ANSS - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to ANSYS’ Third Quarter 2020 Earnings Conference Call. With us today are Ajei Gopal, Senior 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 Ms. Arribas for some opening remarks. Please proceed.

Annette Arribas

everyone. morning, Good

and of They that that of to data outlook third quarter the addition that relative to results assumptions. release, our remind been remarks everyone and underlying website. via in and Relations all and update the our materially and important financial updated and of I at call, highlight also document with projections. on could financial our to our our impact the may Our course qualitative any as third the differ the discussed related risks We quarter that our future link key website. Investor in well our QX are our uncertainties homepage to COVID-XX actual would all which fiscal during the our Form pandemic supporting the the key the on from information cause affect earnings factors of we prepared contain performance results business XX-Q length this and posted public as SEC, year like available XXXX are to quantitative note results have filings

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

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

Ajei Gopal

another thank financial strong QX and all or for quarter for joining on you meeting was beating our us. ANSYS guidance morning, Good everyone, metrics. key

helping line, the line value market. core it’s a resonate ANSYS’ simulation for Our performance we the of top will with our Based are across of strategy that pipeline pervasive strong product on have of performance driving high-end year-to-date growing. minutes. our bottom midpoint proposition ACV in the lifecycle. few EPS. the and and is that excited And solutions both fourth revenue the and Maria increase a XXXX for organizations furthering and the that the demand guidance quarter, I’m demonstrates increasing multi-physics our savings of continues the making strength to while for our details

a prepared From the the way, multi-year remarks reflecting that our but year. multi-physics has some region Americas regional let deals. for Asia-Pacific quarterly with We progress leading was strong strongest the ongoing lease document perspective, quarter, about in QX full perspective. will details anticipate towards our provide be Japan me Our the

larger growth expect to good We show in deals. by a driven the of timing QX EMEA

ACV comes coming QX closed our sale our of enterprise that largest is continue the last $XXX that account in deal XXX ACV $XX and our of the after quarter. the year. in From announced strongest second the ACV. almost American I largest view, past continued aerospace with we excited our months quarter and an around this we in largest in in QX transportation, automotive million On million a from with quarter successes our trailing have vertical. color and the primarily strength and sectors given the XX% our XX% program QX, in and still the history revenue will customer, to have industry show results XX During We point our previously A&D of at I agreement medium we business. company. across of approximately second with and strategic aerospace some and our continue consistent defense defense discuss top headwinds five-year and full and geographies, aspects be lease what of This I’m our customers. and North businesses to enterprise calls, ANSYS’ high-tech, QX particular small a Today, the communicated. sector with additional performance about ground for

sector strategic impacted deals engines, use Space air These has engine eco-friendly develop I travel, improve include defense. efficiency, on commercial initiatives. eco-friendly and spending would initiatives thanks two pandemic satellite continue and weight, QX the deployments X.X such important like the important see we fuel to national rocket to engine companies will and to These aircraft Although, design. relying engines. companies design in to reduce fuel-efficient ANSYS or to avoid in which over inefficient highlight ANSYS as simulation are

operational The first drive ANSYS workflows efficiency agreement maximize was to improvements. with is Honeywell, engineering process automate to which simulation and its using

from product traceability reusability, significantly cutting will cycle Honeywell benefit result, wide a As development and times. while

than liftoff conditions smarter the has in it the decisions million the of tasks design using companies about realized astronauts make leading program space aircraft simulation vision for second and standardize democratizing next embracing was five critical to million X,XXX the by our announced major travel. engines lower faster. at benefited companies generation startup on Firefly of orbit. the can to Space are a The ANSYS products more developing they that from savings with next of Aerospace, space to to flight withstand over $XX X.X better manufacturer use have ANSYS of costs. $XX investing one satellites extreme that a is into that recently are years simulation launching to develop engine achieve from And and that its and

