ANSS - Earnings call transcript Q2 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the ANSYS' Second Quarter 2019 Earnings Conference Call.

With us today are Ajei Gopal, Chief Executive Officer; Maria Shields, SVP and Chief Financial Officer; and Annette Arribas, Senior Director, Global Investor Relations.

At this time, I would like to turn the call over to Mr. Arribas, for some opening remarks.

Annette Arribas

Good morning, everyone.

the homepage remarks website of and posted have this release the on our earnings related document prepared been morning. Our Investor Relations data underlying quarter all to our update, QX contain the and financial as and They the outlook, key key as well our results financial supporting second XXXX and assumptions. business information relative

our course SEC, any future filings that that we uncertainties I to everyone remind and at factors discussed would are with our which important that during results risks also of the length like may public website. call, available via affect in all addition to our are this highlight in of the

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

financial reconciliation in the of XXX ASC the of X-K. and revenue are release stated. Form to a morning's excluded comparable otherwise referring materials financial non-GAAP various earnings items included and this measures reference non-GAAP this call A GAAP be we'll unless that prepared take XXX. full discussion revenue ASC remarks, to measures under under any to mean Please to During is and in related

on Further website. with that reception details before. to IR agenda everyone Thursday, will like our would event XXth held I be registration remind showcase can logistics, location, the and September a Investor closing, Pittsburgh, found and XXXX on our In around be technology in evening Day

our Gopal, the remarks. would call his turn over to opening I CEO, like Ajei to Ajei? for now

Ajei Gopal

Thank you, and everyone. good morning Annette,

per We records ANSYS. end each in another well earnings category. our as revenue the for high was record- setting setting of share, new guidance quarter in surpassed as QX QX

in coming constant-currency. in the at was mid-teens quarter for growth ACV excellent Our

on I'm XXXX the time and that details of strength pipeline, guidance raising outstanding Based EPS will year. this our for the second our provide revenue, ACV announce our to are excited shortly. and financial Maria performance, we the

Our of including pervasive deals. product several more strategy larger simulation past is due across of strategy life our the success simulation to quarters and factors making cycle, number the a over that is driving therefore

We are our deals. to of the across operating two vectors size increase

First, deeper use broad through by modern our of cases a single and to customers penetration product portfolio and second, physics enabling physics new help address cross-selling users; multi challenges.

power largest the closed the with we physics first single $XX of standard solutions. our can our Let me million a example this, leader, we deal, significantly transactions demonstrates history size a in deal QX, vector. Korean the history, an give our with largest of In the the gold you South third in high-tech increase that our of

Moving second portfolio. significant as that challenges become involve complex, multi-physics to multiple creates market-leading vector, increasingly more product That across the our products opportunities addressing companies physics. are

Department In multi-physics a contractor. QX, we of U.S. Defense with a closed deal large prime

of from acquisition a to coupled them acquisition intelligence flagship the help modernize manufacturing workforce our considerations year's Design the on with built from to physics our addition deal their materials the this the accelerate In key additive Granta in systems. foundation solutions, and applications were solution development XDSIM complex

from and examples broad the This leadership our is demonstrates technology many that just one competitors. of our us moat that separates

Now and to we with at during the customers our value discuss was to SAP jointly Sapphire the are Conference. alliance a SAP's excited I On side, partnership presentation that bringing

defense leaders also to June's the industry. SAP's how its twin days. Insights technology of heard we me benefits showcased Enabled helped has by conference, from SAP during where Air with digital from Predictive we the Engineering joined the representatives Show timeline order aerospace and the streamline customer Paris ANSYS months During to

ANSYS with embedded is PTC's gaining Live Creo partnership new been PTC Our momentum. Discovery Live where also into Simulation has

During recent reported average deal with it that quarter's call, size an XX above transactions closed had level. earnings PTC its most the previous

Our in landing the Creo deal substantial ever the ANSYS largest resulting mentioned team closing PTC collaborated contractor Simulation Live two earlier the Live I at companies a Discovery order. and defense

and is contractor it demonstrates Discovery units. Creo to even across intends deploy and ANSYS more enterprises it and the That both users. Live CAD because where opportunity Discovery largest users multiple of potentially thousands drives business traditional for some Simulation Live to complements at for noteworthy value That Live of simulation offerings the

market The garner the for Discovery innovators Company, to for well September I'm recent Live with in as of media. from which as XX best was development new the as the ANSYS for of our continues Fast its recognition this product issue accolades most groundbreaking Staying a one workplaces moment, this named excited product. that from

past areas calls, the highlighted In I've earnings products or specific solution portfolio. ANSYS in

driving call, spoke about solutions ANSYS our respective are gold during I QX like success example, their in and For RedHawk how ANSYS HFSS markets. our standard

