ANSS - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to ANSYS First Quarter 2020 Earnings Conference Call. With us today are Ajei Gopal, President and Chief Executive Officer; Nicole Anasenes, Chief Financial Officer and Senior Vice President of Finance; and Kelsey DeBriyn, Vice President, Investor and Government Relations. [Operator Instructions]. At this time, I would like to turn the conference over to Ms. DeBriyn for opening remarks. ahead. go Please

Kelsey DeBriyn

everyone. Good morning,

website. presentation public release, Today's updated quarter link our may of the all document earnings materially as our relative cause Investor prepared could posted assumptions. information as pandemic forward-looking key the qualitative and information. well supporting results uncertainty that to year results and related quantitative results available corporate our actual first and XXXX underlying the data all factors outlook contains affect that Relations our to of have our COVID-XX the and contain note on are regarding Important quarter and key our the on our on SEC, We financial fiscal are first Our the to homepage from differ projections. remarks which and They financial discussed Form been filings update the QX XX-Q, performance future website. the our impact in our with of business

statements view and upon information. business to obligation the our any update of based undertakes no today, ANSYS of as Forward-looking are such

President like the this turn and items are During will remarks. Ajei? to of referring financial CEO, that to over unless this morning's Gopal, non-GAAP and in our we included Ajei I otherwise to discussion now A the are materials. be measures excluded the GAAP would reconciliations stated. measures for of non-GAAP his comparable call, various financial to release opening earnings call

Ajei Gopal

report where our ahead was our margin excellent ANSYS, to internal that we excited this call, and revenue, of on ACV for I and the strong everyone because, heavily explained to This our as QX and thanks all for of you, pleased an activities ACV. of previous to past confidence also our we with against us the coupled Thank morning. ANSYS, financial continued and and EPS. pattern I'm the customer operating year seeing we our significant is our welcome ability in is joining for I several geographies. am the plan quarter guidance our for of are beat to Kelsey, QX QX the following year, of pipeline, us strengthening across And are major The goals. the ANSYS last back growing increased loaded end towards the years. in of momentum execute our gives sales business excellent pipeline that

a guidance flow. As operating we revenue, cash for result, EPS annual our are and increasing ACV,

across stronger-than-expected growth over geographies percentage strong of had pandemic, see that In be who new minutes. industries. We decisions anticipated. was the small Nicole were industry at ground customer X hi-tech expect during their growth, the just in showed aerospace sales currency our behavior semiconductor, purchasing and continue to and defense, our transportation and as traditionally ACV sector and and automotive pleased to to we and an midpoint largest Large QX, constant point more example, contributors. From of in slowed annual perspective, will few by increase our customers a to for range. details medium-sized provide see guidance

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platform how In I sessions, changing and production, high-performance Creo leverage and easy ANSYS resources encourage are discussed directly in role Simulation to a PTC is the you sponsored developing, their Rockwell are Creo simulationworld.com Simulation operating to So key how were computing World we gain next-generation several transformation. Live partners Microsoft learn ANSYS the these Simulation well. learned represented organizations as how cloud to way they testing automation ANSYS from can that key product change Microsoft Automation where visit highlighted in products. Azure sessions users and the driving plays Simulation access development. digital the to products. simulation in ANSYS

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Nicole Anasenes

everyone. Thank you, morning, Good Ajei.

outlook me minutes perspective quarter financial XXXX. Let color performance and on some take first few provide and our additional for our to and around QX add assumptions a

yielded EPS margin all across QX Our our strong reflect and outstanding guidance. QX above our results revenue, operating business, which execution

as As customer saw based about our we we customer and activity the the small momentum were new medium-sized on Ajei in geographies. mentioned, more full with industries year to behavior increasingly encouraged QX, in large SMB across was QX, for optimistic was customers. deal and broad-based which our see and We're expected, behavior

driven and financial XX% sources. constant ACV grew and new non-GAAP highlights. our total million revenue, the $XXX.X some of XX% discuss or with recurring revenue in XX% QX currency, saw lease strong QX me or quarter. the QX channel was ACV let leases constant performance X% by first from We from was million in $XXX.X performance grew in X% signed currency. strong of in coming Now and

the to higher a had of contribution a We came XX% drives more sales growth Pacific. revenue expected perpetual deferred million, quarter year's which over total than first we licenses licenses, in Asia the The of $XXX.X addition, of and recognition. increase closed perpetual last with revenue In mix representing from balance. a quarter from balance upfront backlog largest