multi-physics to signed the government design deal costs company the weeks cloud, this can be to that side eight by to aircraft time to investment by large advanced capabilities. to and chips and contractor security. designers customers the ANSYS while help We multimillion on are dollar are American we increasing for a in team next national a productivity prevent our channel because seeing testing unparalleled because the and ongoing optical chip private chip speed using of ANSYS developed solve the breakthrough of We trying of reduce is generation problems QX, North to an design win to simulation more due help defense for by their use deployed This XX% design are important detect defense coupled system competitive R&D, organizations organization attacks our and test as In to deployed ANSYS, the by are specifically arrow secure calibrate saw XX% simulate of leadership, advanced sensor simulation workflow. engineering blurriness to possible multi-physics lowering the ANSYS’ the to in contractors, and only simulation attacks, sensor. multi-physics another air runs solution. investments because is is hard QX products. designed. simulations being security new interest a agency which secure. government an in also which was of accuracy but To our not These enables offering, turning on and agencies vulnerability and new of used with relying to which flow, ANSYS algorithms measure optical chip leadership noise up This from high fully eliminated ANSYS of and multi-physics

amongst organization this shared prime the private a aside, needs contractors that an products customers on to its As using running of ANSYS first infrastructure. secured is users the ANSYS and was serve an and cloud deployed

AGI by the software built Last mission with combining a traditionally analysis to simulation acquisitions. missions, in-house purpose multiple we be simulation, a from a to customers and week, launches, system were by this to become applications AGI which commercial rescue opportunity level and area. defense with leading from able growing this which move codes. in as and engineering, partially increasing simulation mission forces me not we simulation By and analysis AGI, search mission for and a ANSYS. area, analysis components Let in and of digital is will AGI acquire address our all leader broader firm combines to intent has from called participated has needs and customer and solution and has missions. such ANSYS number Historically, in satellite of due the announced operations. national pioneer addressed

the Our at crucial and combined up to stack, thereby portfolio will increasing all success enable resources. way the and the chip customers other to starting level up the of and time, and simulate entire money, customer’s down mission, saving customers’ likelihood going the

Ansys software that formed solver. results to are that of may and AGI with a for products products Several to of one employs the between its assets availability using flagship that and customers Ansys last One the HFSS we large contractor, both remember the partnership together. And then prime our year. visibility AGI connection You various example, between alliance visibility electromagnetic large uses the and mission analyze companies’ radar quality of and track HFSS connectivity. signal with

to of telecommunication deployment to a example new another concrete. successful more make use Here’s the The of plan it simulation satellite.

satellite can in and deployed. position terrestrial the other can avoids of that to of the to ensure the will capabilities other expected as communications help capabilities base telecommunication to and AGI’s HFSS space. relative satellites with stations the of when AGI’s simulate mission the combination satellites First, capabilities Furthermore, orbital help and orbit that and the Ansys the objects orbiting simulation the ensure perform satellites launch collision new and

AGI We transaction will closes. our a more with the with share be you in about plans after position to

ESG. customers. SaaS pay-as-you-go and for that with six hybrid their customers flexible ANSYS over which built continuing can to electromagnetics is our on performance close important topics. highest networking cloud. model Cloud Before match high an to in platform. enables own bring access computing mix ANSYS the Furthermore, Maria, supports for use computing in to enables critically its public preserving I the lease ANSYS mechanical, and the to performance gives in elastic license lowering doubling demand entry during high-performance discuss fluids licenses, These Cloud It’s compute barrier two existing allows turn so and the our commitment the the to ANSYS customers available ANSYS products products Cloud Today, a The infrastructure Cloud, convenience. many infrastructure with the that their increase remotely your models, The elastic market. ANSYS use collaboration lease users and pandemic. call model and I’d ANSYS work like last to continues customers investments, to ANSYS Azure and important customers for to offering, to A greatest Cloud access latest and customers a Microsoft Cloud include months. our majority licenses on and that and greatest thus with to of consumption the Azure usage flexibility. and model existing for

cloud For Microsoft public more ANSYS we in example, data using simulation are centers accelerate as processes. majority encouraged cloud, The XX%, I a and product about excited Whilst, ANSYS users our enabling is its Cloud accurately. Automation progress. offering is of the their products to in on own has Government customer, mentioned by the to larger note premises development by joint view company our to Rockwell reduced customers that ANSYS rapid problems runtimes solve Agency, important It such earlier. or private