XXXX, highlight autonomous like ANSYS dramatically I'd Solutions vehicles the the will of QX, the by impact are a $X to implications financial global impact OEM's and vehicles that autonomous estimated chain. and an the considerable With economy reality. making on In entire trillion supply are

they sophistication, the the extensive and simulation. of critical these products, cannot nature it be safety developed Given is of use that complexity clear without

vehicles interest supply from these to result, companies their and automotive chains reality. OEMs, entire we are increased a As a next-generation make seeing A&D

while paying efficiency. to work timing may And airways, of be of simulation features ongoing and autonomous there improvements the speculation in our the is vehicle vehicles take autonomy roads when form the in around dividends and will truly around safety,

for aircraft leading with virtually Medini are test OPTIS to including obtained ANSYS' and reliability and best-in-class transportation multi-physics future products manufacturers acquisitions we've ensure safety these their automakers and enabling coupled to through recent technologies that systems. our products

believe for holistic landmark vehicle leader to be chain In QX, tool announced the industry's we autonomous a we first to deal automotive BMW create simulation developing what technologies. with

Using efficient Company expects test tool space exploration XXXX. this planning, data environment. safety valuable development its test The highly a chain in the optimize launch analytics in iNEXT rigorous providing framework and solution, a will automated to BMW data virtual driving by around

developed As wider multiple part and assume aerospace for and including of of ANSYS market. the tool industries, to automotive affect the portion BMW this will rights will chain Autonomy defense. to this agreement, also commercialization exclusive

also which use QX, with In announced Space, XXXX. critical ANSYS Solutions an sophisticated we will with enable goal of SCADE autonomous safety to by and flight the intelligence Defence agreement Airbus with artificial controls fully

product with Airbus cut the RX. market associated is autonomous of plans software release of solutions development in drive simulation the goal drone ANSYS to to expenses. model software Their QX certification use our control We systems further AI workflows. traditional based link development and time our the and to to with flight based accelerate of to new leadership expanded XXXX

and to of we've the leader Renault to ensure autonomous run for time reduce RX, to In shorten capabilities multi-body innovation simulations expanded safety VRXPERIENCE with accurate dynamics. prepare and complete testing, is already by This advanced physical Driving scenarios market vehicle its Simulator being automotive our initiative. used and vehicle

also the to of autonomous dramatically in RX and used crucial vehicles. design capabilities enhances RADAR analysis

Our systems. for provides takes a more Accelerated Doppler processing new radar up innovation around than the simulate it XXXx to time speed

that sensor enhances gold standard sensors breakthrough vehicles. designers capability the the between radar collaboration incorporate and delivers new and OEMs on accuracy This

can that land to strategically reality. of in environment. potential mobility, the represents a and opportunity vehicles play is use our way and a safety, and dream powerful making think Autonomous ANSYS significant am With reshape solutions well fundamentally This long-term ANSYS. partnerships, the we our vehicles positioned autonomous about role excited have multi-physics the I market a for

positions years marketing than She of that to and and gears, XX to as Lynn open Vice field has to how Lynn our corporate we to market of experience HP Trials, Worldwide track welcome outstanding well digital will new held others. avenues a fresh an brings as President Siemens Lynn marketing I'd has demand branding. Marketing. at record Clinical Switching like Qlik SunGard, leadership build Technologies, more Ledwith and and brings approach branding. amongst as across

proud In summary, we've accomplished of in I'm QX. what

Our ability give coupled gold-standard to electrification, goals help our solutions and take to excellent advantage others, functionality for of IoT the beyond. our financial our ability the remainder and like of us with and confidence megatrends achieve XG, customers XXXX autonomy, in our performance increased of

turn Maria? the And I'd call over like with to that, to Maria.

Maria Shields

Good morning, you, everyone. Thank Ajei.

I a a standard key assumptions and additional state perspective few performance our results second some to and very quarter with few our of strong QX comments QX in from Ajei add our our non-GAAP on financial will of me remainder outlook minutes shared around otherwise. Consistent take for let and unless now and color the be terms practice, highlights provide XXXX. my

QX XX% reflect EPS the both We business. record the of guidance. with growth results execution the continued quarter constant-currency revenue well margin customer were strong across and solid above combined momentum, high end results our operating QX business with and finished and that of Our

dollar in The lease originally by revenue the a of close strong value the driven forecasted multiyear second execution, were in a performance that of transactions the including and half closing was of to few sales year. QX deals larger

pipeline, and are and to automotive the results, in against and The A&D by of of strong and our combination deliver to second high-tech, confidence continue half to progress XXXX. which us record our strategic most have we financial make in been path success, priorities first that gives notably of driven year strength on quarter another our performance a

ranges Key and metrics $XXX.X currency ACV of total rates quarter constant-currency of XX%, within for QX with the financial the million guidance. QX that we of our provided or with $XXX begin Key growth were exchange million. revenue

increase The our and record a a balance increase of XX% and with software in contributed maintenance last $XXX QX backlog to new renewals high. lease deferred building QX total combined revenue sales year's strong to million, a comparable license over

