and be and many, a as So, there leverage to our done and what $XX opportunity infrastructure see it into we've said, even over business XXX which financial slightly the ANSYS usage OPTIS ASC this on opportunity basis capital we being also the from beyond. now will distribution both talent, ASC said technology. the past could $XX assumed and covers that make have of The we and I XX OPTIS of to But higher to be that be fold see year. stand-alone to and ahead And creative some that are it the interest total and million, optimistic do a almost lower our income acquire many global on OPTIS bring better stand-alone share than ANSYS' remainder we million slightly will count can technology the to relative the and for XXXX the that for we and a XXXX incredible to tremendous XXX

Monika Garg

And on you see competition the comment in or you you don't then, market competition? with see OPTIS the any can

Ajei S. Gopal

interesting what's a that couple at about is, takes – that towards companies look There's of OPTIS have approach light, light. physics-based OPTIS but what

they're – technology consistent ANSYS portfolio, into that's our incremental the incremental technology at look very with they approach. so, physics-based bringing And

they light. frankly, acquired out there companies of Synopsys you'll of ago, and a companies a have few So, couple one a that so lights, those and years do see business around

in the is lighting, light work appearance simulated around Some you're of sort to – looking human eye the is where of how at light a environment. of the

of what's what because and of interesting that it's OPTIS autonomous OPTIS move sensors. light, is, some really it has to now technology and about that into think And just is is us unique we OPTIS about allows the of not same but it's about in – space, technology use the optics about sensing some great the

includes of changes a market sort LIDAR market a into the autonomous broader a for So, illumination from and space. traditional that camera market which for opportunity much the

OPTIS. about unique what's OPTIS and what about that's that's we're so So, excited

Operator

question comes Ross Please next with Markets. Capital MacMillan ahead. Our go from RBC

Ross MacMillan

organic first wondered I said one for currency. the basis you Maria, ex-OPTIS. provide constant so Maybe if that constant also much. growth your Thanks a year, ACV I on you just currency XX% think an XX%, on could

Maria T. Shields

of Yeah. million to Ross, outlook right our now relates $XX OPTIS. ACV

Ross MacMillan

mentioned Okay. That's had another helpful. non-GAAP financial on this you with And is one the just margins some that then for there year, integration expense OPTIS.

year, don't prior if would if number including you margins I guidance the it again down at So, us did did looked the again, your for I as for I'm actually be but the had an excluding year, we it same curious, just think OPTIS, look come OPTIS. that – operating ex-OPTIS change? the non-GAAP non-GAAP margin operating for give And

Maria T. Shields

Yeah. No.

our guidance business. margin and guiding So, XX% to out were call Ross, of XXXX, we the last XX% ANSYS operating when non-GAAP we we for for gave looked

XX%. guiding we're Now

dilutive, X% about is would it OPTIS So, OPTIS. without XX% be

Ross MacMillan

just question bigger Ajei. one then And for Perfect.

can I when organically? GPU versus think in CPU Just curious, semi Thanks. is just you do footprint, can do you about and there that your simulation, I'm more

Ajei S. Gopal

asking. I'm exactly you're question sure the not that quite

do asking building customers are who processor answer take can the we yes. If technologies, we work at looking with different advantage you're is – absolutely, and or GPUs

do advantage absolutely we answer asking take the is are solutions, GPU you that, yes, do in we too. the If of simulation

Ross MacMillan

and the solutions they solutions historic the GPU – in simulation applicable some and obviously semiconductor question your made are whether No, was to simulation. CPU industry, as market you'd to I'm to for are that Yeah. and clear equally today have not I'm just more your acquisitions design design as you as

Ajei S. Gopal

answer yes. I the believe that is

these address the largest or GPU when on do transistors some both we are for using you GPUs, processor of some with I investments massive as resulted to as based our that chips, and to that SeaScape the essentially mean, be And data time we've next-generation us in in can obviously, a might can in which the CPUs deal that, we're seeing GPUs sign-off. products is they I that's architecture whether able are of CPU. of some generation for allow we in know, analytics, yeah, next billions needed our mean, RedHawk-SC. find, scalability as the equally to that with capable result big of which be and do some certainly matter. so, of to made you're semiconductor example, reduce that you dealing we of And

nine which next-generation sophisticated the very customers support ability feel top in next-generation it, confident very about just be and in of out terms CPU – have to think we at of So, the in we mobile fact, invested transistor have that looking RedHawk-SC at our count. both if GPU are XX And designs. they as looking these their you GPUs, could for companies

Operator

from Koenig question Securities. is next Steve ahead. go with Our Please Wedbush

Steve R. Koenig

you and question then one mind. don't One follow-up, ANSYS. Hi, if

it little here, all revenue, million looks in of color maybe very it backlog went went perpetual? bit of just the to into – much any $XX of the split as how into opposed term a it the First, weeds almost deal, and the versus like large that on deal,

Maria T. Shields

all perpetual multiyear ASC there deal, ASC That's XXX, That deal Steve. no under XXX. was Hey, ratable component. it's under a and

Steve R. Koenig

It's all ratable? Okay. Got you. Great.