As such, piece our ANSYS for remain small offering we business a our future. will of expect the relatively foreseeable Cloud

social information internal our our change on CDP, identify are website. and advance This environmental, QX, we to is governance Finally, Relations we and submitted us environmental to opportunities. Investor report In our risks programs. helps our available which climate XXXX continuing

execution analyzing team environmental ready. partners. and quarter. was that sustainability plan another are for strong solutions Thanks to the publicly customers channel in summarize, global information enable of and from our make when also our To great dedicated QX employees available that our to We benefits

Our customer costs, close well as compelling with against around ANSYS customers turn the remainder confidence gain combined With over power the discuss relationships, helping while market. of in topline value continues Those pipeline us the our growth of assumption the proposition the Maria for our I’d year. like our the gives to as spurring products XXXX. traction and that, to to the call factors decrease objectives continued to of for our deliver strength remainder work our to as financials the the details outlook Maria? and of to QX, we to

Maria Shields

Ajei. Thank you, Hello everyone.

and team’s key by pleased an and some on ongoing of overview of very around strong report performance, our assumptions qualitative XXXX. the and financial quantitative quarter focus financial driven highlights then walk QX for I’ll the the to We’re through color add additional of quarter final execution. another outlook

you ANSYS Before team. I again, to take moment the begin, I’d a to say, like thank to

the continue employees remainder to as be continue this of will keep our XXXX. healthy, to throughout third efforts the home from our of colleagues previously And the work to safe quarter. of most part As case and we communicated, throughout

and the trends with backdrop QX’s the increase building experiencing lease reflect reflect QX million, combined first increase revenue high about constant revenue. business an is manage guidance. QX the driven a XX% discipline million, continued was fiscal quarter total which total last margin of that for QX, sources. a plan coming and in we to the quarter, deferred level results pandemic. license year’s line to the comparable solid of execution. ANSYS with by for of business on global revenue balance. lease the renewal our We be backlog contracts above results EPS that growth particularly continue to throughout business model. attributable key topline XX% record our strong, Our or financial In is into of our with the our with X% ACV end of percent results QX This a that third The and with maintenance over with end strong last of QX operating to guidance. continue respect $XXX the finished to This million the the of in travel a the XX% which to both margin results of combined in discretionary and reduce XX% the ACV sources. a new third prolonged stability of sales of of Other focus high both recurring our communicated operating been we’ve Even from with $XXX quarter our year, and of category record sales is Consistent contributed drive $XXX spending, currency help we margin high total with recurring revenue metrics XX.X%, of and the to solid of a rates entertainment. in finished revenue on XXXX, gross quarter QX that were and half

in ample XXXX. expect position was total and a While taxes, pace closed fiscal strengthened We that $XXX balance effective million climate. end was $XX.X with our of by have and that we cash and net strategy, same high employee We manage rate increase in for XX.X%, remainder the business further our progress we hiring, and we third the which short-term which quarter benefited with of investments. XXX the cash liquidity we and The employees respect in long-term With finished the in continue result also current third to at quarter. at cash above cognizant solid from continue reduced to base uncertainties the rate is we million confident quarter the of a time while $X.XX, remain did that against of business of remaining EPS our our combination third tax of results to discipline. of exist the ongoing quarter operations QX the to of guidance revenue our in the the from a flow total sheet which that