helped strong of margin and quarter operating XX% exceptionally XX%. gross second The drive topline margin to an of results a

quarter. experienced pace had for also hiring than planned the a we of slightly We slower

second employee That the continue being XXXX. XXX second XX% from and of $X.XX the QX. overperformance execute our in record said, to our quarter revenue We to increase EPS hiring we plans of did throughout by over benefiting half growth of employees intention the reported of our QX It's year. representing approximately on base

our we in the quarter. With was slightly XX%, the effective below had coming guided that QX rate was tax into which respect taxes, to range

we rate to forward, in expect effective of and XX% be XX.X% Going XX% the to the for tax XX% QX range year. full to for our

and short-term for for million the for million closed in us leaves first Our totaled and investments. million which under XX,XXX We authorized with million $XXX available operations quarter, repurchase current $XXX shares of cash quarter the total X.X and half during $XX a QX repurchased program. with cash the shares the flow we from

turn me Now, off for third of and earnings our let the guidance. for outlook the XXXX. ACV quarter revenue to in guidance finish our initiating Coming and strong increasing we are QX, topic exceptionally

a the the specific the discussions to respect let the with comments of U.S. into get I between Before and impact China. numbers, trade few just me provide ongoing

our China than expectations X% point accounted revenue. XXXX, out in I'd our And take does that to business for our like total annual XXXX China. remind increased everyone that into of reduced our less for outlook from consideration

move the of let details Now, me our to outlook.

revenue non-GAAP EPS expect we $X.XX. $XXX in the QX, in $X.XX $XXX range non-GAAP For of the range and million of to million to

the to the outlook in million full our of non-GAAP to range million at of we XX% or are in $X.XX to XX% range constant the $X.XXX EPS growth of increasing $X.XX. revenue range $X.XXX XX% For midpoint in and the year, the to or currency

of also to XX%. increasing ACV to XXXX of This growth outlook currency to our represents for million. $X.XXX constant are $X.XXX a We ACV range million XX%

customer trade for discussions, we are of industry geographically aware XXXX and across diverse base. that everything political outlook sentiment of the customer ongoing and respect factors with remainder currently situations in to Our our

in It shortfall. that several hiring were delayed transformation commissions to additional also second sales the first half from digital hiring and infrastructure business the half's spending increased and costs related reflects projects,

year. flow, to XXXX first like relate including finish operating ASC that flow related and acquisitions our in lease we cash of the of the under would to for QX XXXX higher annual acceleration everyone $XXX our revenue $XXX in payments that for million to range the I currently, impact that the are year we additional tax respect this to profitability and in earlier XXXX, With to strong operating includes outlook million. remind the the closed outlook tax of XXX, cash license maintaining relating payments

XXXX, expecting Looking specific details operating the assumptions expecting rates in ahead into in the outlook margins for we're operating to margins XX% and around slight key in and that XX.X%. a year to factored of uptick QX, XX.X% XX% our of contained document. range to remarks currency and been for we're Further prepared other have full QX the are

lines on that double-digit and The strength and key growth our is and first from both make results evidenced by takeaway simulation business. to QX working half as our top is across the bottom pervasive strategy the

We Part our is customers continued simulation Ajei guidance the year that diverse our of our for the competitive services. we confidence mentioned that from raising momentum a industry-wide drive that based remainder for customer upon base. our and demand with along see the the recognition behind that are for our bolstering of megatrends advantage believe products can

that relationships confident to financial with continued provide in solid foundation and investing the our our pipeline, remain customer focus execution on deliver We recurring a on to growth in longer-term the business, well as goals, and strong ongoing our our sales continue business, our healthy XXXX XXXX as targets. combined

the lines to phone Operator, questions. we will take now open

Operator

first Our with Wong comes today Instructions] question ahead. Guggenheim. Ken [Operator go from Please

Ken Wong

And quarter. another great

help in - mentioned tell immediate conservatism QX. China, us saw impact could then guys guide. headlines, also some a we headwind in have obviously ahead, guys of headlines Any in factored can as you topic what kind or was currency any as the is. outlook? of you you lot And recent the On guys there's in whether right And that you you already that as considered quantify chance in now, of not look far

Maria Shields

Yes.

