ANSS - Earnings call transcript Q3 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the ANSYS Third Quarter 2021 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 Relations. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. Instructions]. [Operator event today’s being is note, recorded. Please time, conference over this I would the turn to like to now At Ms. DeBriyn for opening remarks. Please go ahead.

Kelsey DeBriyn

Good everyone. morning,

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

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

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

Ajei Gopal

financial another strong we excellent stated goal you key for thank where us. our ACV in with guidance to double-digit on quarter our quarter, we’re ACV the delighted growth across growth ANSYS, for With I’m that all date, everyone, was of QX acquisitions. metrics. beat tuck-in morning, and year Good joining

our multiphysics R&D guidance investment are our ground impact & XXXX largest relationships. the raising ANSYS’ combined strong our in simulation strong Nicole contributors. our our across our product QX of driving lifecycle, customer performance. our beyond transportation a far bolstering the strategy customers’ a are are demand of From geographical and full-year leadership, evidence in The Those With thus in and the deal momentum will semiconductor, details pervasive continued accomplishments the financial initiatives QX of sectors making aerospace confidence, robust vertical for came in and above our pipeline product perspectives, Our business top-line and and high-tech solutions. further automotive we results factors, of few the success multiphysics minutes. again and as expected. and in defense, were have with

by geographies, followed Looking again at Americas our the Asia led major way, Pacific. the

be for quarterly to We expect each have region more quarter with Europe. its in QX, largest pronounced skew in QX the to

It users. One product of power our is ANSYS across a chip-package-system using an was the From million ACV with to and of ranging systems line ensuring in This sustainability perspective, reliability and from already using X-year contract American for portfolio QX’s the customer. second deal the solutions agreement meeting multiphysics its largest highlights signal simulation multiyear its $XX frequency across expanding high-tech was ANSYS diverse a now from to of and goals this customer analysis for integrity. is number applications, radio was history. North

global company’s broadens leader multiyear simulation, customer by challenges storage technology, this ANSYS Another longtime with mass agreement faced to was address use a generation a Seagate contract in solutions. the Seagate customer, new a next multiphysics of QX key product deal in and data its base. is

also for and products innovations. hard multiphysics integration access drive enable The heat-assisted a drives and streamline to thermal to higher assess ANSYS of optical products acoustics company further to create effects to suite using capacity to process our has is to seamless now magnetic Seagate example, recording. For workflow

As we medium-sized pandemic. by or customers, discussed, the disproportionately affected were SMBs, our and small have

in the have we during investment customers last simulation. However, few quarters, ANSYS are And recovery. a their increased seeing SMB

increase customers confidence further SMB gives in me QX and plan we for sales from ongoing Our our beyond. as

I calls, I of structural of these discussed unparalleled and extreme typically you some electromagnetic During best-in-class various our give In business. into product the scalability insights solutions. the ANSYS our the our past, aspects have accuracy solutions,

As is me becoming for customer base. you simulation with Seagate, increasingly optical discuss heard important our

optical of product X% the an in In our agreements fact, in order. simulation QX, about included

our on ago, optical optical ANSYS simulation closing Zemax though, companies for today, of on solution, not end-to-end the from rely for our time products to discussing based can gamut Three I some that, Given our as did as years portfolio. an photons in ANSYS well spanning to simulation. the spend offerings X recent acquisition, product would any like electrons lines. have Today

and analyze The and photonic model interacting electrical design first, ANSYS Lumerical to empowers thermal challenging systems, including effects. integrated users optical, components product problems and and

optical ANSYS system’s and illumination The on effect the visualization enabling camera-sensing and performance final line, product capabilities. the simulates second vision by SPEOS based high-fidelity evaluates human

Zemax, through systems. our of working independently Instead a recent optical model customers the a as complex as operates part of acquisition complete optical of multi-physics to offering, suite behavior lens which accurately Third simulation siloed enables is workflow. of our lights

ranging a and autonomous phone from cameras, mobile found to used optical ANSYS set medical for visual and vehicles, of in other solution camera and telecommunications lidar aids. arrays the together, applications to Taken diverse is equipment

industry Lab to signed photonic of in and environment. Ford, example, behavior expanded integrated validate leading-edge vehicle leading including the Lumerical and and the leader, ANSYS lab in agreement solution and and solutions develops Lumerical ANSYS circuit to performance. headlamps, use its sensing. products SPEOS, headlight uses model sector, and nano-photonic in for National tools the custom an of headlight optimize a quantum design simulate computing, automotive smart imaging to In photonic uses Sandia and and components design styling QX, Sandia The technologies. predictive For

in up a simulation QX. Zemax an across replicate enclosures, agreement optical X time lighting, high circuits, Mazda is for aerospace using applications, driver of customer displays uses integrated in of internal this lines customer giant for and deformation. multiple head also increasing on detecting also degree and our for to thanks all SPEOS creating Automotive In the photonics and functionality predictive loop accuracy. with SPEOS features lens customers defense, a leaks physics-based cameras, Lumerical aircraft it to ANSYS sales product physical optical using relies and solution its and use from radiation Our world the real headlight study is to of exterior the