outlook the to XXXX, me of the increasing mid-point guidance. Now, the of of in the let year. with both ACV current move outlook opportunities strong earnings off high-end our topic and regarding combined for another on and of full we pipeline balance finish the our QX, revenue the strengths are for Coming of the

of results we in our add will of is To be closing expect AGI fourth quarter, deal have the impact the on date Let the acquisition guidance, not excluded certain. immaterial. extent from that the non-GAAP the as our updated because closes me just financial we impact the the

me our to the move outlook. of specifics let on Now,

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

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

we crisis ACV increasing XXXX $X.XXX to ACV have environment multi-year experienced We With renewals X% being constant we we’ve of first levels year with scheduled QX SMB a to outlook disproportionately said, whom similar and to adversely effects we affecting particularly commitments to part the the customers for growth of of currency what business, and line are with licenses. billion a respect new in planning year space their the remainder pandemic range continue of to billion or QX, experienced the in our our active year, are began as since a we also to process X%. full remainder with business the of expect negotiation In That in that of we pipeline what leases perpetual their QX. in the enterprise the impact in health spend $X.XXX of will late of the for of and expect R&D beyond.

Our outlook sentiment discussions largest factors our in we reflects revenue, in annual sale as year. third-party respect of to geographically $XXX the our payments. respect for aware year, reflective for in commission, million on and ongoing our quarterly of operating remainder of everything base. profitability to estimates that full $XXX we customer customer currently with It flow, is increase across million. ACV the to range are of year tax industry-diverse With and and ACV This current head XXXX and the we an maintaining trade of view also are outlook the cash into the

extended will contracts. impacts delayed because our factored payments existing also negotiated new of of terms that into on into and adverse contracts delayed have XXXX, the outlook, on We customer be payment payments

flow related $XX to the operating payments million. range in of these negative to of cash by We’re million be impacts maintaining our $XX estimate XXXX

a have will into expected flow. estimating assessment, XXXX, in cash $XX recent cash to which which tax recaptured are is Our in of outlook we a majority million operating flow also unfavorable on negative impact account, of the takes XXXX’s be

detailed QX, margin with with expecting XX.X%. And in for the industry expecting previous leading assumptions operating we the year for once XX% full key the the other range our document. process XXXX been around and annual and are in out to outlook, we’re contained to of planning Further QX XXXX to ahead we quantitative will prepared specific we’re practice, margins remarks year into qualitative factored our and details the our close outlook XXXX and XXXX. with line Looking provide currency standard XX%. guidance, in Consistent rates have XX.X% to finalize of in our range finish operating that

are of We resiliency are QX dedication of Graphics. closing, acquisition customers finish to testament with excited very fortunate operational results tenacity the model employees, Analytical financial and also a strong results. partners. In ANSYS business and the our we are about very the both to and to of and These pending

the As deal, for $XXX you XX% cash the shareholders recent pay stock. purchase with will receiving of XX% common saw we announcing its release ANSYS and in the million press in AGI in price

continued expand yet capital questions. acquisition leadership ready in milestone another and and call for our Operator, later our growing to This grow XXXX, million modestly to this an expect finalize With now $XX we’re to market. million non-GAAP to accretive to additional expect QX. deployment $XX in closing in revenue. contribute to exciting deal is to business we We open the and it And then of the be respect of will EPS. our non-GAAP

Operator

Tyler question now session. Radke of Tyler, please from Citi. comes [Operator begin Our proceed. first We’ll Instructions] the question-and-answer

Tyler Radke

right. qualitative much, morning, seems kind level confidence into everyone. very of the are about the It wanted and I my – years. is stronger somewhat like heading mid-teens, you’re in ask expecting QX. ACV of the of commentary your more continuation math is a bit All deal little environment suggests ACV and which saw just number you grown grow you’ve to if of you Thank right, from good expecting in think than I than QX. it to And that a stronger you a

deals what’s in about close confidence that you QX the in behind talk at just to or that maybe QX the strong QX. pushed such So a out expected got forecast

you’re what of sense Thank the pipeline. in a seeing you. us give Just

Maria Shields

Yes.