I'll bit positive the little China a quarter. of to That overperformance Ken, take some drive which wasn't of did it material situation revenue. helped to the Yes, the QX, from in in said, see being So, we that. impact

the in relative that all somewhere second And what our from the in would business we $XX range. into outlook is We reduction announcement. last factored the in to million $X gave say have million in evening the yes, expectations currency our half. the in transpired factored - to earnings a China I

Ken Wong

for - maybe then And Ajei.

of past, mentioned large transaction about a turn typically opportunity deal. think there results? million multi-year $XX the deliver future is physics of a of to of similar terms You that like single type the an kind into something and the this transactions deal, When you what kind in type in uplift, multi-physics

Ajei Gopal

convert sizes, single-physics, I deal Obviously also And said we're is on - Yes, a the depends deals cases across cross-sell the trying the to two said general, it the expand generalities, customers in not call, single-physics in an on cases multi-physics multi-physics the on opportunity this always into by there but is we're trying I is the but there organization. deals. half work us those it of use case for application, as only in speaking drive depends specific one, to as are use some some the of of with focusing to together. but

broadening we as to there even which multi-physics organization, in we're multi-physics single-physics, sales opportunities a So individual deepen continuing to and is has at holding. the look the even deep

So of the both but larger deals. drive ability with each absolutely, other parallel working kind basis to of our it's they're

Operator

Griffin And with our next question ahead. comes Securities. Please Vleeschhouwer from go Jay

Jay Vleeschhouwer

Good morning. questions you. Two Ajei. for

question. that's at a some Design Conference me in to Las methods interestingly the on Management, talk not But there the And in computational services. strength the for high-tech, is be we're and showing very presentation of improved what to that thinking long-term You cloud, new SPDM same the ago for question, perhaps least in quite noted industrial seem momentum Automation couple terms CTO, ANSYS shorter-term new example intermediate also business about at is two evident. gave industrial equipment see and ANSYS' the term, collaboration and months or technology aero were in the end of last auto. you're which interesting a vision things seeing including in could quite you do market momentum you architecture in growth more, including areas, Vegas, like for new the references the services-based for quarters market Long-term

in and is perhaps in that in today and to the regard question even effectuate investments that that is your vision. to internal R&D sales technology marketing vision, So forming how with longer-term

Ajei Gopal

question So let me second start first. with the

techniques of we we new and investments. that As you and to to accuracy new make have nature at fight and ANSYS know, ideas of technologies technology, the bringing the effectiveness and market, our ourselves on solutions our in we the continue new

some innovation, continue you're to in what the organization make product to, And what work obviously, the a cloud, we're to obviously, in within drive saw, our we the to drive to investments is that and cloud, doing Jay, continue of glimpse product cloud. continue you mentioned referring - you capabilities the we into

that most announcement, obviously talked a ANSYS' that is Cloud have the about which Cloud, we're HPC recently of result I couple one speed We've some faster my in driving quarters to speed of up course XXXx an We as able were which think script. up investments, center. for capabilities our I traditional driving is well as data of continue of those techniques our in investments make within making ago, fact - usage of get to usage computational algorithms, investments in we referred in in we to

investment mentioned, that a that amount we're activity. invest next obviously of I making is there in componentized So generation of significant and set different a our in platform we think as you that vectors reflects the architectures

platform we as of We make and continue technology industry-leading an Workbench in in form to the that ANSYS have investments well.

there big investments successful. us make learning, machine different data all analytics, artificial our we a of So we're is in making and of think most support intelligence, business which number

that at and and that So were obviously some to the look presentation. case, I'm glad seeing that's you're able of you

that supply entire the and of we're business place, the permeates those verticals I'm activity a excited are are taking areas concerned, areas that's the on - tailwinds these constitute that really an. of taking our as all course and significant is of are of we're chain place about automotive the industry and what that's growth excited frankly activity focus and those in defense driving the and industry drive aerospace seeing high-tech level markets, is far the As about there the growth and

think they well. from where about customers might markets when many elsewhere we even supply supplying end the to be cases refer in belong company companies we as as the in an electronics And you know, chain though other

So your I I questions. answered hope that

Operator

Matt question William And from with go comes Pfau ahead. next our Blair. Please

Matt Pfau

get penetration trying business types just within are they additional to single additional I detail Thanks. I products are driving use new some deeper and gaining guess customer I'm ANSYS are engineers detail be to competitive of getting helpful. your some displacements to on with physics wanted units, you you additional would you're how there base, understand, or

Ajei Gopal

more in technology So products of usually may two is there what and using require more that happens use cases more that the users be technology be is is, in amounts might obviously one, firstly, of vectors, there that and more greater that usage simulation. complex

Our sales try customers, the to nature as the that being to of positioning the obviously address of to problems solve. the challenges. in nature team we of is engaged trying with they the of are are the way And we some understand able simulation effective technologies,

they the become we part the of more different take as in cases so departments, the and more enjoying of across success organization, starts one different organization infectious And organization. in that on products, across different parts across some that are to

think that important one that's And dimension. so I

realize launch the effectively validate to thing as products those simulation or to simulation to other amount more to that required run. become be The of is - requires more products complex, increases and more

physics. more it's use ultimately ANSYS, greater more of all obviously more computing within and drive a that's which So and users, it's use high more business of that cases, translates so use single to for performance HPC, it's HPC, into

are at in a able looking to of problems and then And tend case, for larger leverage companies said season sale. we're that I've products nature be to and into broader in before, multi-physics then especially - single-physics as multi-physics for that course

Operator

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

Jackson Ader

this This on Sterling for is Ader Jackson morning.