The During and an a results XX.X% the operating quarter revenue expenses. of positively with was continued was and QX margins, business above from by of benefited fiscal we above our operating better guidance. as Similar margin guidance $X.XX, Operating performance also strong which which of to quarter manage impacted expenses. our revenue timing our solid to our was gross margins first than discipline. first well EPS This XX.X%, guidance. of the were timing the as yielded result EPS margin quarter, of

tax was QX XXXX. rate remainder in XX%, which rate tax that the we the of expect is effective for Our

totaled Our quarter the balance short-term operations with almost sheet. strong XXXX. million, and from which $XXX.X in in cash QX cash $X investments ended the We collections, billion benefited finish given on flow the higher from QX of

Now me the to guidance. topic of let turn

for year. revenue, our year. environment. ACV, a our to pandemic increasing increase are build reflects We quarter the financial continue operating EPS and first regional the outlook in in for global in flow our Coming continuously QX, the initiating pipeline for outlook cash guidance of and performance full evolving and uncertainties This while the strong mindful confidence finish being strong QX in we off our

increases exchange to increased guidance year initiating since rates me add in February. that also occurred full Let currency guidance headwinds from these despite our

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

As operating EPS are mentioned, we flow ACV, the cash full revenue, our I year, raising outlook. and for

full $XX or increase QX outlook year The of to billion constant our are full This to to to year our XX% our exceeded $X.XXX represents headwind. expectations ACV approximately We our XX% billion. million full exchange $X.XXX by offset in performance, growth increased increasing in which year pipeline, to range of and ACV X% X% confidence reflects currency. foreign

constant translates result, over by $XX compared midpoint guidance. X which we our to our increase As the guidance growth February ACV point million, operationally, of a are an raising of of currency to

look we growth based a rates ACV how skewed quarterly ACV be ACV value sales in of reminder, similar full with be to XXXX. quarterly impacted expect year year, second half can at growth roughly As is This it on first best towards highly second as the the will variable. the growth each quarters vary Overall, to Consistent dollar prior be half will years, ACV rates half and to other. the year. pandemic of

strong Similar QX to to the which to million offset XX% ACV X% or billion $X.XXX our in is increase headwind. constant We performance, foreign X% of $XX be of of expect to X% $X.XXX range this exchange by revenue growth approximately revenue billion, guidance, in to our currency. non-GAAP reflects a

result, a points our midpoint constant raising $XX translates which a February X.X the million, guidance. are by of than our the currency operationally, of of to we guidance As growth midpoint revenue higher

know, revenue you introduces As the growth XXX quarters. ASC within volatility

However, a is basis, full on year less variable. revenue

growth prior be years, based in the on revenue mix in of dollars. higher expect the revenue pipeline. to be second with versus half expect in quarter types we the the our fourth We Consistent absolute half first license quarter our largest to

and by of It that expenses performance $X.XX in EPS we we timing of driven in increase areas our the $X.XX of investment of quarter increasing that our incorporates now $X.XX. second to favorable is income and is remainder strong occur noting the record year EPS some and other on expect investment. QX performance a strong foreign spending This the full in QX was offset of to in range gain the are to headwind. the We exchange our as $X.XX that outlook worth EPS approximately by an focused expect year be redeploy of to will

let Now our to me flow guidance. year full turn operating cash

cash by of flow million fourth our whether would $XXX the payments $XXX But to start headwind. to outlook to with the or offset on the to the a cash We end were reminder, exchange longer increase as skewed we to year the operating of $X range our approximately million. increasing beginning in deals based a they and expect be XXXX expecting are strong of relates foreign We This are the quarter. we quarter in large pleased no million make, flow. timing towards to of close

of the execution and to into like our QX For XX%. Further thank year, expecting have XX.X% been that for other our modeling remarks ANSYS are currency operating purposes, factored contained second quarter the which and document. to assumptions prepared we're quarter, specific year the for of fiscal results. exceptional continue details in their operating 'XX I would during margin and financial QX we to full XX%. to margins And team for outlook around expect XX% strong rates drove the operational

and talent long-term relationships ANSYS. in for outlook deep technology, the customer optimism Our incredible drives our

with business foundation our we as provide business recurring on strength to well in of questions. will sales pipeline to and XXXX the a take line on growing focus our the open execution financial strong phone and the deliver goals combined longer-term Our Operator, targets. investing as now our

Operator

Instructions]. first from question Munda Gal [Operator comes Berenberg. And with the