go-to-market that We ANSYS customer analysis. wing easily sales to combination fluids the defense team that squarely and with saw to camera aerospace to able relatively excellent and ANSYS problem optical While of strategy products. market our still challenged customer Based speeds our understands even true an and example that extreme was contributor small capturing our images on images. across optical deliver pervasive into results, financial to with motion, weather. was these optical a products By new in a of our bad how customers our portfolio multi-physics products, using access blurry the a correct was these portfolio and overall our another and perform solutions at ANSYS of can to the simulation, fit crisp

enable Fusion by validate printed extension products. to real Autodesk our next within are the insights excited Fusion their time XXX of generation XXX that a explore to electromagnetic development electromagnetic accelerate perform kind analysis PCB users partners, board will time we Autodesk Moving to circuit designs first and I’m with relationship workflow. the and expanding real ANSYS’ into CAD embedding near simulation performance our of This to capabilities retrieve

partnership Builder production Twin equipment stage, XXXX our that users stacking systems technologies, industrial connectivity We solution thermal am physical and control maintenance. Simulation Users or RedHawk-SC the we a ANSYS analyze design designs digital Electrothermal silicon enhanced multi-dye Icepak. with in to TSMC’s ANSYS have to chip also create optimize high comprehensive I to controllers advanced Rockwell Along for twins analysis expanded controllers pleased with package can ANSYS Automation results. to systems and fidelity emulator with at TSMC predictive in enhance packaging have complete can for real example, through using semiconductor to time, of and performance connect expanded Interface. Studio

collaborating to initiatives a ranging supercomputers, energy energy supports that consumption drop software, will will reduction to and we and published our Fujitsu’s sustainable report the lead simulation environmental a HPC and efficient which safety plays reduce automated autonomous sensors, autonomous vehicles. our Keeping to our from also to simulation to costs moment, by develop ANSYS illustrates including more driving for with efficient testing. fatalities autonomous prime development enable LS-DYNA more energy with role Fujitsu customers now are in help recently Using in traffic in benefits, governance customers. the vehicles, simulation of workloads vehicles a societal and in development product machine. social handprint for simulation emissions. products We offloading environmental, significant for This a

and targets. metrics, have our We with delivering guidance the ANSYS. to the key another governance, the initial We force and for climate remarkable climate year-to-date. across on focuses of which expect beat quarter we by all of related summary, metrics end financial strategy, also double-digit and risk have our results the reports Similarly, goal met financial project our working and submitted have management, In was QX growth disclosures, task year. disclosure on begun report on

XXXX. turn as as optical in over well newly to as give our These further factors outlook simulation. a also meet that, QX combined our the solutions such to Nicole? increased an call We’re Nicole. important me strong for and our I’ll expanding sales our area leadership in with emerging confidence outstanding with execution product pipeline ability And core

Nicole Anasenes

Ajei. everyone. Thank Good you, morning,

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

The and the expectations, quarter, third the guidance driven revenue, we our our SMB both operating strong with as the sold ACV robust quarter customers license quarter during during the was quarter. business EPS the enterprise high-end with of exceeded strength of delivered and growth broad-based. our and growth well, mix margin types customers in large in performed of our while by and line demonstrated our QX the

across XX% the me QX sources industries. financial year-over-year some and or mentioned, discuss was million I wide ACV total. and XX% ACV strong in from and $XXX.X of the grew tough million, geographies XX% recurring performance driven guidance let or constant highlights. was across grew XX% our QX and revenue types, QX also customer revenue XX% customer QX our types constant of We license exceeded mix. as which total high-end Now, represented in ranging saw currency. industries. $XXX.X by currency, of growth was

first and respectively. ACV we both double-digit growing top-line XX%, For quarters strong XX% X revenue had of performance and with XXXX, the at

quarter the QX executing QX closed we and of both double-digit of including of revenue with and model total for mentioned, balance year-to-date, a million. M&A. deferred business Ajei tuck-in backlog are As GAAP our against $XXX.X growth, We

we the During of results gross of discipline. well the Operating which above third timing XX.X%, the timing of strong with the investments. quarter, impacted was continue margin our performance which margin operating as margin as EPS QX operating XX.X% This mix investments. of yielded revenue mix, an guidance. business revenue The license also to of quarter $X.XX, quarter third to of fiscal guidance. Similar from by license positively results better our from and and EPS with our margin, than benefited from was was solid manage a high-end

in the quarter of rate we rate tax effective Our the fourth expect XX%, for XXXX. tax was QX

the from in by of of shares the we In sheet. benefited flow priorities, balance which with cash repurchased on driven QX ended timing quarter operations receivables primarily around our line allocation and favorable and QX XX,XXX $XX collections, a due. We during sales, totaled investments with cash from past Our of million the for percent short-term reduction strong million, robust quarter the intra-quarter approximately $X,XXX.X in capital growth, million. $XXX.X

the million repurchase shares X.X authorized under share have repurchase program. We current available for