in touch in the maybe take the sector, second back look, XXXX space, just we automotive of simulation then first of If how in U.S. the, automotive out going industries. autonomous the could driving half traditional the particularly does you If maybe and half? to the for

Ajei Gopal

the the when to power and of to those second smarter industry I areas. way autonomous and autonomy in use is we And cars. broad is of there the of - both perhaps those the first use automotive automotive of levels think addressing the leading electrification the trends. ultimately investment is the So are - electric the - thinks cars. safer about the changing of industry, And and drive are second creation and both and the say massive is that two these cars of would massive

industry be spending an you if And company, make with trying transition. they're automotive this to - ahead where they those sure areas areas retooling, they're they're huge that can they the through a goes have conversation to spending money, stay two are tend as

area we've but about integrity, building still and remain deal analysis for companies worried that how at problems many you and we've example; to time the that helped - fundamentals and but number they're of in about you for the include are same So they've years, how do worried which structural those cars, give is big, years, one the so that solve car you do vibration structures with a deal customers been analysis of problem. noise an with

combustion when Well, that pronounced internal drowning much engine, with even problem becomes no out been you're car car quieter. when was with might an what an in to which dealing might car noise an have move which and more a is okay, electric be longer the you so okay electric

this even the new that So to they're complex solve technology. of cases are and some they're because with trying more in problems dealing

for for autonomy. And but incremental where demand and not it's historically ongoing like also electrification so, cases we an see been to only simulation use absolutely, new be these used, used,

to through I Granta interaction of And the thing between get, look the that also the nature role. we outcome draw a the into and that's use of they at they come other your of play of that that and some materials I materials role The materials would where important. the the course acquisitions technology that's the got of and is starting companies different to mean are materials, use attention understanding and

the foundation ANSYS about industry, of techniques the and one original of and are our Mechanical absolutely the automotive solving every being So it are and to technologies automotive all was them as are the was heritage which and have, the we when that center technologies whether single most go forward pertinent problems I relevant industry they think for in Company the acquired successful for industry. that the recent

Jackson Ader

One quick follow-up for you, Maria.

the Just cash on flow.

sure we're we think clear. want to I make

- are that's the half, why to cash particularly operating large flow has you are guidance So half previously first the the signed than tax lease in payments the that remained in unchanged? deals they you and leading these or second contemplated larger

Maria Shields

No.

So just doubt to be actually But payments to it that deal in have clear, that forecast, tax no outlier. was being that as an began wasn't under in said, we the XXX, articulate our QX increased.

XXXX. So well that all to as second timing will on the a result, it's those the full into of flow or of the the combination of year, we move flows payments up half the acquisitions X% earlier for see lead to and as dilutive we or impact deciding not probably around prudent QX get of from the flows whether deals cash under to increase larger closing headwind a year guidance us until in did XXX the a in cash cash about tax XXXX as impact the not that in take sense they the

Operator

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

Ken Talanian

are us year. could you organic the sense remainder for if wondering was how I growth ACV of the thinking about a for give you

Maria Shields

would impact this of inorganic that I the impact about year the the are acquisitions say X%. we Yes, - did

So the remainder all organic. is

Ken Talanian

your products existing workflow offers you broadly recent more more of acquisitions? than and for sounds it like both a integrated available you're discuss technical Ajei, Could were RX then in integration before. And terms

Ajei Gopal

new years Workbench a executing - integrate know, that of we've you products strategy simulation framework together. it a a a through mechanism continues it and against was innovative us to could that and to be our very continues to easier, a the number integrated we've that be been be as make the Well, that strategy, that and dramatically solution which had gave ANSYS by together made - for technologies

both strategy to here platform as of our believe drive I best integration, to strategy and continues our in we earlier, ANSYS ongoing make of because we to platform the drive and invest work be open to of integration our that to that people said through for Workbench level to it the platform level frankly, is in customers. And an componentize interest easier continue

of in, allow So that when to workflows had of part and technologies we the we our we years, to that level I a integrate autonomy, define of for we investments think XG, to some do et integrate our define increase strategy continue customers, we number addressing that's you mentioned in challenges together third-parties mentioned next-generation continue that our APIs, with electrification, of we're about of course, certainly When we've I we cetera. that. and these

require customers as on These are provide products. across we've multi-physics and an to our well, integration to intrinsically solutions, integrated able and workflow we're the position those based also work which done our

Operator

And question Please Securities. our with go Wedbush comes Steve Koenig next from ahead.

Steve Koenig

much. Perfect, on a Hi thank you great very congratulations quarter. ANSYS,

Ajei Gopal

Thank you.

