ANSS - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, good morning, and thank you for standing by, and welcome to the ANSYS First Quarter 2022 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 a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded. like the I'd to call time, Ms. this to conference turn over At remarks. for DeBriyn opening go please Ma'am, ahead.

Kelsey DeBriyn

Good everyone. morning,

and Our earnings XX-Q first release, Investor information update updated the posted the link and the the Relations related prepared our business our in on and that as assumptions. quantitative fiscal key XXXX relative the results our factors quarter and remarks public well our contains website. first financial QX supporting They XXXX future key presentation of data quarter and year Form homepage have outlook contain underlying Important been discussed forward-looking qualitative to Today's as all filings. results information. our document are financial and our affect to may

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

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

Ajei Gopal

of additional as in of suite, has came strong the COVID-XX by QX leading our tone strong currency. the in geopolitical and in joining continued combined momentum, metrics everyone, and rest well XX% great all that thank lockdowns again for spurred and our I'm the caused results Good nearly product another dynamics. morning, which multiphysics report believe ongoing the grew by These constant regions set you disruptions us. pandemic, key QX relationships certain We this to as across with customer the beat was for ACV that happy quarter midst We ANSYS. will continued year. for and

them and out hearts Russia forecast. from the business relief affected As our all those suspended new ongoing contributed all and events. tragic to Belarus we have these and go ANSYS previously has to announced, removed with Ukrainian our and by we have efforts, XXXX

sanctions, and for increasing We absorbing of demand solutions, are not based we our ongoing the headwinds on operational strength EPS multiphysics and forecast but flow year. outlook on the global operating are Nicole the of the have including our the full our ACV, only from discussion a cash details will few revenue, in currency the for on exchange a of outlook. impact rates the minutes,

all the From demand relatively Focusing several simulation revenue last perspective, across Americas saw geographies, led now the expected, Asia we QX. by Pacific. and growth, for across industries on has our a The consistent been as good years. ANSYS for

an in and defense minutes, Given recent and are activity few which in accounts. I energy initiatives, a now increased sustainability market aerospace and will conditions, we discuss in and events seeing

for million its with on The optimization largest mission contracts it North digital a a government This win return to by solution is cost new and digital engineering, driving Our a multidisciplinary set engineering. of broad contract using through in investment realizing is design integrated quarter strong digital transformation the organization. out ANSYS American power its agreement its customer helping while was to three our long-time year contractor. $XX customer defense

I specific calls, our these business. of On typically highlight a aspect

I products. the and of solutions semiconductors, next-generation Over the development scalability are best-in-class optical highlighted ANSYS several critical in unparalleled of discussed reviewed our playing have I that our the products. simulation role calls, leading the past I fluid suite of

ANSYS' one that enabled has through multiphysics plays to traditionally crosses would industries that like the call, simulation critical complex to this strengths in plays ANSYS role I a to crucial and discuss that sustainability. simulation. is companies and in For Sustainability ANSYS ever topic our fact, to the built, energy can in sustainability and physical broad many, portfolio, resources enable too call. a mention Today, multiphysics are this customers' of though, products use initiatives, number to of our prototyping. on save before thanks we virtual

sense examples me you sustainability: the as in to playing Let you a the in three is decreasing next, of increasing emissions. in driving role rates have and give that simulation just first, representative in fuel so efficiency; finally, electrification;

on Let more materials me new outcomes solve consumption to by Similarly, QX, effectiveness company are and start compared hybrid with emissions variety capabilities, and when design. more The agreement announced electric reducing carbon from Electronics energy used architecture, to efficiency, multiphysics from engine a initiatives where ANSYS are ANSYS' makes today's five being to fan to initiatives. and ranging battery fuel electrification sustainable products reducing fuel costs dependence use, resource-efficient of significantly these company's a ANSYS' dioxide pollution engines. are solutions XX% Aircraft sustainability in Using this multiphysics to producing are more that we advanced and week year fossil efficient and support cost than most advancing announced support enterprise productivity Engines multiple the expects working with an license development aviation thermal the production for efforts we while earlier fuels. that with Safran structural its LG open efficiency. We sustainability by new and reduce redesigns. to material enabling product solutions challenges

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faster and than result, transformation LG digital products next-generation carbon accelerating its ever its decreasing its while a can As footprint. Electronics introduce