X, net Additionally, on purchase a we $XXX.X acquired. Zemax October of price million cash acquired for of

turn me the of topic Now, let to guidance.

the year see We fourth in sales pipeline continue quarter. our in to we the confidence outlook given improved for the build

our operating revenue, This result, raise initiating guidance strong and quarter. going cash full the ACV year. into quarter financial As QX the pipeline reflects fourth increased the for operating a of EPS and third the increasing flow and margin, the outlook performance for in momentum we sales are our

$X.XX. XX.X% For million, of and to expect range of the revenue margin to $XXX.X the the the operating in million range of EPS fourth quarter, range in XX%, in $XXX.X to we $X.XX

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

XX.X% to of ACV or represents We growth in increasing to the XX.X% are constant to XX.X% million. This $X,XXX $X,XXX full-year our range Outlook in be XX.X% to of million currency.

a since Our of QX pipeline that continued accelerated XXXX QX behavior announced. on approximately offset saw not QX, include the our approximately a is guidance It $X Zemax the incorporates based year million of does August spending in has raise guidance. $X and were in and we full momentum currency outside from to also business contribution to The December XXXX of after by vaccines $X which million $X in million is headwind. million repeat

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

Zemax, We be is license million constant XX.X% $X,XXX by our $X QX growth reflects $X to expect to $X approximately of currency. from or revenue ACV, approximately million XX.X% $X,XXX pipeline. This well driven is headwinds. mix, in to incremental offset revenue million raise performance which increased as incorporates XX.X% from as revenue million currency XX.X% strong to the to our momentum of the contribution range of million, revenue to our in which by QX of million $X Like organic the

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

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

In on by rate year-over-year XXXX growth and the full-year the revenue However, be volatile. versus our XXXX revenue growth quarter to basis, of a fourth in impacted expect we quarter current XXXX, fourth the less license of is the sold types pipeline. quarter mix fourth compare

range to of XX.X%. to margin increasing are expect the XX.X% be margin and We in operating full-year now operating our

quarter Additionally, increasing $X.XX approximately worth that by some performance incorporates of noting expect by is strong fourth from It to QX full-year of year. QX headwinds. of the and to now investments our our we range to our the QX and $X.XX. be EPS This are move EPS, increase the EPS that driven the is in of performance currency $X.XX offset of was timing

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

finalize our XXXX. thank quarter, robust XXXX the and a prepared and once that Further rates to increasing million million other standard out QX $X our to we $XXX provide expected are year strong headwinds. I details the QX for and will to stronger into XXXX by model We partially financial by We with document. our currency continued we team specific would our detailed around offset process business Consistent XXXX recurring going momentum is and outstanding pipeline, growing million. guidance collections is into $X been again to like $XXX This increase and outlook a range guidance approximately business. demonstrated of with our strength XXXX quarter during the ANSYS sales the contained the of million their currency delivered once ANSYS planning driven coupled close practice, execution our the and factored has which of our performance drove of the which remarks year. last quarter, are assumptions during in

We outlook, now the Operator, well take XXXX our open are as objectives. well lines we positioned to will questions. as to deliver longer-term financial phone on our

Operator

and you. today first we Instructions] the gentlemen, session. question-and-answer ahead. comes Please with Baird. Ladies John gentlemen, And, [Operator Vruwink ladies begin now Thank our go from and question will

Joe Vruwink

Oh, great. Hi, everyone.

For there composition on in of back and points in get of future the lagging to is of ACV? years? suggest the X% is does say Is on instance, it the the also if line targets, now recovery, optical, original is be faster And not XXXX, is might to growing XXXX, it business budget? bookings. growing today like Just different contributors there maybe so the growth how the to relative bigger to ANSYS true provided around you of with and end of in you areas the that contributors true, that newer that something

Nicole Anasenes

Yeah.

that. much for take question, Thanks I’ll so your So John.

squarely certainly – to is, as So, we growth. tuck-in point our on our yes, What of basis, the you puts are can model say growth double-digit there well X year-to-date us as model. that. I you are With would out, that acquisitions components on within

and the So businesses grow. those to contributors core to structures, are core still solid growth continue the itself, fluids,

out, has past decades. been the in point you over only accelerated X simulation have As the broadest, portfolio multiple that And deepest we years. building

I Ajei’s optical and competitive quite nascent, extensive was a maybe talk think robust, something an quite years the of business that example about And is is so, ago, of right now. couple that

And so, give do would anything example. to I that you Ajei, as an comment that? want for

Ajei Gopal

the long-term areas autonomy, we we we things about a about the guidance, support the if And area optical as look then, as we were things about at when did as for that so particular, autonomous Yeah, in market, well high such we we addressable purposes gave like like including XXXX, to to we XG. about in an business. talk interconnects, when that as electrification, were we talked of particular, core, of the the investments in, growth forth. talked talked and in so adjacencies, making. talked some vehicles, the And support foundations investing XG And IoT, of about you

And so, also point the made strategy out. that we question. executing to I’ll we’ve correct laid a essentially been want that in against your you

You said my from said of with what came What within within the That’s the I the bookings said had optical. component some is deals in that the the optical X% I script. customer. X% not agreement of

of aspect of piece So within course, our there that. was optical is of today. business a some Optical, small relatively

Joe Vruwink

the there. I’ll for Ajei, Thanks. it leave thanks, Okay, clarification.

