ANSS - Earnings call transcript Q2 2022

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the ANSYS Second Quarter 2022 Earnings Conference Call. With us today are Ajei Gopal, President and Chief Executive Officer; Nicole Anasenes, Chief Financial Officer; 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. would turn I to conference time, Ms. this like the to over At remarks. for DeBriyn opening ahead. go Please

Kelsey DeBriyn

Good morning, everyone.

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

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

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

Ajei Gopal

including the guidance a us constant ACV us minutes. in gives That, joining ACV, everyone, details and share. raise where metrics thank and pipeline, healthy across in operating QX Good per have ANSYS, year morning, another margin earnings business coupled few Nicole you us. revenue, quarter beat yet has our confidence key on will our in currency. for for and excellent was we to again with once the and our full further enabled revenue

three-year, Learning ANSYS quarter for with semiconductors, as fluids, Our was million includes brand. our electronics electronics, nearly contract agreement largest well solutions This new contract the $XX of international as an products increase customer users productive on make yield Hub with more this to By power solutions, software. signal integrity. time verification to expects for while ANSYS its and standardizing and a decreasing familiar our

of in properties XX% QX usage automotive improvement Americas enables hydrogen and came costs in realized expected. intelligence, Asia a engineering aerodynamics ANSYS Another reduction customer a its and perspective, electromagnetic an fuel acquisition improvements multimillion-dollar solutions we more to expand This Xx OEM thermal and to for EMEA driving. XX% in growth Pacific saw include cells. revenue than material as its already international has strong a geographical autonomous agreement in productivity, storage and and up for enterprise-level From from interference in the materials to

automotive an revenue with in that Our Murata company XX% system company simulation thermal multiphysics a including currency constant With components. frequency and provides Japanese specializes Murata, the multiyear with contracts, electronic several to for agreement growth flow thanks our radio spans in contributors. and modules. in Manufacturing, This number the aware the an reducing portfolio Asia by was by thermal ANSYS one and our Pacific products sectors of large important ground a From solution is expected aerospace improving high-tech the sign-off and industry defense ease semiconductor, of to use the provide and interface. and perspective, again through of single faster largest were transportation redesigns

from well a number a strength world. continued recorded traditional multiyear we companies the reflecting renewable saw the the where energy as sector, mix cases use space, around equipment of in and also industrial as of We agreements in

digital WAGO's will new will twins This motors. initiatives. leader technology by company customer power multiyear a energy its engineering, [WAGO], ANSYS simulation. creating electrification rethink and its help to of development signed global green and This in electrical agreement QX longtime in drive product agreement Brazilian the standardize on a process example, contract For and automation implementing

and story. the Northrop success Now Webb different congratulate NASA success kind the a of I like mention Grumman like to customer on of briefly Space to I'd James would Telescope.

launch. a developed size a That folding the and unfolding mechanical ANSYS and mirror have affect the mirror greater instrument test simulation. the behave played are how connected then that in developed, and impossible optical to using ensure given to environment have had the is use its most Any tennis all time. unique overcame come part entire of challenges, precise number operations. the rocket, same ANSYS, of the as space, creation. team Naturally, And And segment the a for ANSYS with physically solar it. the expected of entire mission understanding have a telescope why run to this that loss. With the into way Engineers perhaps in structure largest and would the including we its mission expenses would engineers was era stunning dollars role perpetual the before proud and monolithic of we unforgiving satellites' rocket, would. mission images an then here solutions of it the would billions the ever of identify cost first to court from seen We even at ANSYS in scientific radiation

optical were alignment from mirror final used initial process in to step Our the each segment search the phasing. solutions design and test to the

from variables the that Planer world. well used And they're the how determine million is satellite simply to how engineering keep stationary launched to Mission miles addition, results, X the to out our In Earth. impact digital has of and solutions mission satellite this test

leadership our to simulation. in to Turning solutions multiphysics

products, to predicting our physics, of ANSYS cross comprehensive automatically solutions Our productivity. X, techniques enhancing workflows industries. are capabilities and which this machine a have Release and processes, user Included XXXX are that repetitive access disciplines set and in release engineering in customers core optimizing now learning

at added once enabling perform same industry-specific is and help optimal technology provides studies delivered also Power for its for problems of have multiphysics an to at RedHawk certification their computing functionality This optimization enables artificial leadership, impact industry-leading excited recently will NTE users our reality. NXP a physics make applications, and computationally I The software next-generation the massive customers more also products design time. complex the We am Integrity for customers high-performance by capabilities certified process arrive technologies. multiple that TSMC which address while ANSYS' custom Intel connectivity has and to SC and learning, silicon I'm workflows extending examining new Services of pleased fraction that applications. that ANSYS Foundry the the required. also designs joined next-generation high-performance computing to enables also in Totem release for design a Cloud ANSYS announce intelligence ANSYS to This time machine Alliance.