ANSYS Turning electricity. consume motors, to of today to world's XX% improve efficiency the electric which electrification. Customers over are of the solutions employing

the of long-time the concepts with and efficiency to To using development Turntide racetrack E-Prix, solution will prototypes. won will ANSYS by design. while efficient well use energy For cutting Technologies, help ANSYS past Motorsport broadens combining customers the will with reducing with ANSYS, more multiphysics offer is the affordable the of comprehensive electric product of but QX, Formula apply Heuer spots time solutions On the the The cost. In ANSYS portfolio, technologies. end-to-end of is This will two the the product solutions I've at customers to contract innovations the a into powertrain to simulation the physical contract not them City developed machine to which engineers Working Mexico ANSYS testing rest example, and company's is as compliment costs. machines, as virtual operations signed most go-to-market the and for vehicles prototyping designs, solution engineering as offering, for the powertrain the Porsche and on spur Porsche Design ANSYS best integrated the environmental and electric accelerate accelerated sustainable powertrain new ANSYS partner of without motor also design impact the we need Porsche. an Motor efficient, that E Motor-CAD develops the machine physical multiyear of with more of a motion. we in our used which design calls, acquired use design provide energy-intensive commercial optimize at cars. electrification and discussed Limited Electric this we recently TAG development OEM in reduce applications already well with Team enable workflow QX, seamlessly Design user a established Turntide top customized development electric for multiphysics only Motor as industries. sustainable

working solar development their customers algorithms sustainable deliver energy wind that model-based its responsible footprint simulation conditions. software solutions wind range management better a power. is we through are recently are leading systems. turbine and of to data Using multiple costs. component emissions, company energy with wind our control and for announced sources, drive turbine controllers to development preventing power the performance carbon control power These designs from sensors We merge environment, renewable lower created of Vestas optimizing at reduce helping for safer across and to damage renewable ANSYS and Moving including more Vestas

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of a on the planet. of the fueling organizations earlier, the mentioned are examples is simulation these innovative ANSYS I initiatives most the some As just of how sustainability few of

You will our use world during upcoming even XX. May sustainability cases more hear on simulation real world event

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of stakeholders, simulation one in the give by ecosystem Boulder great an masters more digital quarter ANSYS products. another the University As developing engineers Thanks growing universities example multiphysics program industry-ready will its into incorporating XX ANSYS QX rest the skills. who join students countries and summarize, are for new X,XXX solutions was engineering. XXXX. ANSYS to than of set our To their speed Colorado in hands high tone in peers These that experience of for on will will

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Nicole Anasenes

morning, everyone. Good Ajei. you, Thank

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

revenue key our quarter the types the business operating EPS by license and as growth The strength on delivered the financial the high ACV beat driven during was margin our exceeded the demonstrated our guidance, and of end all and sold mix robust QX quarter. we quarter strong guidance across metrics. of of first

of of subscription was recurring and sources XX% ACV growth currency, constant guidance mentioned, We grew geographies. regions geographic line balance discuss and of across or currency. QX GAAP lease performance growth the perpetual growing basis. year-over-year QX that which was Now and XX-month the industries. currency in We our from saw momentum and XX% closed strong ongoing revenue, in most license our exceeded let billion, year-over-year. recurring XX% QX in in million or the X% QX as ACV trailing our constant some respectively. XX% XX% high across This constant with $X.X towards and We top grew financial double-digit deferred strong revenue licenses. performance based both a timing year-over-year annuity closed in by on I me constant driven by grew currency and revenue of driven ACV had ACV and of highlights. XX% in $XXX.X QX total shift total created quarter. the $XXX.X million with XX% is backlog the quarter end which with grew at deals broad by revenue strong a

quarter, our our operating business than margin of first guidance. of manage with we financial margin discipline. was by results. on EPS continued quarter XX.X%, Operating solid margin and guidance, XX.X% yielded strong impacted This revenue. which was better revenue to than growth from also a first an the During $X.XX, of to outperforming similar benefited result operating was EPS better positively with which our The margin, quarter

tax the expect the tax first effective in we Our was rate remainder rate XX%. The of for quarter XXXX.

on In which quarter $XXX.X We cash we Our line the quarter ended from XXX,XXX balance priorities, investments strong capital and cash during our with the repurchased in flow $XXX.X collections. allocation the operations around of sheet. first million. million, benefited for $XXX quarter million shares totaled from with approximately short-term the

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

of Now turn the to let me topic guidance.

a The have impact. business, Although Belarus in this customer given the fully our forecast full increasing underlying XXXX. QX our momentum from in and robust our size strong continued are our demand. business business our And sanctions. a of to revenue, momentum We great material flow outlook and QX absorbed And the breadth EPS operating overall remainder the operationally Russia for reflects our as is strong. of depth on XXXX and outlook of our we Belarus cash Russia and of delivered for a ACV coming year the are we result, year. The removal the not exceeds off

However, embedded offsetting that strengthening, dollar in which impacts guidance. is the our outlook exchange U.S. strong significant rate

me XXXX Let guidance. full start with year our

full or updating billion our constant the X.X% in range We in year X% ACV to are growth currency. outlook billion. This to of be to $X.XXX X.X% XX.X% of represents to $X.XXX

offset raising midpoint Belarus are the of million $XX our currency QX we for by and to forecast to foreign the a That million driven by year. February improved relative business of on million Russia performance This of We was X underlying guidance $XX and and exchange absorbing of headwind. our operational guidance. ACV see rest the raise of by February improvement compared drove saw momentum year our ACV operational constant This growth the guidance. $XX of ACV point strong full increase is we

range be billion We to constant of expect revenue XX.X% to to X.X% currency. in $X.XX which $X.X is to in X.X% X% billion, of the or growth

raising currency Relative Belarus of constant guidance, in and growth. and by which are the from million revenue from operational revenue million foreign Russia our offset increased $XX exchange performance, of February year our full was $XX headwind. million $XX guidance absorbing We our midpoint to