Gal Munda

significant of that growth double-click it year. I confidence? deals the in And and affect can the might of like the to a the deals have maybe you that confidence you bit it hence the that's gives large one, million was on significant pipeline Obviously, talk just you linearity rest $XX the through? how you're little first ACV of if those The the for most a But year, why little just bit that midpoint. the could expecting raising about in have you come

Nicole Anasenes

Sure.

led and we So $XX as -- really which thanks that raise, to million in pleased the what from we performance SMB for especially Yes, we the with were shoots to raise why started the really, part our was question, Gal. see guidance. of our you green QX noted, the segment,

QX, around would were in that you as with And was have deal to in behave. the our kind be that saw came consistent them would and which little enterprises set, improvement the in performance we what into I large bit outlook say more customer we we some was expected So set -- characterize the which, as recall, more a in growing the coming I to about customer patterns of smaller optimism year. of we cautious came the

came out QX of And the full are for shape that our year. things that so things I'd affect the outlook in the similar say

Gal Munda

strategically the then really second a more question, thinking. little maybe And That's helpful. bit

allocating have CapEx that consolidated been couple market. in the years, of guys fairly of really over some successful You last

returning position to are of about add you balance appetite position. sheet strong to thinking opportunities balancing Again, the multiples at M&A? organic really more Do You're a your quite that have is strong the some kind with with elevated? cash growth opportunistic potentially strong. bit little stage this How you to

Nicole Anasenes

our would mean is And the the and investing you return -- transformations from business of greatest they're comes capital strategy technology support allocation typically undertaking. so clients our our hasn't digital as I what I in out, that best-in-class in acquiring Yes. say and changed. that simulation point

preferred, M&A we are So selective. is but

as cash, areas continue other debt that deployed repayments repurchases so so. are and a result, we've And and to we'll share do

Operator

comes question with Jay Securities. from And the next Vleeschhouwer Griffin

Jay Vleeschhouwer

questions. Two

top of of of are your some to coming customer requirements, customers, First, accounting the or technology so said there question company and higher a resource of has how how affected then pipeline customer might the ago. foreseeability, secondly, internal that they catalysts And closer a pursuant is investments, to up, to mentioned roughly number external it is, affect there World from or which those of is business for among And concentration, internal X/X previously evolved any your were sorts of business. that your at Simulation concentration? has are that weeks half that XXX couple -- your now might to continue metrics your of --

instance, For new coming you integration Rockwell ANSYS a up. upcoming have

the think, solvers is going cloud. And to manufacturing Cloud up be previewing into have business then Microsoft ANSYS unit the I some the high area. coming with materials think, to RX for more going additional summer, be lastly, You configurations. count is additional fluids I plus over expanding, core the release,

talk of could one on Maybe lots the any thinking? are how in going your factored So you pipeline. technology about into those

Nicole Anasenes

Yes.

So I'm have first take Ajei question. maybe question. going the I'll the Jay, second to take

kind you as speaks in the it's evaluate, going to playing to able be What solutions. accelerate of the product I So level of in pervasive of the multiphysics strategy larger customers strength help more are and overall on say and all-in our consistent simulation I point And out going it making of ANSYS to strength customers the that to and about allow and using to say out, technology the are I that had our that think portfolio we've of strategy strategy leverage investment, them more would is with the in larger there. development. investments customers market would the to

customers, that proof saw one that is so all an order. of that just And customers. indicate point benefits the our purchase we momentum And in SMB, it that think a kind course, as but it's large would benefits that of I example,

get are across customers large investments the only customers, products really a as customer those diversified and we that of of a not for base. set have and though it's only set investments So small

of we consistent so of been and past the really with couple customers, pretty how selling And about the which has years. it's the across motion personalization engage

meaningfully investment that So an meaningfully be I -- that's any don't standpoint. any from different would different anything see

Ajei Gopal

for question. And Jay, thanks the

advantage a frequency the the course, about of of this customers with of the some of they customers, to best over companies ANSYS and push Oftentimes is they technologies take we they how larger most the they're ANSYS. these companies to use just to best program. gone and X,XXX So of envelope. have to and solution, start-up in, jump When turn and position think versus And have market, the you Ajei. build through because solutions approach innovative in in tend smaller quickly the in no their simulation to a the problem be