semiconductor integration I of discussed solutions Our Samsung Foundry productivity. that call, most increasing our driving which enable is company's emissions. will helping that deliver connectivity help most to technology flow SC, including designs advanced enhance in last it for playing role includes industry-leading advanced ANSYS risk. the ANSYS' reduce RedHawk initiatives, RaptorX, announced in for multiphysics part that the partner and customers' technologies. customers our and a to to while and solutions their of to will the updates, ANSYS comprehensive ANSYS ANSYS design Foundry electronics are speed fuel decreasing HFSS semiconductor as rate sustainability boost nodes design flow capacity, capabilities are the our available with and suite, using Using out develop Samsung chips, On in has electrification process ANSYS, and Rounding greater on design high-speed and error the Intel efficiency,

advance of development our cross-functional initiatives recently created customers and of a to for members composed and Excellence of have sustainability teams Center consulting We our partners.

experts matter design help the phase. new, of on efficient development products how are beginning accelerate ANSYS the subject and can focused Our and creation simulation lower-impact more at

enhance energy climate-related has data the bestowed Minerva including speed built submitted on we Award target, identified recently of I also is our implementing disclosures. our been the was quickly. the more endeavors, This in Most products to has row, sustainability because Disclosure on-site I'm life-saving well our patients that as guided part We ANSYS and reduction by drive committed world-changing that approval template. we choice. to certified year ANSYS To also recognized end, Ideas Company template a of an its and set that to and Carbon as FDA process with This Workplace proud Loved solution employer our potentially medical continue XXXX. and honor are and have that lighting an enhancements Institute. audits, task employees X Minerva Practice are of third To corporate on for by we force process announce the footprint. to collaboration, am ANSYS Fast management, and Best practices why X announced our the in for of that as ANSYS the in for devices own simulation projects demonstrates have ANSYS several outcomes Scope to financial is hit and provides Project values As Scope excited our XX% environmental energy. for we renewable a reducing emissions we to

guidance Next an and opportunity update. the I'm the goals excellent beating development a sharing is was key of business as expansive week, further another looking in some role resulting all summarize, partner To and we'll ANSYS explaining trusted to our have of financial metrics. business discuss simulation longer-term how that you brands to has top part playing us with become across world. our with ANSYS' the product ANSYS, around in quarter forward QX investor for

with to even Our our leadership strength ongoing me gives and business our the XXXX. in And turn Nicole? our meet of over that, call I outlook the will to ability product for expanded our pipeline momentum, customer confidence more Nicole.

Nicole Anasenes

Ajei. morning, you, Thank Good everyone.

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

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

$XXX.X grew the some licenses. X% expected by currency, currency in across sources strong ACV geographic XX% on XX-month constant $XXX.X end a let driven in QX the million of financial industries. was or discuss Now highlights. represented by recurring our saw recurring of towards our lease We currency. of trailing grew QX was which, growth million ACV high regions shift annuity in XX% revenue and total constant total ACV subscription grew the ACV mentioned, the and by as year-over-year second driven XX% year-over-year sources recurring constant outperforming This and basis. performance our QX exceeded X% ACV. or all from quarter. momentum in from me strong created XX% ongoing in guidance, I is our

we and robust both growing revenue XX% and and in with QX and growth. QX drove double-digit our which currency of half, respectively. of M&A. Asia ACV year-over-year. revenue We with $X.X revenue top quarter closed against Pacific double first business total executed We including the the EMEA of line at XX% deferred had strong In in digit and model backlog QX, a billion, XX%, tuck-in performance balance growth, both GAAP constant grew almost

we quarter outperforming timing as second on investments operating better of and quarter strong year. gross Similar quarter, This EPS XX.X%, to with also better as second guidance. revenue the the timing into EPS was continued strong margin the operating that margin the the was margin an $X.XX, The of a yielded results second investments. guidance. to benefited from During was which of operating positively have than business was half of leverage. our solid Operating moved margin, than of and revenue deliver by well which result of a our model XX% impacted