$X.XX our As was count, guidance, the and better headwind. Russia $X.XX $X.XX expect increased a $X.XX. February lower by of year range offset Belarus result, our to performance share we full operational to be Relative year from absorbing and in EPS exchange $X.XX foreign which to around our of full and EPS from

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

million, significant regulations effect with R&E in impact cash our Relative is $XX Our of $XX euro as of yen. fluctuation exchange we The currency as are $XX XXXX XXXX has impacted dollar offset negatively $XXX to cash rates, headwind. movement operating to better Japanese operational million includes $XXX to outlook performance, a strengthening February of January U.S. capitalization our Since million exchange XXXX, $XX guidance, guidance the $XX relative by discussed the million timing to negative range have underlying XXXX. XXXX operating February is was rates, and million. typical currencies increased which of currency impact flow impacts. relative our Belarus million ACV million and trajectory been considerable year these that to the on our X, the and of and January which compared foreign to cash full seen collections Notwithstanding approximately absorbing million operationally outsized Russia the is business from million from our of $XX guidance on and has $XX of by by approximately of strong momentum. When

for guidance to turn me let QX. Now

ACV million and in For $XXX the $XXX expect we $XXX second the million of quarter, to million. range of in to range million the $XXX revenue

full including with our year model first digit double for and growth, half of Our tuck-in constant growth in the M&A. XXXX business outlook currency ACV digit implies double both line

QX currency XX% XX.X% the in Further been the $X.XX in EPS of to and margin in have prepared other operating details $X.XX. document. expect rates assumptions outlook around for remarks and to our factored range of into XXXX the and contained are range QX specific that We

this team. continue in strong improvements our confidence the the to high and ANSYS all efforts centric the and business operational last currency the strong ACV, priorities. past of revenue cash our for financial entire as the would the strategic model increased have but thank push against of growth in I execute business of not momentum for quarter, focus of flow which the and invest team from the our outlook. as and contribute underlying only our those in grow, attitude, appreciate ACV diversified forecast, for excellence all years, a few We level in and a to like outlook for to we the do can performance for QX and outlook of and recurring business the reflected our I our customer constant in

as us our what class previously go-to problems create Our world people source most physics-based difficult and reputation was earned leading industry solve to to the have solutions simulation and the impossible.

the XXXX to positioned to journey into our make take to questions. value now enhance deliver to and on our are a our We us the to and place the will strategic phone propel customers, Operator, outlook to shareholders, world – well better our investments a to open will for years lines world we come.

Operator

question first comes from Jay with Vleeschhouwer Please our from And ahead Instructions] question. [Operator Griffin today Securities. your go

Jay Vleeschhouwer

Ajei, industry. me question morning, Good the let broad software overall and about with you. within somewhat Thank trends with a start you Nicole. Ajei engineering

With Over world has already now let’s are far more And centric it the for of seems we a of we’ve within the terms that become of terms thinking are you there working question more to capital? occurring XX trends just to have capital happen velocity Is AR PLM could market? cadence CAD that operational to internal that engineering the very kinds the in would is overall perhaps implications the services or the at even your altering have year Anything within release market are altered flow centric you surpassed deferred say software. last out may three It’s years need effects, world incrementally currency and of working looking What the perhaps support, that given that simulation second your of just out for close. the category that. product get is, simulation cash had leverage? stripping say now? engineering last say simulation regard years. let’s of largest surpassed make, number of I’m Nicole. or of for CAD and investments follow-up the status then a or structural, not And to that much perhaps let’s more you how flow, in a anything And in behind about cash than the kind make as software within you, you you

Ajei Gopal

is Thanks the Jay, Good for morning, Ajei. this question.

products simulation market directly customers that in are as customers. alluded the comes it the are critical is of you’ve and we’ve the something our is – that So, you rightly design obviously, greater point reason seeing products. to. as you out And the own said And simulation is use we’re their product in facing really complexity always know from as for

and simulation, when that from more You know, cost, product. you’re know product, That’s simulate, that, is your for for a simulations tailwind recognizing the more of are Customers of the effectiveness simulations. more building and can better you terms more run, experience, as performance, it in the they’re the the us. product you a – and the you running

also about and it’s not create for to able been You products individual of about area physics individual an we also more And become also in the excellence. certainly us. complex, multi-physics be as a that’s a for just And to capability. together technologies the multi-physics physics It’s integration investment recognize invest excellence. solution