Operator

of America. question ahead. Andrew our next Please of And Obin Bank today comes go from

Andrew Obin

morning. good guys, Hey,

Nicole Anasenes

morning. Good

Ajei Gopal

morning. Good

Andrew Obin

a question. Just

I it what the so it? of driven. at of rest and COVID what’s those the dynamic could just to U.S. the the it take how reopening for change a yearend A, And next year, you Thank the of assume of world going a about this of the rest COVID into look in relative U.S.? fairly into the world. the catch is robust? you. the U.S., i.e., talk how Could sort you the – driving numbers, why lot If outgrowth to up with would And is sort significant

Nicole Anasenes

question, Yeah. much Thanks for so Andrew. your

last a agreement around value of Ajei strong some customer So company the leading portfolio, one already consistent months, where remarks, is American as company North expanding performer, out, leaves couple our the think million using have exported of his the and APAC, has that be the solutions the America our now regions over with model simulation in has deals example of the, A lead $XX XX other the a pointed the creating an multiphysics continued to customers. for with you the mentioned strength world and the like from – technology we in I been ANSYS users. that across number in but of is

simulation And job and long-term and good development customers, use propagate short so, to leverage and deep connect of simulation. in broader to understanding enabling their able with process roadmaps, also connect to relationships use-cases, other the the that a very and to done to we’ve their to to physics be to them building at users

enthusiasm And in high-tech added for just sector, adjacencies in Asia had contracts that an model the that as basis. world. to strong the XX%, figure really that portfolio, – with not where but at the several executes our example, types, currency executing constant And XX% model I’m another X growth just strength core growth so, that is Pacific, currency We broad-based quarter, has that well. the around very well, a And region customers we’re sorry, showing region America They was executed across in are exceptionally. industry, quite the as the growth constant the Asia-Pacific customer geographies. a region had growth

the where investments years, deepening within and technology, to the inorganic over leveraging footholds also common making the So past we’ve footprint but there globally. relationships organic the and is core growth, a with here, solid having been broadening that the strong customer, and theme the accelerate our we’re X

strength little And with the drivers course of recovery. customers been and the of really terms There performance unevenness bit is the person. acceleration some America. the little are pandemic, in probably and so, and in Asia ahead the investments there in It’s of are To versus growth. Pacific meet during customers our that of a I our in recovery core bit that portfolio the portfolio would had making, of say still are the we’ve of the degree, preferring a to

is the wouldn’t things yet. I quite So the that characterize pandemic. regardless is normal to But we’ve of It showing resilient. seen returned the as certainly, through, challenges model in business

Andrew Obin

Thank wow. Oh, you.

is it that So has it? reopening structural of as the changes of in as way right sort model, much the reading business

Nicole Anasenes

to the really and investments down that to to not is, we enjoying might in the in around opportunity it’s team the in result people out there is portfolio what during But of robust of the say or very it’s point is deliberate note. because building think, that we I that business also kind That’s in over-pivot is can time of model. expect. value our that add that a proactive I’d a mean, as Yeah, very pandemic success our in confidence I the important But management around investing not hatches customers. to the the tough barrel do make a what and the decision business. direction, easy

feel strength. that a coming And real like of position in the so, of pandemic, do really whenever might we’re going be out to I be

Ajei Gopal

look response just next R&D, products in it’s think, that investments Nicole’s triggered R&D. to small at ANSYS, simulation when their I one point the where generation comes and obviously, by you’re to customers that’s And think globally, offerings, there, really and continuing And in. customers investments add to investments in about make in you seeing

make these that sales other matter. a any fact pandemic, or again, in the time for with can to we help them technology. to our next to relationships that points of importance what a during And that’s and be building allows the position their us So generation,

Andrew Obin

made a to medium call, question, some Thank think previous small sort how small remarks and you I highlighted about follow-up and tends of you. guys And just on And your business. you medium. business lead a core

for did of the and I sequential what trends still XQ And about can year? go you much. it But portend you into improve improvement. see to your rest the – continuing a leading this but so there. know in just maybe you outlook, next sort more Thanks as just indicator color are view if of yearend the SMB? talk business You And

Nicole Anasenes

start anything add to there’s to Sure, if have – I’ll you’d Ajei. and you like add,

I remarks, our to in momentum opening we’ve a the see customer-set now with QX. strength seen the really in we mentioned X as row. continue in SMB And in that we’re yes, So, quarters pleased

so, the that And I robust, what’s confidence and and to in pipeline in throughout evolve continues our continuing year, the improve. us raise that’s solid, think with given customers addition fact is to the large to our

And the so, that are two I’m sure not interrelated.

I they’re that at But quite behavior do we’re business. somewhat SMB and we’re been what the think like, I in of feel in that momentum, ongoing related not pleased within although broader the really sense we’ve set, with the pre-pandemic delivering recovery.