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

strong quarter the balance the $XXX.X continued We Our quarter in of totaled cash from short-term second with ended million, collections. cash on the which and flow operations $XXX.X from investments million sheet. benefited

portfolio me to for underlying business momentum of to strong. let our guidance. demand best-in-class be topic and continues the Now The in turn our

increasing for and forecast are of breadth operationally EPS depth revenue, our cash delivered year. robust XXXX continued on We reflects We the and demand. customer and our our a strong flow full outlook ACV operating QX,

and which guidance. continued U.S. impacts offsetting significant in strong our half year the and performance exchange embedded However, dollar full is our rates first strengthening, outlook

with XXXX guidance. start our me Let full year

We guidance. guidance by are midpoint our of raising constant X.X May points currency the growth to our of ACV compared

on X.X% constant We in which X%, growth This Day Investor outlook ACV be expect XX.X% the to billion. us of of range XX.X% full $X.XX a billion midpoint achieve the $X and $X.XXX to to target. in our to represents currency year to billion, puts or of XXXX track

ACV would guidance target. billion For Investor and midpoint our rates context, $X exceed additional XXXX the $X.XX approximately foreign at billion of would equal when XXXX ACV our Day exchange translated

year relative momentum ACV This business, is increase offset improvement underlying year $XX see strong in in momentum full of That and especially for million a $XX May drove Our full our QX foreign raise improved we to driven we performance QX. the by saw and operational was the exchange by of operational ACV million guidance. headwind. forecast

Turning to revenue.

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

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

As of full to $X.XX. which our May foreign full performance, be to a our year expect from the by EPS better increased $X.XX offset we operational our guidance, headwind. EPS to result, $X.XX Relative range exchange of was $X.XX in year

As our moved that investments from QX EPS QX of of timing year. driven by a second the the some performance half of the strong was to reminder,

full our to in operating expect to be to XX% the of continue margin year We range XX%.

the for to interest helpful your we interest full rate expense be provide it year Given thought purposes. rapidly modeling changing would environment,

our and structure rates rising floating continue expense. As term interest reminder, a interest impact to loan will interest rates has

from million, projects outlook year. to full $XX million current $XX year expense almost Our last XXXX our interest be up

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

yen. capitalization XXXX outlook $X of to operating by May flow foreign a to guidance, offset Our our $XXX Relative our compared to strengthening the of been XXXX by approximately full better operational is negatively The has million $X cash euro currency the to these million by of negative range business Japanese million is movement which $XXX ACV rates, million. an XXXX and was impacted million dollar considerable year significant is increased typical from note performance, Also Since When we relative our timing guidance to cash our to operating expense, has rates. currencies including operating headwind. relative U.S. R&E basis impact of exchange $XX higher interest headwinds, given regulations interest Notwithstanding strong the operationally momentum. and impacts. approximately trajectory impact face on January million. of nonoperational and exchange a $XXX on of outsized the rates, the cash have year-over-year fluctuation currency flow seen rising and flow underlying XXXX, continues

guidance Now QX. let for me turn to

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

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

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

recurring which quarter, QX the drove We into performance our and year. sales the ANSYS you of forecast, demonstrated a team, and coupled business business. level quarter, in and high our continued to half of growing all in To delivered financial contribute strength is cash model momentum model currency and going and once which for strong increased outlook reflected ANSYS our flow forecast, outlook ACV, of in of improvements the operational our thank business. a your execution outlook. business our diversified again recurring in This strong the which the for the of the constant outstanding confidence underlying and the entire robust growth have the with revenue our second ACV We momentum

as well on we open strategy. outlook are to Operator, take XXXX ever confident deliver to We as more in than am our positioned well our will future. phone line long-term the I questions. now our

Operator

you. Thank

Oppenheimer. Ken Please will comes session. Wong We from [Operator with question-and-answer now the Instructions] question Our first go ahead. begin

Ken Wong

robust. for taking provided my just wanted commentary just I of kind to check that Thank is strong, guess both I you very Great. what you very into guys questions. the

macro just think half wondering macro far predicting the about what we type elevated goes, the are As you second this as as for -- of guide? environment

Nicole Anasenes

for question, Ken. your Sure. Thanks

much we was strong really of pointed -- we visibility we of the overall half And seeing kind And on of continuing year, -- in sensitized are have go And out the we're of over half business. the last in a and the we're So business we while now the you evidence R&D. pipeline kind first certainly seeing to really broad-based our is out, the of industry, have macro we couple as off guidance, pipeline. looks to that tightening. what the momentum like -- of we're second usually they're yes, kind building as to recall, and as we clearer the the quarters. that pointed back thing to beat in it land underlying R&D numbers with The the when exposed highly is occurring of what's our how second tech rest will to next come to very as thing environment QX and

the parts and QX may and coming just see kind seeing we're And demand the so some reflects the of of guidance the customer the are of that really other the half in same our outlook segments level constraint year. of sector tech into across we seeing. of that back not that we industries, And geographies saw pipeline the broad-based be in