If simulation have recent the of the available investments and platform, of people time our to the we’ve we’ve Python the access the we’ve lot made capabilities. APIs some write ecosystem. And where on wide variety made at invoke you the about same example, that Python look directly can at, for applications clients, a talked

capabilities tool our easier part trying may So But it customers of and because for have in design cycle. analysis on platform some in the much as much it advantage anchor they future, the they virtual can a as which past. not as course, they take are cases, edge need these of boundary before. couldn’t use more more can more. simulation, explore new to The it’s we’re essentially end-to-end the where examples of conditions simulation, a they they used broader with traditional just the those they of to where And done have simulation, their product make the

this to, simulation. towards taken platform centric approach that in we’ve recently a Now they’re of position because

platform these a So that’s We’ve talked things to design, support gives customers. of position that about in aspects are of the broader essential some data lot – we’re the in simulation our hopefully all you for management, like perspective. a that materials past

supporting The as other we’ve broad been talked in the area, in what past hyperscalers. has seen from you’ve investment about the

GPUs, And working supporting simulation simulation they’re that areas with. cloud relevant point support in again with dealing see that our supporting CPUs, make we’ve investing – it’s computing, we’re some where the opportunity of So in the that more We and that using customers, finally, makes and then investing latest out to complexity and of validation the not of insight the we the all be scale take as take much available. continues the simulation broadly hardware make more about simulation products. from I’ll just to

– at are engineering, those areas are look if So in discovery. an you things as those like mission areas example, where all

is twin, well. All taking market digital where areas opportunities to opens to of simulation new as areas us us for taking that us

So investments, down. our our opportunity increased there reflective and parallel Jay see out in simulation investments the that’s for and certainly we

Nicole Anasenes

correlated guidance. those Yes. flow the financial more that transition to transition because in revenue subscription terms this leases. to operating XXXX the dynamics think highly And of that in And start you highly Jay, than know, undergoing we’ve particular, capital is that been of cash the I working model leverage see as to to our and around on ACV you in your question, flow recurring cash

that leverage cash the recognition And to kind and see really of is generates behind ACV lease generated is business a which business that it, revenue And grow revenue the there's operating is that what’s from than slightly the from is those subscription So gets ACV. XX/XX. annuity recognition grow driving the expected faster that because different that the underlying collections. is dynamic cash profile acceleration of cash expected right? operating underlying flow You to flow, revenue. And than could in faster

Jay Vleeschhouwer

you covers both. That it. Yes. Thank you. Thank

Operator

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

Tyler Radke

morning. good me Hey, you for Thanks the taking okay? question. hear Can

Nicole Anasenes

you. hear can We Yes.

Operator

sir. Yes,

proceed. may You

Tyler Radke

great. much. Thanks Thanks. so morning. Okay, Good

terms excuse in quarter is me your of much kind I'm physical just sustainability up and conversations curious in your driver then more But – to how talked a for conversation you I of simulation this testing a follow on more sustainability coming lot have just AJei, your growth and maybe remarks definition opening and business quick key to this is obviously for So, drive about for Nicole. up the Thank you're how ability needs. thinking by this sense you. reducing helps us accelerate give awareness a just And about the for a ANSYS. by effort

Ajei Gopal

Tyler, Good question. the morning, thanks for

So more use been as you And sustainability. so that's the figure obviously rightly the mean, different and like. in the this, I we've the products industry, the value future past, more point make course, industries automotive technology, is we've focus product the reduced trying of comes been ways. seen the in What's after of that in the engine briefly with what simulation been how internal mentioned we've can or looks And automobile of we've out transition in sustainable. we’ve and battery has seen I efficient seen the years manifest recent because as the what area design cars, of out, That's electric certainly last in different – replaces the to in forth. combustion historical what script in or my on the certainly the physical historical happening and this remarks there's few prototypes. this in value clearly of We number provided. earlier,

So of there's discussions. been that set one

other of customers with years conversations have to been continued we've where on has energy. a areas of for of number forms sets other The

that place energy, having right these taking And look around companies with more other with solar, focus discussions like as how important conversations climate, be for areas efficient. energy about And they and you the outside now are continue of like and These be back title, to on they so talked conversations while. more hydrocarbon more things wind, course, start as the these continued we've comes customers lightweighting a certainly geopolitical the urgency. have and to can we're on more or the and at of things So think can efficient how ecosystem. are broader traditional I

long-term and see ongoing requirement gain And able as continues to. it's that so, tailwind this us are we momentum we an respond a to that for to customer

about that So we sustainability the are think multiple industry verticals. initiatives, excited they we as these can frankly, industry across support

Tyler Radke

And follow you. Thank question. up a maybe quick

with ACV for in performance QX currency obviously adjusting line guidance. your So was in

of You Russia raised the headwind, more are lot that, businesses out everything bit posture out. help of you us just the full given year outlook, taking to understand operationally the a a confidence gives there do a come conservative what

So was Thank you. quarter of something guide? your posture versus it what's a the on you in you the or saw of expectations preventing in more of improvement taking kind from conservative terms