here for one So, then good, good. follow-up Ajei. And

mind. there. so, of and It So, margin you bit at an don't to fiscal for little XX% you're XX% I of – like a looks But obnoxious hope XX% a XXXX. goal growth you're question,

Potential your the can ANSYS comes where along to a what's about (XX:XX:XX) on to same What next? trajectory, congratulations. go? So, different move growth point keep kind curve, that margin of thinking

Ajei S. Gopal

are as we very responses. in hopefully come both about excited our business well as our script our Well, through as has

year. a on in growth off the I to to last built business foundations really sustained strong business is excellent an build year the we've the for investing We we're for frankly, discussed. start as And think year. the

to continue investments to we that need make. We have

bring have to We which markets. We looking us to tap for technology we in are to need frankly new markets need very positive the continue where place.

continue M&A to business. makes at incremental sense will look within We as our

have still and where the point double-digit to So, we have we growth, have think where that want to we get momentum, I some we business sustained work to sustained do.

how excited so We're focused I not far. has We We're our say the not very to XXXX I'm we've front some of of responded them. the excited I'm on are in. them those of And about objectives. changing challenges the the But to about have team business that performance very objectives. put bringing in

Operator

Gal comes Our from next Munda with Berenberg question go Please Markets. Capital ahead.

Gal Munda

to Discovery follow-up Hey. I'd on ask like Live. a question

it much you. channel, will and in opportunities be what will terms through You you about And you're how be in it's segment, direct? days, much new had then just think at the feedback of from customers? mentioned pricing. early hear in maybe like an that terms but you you've to go-to-market Thank of existing seeing for of And how versus kind mentioned the quarter-end the Discovery the also, important customers the to if be I'd Live, the it'll

Ajei S. Gopal

really there's two for motion outside into flagship customers we're Discovery into Discovery those course, the flagship moving So, engaged the broadly of the our guys and an happen, the packaging with existing of from the in And order in but assume will terms in activity in more – larger to categories. it's that been these it that. customers, customers Live. with of be with think simulation that group Discovery pricing, where individuals with where we're be in to be we're or that's the users generally average products, the on less into able approximately major And team more our in traditional order of sell that years can It we're fit vary than they're engage – into seeing so, of directly of speaking magnitude ours, depends whom fits our the designers. let's the Live where to seeing magnitude on go-to-market field. customers able will accounts, sales pipeline, they've seeing products. seeing traditional than – our We and of simulation same the Discovery of using been certainly They'll will in our

may one – not used have new of about learned go-to-market ANSYS. to who and are the our may have be in motion to smaller existing And these are lends simulation that's some So, itself who necessarily class may frankly simulation, have channel of one may inside There's customer. second – as it's of people be a we're much, in might important These ANSYS we sales. organizations, cases, as a developing, to the that's sales evaluating are that to class both that customers those that's historically the well Both to below wrapped cases, different go-to-market around partner. and those are across go-to-markets. channel And in been of inside us, has and that of the are activity market routes level level to for channel have they're down playing. reaching some where and partners, a that new it situation, because channel, you

Gal Munda

Perfect.

that and with in going a that? How what more services have you're terms to still provide mentoring Just much are – you let as of this some or to follow-up, guys closer total do services the of guys after doing? of mentioned as think do the been Thanks. the to have of proportion of this experts when enterprise in historically versus the in this Does peers lot terms them increase the especially future, to you you your change the level you a see those accounts. being partners the revenue you to of customers partner in and services importance a intense provide does

Ajei S. Gopal

is the to fortunate cases, for services without products the in think thing of realize our that we're I that, need many kind Well, work in a major customer.

customers customer So, we need they are people pay physics, lot experts embedded product to supposed of these work. connections drive out products do figure of or multiple kind they and and work, integrated don't to can an those. have we who you together work. environment a of to can In charge what we how pull some a They help workflow across cases, our into a the some maybe for make do for

appropriate – technology, we us that This people business deployment partners, access not need an a experts cases, margin of and have adoption commensurate maybe customers the – in And resources, are price around and individuals. free But occasional for our charge The the very our world we little all context provide build ongoing not that course, around customer these a time a of So, on embedded we manage for facilitate different are those, partners. give at of and be partners the those can services much to big those basis. they that, have accounts. business direct And are charge skilled we channel skilled to those in a channel within different bit within and feel the is a that's the many pervasive trying we our experts not on help certainly services our channel structure embedded individuals might more, here. it's of and and able the as-needed really course, we're some also models. an basis. of no, they for and But have who and

Operator

question-and-answer to the I remarks. conference over any concludes like back closing This Ajei session. our turn for would to

Ajei S. Gopal

sincere to so a close out to frankly gratitude by colleagues, ANSYS my and to all fantastic your big another our like I'd and expressing guys customers partners, you quarter. much you our for thank and thank to shout efforts my for

for For call today. your our of so next thank enjoy to everyone I and you joining day. the please else, rest much call, the look forward

Operator

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

You may now disconnect.

ANSYS (ANSS) 3 May 182018 Q1 Earnings call transcript