Steve Koenig

and Maria, one Ajei, for follow-up don't got I a you for well. if mind as

certain end some weakness look kind of did across some pretty maybe sort selected in certain of most from Did every countries, the much for - certain in any linearity and how people pockets like? see good or - was of countries. everything the and of maybe So non-linearity Maria, you companies country quarter your weakness we've been hearing other towards about in some from some

Maria Shields

the our in country would were I we've execute as in XXXX. can't and Yes, I resiliency but to geographic the distribution and about successfully. to against forecasts, model vertical from weakness linearity experienced speak got same that situation we've tariff and closed that our - the that our end, able enough China, we QX the so was at of obviously say the XXXX we any throughout specific saw

up earnings, the we've guide growth, for got we key metrics taken and still double-digit each you feel our see on healthy geographies good in of and momentum revenues as And year, and so all major obviously delivered constant-currency of lot we full the revenue as saw, for pipeline. about of a our we've QX, our a execution ACV

year. focus on for the of need just the to execution now So we remainder

Steve Koenig

you're Ajei. you, workflow. the you the for that as selling the on color proposition the for distinguish CAD and which Discovery value from situations what's give prop Could you're Live maybe Live or us that And PTC some in of the Discovery activity and value part like seeing

Ajei Gopal

and The of I've time - namely a that Live real-time for - from unchanged really the what a of particular Discovery Live it's described it the to intuitive Discovery use, and is a been way and accurate getting so it's so or so accurate. easy makes fact quick make what way offers an very of real in past, value in what Live makes individual the Live valuable analysis is proposition a an directionally is that what to use solution nature Discovery problem Discovery

there found - are of Discovery have to we we users are that see we'll cases case. we there where use use customers the that's of Live and cases Now, or found - new where simulation, are benefit completely certainly, the

give And also used being much part deeper tools the Live flagship much of day-to-day by adept, where apply are simulation more Discovery used use ANSYS cases to but other work, fact past, - people who their of who have of where are a we Discovery in need by to the in is able have directional to them simulation. by Live levels as using idea they

whether deeper immediate do gives said, And can then that - value them they for feedback them start that the gives immediate analysis. they that Live to immediate obviously Discovery proposition without to out should having figure analysis. I do feedback to the as use is it deeper And looking it

are about enterprise to users that not who currently simulation-based when see see you you the are people and insight of side. those of but of advantage of within give relive people there Discovery of are there ANSYS of both we advantages use users suite take taking in see because ANSYS Live you them think in customers, are cases. organizations kinds enterprise So exactly who Certainly, larger who

Now Live CAD. There or example CAD as the make using CAD concerned, with the user in with CAD do vendor. a users in far their natively. to capabilities a and PTC And to PTC is Discovery in of position in as as - course co-existence to that are general an of is who is with we model cadre from what are visible

gives able them solution able someone obviously iterate simulate quickly be was will an an out to solution use the PTC Creo that so workflow of integrated that's the design advantage. laying within to CAD be those live and and to PTC So

case as simulate I situation to I my users in also script. have But Live, case the users. Live. are a decision to there DoD made Creo defense There purchase PTC of also in in And who CAD pointed not that Discovery customer where, where as well contractor that we out are the users, as are the a both currently referred

to to both are so run upfront trying the and to they own they're every externally, to or rapid their They get decisions expert across strategically to to simulation be supply internally simulation, what early. to simulation that do chain, more informed want drive is not, a able whether can and single engineer get try and they

is hundreds situation, users expect multiple advantage of of be see that some using case in potentially CAD to said taking - business we I simulation, solution, as in some won't Live using they customer And users natural or be other have course, users And of Discovery take of across engineers they where thousands cases, advantage have of the there'll be CAD PTC Discovery solution, the a will technologies to advantage in ability we both the Live CAD parallel. another you Solutions, CAD if and interconnections between taking solution. the

Operator

go Citi. Tyler question from Please ahead. our And Radke with next comes

Tyler Radke

So am here. to question I ask free

touched half sounds changes you the the second Thank China here of backdrop? large broadly just just is, to given you closed on since you. relative question macro weaker thinking QX. QX half, any you potentially or to seen weeks about in a first see deals and macro the didn't guess the close like and month the my year in how ability you are in much first five you've weakness You obviously I

Ajei Gopal

very the it think said - comment Maria’s said clearly. actually I mean, I

that looked and what and the broader closely given the about the at have we trade the The where situation are. guidance we giving the pipeline our that into as account we're macro. we and and pipeline U.S. understand well macro about discussions China, our We between and takes everything understand as

in is guidance we our analysis circumstances So we today. what now and upon based we a on that is know the our what based in position, see market are the

Tyler Radke

the lot addition, you guess how the how autos I you some are talked of you. that? a opportunity, through that are just stages trends, far just you think And market to and about or then you end in do through of - thinking and talked is Thank this high-tech kind XG. electrification come opportunity about various the we multiyear the of autonomous are in we about where