Nicole Anasenes

Tyler. Yes, I mean, I think – thanks,

know, We're focused think kind on approach to and number you I quarter take update as you of as is year our see quarter, full guidance on the year. by is to kind of, things full the very we them right.

year was incredibly growth of XXXX that strong building currency constant the pretty an that year. with out lot a the start with XX% And you end of was of we the to momentum QX a in saw so off had exceptional what back of

Belarus momentum think I were elimination to remarks what and it discussed while And around the the headwinds that there it, the so environment. is emblematic we in macro of that And were core in the is business strong. continues underneath the Russian, of we occurring of the independent just shared value currency the dynamics really be create that prepared

we and that alternatives it in the I differentiated plays Ajei the problem, a the more are to complexity the that really the That you solve strength more discussed, perfect can problems our I trying of is component from unique there. I highly sustainability the we our complex think out unique our think all way are that strengths. level customers level example able and solve solve. just through mean, to mission example of the a the the problems is way, to relatively

of and to ability our help more lot we some facing. lot traverse kind customers so a certainty problems the of that and – provide these And a product of they're of challenging

our it's gives to the that full focus throughout customers had business And so over deliver. to past is the had just five of on years view. consistently the just really the focus year portfolio what confidence our on the overall And in the we've continues that pandemic, strength me, the we've us

Tyler Radke

much. so Thanks

Operator

next our ahead Baird. Vruwink question Please from go from comes And Joe question. with your

Joe Vruwink

Great. how Hi, base within with maybe customer to about your thinking everyone. I this. outlook you're start your SMB and just wanted

this there this so any wondering was backdrop. macro is the you're just I'm in where economic and current – if XXXX differently about think given the sensitivities thinking I exposure

Nicole Anasenes

I kind mean, Yes. that front to again, in meaningful on or is set not are based that of kind we the see in shift we did – kind any of seeing We the currently, that momentum point forecast made business space. underlying not of of the the I the to us opportunity underlying today. so our of in outlook see Tyler,

And purchasing post of so as big there of does in kind a kind and resurgence of year, continued more outlook SMB back year. the behavior Last end was It's pretty the COVID business our usual. behavior space. consider normalized normalized towards towards back the business

situation. essentially changes, on continue And the considering so, would if certainly basis, any go-forward to we were monitor what to we a And you. but we that's we're see update

Joe Vruwink

spending teens reconcile ANSYS M&A. in remove this R&D maybe, maybe over is thinking outperformance? it's is by Can about your think when When I low up market, end if as then if try LTM maybe seems it the like teens tech, a the high-tech correct, help period to growth ACV high I I high you even And follow-up, more business reconcile Okay. growth.

Ajei Gopal

the as for address as differentiated of mean, portfolio When more try you just let to about it's simulation high the think grow. for mentioned that. focused tech, I complex, portfolio we get continues that. aspects to And our on simulation a me have need I've before, and products again, once Well, quickly

you're That's where we for you mentioned in. that very need accurate And where, in an announced my we electrification – essential. with the of of That's an absolutely Motor last in an recently like tool example, capabilities. the HFSS In within chain. day just tool Design, example announced so, recently remarks, end-to-end helping again as acquisition so, area entire I dealing or next-generation Design chain come simulation industry when telecommunications, is Motor big products like electric ANSYS trends end-to-end electrification,

to so they're telecommunications. to but they're So in very customers areas been that in are like products have struggling we also next-generation – – we have in in not products really that where investing best we've only our – been areas feel breed, careful in our invest

a course, offerings interesting our other and there's semiconductor that of our The simulation connection broader is capabilities. between thing,

world technologies customers as you start XD when use ANSYS simulation X.X the more and tools domain As semiconductor capabilities and see in are the traditional circuits, like to the of in a semiconductor that's the looking that's when at – well. integrated

us. for as a so And tailwind long-term crossover that well represents

with well the investing, we are areas challenging the right We've like problems some the most the the the right in our they're solve making future. So some areas to portfolio. allow with of investments we where positioned feel our products complex these levels been to highly of of and integrations customers in for

why And so, business. tech that's high we very our feel about good

Nicole Anasenes

Yes. to your asked. answer just that kind of And the point on you question growth

industry on continue our a largest the in contributors by a give XX-month growth to don't as they trailing basis, but the know, you percentage, industry, do A&D that a as So business be see to high-tech amount well. and higher you and represent as disclosure, we

Joe Vruwink

you. Thank

Operator

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

Andrew Obin

good Hi, morning.

Nicole Anasenes

Good morning.

Ajei Gopal

morning. Good

Andrew Obin

your guess statement I than going currency confirmation. make didn't mid-point be it growth to your to be guide. constant not XX% than correct? better sure of more going that fair of just thought of beat first guidance, want better Is a question. It's my to said and was guide, your is right? the a I statement? a but ACV that Because I numbers, the Is somebody midpoint you was

Nicole Anasenes

was than it talking the you're better QX absolutely, – about number? Yes,

Andrew Obin

Yes.