And are seeing the so we these small And companies. developing that we as across large and used several as and we technologies. building have being you companies alluded, the of you by technologies well board are mentioned --

of the think a on with simulation few out from a we time we relationship a to needs to that where pervasive engineers you we to analyst cycle. broader twin great Rockwell. that is focusing example. focus that so so manufacturing going the set development product diversify or and the broader just entire life what And on. go for individuals, example working. areas the you digital the high-end that fair I years strategy could engineering our recall, said talked the we needs operations it's of a say if population And across so at address laid address of were the engineer, to it's with can And in was ago, engineers we're trying there after That's about other with we technologies,

So that It's approach the approach. a have or technologies very very we And than years a -- you the broader we developed, it's see, there's had as have different much a may ago. X X core made pervasive strategy, of diversification this the it as we've have simulation the both support that all as as benefits companies. in been as small of and well towards large acquisitions companies well the business different

Operator

from Obin And America. with the next comes question Bank of Andrew

Andrew Obin

continues of to broader some the people in sort ability What sort was you to job potential as think hire that there do about hiring recover? market? XXXX gating that How about mentioned do a factor quarter. your lagged as the the the you think in You economy of

Nicole Anasenes

Yes.

for So question. thanks so your much

February, for first modest expectations XXXX, the more in we hiring about particularly in in spoke So half.

are the of a that during focus brought for onboarded, first we on employee we really on the hires, us of board, And know, half our the -- primarily -- And bit of we little other. to year can't see new properly So that do us given at times as And those is all our in of about ANSYS. acquired last them in all it's to focus year, engaged. of plus challenging XXX least these brought people second COVID ensure high is very we priority all in of experience AGI. feeling where each a half at more

date, our So behind we're was that a modest. objective, bit but to bit more objective a

And so overall, the really on the throughout to we the attract expect we track, a the own not to our talent in of changed. ourselves This more and consider our matter ability intentionality would around close year. of gap is the and and competitiveness customer market has experience,

Ajei Gopal

could that, important. the to We to that ANSYS. of I We've Employer mean culture the right, think which engagement continue our is If won important well. really I Yes. of add is just ourselves the employee go within as see pride -- to and for I scores one is up think we which Awards, some our is I things Choice

career given we they've their and we been provide represent a And is they've their their we that essentially even for great ANSYS. technology the their a for engineering to as within students what master's or work from been degrees the frankly, to bachelor's company. of points training that graduating in They technologies PhDs. degrees do and that what objectives. the we and culture provide, the all So of do want given school, capabilities getting What number

top-quality as working -- as I are organization, well as attract, both think, from into And who people the other as that from capability at have organizations. talent to universities so well we

about our able So ability to and I'm that to culture about also that very create pipeline ANSYS. been build we've pleased at the

Andrew Obin

just CapEx How growth your shifting does high-profile in sort dominance. much semiconductor North have expertise And here? semiconductor of the opportunity clearly to The for showing penetration a areas we up of industry longer-term you one should have we on several start And question your follow-up in incremental CapEx and for ANSYS is visibility America? announcements U.S. think as do of And about how me.

Ajei Gopal

is be with their they it's customers, frankly, working about really primarily technology whether should that way Well, product the our the our of with. you with design helping any semiconductors think may products, or

other as in board, that at at for the in translates whether so it's investments, the U.S., to semiconductors the you capacity, example, And in you for look start across geographies, into start example, And or look increase elsewhere. to need for in we portfolio the I in the of into more a very, more good multiphysics breadth simulations, for to the us have think simulation. the support translates this need ability ANSYS. And that position. of puts And very because because the

If look -- have semiconductors, that's advanced ICs, portfolio if nodes at have the you we capabilities this I our that said, process as shines. at for where, for multiphysics that for you XD capabilities abilities look we really

And so we're our their support in a capabilities. their customers and as evolve they plans position to design

Operator

John question next with Crédit the And Walsh Suisse. comes from

John Walsh

thinking just Maybe the question, and provided first to a about you appreciate half color thinking first second half.

those the Or driver targeted more, just also just earlier into as maybe economy have initiatives customers? businesses. then And of great bit dynamics the on Was small the curious particularly if you SG&A line? Just understand that's to a kind a either sales back? around medium margin that, the some maybe wanted follow-up little discussion to if and coming

Nicole Anasenes

Yes.