a to for questions. we’ve their the execute of saying, the had in scheduled level With of are a to surprises with on frankly, footprint we And comment So, respect QX relationships simulation first more standing customers QX, and Tyler, renewal high the we’ve the as all not we’ve expected, in thank you largely have year there. multi-year – QX. and R&D in upon been quite to result are that year long, cycle. all based played on QX. our with loaded. just out of what which very in be that what was and we product going nine of no long I’ll but these leases is back-end line grown for life of months real only a to And year, criticality confidence importance able importantly, the been just

a and and So demonstrated we’ve deals. we’re customers to nine we got team confident able highly months and engage know with great we’ve the we’re to that close first in large

a so obviously these quarter what where August, got visibility good compared the the conversations were to number we’ve a into we’ve that with of pipeline. We’ve that’s got active in us And been confidence customers. and gives in we strong

is increased we so up the morning. this confidence gives the of And put outlook all us that that what in

Tyler Radke

you. Thank Great.

Operator

please comes Securities. Ken, question from Guggenheim next Ken of Wong proceed. Our

Ken Wong

Thanks Maria, what’s point higher of a Ajei to asking. or Great. maybe for question. taking – final put my on Maybe

conversion, Just see cycles terms wondering, soft, pipeline macro love This shortening from you little guys in did the confidence with kind the you you what just confidence. gives that sense – this whether of to end, for underlying a gave KPIs anything elevated get we’d sales internally new our of still a guys you in and its that see in this uptick higher business?

Maria Shields

I different year. no all we’ve Ken, is, than say Yes. seen what What would

away seen and model impact to to while when critical we the comes QX, the is to it said, some sure SMB script, close to continue new access in an that in that model, we’ve deals their business, a As shifted I from that of process. they need the the if these technology, so renewal, you’ve to we’ve make perpetual listened those to customers that’s a have can R&D to now the lease reality

the relationship it’s going give largest we’ve customers visibility, frankly, the us be we to to but, provide continue and quarter the in pipeline and nature a ongoing of that is strong the the it’s it’s that confidence – critical what that So our QX history. company’s to got

Ajei Gopal

from what And – working the add you deal, coronavirus, look just the a bearish large And you largest of we’re at market history think with the perhaps very as announced comments, if on At now. people QX, an just the in if but operational largest the second the QX, home. of we in from history much perspective, you company, at once had home. people the in more to example, closed in execution company, Maria the of deal and we I a heard seeing working right as of said, the closing again, to for the look we view when was time, from while a a situation everyone

gives fourth have the these some for this the when saying, that through to perspective I’d in for And the year deals, an as a you opportunity perspective and able confidence about – existing customer. we’re that. that sell for for we that’s us we with environment. So renew you And just us It’s the in relationships the more and Maria was our large new quarter. to execute are demonstrated And not and it nature have of give is the capabilities, ACV business. we some that reason to and an our we’ve new opportunity to ability do

Ken Wong

Great. Thank guys. you

Operator

JPMorgan. Our please next question comes Jackson proceed. of from Jackson, Ader

Jackson Ader

everybody. question. Thanks taking my morning, Good Great. for

across think deals, in large maybe and something of both Is theme on you deal. Ajei, up, following the backlog lengthening five-year backlog and key said the quarter the the that you’re you’re areas contract deals curious, you’re second The mentioned, contracts a seeing them than third terms and seeing revenue business. was Just as getting I in more so far if So of the your just just quarter? long-term and becoming all finish lengthening these line? revenue of that is growth from backlog combined

Maria Shields

Yes.