Ajei Gopal

Yeah. customer amplify of somewhat different Nicole points the And just to the one SMB. dynamic made, from the large is

customers. new of processes by maintained relationships their we’ve comes direct us ANSYS. our dynamic evolve efforts, ours. are part, customer project, vendor. activity, the that to a they turn Many to they long-term a the For driven is with or continue as the it built They’ve of with their these new these And as start to large around sales-force most R&D a to when customers long-term

new are that be relationships early channel customers on And, may those have an there’s of through opportunity to we of case the footprint SMBs relatively organization. these based customers SMBs, as customers. the In They long-term their the so, relationships. some within in in life many expand an relatively may be partners. cases, And

– SMB different dynamics leading you slightly These a are necessarily And wouldn’t enterprise. both and it’s across go-to-market so, their wouldn’t which each and say them is supporting leading has a And, made. activity. was I motion I of point indicator. necessarily that are own different say SMB two indicator, one there the the

Andrew Obin

much. so Thanks Fantastic.

Operator

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

Gal Munda

and you a wondering And you the the versus in trend that seeing, looks QX, SMB what’s for still taking you this in is really outlook? just Is As we’re to did kind row, the my or of in morning. thank what in mentioned? also, one, questions. the – pipeline strength second you QX enabled in in into Good that you you was Or time you raised in strong with material. just come again, seen it originally Asia that ACV you’ve it of mentioned coupled guidance terms terms QX Maybe look that. becoming expected? first Yeah. I what a of just

Nicole Anasenes

Sure.

So, strong in as strong close point out our with QX, you that did within a QX expectations. we really ACV had line really growth. QX in come double-digit

of QX And momentum ACV has really in the guidance so, in since we is raise board. the August, last on time improved a function shared that building been the the across

you we the what overall as were reflection that and delivered And is you we’ve to recovery in kind I of momentum how when the whether more building in of you’ve characterize to we There that’s is beginning so, as would of I kind raise what industries what of momentum mean, customers. across at that any isolated the the that the not still driving you in sure year, one-off it’s kind been to able date rightly an is It I the look would say look point seeing, of year, year like. And, is out, and the throughout dynamics QX. quarter, recall view. been around not were broad-based been going thing pretty

expectations we’ve ahead raising so, over systematically of with us, we as time. been see things of and you And kind sharing

Gal Munda

you. just maybe, follow-up, Nicole. as And to then helpful. Ajei Thanks, very a That’s

expanding You mentioned terms Autodesk of within electromagnetic especially partnership Fusion is XXX in again, that product. introducing the PCB simulation

each you expand slightly the electromagnetic with of physics a kind traditional of the test partnership the It’s Is there a vice and the partnership that side PTC with Discovery into Autodesk more closely as Live ANSYS worked Would both also with simulation. start introducing PTC the You’ve physics solvers you of on partners. versa? and possibility different for side well?

Ajei Gopal

technology to Well, leveraging reach I it, table. the partners to of really Gal, allow help our from think, vendor. with so have the can They us you expand a simulation. customer that bring a They to leading different complementary skills. segments, think a the about benefit look ANSYS reach more Partnering what people by when day, market combined bring solution end allows can partnerships They’ll us at brand. our create

complete the benefit than customers one own. from us day, a the our can at end provide of more either So of solution on can

Now, partnerships you’ll maintaining ecosystem. and this key key see our partnerships all along, our open to an to is

our partnerships can meet things open, off, that strategy not about so we’re our the to are are up. optimal our remain create system customers available, opening their – things So things about not but And blocking making needs. and products

what think So trying the leverage to we can benefit from our think about entirety about of we can our sure customers partners have any to can’t go. partnership we that to are about bear, make some open as of perspective individual I with just an we work partnership But, hopefully you make partnerships. strategy. may we have specifically that about the strategy, and our comment open bring because think of how to direction that, it

Gal Munda

Thanks, helpful. Ajei. That’s

Operator

Radke go question our gentlemen, next from comes and ahead. Citi. Please of Tyler Ladies

Tyler Radke

healthy it high-level really Hey, a up quarters mean, question for sounds I morning. into strong thanks. pipeline a Good here, you, couple and Ajei, put is like really the just clearly, QX. you

attributed feel I some like on challenges you. accelerating In much growth further this a going is do what’s other on of rate customers the the forward? going this or just need and, and think potentially Thank pressure you with kind that simulation. How curious could obviously, you evangelizing we the are be sustainable period constraints for you macro testing feel about supply broadly putting like words, do of just the to is going think if of guess, through? new physical strength more chain supply requirements. chain as Just kind of And,