John, thanks, question. your So for

skew business. would how the related overall about of the is I margin think to So

So said, With purchases is is variable. that our with overall cost business on our not pattern behavior. as skewed of based largely structure smallest generation towards Overall, half. kind the just which we've highly the communicated and and the people, is more business fourth past, is associated the in tends second revenue first revenue to our the quarter quarter quarter of be customers' --

more go much in and year. the of the margin much the muted the as throughout be we is half so first year back the profile more going year And to half of the elevated in

a that's saw it it we -- in And prior We've in we so -- see we we it normal years. pattern XQ. -- seen saw

would so suit. And that to overall pattern we follow expect

Ajei Gopal

organizations last small a typically medium into where in affected. like, we're about we recall, parts broad-based likely to that disproportionately situation same the have going economy financial back. to business in you then world, the time, to impact small the the is now year, don't perception there's be and They have globe, to Obviously, therefore, of the and coming larger was vaccine have that world. business, India. have Obviously, example, there we parts And cash. conservative of we more do, rollout little be and when the with medium at talked about with situations that we comment bit in your tragic the for a recovery be a and respect of that translates as around the a situation pandemic, pointed in But the out resources the

we see certainly smaller need to that missed the seeing they the that have is exception. across the activities with and In So out customers SMB up on. catch space may cases, in are general many no

an some of And trying so even on to there's this work. emphasis perhaps greater drive

point the have other global the channel is oftentimes that relationships our channel with And The manage medium small partners partners. here we and businesses.

arms have operations. them main legs where with many of the Street to to working line the the companies And get into we their many, back these on help smaller and so can stage get they

global also we're to leverage to able customers. this channel help and able business us network small the reach to so being And by medium

Operator

comes And from Citi. Tyler Radke the question next with

Tyler Radke

give think, there a the up more pipeline there. of you if expansion wins And how I sense this Maybe about just I a existing pipeline around kind relationship. has for much know with Ajei. Curious maybe a you've an talk an auto the trends kind it lot the auto company. if -- then of in broadly, years an you, leading question Obviously, deals one But quarter, was expanded? had and kind autonomous First And you could just with some strength for EV talked been large on so, of renewal? success that are to of automotive deal your a relative of industry? electrification, area for large us how coming and looks past? for about lot of in the

Ajei Gopal

a usage of customer existing in the of call to expand And The product obviously Sure. fact, some some I their a they ANSYS. other in customer that in of position in existing existing their and referenced time areas. of long were was, relationship renew

came of able to electrification, manage. recall, efficient we Granta. new and design customers supply of mandates and reliable adoption a be was becoming areas about in to system materials, then, harnesses. in area pointed the those neutral, for fires and of is customers to the and to for there seems years machine carbon We're like more as simulation designs. to with for government as that I all see They excited battery as is And And testing, complexity demand all to electrification, are are have electric cable major imperative seeing a relationship, And ago, our things regarding frankly, geos was of you are autonomy. for example, we're space to new trying the electrification, With solutions you things the to of like a continued to expanded, vehicle EMI so focus chain. of we're few -- accelerate, pointed wide that electric The through you be What us. the in C on seeing electric motors important things mean, activity, frankly, acquisition huge cause in through into to good which for battery And that and an get Those have driving automotive thermal a is, that regulations in, and runaway, a who clearly, you continues did to simulation. course, broader growing where was try is vehicles. that you new there management place us powertrains.

electrification, will space. on think examples and that in that situations to to the lot the coming to of I in people creating the respect when market frankly, be complexity you of number we customers of expectations fully certainly continues then, a autonomous argue would a course, a with represent, of of see that of And just And area market an vehicles on across investment have level has with I because autonomy, ongoing car been terms there's interest. which pushed significant board. a So of public back participating fully involved autonomous the are streets.

the that years our feedback And partnership supporting BMW announced doing, in the so couple last Earlier had we look And at over pushed the capabilities of with autonomous about year, amount being work we've almost, positive tremendous last this hazard of if partnership we've partnered their conferences that work announced efforts. design. some our on we talked at where advanced capabilities. back. for we've with that's driving. But talked customer detection with you focused NVIDIA with on We've a LIDAR FLIR We've radar We done NVIDIA. Velodyne XXXX. been back

autonomy. we another strategy National a may taken we our can physics partner set with of a we with with partnership have a comprehensive seen work -- recently, Instruments, important who's you Most announced capabilities which was it's have So where sensors. partnership in

the a So as us address well. autonomy, with breadth of to market allows strategy as we've it the that develops and complexity partnership got which

They we about frankly, So excited our electrification have of very invest to autonomy is both And markets. in -- space early important, we saw I because those saw validated. that and been being think were tailwinds. investments and those we represent I'm both

Tyler Radke

Nicole. just And Great. quick a for follow-up maybe

segment But or improving, industries of which to help you kind us expect kind talked those impacted above those see you when of is QX? of perform understand Did where terms terms see. those are normalize? expectations of about maybe just SMB verticals, in You the improvements? And good we to in impacted in

Nicole Anasenes

Yes.