say is, leases. some deals them the So five-year into cycles anomaly. at are have that these customers two if say you leases, these are I’d of what an Jackson, still extend decided look what already those five-year I multi-year is, deals, the And or to three particular

confidence. to be so life longer. also And got And longer using for the a tend cycles of lot lifestyle where in product they’ve than the – are they’ve customers. more verticals, they some And much been simulation much

them plan accordingly combination all of can can their the they’re to So the R&D trying have that what’s work on is those to term, so out extend really they we factors driving that new them confidence the successful particularly to of teams. technologies and roll with across deployment

Jackson Ader

helpful. That’s Okay.

to given increase guys session, in the follow-up, here spending ANSYS the is Just a you maybe exposed do feel quick that the U.S. some mind everybody’s infrastructure election portfolio and some talk about infrastructure spending, how

Ajei Gopal

I we’ve and our you what – have pipeline Well, mean, our of on that based guidance gotten from the look, in the team. the given into I view that terms essentially we we’ve is think forecast

may very may or potential investment go. that speculative not that’s it’s not concrete, based directions on So

about are more But be we the Obviously, obviously giving into investment QX ANSYS, we’ll business. investment way haven’t areas more specific our tailwind incremental case. hypothetical a in in continues to our analysis. factored for thinking using obviously the concrete be there very in equipment translates that’s any us for of infrastructure that So more where if people technology,

Jackson Ader

sense. Makes Thank Okay. you.

Operator

of proceed. Jason Jason, Markets. please KeyBanc comes next Your Celino from Capital question

Jason Celino

growing how maybe there’s perpetual little services and or the synergy, the seems The taking lot recurring new about, frontier of acquisition. before acquisition my company I be space bit. some have know and talk revenue for you of revenue any they you split AGI for for maybe guys. a thanks Hi, that question. fast that to a background can maybe but was of a But upcoming business maybe

Maria Shields

Yes.

the So public perhaps trying I’ll didn’t is, as private a U.S. are their books to track you do decade, as were is sector and and Particularly, of look satellites be successes kept aerospace the about, absolutely, our recreate the company. space a spend excited in that to back spend investment our of results about they and as we what the course going the extend and over amount very that saw of And say next and to technology mean, into defense. going not of it lot is their systems, presence that coming we were in partnership. records from. company think we Jason, we technology putting They was where time was that mission are would the I lot a we between is and of growing, critical GAAP has incredible profitable all how the as the AGI of they like. exactly early and our from these synergy opportunity demonstrated private GAAP

We’re and to that business very important long-term business vertical. that expand marry with the the about to opportunity and our in growing excited ANSYS presence

Jason Celino

Thank Great. you.

Operator

question please our And Gal, proceed. next of from Markets. Munda Berenberg Capital comes Gal

Gal Munda

talk signed? spend? ramp next deals, a reviewing Or to the work they terms good talk terms the next more progression use over in was Hi, to the in when quarter time expect in clients little typical such morning, uplift you’re bit exist? of larger on as are things you’re a Thank land years. you of kind of portfolio deal, And of deals of seeing, for they taking just the – you. the when everyone. kind and if about you us kind contract that a I can potential, are of Can if of that Thanks seeing few my and you that your the how kind a over is maybe did linear negotiate for us one, these thought hard of the terms question. just it follow-up you

Ajei Gopal

in don’t really the or I especially where nature can dealing opportunity lines. these can the within In using start that think to And when a you’re that. the into you deal there’s capability to that on you’ll of a product but And growth of the desire just and and larger you the cases, cases, really kind one-size-fits-all Yes, a see that’s of to the way multi-year to programs programs with some in depends the of the factored account deal. new lot maybe they increase of activities use number have. technology a not and cases, some some using new simulation, the work to customers and users, apply the structured. they’re technology in add see simulation, deals, on multiple A customers, have is of bring

a there’s But the deal work the of to the to details down sense one-size-fits-all. find have pretty the our usually like basis through What no and what to in that’s accomplish, to customers how a then dynamics – they’d good understand multi-year within really do when the try the with of of capabilities, is customer. sit conversation it we demand is. try map our a where we usage We really we against that and agreement. So