Ajei Gopal

pressures. with. And product they've frankly, competitive customers that them pressures dealing of maps to reduce to pressures Nicole allows they're been same certainly all was time of continue can physical the reduce reliance deal and broader it And on them some to multiyear forth. driving. warranty allows save competitive them we they've And we because see, these that's aware can Just but rapidly. to making, the point Simulation to geopolitical in. amplify money so at simulation the and that innovate road of where that more costs concerns many It that with they face comes and time, they're got mean, we testing, I our helps

top that seeing which compelling what the well both I customers we're it helps for a that's, the really line line our market. so and simulation, bottom as is proposition savings, proposition, drive growth as value value value in proposition achieve And think, is

Ken Wong

you you Got areas it. are any you, verticals maybe And seeing up of from auto, there as that if really their heavier open I Ajei. COVID could Look, still that strong. for catching strength some Tech in to a macro Are pressures of perspective, improve? or feel of terms of could a macro highlighted follow-up just quick potentially kind maybe aero. peers maybe end does up remain markets

Ajei Gopal

No.

expected -- verticals to I think our as areas verticals semiconductor, across I well. Certainly, said as high-tech other pretty in and defense, aerospace transportation, the see. as consistent was but in and strength we saw comments, and automotive we the performance the bigger are ground

So to nothing areas or of consideration in concern. explicit terms specifically note of

Operator

Please from Baird. comes ahead. Vruwink question next Joe go Our with

Joe Vruwink

Hi, on Great. in everyone. I guess a business. question the seasonality

in I you've agreements. signing increasingly ANSYS enterprise multiyear think having maybe -- a just of ACV generation with into about given bigger XQ, the talked past, skew customers

just more way currently, your like XQ a versus ago. room get enterprise any that on leaving some Just it have then in or guidance wiggle cushion relative less a to maybe Or given Is where is reflecting year SMB under from belt it XQ really you strong the visibility activity? then XQ? and and XQ to proportionately looks coming stands

Nicole Anasenes

question. the for thanks Joe,

visibility much I is where half characterize just deals how guidance would the land. So second clearer to

past transitioned couple to know, model we've years. a lease you multiyear the subscription of As over

model, years, the kind move And start both multiyear across lease the so when that to of within time. can you your the renewal of shift happens base and quarter and quarters the as timing into within over

long. half we're we characterize six the clear today, to the be once from kind second cycles months quite which as of I sales because is clearest so tend would sitting into where And three second to half have you the your get visibility

timing have little more of up you a things what in bit terms to. clarity the those line may So of

would little it's maybe So it's I rate slightly slightly think -- characterize a -- growth standpoint. it I stronger a bit from

a of SKU see the It compare. growth reflection the would maybe overall a to it characterize pretty the I heavier pipeline slightly result might today similar stronger bit the year-to-year think quarters. last into of little a of prior the timing than I QX year. as weighted of we with is of yield as QX a But be kind rate

Ajei Gopal

you activity. said, when that about when I operationally, relationships kicked as customers. lot obviously, the are in of of timing mean around there's sales a with off And And the it, team Nicole think manages in terms projects

deals that the some the of So of drives larger timing as well.

Joe Vruwink

specific of opposed that this nothing And there's season, segment earnings SMB if strong. being your enterprise would in of versus other? initial maybe nothing takeaway there's maybe forecast as to quite your moderation indications base, to one customer been kind But the out one call

Nicole Anasenes

and I -- expected Yes. of momentum. to with in They're continue primarily deliver. what consistent year. geography they be the -- kind in what mean accounts consistent what of reflected the we is the Momentum coming customer No. our SMB into kind base

I would the versus mean in half The ACV, we QX pipeline look what they're you QX consistent terms again second And close mix of at pretty expected to see. of have when is with percentages.

percentage year, growth So again bit rates versus terms might that little the last skewed. ACV of in year a this occurred the be of