It was say so would about the specific. performance segment, SMB timing across particular, geographies, was in any So timing industry and in line renewals. the that industries, given not volatility broad-based. in in was what is into that the expectations with industry of it coming deals quarter industry was the we I the due of usually large And or to any is a quarter. had Overall,

could vary. that And so

in mentioned, as the expectations overall. saw the the in was of And customers. improvement with exceeded really in its was and had SMB of large level our of was our line we what just overall, encouraging quarter business the really we what that expectations performance entirety around in kind So broad

Operator

question And Baird. from with Vruwink the comes Joe next

Joseph Vruwink

performance in Just on the SMB quarter. to stick the

your been X/X performance million in you I'd the about actually the the the say, and about wondering ANSYS customers. point X,XXX of said question for midterm tiers by had of $XX the million, of one period? through just what's of SMB kind of onto horizon? how the within gone second more midterm that the And of maybe any kind customers at over expected of $XX on start-up have the ambitions experience I'm course X/X go-to-market changes SMB have that you graduating upper SMB revised just of now program, much And do to line accounts. is back you come then XXXX? plans top think last I year, of that to related

Ajei Gopal

So we let of the the the as about the have or second me we address part we start-up SMB first, have. question think that that program program

small said, may And develop that what's program may ANSYS is companies very I targeting they to be cycle. -- I the many their Simulation the of possible. push start-up early mentioned to we as for cases, in envelope very World, simulation continue companies at are number work continue them capabilities. a had of and in speak. If -- were we'll with there we revenue. And They really So life their have very, pre-revenue, as amounts they

Their heard in of that They're speak to additive You program. an have our launch a earth about them satellites certainly solutions is model suite mentioned create a I you Relativity, for as orbit. to and as me and of able heard our Motors, start-up using service. well. from technologies company our was low business -- Lucid be example may in vehicles

companies. is a small only to exciting related very Obviously, medium of very it's not start-up So -- the business group program. and

as companies well who participate program. smaller in We just that others who are have

couple program. program graduate, into their the that as will, once you they of the mentioned, And mentioned reaches have certainly later. a expectation we've part start-up I information of on in revenue the we And start-up members certain Our they customers. that me, can but I ANSYS level, -- to participate success, mainline continue for you a they is in participate front give statistics I of anecdotes. being if of then seen, obviously, don't as more

Nicole Anasenes

Yes.

just going out to be companies. look, hit. in return off the So COVID quarter, I encouraged shut normalized large by not it would the when as return And kind capitalized particular your things market pandemic. to as question as characterize very to -- of pandemic on about we to a we normal what of performance saw. patterns. segment they're well to beginning -- really the And to of as subject that of any capitulation a slower the also pandemic was so overall quick to get continues more the a the were result. and be as They're They're This we

centered of about would And say see right transparent to -- see what front we around of our be can us in I includes a try opposed so as that really coming it's And outlook change. -- we we speculate on portion behavior back. what how to

about And in the of the we've so outlook. that's kind how of thought context recovery our

Operator

from Adam with And the next comes question Stifel. Borg

Adam Borg

Maybe just two ones. quick

for competitors changes talking on on just contribution us I a a for help deeper you was getting follow-up just the what competitively landscape. seeing but of 'XX simulation just lot a for housekeeping. revenue in Obviously, quick your little ACV? expectations into of a the there. Can competitive the more And what some are Ajei, quarter remind of First, hear the the as and Nicole, more guidance? And the about any love bit and you're market. you've to are then seen success, what inorganic maybe

Ajei Gopal

Yes.

scale CFD to example, deep wonder up it's want markets them. in and they solution mean, sustainable -- our very are, this and got able and new which company. solutions space, And -- relationships. years, points. and to they model, deepen it's the We've or being with that just an to some in physics-based a for the than cores, frankly, So scale. unequal the perhaps in try that that's to across I our customers. our enter And the achieved of our marketplace XXX,XXX expand create an to We've place a broaden understanding two. competitive space think attractive be integrated we simulation. the enter And customer for model ANSYS competitors unique because attractive mode. the enormous physics. to we as pain a I added advancements no over portfolio. terms entire to argue, efficient most and our in. try continued we've of And solve of seen in strength multiphysics We've to see at portfolio, to competitors to some see customer you of and drive more of space us business would is us And I We've allowed in the very the our a that's meantime, across we've And our these innovation in continue our expertise allowed techniques lasting and business participate capability taking deep point model,

about portfolio. excited So I'm very our

think success. laser-focused on I customer we're

the from our a able have any by executing. competitive number to another is for By that us. in puts across company, strategy -- our to of of we're difference one competitively. strategy position This us company good I there industries. capabilities any see very it to a doesn't in a And different small acquired gets being we our dynamic make We as support And customers large we think the in frankly, if are smaller market. broaden fundamentally right physics, that and a deepen continue