Nicole Anasenes

Yes.

Andrew Obin

second. for was a I there confused Okay.

Okay, fine.

Nicole Anasenes

no. the No, midpoint It exceeded of was well our guidance. actually no, Yes.

Andrew Obin

that's because I thought. what No. yes. Yes,

fine. Okay,

Nicole Anasenes

QX was, – constant the Given significantly what midpoint in yes, coming QX and in the is I XX% was over that. yes. X% quite at just currency remember, X% in midpoint

Andrew Obin

sure. thank Excellent, you, making just

U.S. to does yes, show question it and and to up your ago. XX stuff trying XX to we've back understand that just recovery But globally on sort think aerospace in top months? do nature. cycle business what's aerospace defense year should the aerospace the Europe that your going XX over a) it to a budget looks next and higher and happening higher what of longer getting trailing So over commercial driving defense ACV the and versus been should it in structurally to chart, the defense and XX impact questions what's we Ukraine month of – like how you given I exposure, just appreciate in And on XX

Ajei Gopal

our and seeing the activity also performance you verticals. and in heard we're defense increased in seeing market of and – QX comments, saw with good defense aerospace is we recently. we're And customers in most one as three my Aerospace top

aerospace with indicator pretty But then our in overall certainly bring that these too to And can So and and the business broad, it's the is business we for activity it's, good increased our think very global based on conversations what defense tailwinds of longer-term cause of again, I those portfolio conversations. early customers. from it's declare, while a these is to capabilities table. our events clear and

Andrew Obin

just your the then business that and else of lower indicate be that trying of and I sort disclosures going thinking is to should German have and some and be Or is decline there And at of share thinking that that terrific. something right, auto shrunk, All Germany Japanese auto understand, Japan, in Japan looking should – go on? automakers? German and I that it's does businesses

Nicole Anasenes

Yes.

markets. comment me commentary the market let So Ajei in revenue give growth the on more those I'll on let dynamics.

is impact at dollar against rate an in going the weakening actual they're a most the on the two, dollar, Japanese those but first, there. significant impact so to – there the against the the have so weakening yen the disproportionate quarter, So and euro basis,

general, license license note, is basis just quite in volatile. differences because other the and a of mix The to that on revenue can thing, mix year-to-year comparative in be variability

you And quite Once quarter. ANSYS get level, the volatility a country you the even look volatile. be at quarterly the so, at lot numbers to the of quarter, a are when level, could within there

necessarily the are in that of – happening kind is broader dynamics not the not indicator number of an it's So, so quarterly environment.

Andrew Obin

Got you about and that. that's also where we see FX. I thought should you. Thank have

Nicole Anasenes

Yes.

Operator

go question. question next from Kalia Please your from Barclays. ahead comes Our Saket with

Saket Kalia

guys. Good here. Okay. Great. Thanks morning. taking for questions my Hi,

Nicole Anasenes

Good morning.

Saket Kalia

could morning. acquisition talk you OnScale with about little maybe good you. a if the Ajei, start I wonder Hi, bit. I'll

the you quarter. take take any you And computing currently that thoughts does How into how how the goes that's sort market the – different or how and to I that of rather early, any on understanding to that that's thoughts of in on – whether to market ANSYS market? than has? just high-performance and whether happened think beginning sort ANSYS of it portfolio on it's fit that

Ajei Gopal

are to strategy. two important cloud So, Saket, elements our there

location The device first is second independence and is the independence.

our parallel in user when to launch their to our so, ANSYS me support products to pointed how as to for HPC, typical computing or And public in you And about us application We with advantage that compute the hundreds Cloud. advantage important our is our And of and cloud how is to then multiple that about me customers earnings the simulation talked enormous. talked hours customers. and response take they ANSYS in computing, choice. run what's why simulations strategy And question important I about I different customers to flagship use allows customers. products use on that's so AWS, take think AWS flagship advantage a of talked our could single high-performance in call customers cloud I required said software. of to in could we instance question, while and as ANSYS their simulation the the enterprise running of access taking be power compute across hardware from location ANSYS managed talked start had, the for high-performance allows let simulation that ANSYS. pair your which while the Cloud back about a how in cores, Azure amount described And of answer can their by let independence, we our from I that's single also and products, in to I with powered Gateway that take you with I last to and of alluded

last full-featured that cloud location-independent computing So our providing how time, about high-performance in interfaces words, strategy ANSYS full-featured while supports solvers. our user other products products for I supports those talked for our

next leg really So announcement is to independent the technology our coming manner allow strategy, to ANSYS solver the of part a a browser. to question in which of recent with device through is your OnScale access

as you web with offering to a created web infrastructure. OnScale, know, coupled So an user that interface SaaS cloud-native simple simulation and intuitive exciting had

our a front back-end access that solvers customer ANSYS And a through device in supplement continue with browser through industry-leading course. question, And words, to experience of flagship cloud. so we In a your is in end, now we we now to will access the the to solvers part ANSYS, and your OnScale manner. point that interface will enhance other enable independent of to that SaaS will