Joe Vruwink

you. Thank

Operator

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

Jay Vleeschhouwer

then within next which months, follow-up. you your and other from pipeline? you been recent Thank of comment incremental such the terms in XX especially I And morning. the [Miracle], on demand for seeing time business, gave more larger of look Phoenix any in component Ajei, any in you I'd going some be of of anything multi-solutions the have as a examples could the interested role contribution transactions. multi-solution now. LST prepared at of When remarks, or pipeline the you. and some your Good with of that, materials year remainder that's that on acquisitions or for highlighted. you're you And for sales of Minerva, of the And the some course,

Ajei Gopal

you as pipeline quite this certainly, And towards customers, our Jay, pipeline, multiphysics I to much our includes as comprise of along execute journey you consider you products sales that mean, very out. continue enterprise from solutions as know, multiple So some and the now, especially for our direction time that we've on pointed of portfolio. larger we been parts

the so strong. addresses message And multiphysics looking is are It customers what for.

We a benefit space, pioneer and we have been continue and in continue we that, as see certainly we to from to that see traction customers from them. support

we we So larger multiphysics you activity look we the and have ahead, customer our it's base, the customer into multiphysics multiple at -- also into start but product down penetrating base. the absolutely, as look pyramid, certainly capabilities sales to see increasingly end, as

So I very important. think that's

Obviously, product don't I products, qualitative but color. breakouts can a couple mentioned of you quantitative we give lines. give some You by

in plays also really simulation customers customers, to managing of well about plays I of within certainly the is and is choice effectively from care recent product sustainability could aspect that. that's asked health You we've put materials mentioned that design, which another design amount important in about I of Materials simulation what's the start I Minerva into the they a go long-term some consider you mentioned really created place the that optimization materials -- workflows opportunities years built think couple the an that's product Minerva. in mentioned interesting we you're sure recognize materials places, in important. design the that's with you, with actual could I've and being to calls, that to past in as by important. our a the data Materials, of be simulation certainly also through when role the being I that's in implementation, area. managing is number script, something I of think role and couple the information understanding regulations, also important, be take materials used, given important, make -- our because gave in continues regulations compliance as in of potentially the data understanding that compliant a Minerva most

we've comes progress -- another on able basis to traditional engineering, It's the where board to the We've very supplemented of it in and make that and that's in. I And out build our very where continued about and customers to something so And been we as build our area. acquisitions with continue strength that the Model excited products. ANSYS know that portfolio area to I'm materials sense have really excited as about. we appropriate, our makes have given ANSYS, across strategy. when are

Jay Vleeschhouwer

would be made Or XXXX your catalyst But be we'll billion, about sustainable is you were accelerate, this would XXXX rates if week to the ACV the do think, about ACV point years? would investor next at for that? for interesting the you what call. constant $X.XX that, on of that currency a ACV Nicole, a Maybe at guidance of CAGR which for the it number CAGR next talk imply three-year XX%.

Nicole Anasenes

Thanks, Jay. Yes.

I sharing on I But But really with week. pointed comment that week. as about we for you certainly, scheduled We're the out, our not So we comment long can't so future. can update the next -- looking next to it's too you future. investor have what long-term forward guidance before

So what stay is tuned. double-digit confident But business we we M&A. a model be of tuck-in including in mean yes, stated growth, I continue have what to and

the course the in broader and sales that anything the of second just deeper and portfolio outlook the quarter of -- of our half at is really model year, it strength demand in look for in confident customers, from squarely market. we than you the that and transition, if the we're We're have success our we given on the our and in have our of second this business model, year. transition think the model delivered I the half consistently else that available

talking more to we're about yes, detail in week. next things looking So forward those

Jay Vleeschhouwer

Thank very you then. much. u See

Operator

Our Securities. next Abernethy question Please Rosenblatt from with comes ahead. Blair go

Blair Abernethy

Thank And you. nice quarter, guys.

Just on questioning. Jay's Ajei, just following

to around to this terms ANSYS. a this for In that's standardization, in they've that you your mentioned And simulation Is platform, or decided a the are customers trend trying been product up towards you win positioning get you on on see you're pick set? needs that all? at the to is And are standardize on their standardizing help years. steam WG ANSYS of few starting something more