Nicole Anasenes

outlook question on well inorganic our February, overall. contribution, going changed Adam, was your gave is and against $XX our is million well, $XX in just answer hasn't AGI, tracking from what to to the which we're guidance contribution with And The million we quickly Yes. consistent that. acquisition of

Operator

Jackson next question comes Ader with the JPMorgan. And from

Jackson Ader

from term next the about is few think deal just changing auto of -- that's Appreciate sector, maybe the in the on or us quarters? an spending patterns right just the just near chip came actually shortage front in of on the delays if kind potential we with quarter the But any for automotive here that largest more space. question First in automotive from OEM. the

Ajei Gopal

are know, our produced. tied being you number We're as not to technology initiatives. that tied R&D is to or a of manufacturing units Jackson, to

an in seeing produce better interest is continued what we ongoing are technology. customers so to newer and our And

in. and I to quite these have I the about electric getting again, of cars The autonomy. ANSYS And OEMS but electrification, But as As chain. it comes where not talked the entire supply market, only about about are implications significant. length challenges mentioned, I've for talked that's at through some said, just I

in being the as continues said, in of the tied to R&D And produced. initiatives, there investment. we're be not of units that's activity, the I design levels where So significant number to

shortage or cars in produce to affect challenge being any doesn't so an us from able perspective. economic And

Jackson Ader

customer then whether rates. industry. I'm switching vaccine the to growing commercial and another aerospace hear and and And budgets over Okay. what investments in base just to the curious seeing growing you're accompanying are

Ajei Gopal

I think we And the we commercial some about manufacturers the are bit talked about little a aerospace year, about activity of on I in talked them. other gave as particular, engine Well, closely calls, earnings segment. I couple and last a previous that of we I have how and in talked working with

is Some of an machine is really significant. it are have, about sophisticated -- it the quite aircraft sophisticated a When and they think component you the with dealing challenges they're engine, remarkably tolerances small. that that are a

cases, use course, a use together cases. problems. of next-generation able structures, of are of to things just And to not of now of the requires but customers solve it those with multiphysics struggling fluids And It's thermal, be use come our of combination simulation. these all traditional the so

some but efficient eco-friendly about that's up green script on with significant example, world there with time design. aircraft aerospace of amount is I away. able the more For aircraft, and a initiatives, pressure to be to in the come commercial electric talked still

so eco-friendly programs, -- lighter example, a fuel-efficient, quarter-by-quarter things basis. in are initiatives. the engine to continues it's be And these weight, programs, What's These initiative. general, multiyear trend engines that to to not aircraft but or that's realize for a certainly, are important that programs, aircraft getting is an industry. change on But a in

and with with them long engaged help period these are multiyear stretches working of successful. And to amounts So initiatives obviously, be R&D time. that them over customers we're significant of a our with

Operator

Wong Ken with And the from next question Guggenheim. comes

Ken Wong

the from would some in months you the that one rebound change any for not uplift? With I Nicole, for now, guys terms bag bill? been in then an that other from thinking a discretionary your X spend? and about just benefit your have might of aspects of to wondering you're business And coming Are Ajei. of of X% first you, sort how or suppressed might during about business construction, of an in recovery that pace meaningfully infrastructure With pandemic? there obvious guess, spend it's that The magnitude the potentially see

Ajei Gopal

just me take the Let first question.

are that construction I think equipment, we it's important when to about the realize investment, opportunity industries, infrastructure see heavy talking we manufacturing. with certainly,

course, would for industries which even in look twins, infrastructure. we significantly but as of be you techniques you're and -- will in investment in digital about beyond that. number goes of we relevant. right, construction, have context that exposure, a we are there itself, capability from we construction which And physics-based think it where start have twins of of like and benefit technology then digital So next-generation the and have And at to strong

we very benefit about that think are So in the infrastructure, we we infrastructure excited us the would -- whom investments and serve. certainly customers