Gal Munda

Got you.

does Or linear you of average just come kind is So $XX $XXX onboard, just follow-up think more is or when over kind because when of itself – a the the to that. up might that the that a deal, years on expense? you have users ramping out of assumption? it expect that fair to that they fact Do million it more be you sign million doesn’t the years ACV over is

Ajei Gopal

a I I vary think, on that that give deal. that’s for It single basis. we every can deal-by-deal there’s you said, standard nothing will as

that wrapping much objective customer many cases, advantage take the needs as by on our And to make is technology cases, customers’ in you’ll And see and objective we – programs, getting up. them usage our they some satisfy so can varying can as of. in sure

And a this. basis. one-size-fits-all on really because tell you cannot in it’s on case-by-case a I bespoke very so reflected that’s

Gal Munda

Appreciate it. Ajei. you, Thank

Operator

comes Securities. next Jay, from Griffin please Jay of proceed. Vleeschhouwer question Your

Jay Vleeschhouwer

what from Ajei, your And Thank were having we a Simulation acquisition, into that June with then and as a attention, you so and your question, you. reference technology conference stemming described morning. my starting Good then to domain-specific AGI ANSYS Semiconductor Conference. back is applications the got recently, industry number solutions. events do with the more of there in World tying that

right aperture more like. wouldn’t phrase explicit the controlling and open missions you vehicles And or interesting solutions interactions domain- wondering now, or terms to in commented you’re into back so more? to catalysts dedicated purpose that before autonomous conferences? use to mean, back then and what more over headcount there where if same example, built. just need rather conditions of then at some need you around to you the we you your be tying AGI, of open I see more up time, running going we comments, earthbound openings, expect some you’ve is, – applications use rec, might some see have it’s of X% more? And more from And the typically widen space, your that than hiring would question or your and that your that should what I’m for open in And in just say, terms applications industry do on more X% been satellites headcount, of as let’s the cases, so

Ajei Gopal

Okay.

with So observe absolutely let first the question, let me one. of with Jay, that right start you’re me start, part to that. your Look,

capabilities have that have been we’ve multi-physics needs together able can These class built the only machinery, the all to customers. capabilities with that market multiple electrification. to. capability address so our workflow for within a we’ve world address automation with or the all to with about given bring we to portfolio together, We infrastructure platform We’ve of that solutions Minerva, and built effectively capabilities not these to XG, that about goes Rotating of the talked point and physics examples true are talked that that require integrated customers. infrastructure have are ability rapidly a forth, these and that. data many example, The capabilities physics multi-physics flow around us integrate we to technologies [indiscernible] working we’ve there our much integrated solvers our and with the and more with needs

so capability. multi-physics to to you’re our this starting some to so made create because integrate see available being these domain-specific together easier to be technologies able much solutions it’s of And

more you see of is absolutely, well. acquired active into should to So integrate that portfolio it that. easier The technologies as side becomes of our effect

is could evaluate autonomous we would telecommunications, have export for one infrastructure, of other with. be other us vehicles, opportunities satellite. second to you those for level engage course, cases observation And mentioned and you simulation, question there’s these imagine, use there made and the component be and to whether use than the of are that certainly would simulation made that opportunities was, space system-level cases may the example, The other that you that part answer, XG all future with that connecting to potential your observation mission

Maria Shields

add ahead makes close in more things critical be new plans began of sense the employees AGI, us and Jay, I’d to long-term success our a QX, still of think know, which parts you think when that hiring and respect go there’s certain it to ANSYS lockdowns business. are that will we pandemic United just with And we for and States, as to And is recent to extended in what into in of our business. about with family. prudent the reduced as comments, in planned in hundred year hiring the the early the other uncertainty to And continue are to impact not our say spend the the we’ve enough couple EMEA, the additionally, the volatility

much right certainty investments, on global given rapid too overall pace us would But XX% our little as to perhaps around now, think comfortable pace that, economy So the for trigger that’s in I more of you make spend. XXXX. investments, or more increased front, a saw to the much return I XXXX to hiring of particularly pull the early bit recovery more think would in it’s perhaps the us of more in a