SaaS And products, business new new allows in option future so to that ANSYS customers. also one us might this or users flagship used to maybe and simulation, that be so the not even areas traditionally provide medium have small existing to in users a in attracted in

with customers the multiphysics So capabilities to best you device-independent strategy of market. our of location-independent really provide simulation most comprehensive in and cloud that is when set together, the all add and to access

Saket Kalia

That Motor you ACV Nicole, currency remind year, an to a follow-up, much inorganic just you're is I for quick just maybe including whether just and it. sure constant inorganic year this kind and a of asked. on sense. lot just the growth can Got just make Design there it. an ACV much it makes us includes Got basis. how of – wanted think this housekeeping, I acquisition? I is how too check organic to much that but it's don't for

Nicole Anasenes

let of take And me description that. correct. kind through you of the you're Yes,

the in – ANSYS as of where revenue. are And to to it momentum acquisition be inorganic around at press Motor $XX prior discussed and business. to the constant of OEM in two prior the in and contribution a we midpoint. were The we operationally, minimal this previously guidance Motor translates release, $XX know, based recent by of partnership, increased point of the the to is currency both then organic Design million And that OnScale with Design, contributors Design, Motor basis on the increase expect that us a technology had acquisitions, our immaterial primary you early-stage million brings as the And and increased Zemax of was currency the product. that growth is ACV So that that the OnScale top-line. constant mentioned XX% we've an we our growth of then and ACV. guidance about quarter them

So there from benefit top minimis this line de incremental year. is the acquisition

of which important now about aspects cloud excited are earlier the of investments the sustainability to the to roadmap material today. of while conversation initial had we as as accelerate roadmap, yes, not contributions two really roadmap, well long-term the these electrification connects really things, discussed, our So Ajei we're impact the financial two as these

ACV our guidance I from ACV that M&A. again contribution so Zemax, put full XX% of you year outlook, $XX Zemax in of when us million still is exclude which – mean business would model currency the reflects from on tuck-in the So double-digit growth which around constant growth, including the

of net actually impact to just that operating The received. margin guidance other that we've a absorbed absorbed the both and acquisitions – fully negative cash the negative cash year full in as thing, and impact but relates margin you two to flow. had it we've is flow, note, operating The these on

Saket Kalia

it. all guys. helpful. really That's Thanks Got

Operator

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

Adam Borg

the acquisition. Great. Thanks contribution, taking the details a on lot and the guidance also and for MDL details the just maybe the question inorganic the on about

you years. in partnership couple for have established It's already as a had about, talked obviously, of So guys our been motion. you a go-to-market

So other just get thinking an areas you design in much. broadly, understand to so to it love market. to opportunity helps buy I'm you and I'd just partner. deeper the more for is CAD. then into some Thanks deeper CAD respects why into there about [indiscernible] versus of decide And get this

Ajei Gopal

bring electric that the I've connects and machine targeting market. Design includes tool excited in couple to motors, I'm Motor-CAD as other And a simulation have demand elements that that chain in for into a seamless lot table. increased motor a our said. had with the We've best-in-class partnership of They're of So the the the of years. portfolio. they the market complexity vehicles, electric What Motor successful we obviously, is about electric acquisition a the of solution

Fluent example, mechanical. for with we Discovery, with Maxwell, So connections with with have ANSYS

connected suite multiphysics full the capabilities. really our it's So of to

as motor map Obviously, control objectives, us a but that And position Motors. own left seamless we'll integration support ANSYS, they drive independent now product so gives have workflow that acquiring their part be shift the really streamline that to the multiphysics in and in our really company, across levels greater Electric an that portfolio. product road to have ability design of and that they're end-to-end we around of

possible So that Motor-CAD position we're optimization the electric that capability be from about map, solutions. seeing we're workflow. which a gives in streamlined with is coupled to importance a of for you they excited out drive ANSYS We're And the of organization. the that we much about to visibility Scheffler, – that. R&D And validation had greater kind into see that and line, of excited you're have customer for ours, that. example, workflow us now when to organically the OPTIS a And road machines. becomes better able design what

about excited the acquisition. we're So

acquisition, a it's and team think I strong. is very the great

Adam Borg

again. the about Walt That's think a of still maybe it's happened at just know on promotion. Thanks observations planned you just a change top really go-to-market quick And but as congrats on to really follow-up, I any the it and as so helpful. early, any changes initial the helm?