Ajei Gopal

one X so in term. question me sort address Well, let about your of you the think timeframe, is short

manufacturing. by short-term, not is use and supply may businesses, earlier, the businesses I reason as affecting to in but R&D the of products, most So supply of the is, chain disruptions the it’s to of for tied by affected not that’s design the is really software part, chain. the tied phase one be And we’re mentioned many denominated the the our

if working with a looks designed supply that figure challenges out customer, our that what So designing been with our as technology our a the product the doesn’t with our particular like. can’t customer they’re relationship and with they’re like, next affect units whether chain, of technology the many with what produce looks that’s and has engineers, they’re or future working to product already they

your think are you in think, I forward. their customers there. not about affected alluding I our from really think, long-term by so think the make during short-term the no When So real question. we to perspective, continue globe exactly chains this around it’s to going about about think to they chain – the the perspective, questioning R&D, companies, it short-term, also you’re in supply in When issues supply and need how a long-term have you investments

generation thinking used. In actually This isn’t be necessarily are customer next will many all way simulation. building factories going So in building more to manufacturing about they’ve they techniques, the things moving the be to seeing for you’re robotics, traditional about of final and change the a chains, way. much in cases, factories manufacturing been they cases, the where is thinking generation in product these next customers supply are have automation, relevant about thinking some where more closer

work We’re that had they position help go design in in through our rethinking there techniques, through materials, in as we’re that this as they think simulation next as capabilities, the of process, a to to about ANSYS go position through these start customers goes them. to we position generation manufacturing they as with the advanced help a a – they

we their evolution. next this looks like as long-term try own can help generation where what as tailwind, in so, this a they out see to we customers figure And

Tyler Radke

Great. Thank you.

Operator

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

Jay Vleeschhouwer

Thank you. Good morning.

from First conference from ANSYS again quote platform question, X quote. of strategic Ajei, a regarding comments foundation has. a very growth that’s vision the a IDEAS you at semiconductor that becoming it’s a quote were to presentation. the your foresee there simulation the company’s cloud hosted by management Similarly, direct first and as unit, business for insights a as There month platforms last your reference future service a time was that your digital interesting

today you’re in technology, as you Nexus terms in that last area. and thinking a itself adjunct positions about call in support talk follow-up second certainly deliver the then how night? like question, becomes after technology, but And your planning terms making not doing in conference of future, an look of about suggests on typically up you’re what technical to of you cloud just you disability in light you’re you’re of mentor highest investments cloud perhaps, for That’s or commentary of what the can your the improving not that your PTC complement is and So, ramping or consulting? lately, open the their delivering number was unlike to pipeline discussed and the make R&D, and ultimately like,

maybe the function. necessary of talk investments the availability those personnel about for So that and

Ajei Gopal

we’re And, for Sure, look strategic let a comment direction the your where so you to with unpack question. the more start you I Jay, that try about going let [ph] [dembrading] hear [ph] me some me that that heard customers. our think, branches] times you’ll think And and some hit exciting asked. direction over longer-term the of lot next year, and as of of [our on, the so comments super

enabling larger high a Cloud manages to bit Cloud customers access is ANSYS high performance scale, got talked we’ve computing simulations about little able which for fidelity our there, of out these computing a You them of run at that remember it’s Cloud, being scale. to just resources, some performance high to many and access about

And at customer the quarter the scalability about last this call, by possible, in Eindhoven, that problem unknowns. computational some enabled that scalability technical a advancements so, this X for of because done. us of an we’ve XX on is solved aerodynamic with our they And something with where course, of that of cells billion University of billion Technical product talked a I core was like products

running we just use of products But his week, fact, access world’s give in in mesh XXX, cloud is supercomputer. show the up on is Microsoft same to we is powerful Ignite ANSYS’ to by to what detailed which generation most Nadella were the a obviously of keynote a AI on platform, on ANSYS the this in possible position Cloud Azure example, Satya sped in at phenomena. transient essentially also, for which simulation bottleneck creation the So, computing resources. And, example

that of I expand we’ve Cloud and the well that that capabilities. We matches cloud mixes added licensing excited we year, licenses. I’m And support flexible model, this as example, number as a So models, of was we continued model, one into pay-as-you-go about. support to think lease hybrid elastic support we’ve products an elastic which

seen in For Lumerical example, continue SOCX in And an also added usage. we’ve in overall cloud we’ve LS-DYNA, we added added to experience. we’ve we’ve our significant increases products, improve certification, customer

core year, course, one And this as the monitor we’re inflection seeing to ways at this we time hours. core by many we times of compared And as X almost that So is of hit that, that haven’t looking hours point. last year-to-date, still year. for

and compute. believe So be the that our we’re within they’re to greater much going, of we’re we’re where scale they’re seeing giving the And some we’re there going, them base. we demand able drive anticipating is still our to out watching opportunity customer customers, where

other some and of about in things new how were that sure, I’m we was supports number our our capability. the conversation, the of There in AIML, we’re of also have where that about and We’ve AIML simulation. are we So some a mentioned excited I’m about and product. technology excited with that things, really capabilities that cloud talked

customers because to All to partner make area more in us vendor the to can to allows that be leadership customers that drive a allows ways, to our advances and one our continue us in of delivered responsive our the marketplace. those customers or we to interrelated, that other in be are

was It What was the was question. So the first that second question, around… Jay?