Operator

Our Stifel. next comes from question please Adam of proceed. Borg Adam,

Adam Borg

taking question. the thanks guys, for and Hey

Microsoft AWS partnership guess the to limitations announcement any well the new expansion. there terms of portfolio in follow-up, Just just of to on top offerings Are much. nice ANSYS physics efforts. a on mentioned know, of Thanks the as or over ANSYS offering Cloud, Cloud? you joint bringing bringing it And I their rest the of customers are are thinking over? given go-to-market to may just your seems that was Cloud-like a I’m I’m I our expand. go-to-market with Ajei, guess it like unique GCP, any asking your I or simulation there limitation, as the about as curious, the so run ANSYS recent technical rest continued you’ve needs?

Ajei Gopal

we that on make ANSYS really using situation on running offering any of could have se, reality market we who to ANSYS infrastructures. hyperscaler is customers the isn’t Azure. that And there ANSYS multiple capabilities of today. And The are restriction one take on fundamental technology Firstly, the the available on per Cloud we that’s top Cloud. the

that We it Cloud, to cloud offering on to continue ANSYS as add will capabilities the our – makes flagships have and to we sense.

centers there. that be ANSYS should to sure cognizant the make you the and or Cloud. to it’s on-premises able ANSYS technology as investments customers ready available is comments, So of continue you our that us as for part, still cognizant – our But in of to to when their should to go. to we’re It’s make to and data we in we look that, our are private have the look be is my them are in have in to own to customers, most fact I’ve fact explained with more in Cloud, capabilities running objective support there. clouds. And And ready, the

Adam Borg

a follow-up Maria. That’s great. quick for And just maybe

a both inorganic Thanks of on Just missed this you so XQ? for Could could ACV, comment just housekeeping. not and – I sorry but comment it, just but revenue expectations from bit and if you much. I’m for contribution the quarter

Maria Shields

Yes.

first for year, about it’s QX nine it’s So and the full about the in Adam, months, X%. X%, for

Adam Borg

Excellent, thank you. again. Thanks,

Operator

of Barclays. going to Our Instructions] Saket [Operator from Kalia come is Saket, proceed. question please next

Saket Kalia

the guide Can quarter. for in that Good increase see changes thanks of but mine us remind prior have you maybe remind the maybe Most guide coming in for versus last us is that the question. Hey, been questions just my to currency organic growth? answered, terms great. just here ACV taking of And you last provided you, constant from increase new just guys. reflects Okay, to FX in off of Maria, recently? what how ACV also much

Maria Shields

Yes.

basically a and pipeline strength visibility the play August. outlook that used contribution factor did that the now was key we in within It’s insight the currency And for what likelihood our have increase. I were our are that closing. increase in full were is greater of the actually the not in to our increasing underlying metrics The rate we in say factor able those when Saket, into outlook for the of to guided would that our year, ranges increased QX deals So inorganic much X%. ahead really we and are go the and probability and deciding we

Saket Kalia

helpful. guys. it, Got very Thanks,

Maria Shields

you. Thank

Operator

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

Ajei Gopal

Thank you, operator.

think execution, the about our strong I’m continued year, our base pipeline. I our the diverse remainder customer and by of excited As

around excitement you continues and Our to customers continue like to to my gratitude confidence. the work to ability rely sincere customers support. and your on a to our I special my large simulation express to continued close to our adds our that to and thank remotely closing, inspire. would In world, their partners only for ANSYS colleagues deals And

rest You have the my today. gratitude the delivering Thank call day. enjoy strong for Please everyone, the joining you, of quarter. for another

Operator

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

disconnect. may You now

ANSYS (ANSS) 5 Nov 202020 Q3 Earnings call transcript