Ajei Gopal

is record mean in intimately track in He's the aspects of our of a transformation. said I a fastest-growing success He's our He largest been has enterprise – the He's long-time products. with ANSYS dealt as He's knows involved he of within largest in Well, Americas. space. has executive, the my been ANSYS. tremendous he of the region has spearheaded sales contracts our in He industry. I been Walt running just all go-to-market. in the the knows and some and involved inside He efforts. go-to-market some comments,

move and the sales teams our a So He to his involved intimately he's strategy, creation was our leadership. I'm of choice in about clear excited been forward.

excited talent the deep And about exceptional at an really here have I'm bench of ANSYS. We future.

Adam Borg

Super clear. Thanks again.

Operator

And KeyBanc comes on Mr. is Markets. Celino, Celino Please ahead from question. your that go mute. And your phone Jason our next question with possible from it's Capital

Jason Celino

embarrassing. you're would have that. the Europe there curious And in. everyone's maybe about sorry Thanks on seeing for minds. the if didn't Thanks. what Oh, on is the me pointed, then any is That's sanction what trends how pipeline grown up. I'm EMEA exclude it in shaping quarter? of getting more and impact

Nicole Anasenes

Yes.

first we industrial in of I was – in overall. quite So strong our the saw with strong. is equipment currency quarter, saw We industrial demand the which constant A&D particular, pretty overall, in industry, of and QX, the saw relatively X% mean, strong, in we growth end –

the year overall so on Russia And of of couple of a full in was the million in impact QX. million of dollars revenue impact $XX

Jason Celino

remains you How for especially plans capacity And relatively Thank second guess, software then and really are half? do how for hiring Excellent. hiring feel environment Okay. about productivity heading going? sales. quickly, tight, you I that. the And Thanks. into the

Nicole Anasenes

Yes.

pace QX our rate of expected, and at QX So higher was than we hiring XXXX. came in in as it did a

to second and So as continue ramp hiring half QX planned. up we're planning to in

Jason Celino

you. Thank

Nicole Anasenes

Operator, we one question. time more for have

Operator

Please Our final your from question. Securities. question Matthew today go Broome comes Mizuho ahead from with

Matthew Broome

Okay. Thanks very much.

part but sort legacy a sort a is of sort greenfield simulation of obviously – sort of you And do your there mature of as significant within bases? opportunity customer it's view still ANSYS company, of for is So that? sustainability

Ajei Gopal

XX years. a for around been the been of we're fact company, – has proud around we've as that, ANSYS Yes.

are to growth that cost the and our able we're and that between which more not capabilities. is to to savings the is a that the of proposition testing technology companies understanding past, And validation of products achieve these top-line just It's deliver helping And particular particular fluids. value complicated before, from a of and all reduce like it's or longer-tenured, reality increased than matter the product as understanding the extent, sophisticated the product different we become discipline in one interplay will, said single of solving all drive propositions. those structures market value faster customers that through a you this, of efficiency, by bottom of so is more every we products extent getting be deliver, to that evergreen bringing out and savings software line seeing there. more you're terms to – I've costs, of warranty But as if significantly

the the something take than a number engine was A a car internal – years combustion is ago. a like you car human-driven different car. today car So beast was of very

about in If powered we for think you an we skills Electric for Motor, different that's customers capabilities. support position autonomous and And calls are a it to example, look, an this they that excited by go journey. are our vehicle, through as

virtue by is So simulation driven, there the that better the really run, – more of the value ongoing product. your the is make of – we you simulation one, fact

ANSYS. make And final I is so for when rely drive cycle and start with new to about And that. the simulation for more, [Audio more you think simulation when use to here you use it company, Dip] environment it's is start customers of And products a a virtuous you to on product run. the there complexity to the and continued demand a point continues want within

led changes, And detailed so that you there things position issues who are not an to was there haven't again examples just Today, requires can different really component, a done have where for past, what validation, nature. and using you When component are changes those have in a incremental the to a fundamentally may if get made out where and are a to – to what ANSYS seem warranty of which incremental supply in chains run simulation or may some of that's difference. necessarily want change, companies small that simulation disrupted analysis less swap one and that's validate might provide. design

use are are to is strong. capabilities, telecommunications. effort, in and course, areas of areas So sustainability, continues where the position to of once money then, build all and simulation These electrification, like and next-generation the help we're to autonomy, them. a value enormous IoT, customers spending again, energy proposition And – of be trying amounts

in simulation very future ANSYS. I'm of excited and So the about of opportunity the

Matthew Broome

you very much. Thank Okay.

Nicole Anasenes

over to That the turn closing we will all it Ajei for I have remarks. time is today.

Ajei Gopal

to about excited strong am our XXXX. I start

enjoy industry-leading of I to plan Our multiphysics joining strong strong you, produced me the call gives the we for want confidence these Thank with as thank rest and of and customer demand, portfolio, their for rest everyone, combined which my the year please commitment, colleagues great and execution and beyond. for for the stellar their ANSYS the today, results. execution day.

Operator

presentation. we'll joining. conclude gentlemen, and and with today's conference you We thank Ladies that, for call

You may now disconnect your lines.

ANSYS (ANSS) 5 May 222022 Q1 Earnings call transcript