Jay Vleeschhouwer

technical as of open second the your noted, typically is largest and R&D? I support in around positions, consulting number after investments was it Yeah, positions which

Ajei Gopal

help us I our position the is, we think it’s position insight at and we absolutely customers way as to into take our they products level with that we to make our that’s are of that continue customer’s the area, question our value, technology, work our in so a use a a to the feedback customers X-way in certainly, next have make coming Yeah, we’re continuing evolve. to that a something the do investments investments if our we from street, into gives We is think relationship the in field. customers with area, in the case. it technical generation we’re customer insight And, and in

and we in areas. to investments make excited I continue So, those we’re think,

Jay Vleeschhouwer

Okay. Thanks, Ajei.

Operator

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

Jason Celino

follow-up, the of fair instances, one in of on for million was acquisition its Is I for maybe Zemax, this together? $XX my the contribution if contribution make that know curious was think on then thanks how those a Hi, question. requests. said and Related Zemax million I’d taking came be you an I you. And it basis? that annualized customers to past, quick to Thank to sometimes it annual is $XX wondering QX?

Nicole Anasenes

so that answer Yeah, question contribution. can the quickly I on

we impact ACV said, of will So offset as largely by be revenue which impact. million think – so and we’ve million by – year, offset we we $X have expect had it’ll to currency. This about $X –

estimating organic an incremental in approximately Next impact. year, we’re million $XX

Ajei Gopal

strategy times, a have I’ve that as many not is we far to together, the on as comes one a support clearly acquisitions in strategy. our capability. And as are areas acquisitions themselves; said of the of And are how drive continued of broadening multi-physics acquisition to the

of leading we mentioned able customers in for And, together I the efforts. as Zemax I the have As broaden been capabilities, in the on has and support call, a are space. opportunity our be an and simulation think technologies obviously, using products the while work to could in to some who talk R&D radar how to portfolio products optical all but script, you about our that and us me for heard their deepen

our right fits so, into And kind of motion. go-to-market this technology

very are able to with this familiar salespeople nature. Our of being position technology

for a to us natural acquisition very it’s conclude. So

excited the technology. We’re about

bringing those We’re about people board. excited on

Jason Celino

I Excellent. appreciate the Great. color.

Operator

Wong today of And Please question Guggenheim from our Securities. comes ahead. Ken next go

Ken Wong

obviously potential MagSafe. has the Apple made it tech Great. expect module should that Thank of for you Apple, and testing a we a simulation I on to Ajei, announcement customers? simply my existing RF wave large an very taking this month, for partner question. last your additive in new safety you is brings touch ecosystem wanted Or to ANSYS relationships? guys

Ajei Gopal

may we specific not make may any talk that, company simulation. excited we’re or are can using our you who necessarily So I But about available what that really to not do. I can’t customers can in tell technology experts what is

use. non-engineers product simulation to And take applications is that part lifecycle. make simulation are strategy more the across easier of pervasive and for Our is for that to it creating

a of you for And part applications deliver of so creating technology our will integrated users, can be under that covers end technology as our specific can simply our elements problems. wherein the our if to they that experience to various invoke strategy, SaaS we’re together include solve

across we’re that So driving market. of those bringing are area historically those that also But part not we are the kinds strategy of And the are typically certainly of about the participated in. product – see we’ve making an applications lifecycle. to simulation we not that that pervasive being that’s overall as excited

Ken Wong

XXXX? there. Or higher a element some suppress the buying is perpetual to it. perpetual simply other Got that just is snapback appreciate mix that touch causing higher Really there mix? And, to Nicole, color on the perpetual, that of wanted from

Nicole Anasenes

quarters Yeah, would first of you X as a characterize it, take particularly perpetual year. the no, during hit, licenses did recall the pandemic a I quite significant last in

in last licensing did their And why evolve. time of a be But year, which to the because fourth based more is quite QX. to enables as they a reasons more really recover the compares challenging little them flexible of the continue quarter models, it needs one in bit customers so prefer

past the the has licenses. shifting perpetual over been really from away business so And years, model several

flat. leases. has been of primarily If you the been through acceleration And of time, the it’s periods over pretty look longer growth

us business really been so for business. and past has strong And evolution very of years, that’s successful annuity the very built X over a a the

are we compare from effects the going lease-based that towards of we’re customers some – to over see of seeing is we X kind And we shift so, that of – licensing. the the quarters first long-term while year, in that customer believe this seeing continue did the

Ken Wong

much. Great. Thank very you

Nicole Anasenes

welcome. You’re

Operator

Rosenblatt And Blair go our Please Abernethy ahead. Securities. next of comes question from today

Blair Abernethy

Thanks. Nice quarter, everyone.

been now, understand on-prem customer are use Just – HPC, so our to tools, a from and where cloud lies cloud. the Ajei, wondering just there. to for following not you just where if in cloud-based long help can has with our was I the the maybe around in tools, But, customers of you terms interest on Jay’s are simulation question right traction looking of shift they if which seeing sort time. out us