Nicole Anasenes

ensures work. your And question, really to in we expect going setting return employees they're be and market today. that's feeling which on discretionary employees, of majority returning it's remote working are It's on to well, engaged -- focused And really they dependent, and going our we're -- secure work. alternatives to vast about Yes. providing to the still a that to

Travel safe to considered is And the slow. to we've that we although to incremental is work, to probably would an it's expect from return unknown half be the feel open. specific so further traveling what because office going be become continue or recovery. everyone. frame during in that not, we not And along that time investments it standpoint, ensure markets consider people second in we're that not seen more the ramp to more comfortable to or whether as But would remains one enough

Operator

question And the Kalia comes next Barclays. with from Saket

Saket Kalia

you. contribution that the for tidbit to ACV. first for maybe on inorganic Nicole, Thanks

sense? changing do currency ACV think to FX question you in of Just given Does of of backdrop just certainly sounds for and that set the how the is, what growth. about guess, kind like brush? growth organic broad year, I level sort maybe constant improved make organic this sort

Nicole Anasenes

the it the shared perspective of I AGI Yes. -- about well, how contribution. we think from I would -- in mean

the contribution think So kind the is of about the business. portion inorganic million being $XX how to $XX we of AGI million

Saket Kalia

But of basis, FX the the is headwind Right. kind there's also million year-over-year guide last. an then sort But play sort $XX that into FX. it how incremental I that of well? FX changing gave it on a you versus know part of of that as

Nicole Anasenes

Yes.

impact, So -- go the to the back overall overall year-to-year guidance. let's

constant pretty a guidance, consistent And a that little currency is point overall -- the component around So raised momentum raise by would the given the the by bit the at with I a a over in point business, organic guidance our growth same. bit midpoint, end, we've think remaining the so about on that little is higher low right? inorganic how

Saket Kalia

seen past. that Okay. was what base it. in know And just maybe is kind some maybe then it. from just kind Got APAC. it and seeing of nice we've to broader the to you back Got the given recovery, more normalized levels perpetual of actually called SMB kind I follow-up you're of see get out the

So sort the of is, to perpetual kind maybe quarter? of maybe maybe of question to you region performance levels? to sort Or starting that this perpetual pre-pandemic isolated and is back get this do to see

Nicole Anasenes

Yes.

disproportionate Asia the So stronger there perpetual -- was is model, and prefer region percentage that was the Pacific has quarter. -- I mean, a a the in customers of performer that a who

X the project time. needs those feel very model. between things. continued -- leasing the term, there long R&D Customers we needs will that shift change have relationship a dynamic there's and towards over the a long that and be development, Overall, so And change over

model leasing with time the time. over provides able use level they so those things need to of them they as capabilities the And to the be and customers over need to change that flexibility

momentum And model. favoring and licenses the subscription that the towards flexible time-based licenses. wanting be that's to seems more market pattern around so long-term more that and in overall, And the today are trends more with consistent customers

geographic I see on in would customers, given the surprised wouldn't region But that change on the saw is of of be depending in quarter. seeing nothing in a say we mix So like there's any dynamic sea we're I the customers, to preference. depending quarter, a that

Kelsey DeBriyn

question. Operator, we have time for more one

Operator

Markets. And Celino question from KeyBanc comes with then Capital last Jason

Jason Celino

strength the Maybe to question. the magnitude I'll was in pull highest But Just follow-up the to growth at to is forward, of which growth maybe explain attributed ever. potentially that a quarter just trying seen the here. maybe all one. we've perpetual Saket's ask would rate? understand the strength This perpetual

Nicole Anasenes

Yes. the were mode. pipeline perpetual disproportionately in purchase Pacific in No, lease to chose to modes in Asia in purchase they perpetual and really they who the customers to region the attributed growth chose quarter -- in quarter is the versus the

So the what pipeline in-quarter it and of really resulted. was about mix

Operator

concludes closing comments. this our I any And like to turn for question-and-answer to conference session. would the management over back

Ajei Gopal

that, like And successes. I you, for of Thank importance network and environment. the customer for with their you in partner global newly And simulation our thank excellent year, for your thank attending With day. many operator. you I our focus our to difficult a the my to am start the recognize channel their rest goals the to XXXX. all we meet of contributions business pipeline efforts today's at I'd confident enjoy great call, ANSYS for hope and their raised from that colleagues to strengthening our their our customers, commitment, I and want will

Operator

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

You may now your lines. disconnect

ANSYS (ANSS) 6 May 212021 Q1 Earnings call transcript