Ajei Gopal

of significant We autonomy, starts ones as over will broadly All were get mentioned, better, early and technology the Autonomous, in in I I see that development. as of improve. the all levels mentioned, as early these years alluded I very who customers We think my to, their their case make think and electrification, XG, this multiple products better certainly I Certainly of in IoT in of development. are in to I and investments think script. very

can you I going on the think be is in experts the to Level full autonomy get X ready agree when marketplace. don't to

that of safer sooner vehicles path Some people the all improve full will significantly fact safety innovations are to some on X or towards the say later, road. being on people even and make will created say remains the starts better and the autonomy kinds Level that will capabilities but partial are autonomy there which

plays role. simulation significant And a

make So this course simulation it's where automotive, role is in And is equipment. industry aerospace, to autonomy. that in that it's multiyear observation the I play huge is the on, industrial a just it’s going of would a other not journey

talked submersible. I well, in think autonomous equipment about I so undersea conference an call as earlier an

of autonomy to I are growth for of be and go of So is for Similarly are ahead it our that as similar applicable all amounts believe for all an continues where IoT, equally core areas there to of we trends these electrification, be frankly us major major, multi-trends industry. kinds in equally of mega enormous business. are work there could detail driving through trends and that the XG,

And so, challenges address to market very problems part to and facing. customers' are able edge I that in a to be think of that's in we're growing strong with as leading in core business the a company they're that enviable a very products actively products mega a and position have these multiyear

Operator

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

Gal Munda

the one are of coming just in that forecast you terms the to So in. is large guys for deals those first ability

year had when more the might than half. really but fourth less in deals What a those ago? above when forward. having to say look you close end towards deals those the and what of going you've only pipeline - your a from and coming have those you deal even year $XX close, for the confident fact a we've Now able that is ability considering in deals bit potential the Are at and learned million the and predict year is kind of kind started more you it to of, the to a

Ajei Gopal

some think pipeline, certain I what ANSYS at for basis. you're about exactly number anytime not that think pipeline have customer do volume, looking to happens customer the these you an varies overall We're the on if larger larger It customers. deals. and deals predict we by large and especially obviously trying the we business of assuming, in - of individual a

as a And working transactional of more business course we the with business. volumes because we we're of dealing large nature. transactional But when smaller have to of predict the much we numbers obviously of the of easier be piece have law amount in more that's know large a that's

understand they're course compelling a proposition to for know market. what to we get understand we with been is. dealing make driving in are value cases a exactly the technology them us. the deals some trying way the out while, particular trying trying the understand different spend a They're we that's to In challenges of working what we've For We many larger that to the They're product market. particular They to money the the in event is. compete customer launch. with And customer with. problem the

help drivers they're with these money to spending major objectives. and are us these business achieve of All

business the And we so, prediction some value and together, factor can of nature objectives our of customers. with We and we of given in, put it the understanding can with have link provide, that we when that these we into we predict pipeline. the the of our relationships these

in more a analysis that thoughtful we give guidance where it’s the it's results - we that obviously you of are a So to and guys. -

Gal Munda

take it you order of the in terms that Live on both got definitely. PTC from recently getting And around question driver could move a year. years to have few has is then said in follow-up, growth just become Do traction let's that, so. in another really Discovery of it like and there numbers, you nothing But material expectations in the ramp up say, it's for material more or for a especially seems understand that you needle? as commentary a We the will did this Live to to more volume year think Discovery what

Ajei Gopal

our able the to discussion longer little bit technologies. we’ll think product Yes, Live Discovery of expectations take a give in more be Day about internal during quite obviously that it to be way Investor we think to but about will a for Gal talk it, when take a I are a and conservative. is technology, industry, that our Live, you breakthrough like to customers our these time advantage will And quick tend for customers even Discovery

of or it's about the as business rightly you really it a out, not as so, in our think we part point year short And term. material this

during of to be others insights, couple give questions able Investor a we'll the you months. more address So presentation and Day in perhaps these

month. Next

Operator

And our Borg from with Adam next question Stifel. ahead. Please comes go

Adam Borg

Regarding getting to continued with growth XX% about and services, sell broader curious how so you platform momentum it's your services the services strong customers. you XX% a plans to recent involved Are trends the as great to sustainable see the in to just is? partners continue

Ajei Gopal

problems some on services of help problems. ANSYS these more capabilities, the the of to services why them these more next-generation So understand able were that using one services to complex is customers capability, solve how one areas, to are of looking reasons solve using they've our got some of to

to these some that. do them of to solve provide services. to looking where help us that's they're So problems, reaching to complex And out we

not portion is we know, company, software be business going yes, portion our model a to business to and But forward. business, of services not be are services a it's our a and big as not business is of going our a you big

third-parties with we're to third-parties and customers plan newer these looking work with to to to continue work to to, is plan of as to that - partners on evaluate appropriate, are continuing responsibilities is to. take our areas take solution and some Our

drive to investments we our revenue. our where And license services business drive will continue in

about as percentage the really ratio services changing see way a that our in revenue you So should overall the the that's think of we obviously, term. and services business, don't

Adam Borg

a versus one-year follow-up Thanks. quick And multi-year lease of maybe just percentage that the the Could for us deals? and what's what duration remind multi-year the are you are just for deals average for Maria.