Ajei Gopal

– take usage, the fact to certainly didn’t our can cloud customers, easy customers using the them give remains access driven certainly from I have that during and like have remotely elastic advantage we advantage some experience, that customers give wanting that mean, a where that who our working give we to of we take it’s certainly more the compute we’re cloud, when So, an seeing experience as of drove want happened access to licensing can people the cloud they during elastic their technology, our can pandemic, capabilities. fast were And the offices. our

a give So customers that to lease in a for that like them we to SaaS while. can a feels model, our used access they’ve which technology on similarly, premises and experience,

HPC. choice our from cloud in as both they want perspective position ability they give for a do. the customers well server to what to of that Cloud we to need compute, scale support ANSYS So for a them be gives as up

the many so their centers, to advantage up is of out manage. complex you some prefer own data across to are customers think really it running of to own they mean, to multivariate about And, investments terabytes So of our our information. result that I take data at made within of a they simulation, amount the in that’s could their simulation building centers, data customers have optimization when will have customers. a that look multivariate

move of model? one matter into parts it where question another? What that want you a And an from simply transition, they where the How positioned. And do workflow their really so information? not it’s It’s of Do multiple piece I then how keep cloud the there’s do to on standard part think needs managed. of very is it? it’s and cloud. moving because that you from a So store customers the thinking entire vendors that’s well be holistically to we’re this across to you make

Our technology for ready is cloud. the

We’re positioned. very well

it as they’re and matter a excited meeting We’re when capabilities. our ready. And is really about customers the of

Blair Abernethy

Thank Right. you.

Operator

today J.P. And comes Jackson Ader our next go with ahead. Please Morgan. question from

Jackson Ader

of Great. Thanks has we that where think cloud. difference more questions maybe items? if or actually that up for on, of taking if deals can are shift recognition, your my partnership there is? any questions, to cloud with there guys. ANSYS But Microsoft, the cloud revenue how about, And would the in the Actually lot is there know been through impact we line mean, I follow if kind depending a a the I just, on deployment either on

Nicole Anasenes

I the perpetual outside revenue Yeah, recognition and the exactly is on current customers that lease we cloud which entitlements use-case capacity HPC our from very the itself be part the model of say I has no majority the business that in that that or mean, license, of their using have impact – would because separate same other usage. – cloud, it’s a it’s are the small vast would access The is and on immaterial. to capacity seamless the around whether

Ajei Gopal

you compute as it can take take both running seamlessly And cloud turns, the license right? licenses, premises. of as is well same advantage the product, way can customers we bring our built of So you Jackson, that their own can ANSYS advantage on capabilities

of managing what customers that are And that, the that’s so, you the give we fact for. looking flexibility

give that’s If that, that. investments got And compute. their advantage so, they’ve on-prem take great. them of to asking They their in not we’re up can

to they can that they want take In of do choose advantage they cloud, addition, can of the take advantage to Or too. if cloud. completely

is So position we’re them in support that. to that with looking a what flexibility and for, customers are

Jackson Ader

Okay, follow-up that DYNA. on then, makes a And sense.

that their they here that of of crash outside be solver down flexible first other Is have thought this the middle, expanded probably or the portfolios and of you core the from kind and can to specific we So solver about do, DYNA malleability talking use-case? like we’re DYNA of kind is acquired can are also when what something the use-cases are would right different LS-DYNA, impact.

Ajei Gopal

by what the sure mean you not I’m malleability. Yeah,

as I think that, firstly, of an DYNA continued wide explicit portfolio has It ANSYS we’ve capability we’ve explicit of And integrated implicit both combine together, portfolio, broadens and use-cases. and use-cases variety to opportunity. addressable within expand capabilities. analysis technologies the into obviously provided those the which use-cases, the the

obviously that’s case. So the

efficient – machine is might because that, is their efficient, I referring is the to help And PRIMEHPC announcements efficient, And supporting DYNA you supercomputer. of Fujitsu recognize our what some onto in be think I think I hardware essentially that Fujitsu. made comment is important their an more platform. on DYNA the perhaps the because platform. to workload that’s available the we about their to on they’re machine, they’re Fujitsu large-scale simulation And they the supporting that compute can on runs can on – DYNA because customers, the offload we solver

comment the clarifies hopefully, Fujitsu. about So that that on that was the piece, point and

Jackson Ader

Yeah.

Thank you. helpful. Okay. That’s

Kelsey DeBriyn

Thank the we to over have. going comments. time it you. That’s Ajei, turn I’m all closing for some to

Ajei Gopal

Thanks, Kelsey.

I’m execution, base our robust excited So, excellent pipeline. about customer our our broad really and

close special I ANSYS Our thank give me medium XXXX. customers’ reliance excitement business partners our gratitude their our express out large to small to to and to only contracts add and my that and for in the close to ability and as And look like customers simulation, sincere further you would to the colleagues. to a continued of support. our strengthening market, we confidence my

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

Operator

today’s presentation. thank concludes you gentlemen, call. We and attending Ladies for you. today’s this Thank conference all

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

ANSYS (ANSS) 4 Nov 212021 Q3 Earnings call transcript