Maria Shields

one between the level. at transactional And at obviously bifurcate enterprise don't year question? the to the and we one-year and Yes, multi-year strategic part second the your of tend be the be level and tend multi-year. Today, to

Adam Borg

Duration.

Maria Shields

I'd changed. years. be multi-year really say hasn't to between deals still two tend Duration those three and

Operator

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

Nate Hitchcock

chain if vision or Hitchcock share thanks about product, this in were commercialization tech this space. I marketing with for you do ANSYS regarding Rich, wondering, or Nate anything tool and other note simulation begun one auto then to plans marketing if This follow-up. you've where have can And exclusive other for OEMs is for that my Thinking we release will tech the taking BMW, rights on question. assume this

AjeiGopal

in more general general. Day at in have at of your understand you'll perhaps that we're more this autonomy ANSYS, that not a answer direct about the in But We about and little a in chance autonomy half time. we're point question bit talk no externally detail what to technical marketing our will Investor about doing

as BMW the BMW which We with years. the expected lead next next with are working to within of is the they launch be up couple iNEXT to launch to - of the

Nate Hitchcock

relations geography prepared closing we of strength deals and constant if XQ additional provide XX% regarding the ahead you the second or of growth really can of is earlier half Pacific schedule, up wondering following result the considering revenue And saw some in Asia remarks then company other Asia any trade And strong as some very if detail the also currency. ahead a and Pacific the other we're due buying to here? of year-over-year

Maria Shields

say by two things. would driven was I Yes. Yes, it

that portion. but ahead, buying companies smaller a Some was

large transaction in his referred the to was prepared remarks. other Ajei The that

that are the you to. referred performance in numbers of drove what So those both impact the

Operator

our And Capital. KeyBanc ahead. next go Please with question comes Celino Jason from

Jason Celino

just suggests compression. basis in look XXX operating I of increase XXX, the little at making or margins, talk Can it kind you When color. investments more of margin guidance for points a just at we spend plan about the least some of QX operating

Maria Shields

Yes.

number that remainder the pace continue heavily of we or business. So underway the impact the the of closed will the to in acquisitions across for the in so transformation some say we I to in that But a contemplating, driver. it's second got the really are commentary lower and is in of of the would projects those, primary for the we if year. up of And slower making all of my QX half first all, invest the remarks, digital a earlier, what's no doubt you first revenue combination heard and of my outlook hire of course half. operating driving continuing margin We've

Operator

comes our ahead. Please Robert RBC. from next question go Simmons with And

Robert Simmons

and that kind just sort you've what's then been bottleneck? of kind on behind areas both particular QX, So Are you of there the mentioned, few on board, like questions a of or hiring across QX the is it your on behind you're and that.

Maria Shields

But environment see that Yes, I I'll call it's impacted of as spoke last and that's the on across a not imagine, as combination hiring also that's issue the acquisitions open, positions board, can only, fill talent globally. responsibilities. before challenging new not earnings in domestic of a by, to call QX there it you that pipeline a was really and just was ANSYS we is open just our to some is keep to at teammates do a hiring opportunities the if you a broaden quarter take we two the joined look when new

down slowed that So the activity of in some QX.

going the the to and said, As for people we hire hiring did in aggressively across pursue we business. continue we is of our reality and are I the physicians the QX XXX year, recruiting throughout plans remainder are to

really the at I've business seen business we've single more the a So in there challenging is and across it hiring part environment or It's seen a decade. impacted. than of disproportionately least no is that's function at least,

Robert Simmons

be rising to wage seeing or liquidating And pretty turnover, then, you been growing you it are you just is that find is steady. people? harder demand And up are is seeing or

Maria Shields

who still are more we go those to to do just you to be no, their the recruiting leaving, got turnover, what employer can efforts takes but have is going talented they imagine, able to existing sometimes do have people. employees so longer. that highly it to getting Yes, are as you aggressive single-digit And very we retain existing are their to and relative when employers announce retain, they

know, continuing for. looking to are So what highly find it's in as candidates for hiring you we're people We're tricky. we selective also

XX are find attract retain So continue it's we've we years them. and our to that not always easy But we to talent almost now. done as can for confident

Operator

and will question-and-answer like for our session. ladies any this And Gopal the turn conference Ajei back to to conclude closing I'd over remarks. gentlemen,

Ajei Gopal

I thank you all for your questions.

around joining like my hard to I their for enjoy channel success. Thank I'd And that once to leading please well Before and efforts off, you much. of all colleagues you and thank sign the call again the for rest of our day. at thank you, work our your are of ANSYS the world rest so as the as for all partners their

Operator

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

You may disconnect your at a now time and lines have day. this wonderful

ANSYS (ANSS) 6 Aug 192019 Q2 Earnings call transcript