Ajei Gopal

differentiated it's breadth us the think reflection we frankly, with the of that depth a gives it's broad to have the and fact And I us believe and the that capability of the depth And address our and a allows the conversations of those our to are Well, breadth be have in needs that portfolio really able the to of we of we customers. credibility the because the customers. portfolio. marketplace platform

to talk investment and they better. ANSYS, to continuing the solutions not likely we our future when you you we completeness in of we'll the we'll in portfolio. they'll investments, today, how offerings. customers, with invest they're know things buying enhance an continue making continue accuracy challenges tell you tell know to that make what deal they're the and portfolio, will that in have you product face they are the innovate if as and we well. our that they to of And we do, just value the They'll they'll we're make tell and to value And So the that our they they

tailwind a a particular one is some base continue customer may conversations. broader time. So to another. I they period difficult do simulation wholesale number years, into to these use is same go to If some when of for market us simulation code that replacements using for a that gives for think we a of code a of It

are decision where seeing we're planning more So within customers replacing to and take replacements. competitors some we who which ANSYS, wins we competitive And for of we're But customers, been customers the come it's is replacing have number whole-scale it the does better obviously, to seeing a years, present do where choice. we're made that, customer some of to and the feel also choice. a has better felt

that well. place seeing So we're as take

and by investments think, strength the So is the the of that -- the dynamic portfolio I is, driven making. we're product

Blair Abernethy

you. Thank Great.

Operator

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

Tyler Radke

morning. taking for Good question. you Thank the

pretty on quarter comp. So really double-digit you clearly difficult delivered growth ACV strong this a

curious demand any is curious double seeing and point market or kind inflection double-digit you from I'm really has And You the product I related digits just of like growth if hit the feel is you growing think as sustainable? impacts the that's piece customers to well. talked an business your I'm strategy. about recurring that the if go-to where guess something of not ACV

If -- just here. on comment an you has you could hit the inflection kind business of think if that

Nicole Anasenes

Yes.

the pretty your any So consistency then, with is global why don't pandemic, year significant impact So consistent half if been say has performance Tyler, deliver on have midpoint the our past able the you throughout in environment outlook again heading what that? to M&A. a over at the I of second go the $X was for the the is first there shifts on guidance don't think that. the why I underlying look ACV gave start. environment, XXXX, of of Ajei, that the guide at exchange is we you the context tuck-in today, had into growth, we've the of of I before thanks, end you significant consistently which rates. back Yes, a foreign trade I add for in macro billion And mean that couple we and our I of And would and were half question. before in double-digit including there model mean and years XXXX to

road highly transition investments and if recurring a business subscription so And that our maps. think build deeper and able us up setting to look I deliver to lease to consistently really our portfolio in inorganic then all in in back long-term the important to customer to that you investments made that alongside been we've model. model, build And be the relationships the have the at factors go-to-market organic transition their

come. And I look know, really updating more Ajei, with performance don't year so if of we're and the bit for to of year, to to and that the outlook there's little the that? to you'd on you able give to add pleased a rest this what's anything business we're like the the forward guys

Ajei Gopal

Yes.

added pointed that of next go-to-market That's really investor our great the mentioned was call, as update. process saying, making is ability several to gone customers, you have over the more number go the in I relationships. also last week through And the of hear support one. We've you'll important. transforming our we've and product the think, But of we obviously market. out, tremendously a been in years. has as just customer helps really this And years think -- several last market. at to earlier I investments as portfolio, over strength to I certainly, this some our the been Nicole is And

they rely our that maintain momentum. and customer have And We continue relationships to know support we them know they can us. great on those we customers

And start the ANSYS environment of together, achieve objectives. our customers creates of to they to that shines business it own order all take and that their recognize you through, value when so put in can of advantage an simulation where

Tyler Radke

drove really And XX% year-over-year. as U.S. out performance? APAC, and what like wanted just you. particular, about I looked anything just thinking Thank to that actually year It U.S. strong, full how you. Thank large the follow-up, international down the to growth about the better. geographic my call we're performance. in talk growing just And versus you or assumptions clarify were variance Could EMEA in was for

Nicole Anasenes

Sure.

lot a revenue quarter, start a statement within point kind So basis about lot when dynamics on me ASC right? volatility. introduces mix general, compare on of let you in broader get just some differences you So sometimes volatility. a of in XXX the a have of quarterly And year-over-year with license

You get down level. of at much the it geographic more

APAC prepared metric mean, well, markets Pacific an is growth X-figure from from And with across we we dynamics start all me EMEA. of of why let the both our ACV growth had performance manufacturer. and -- answer EMEA did not I'd momentum. signed of In several there's all focused had and stated telecommunications European in industries some a longer-term ACV going a often to which between in out, there's revenue in and saw standpoint, company key versus so our where let metrics even me performance. strong X-figure growth. in really sale defense. region always a EMEA, start we have say Also customers equipment. We couple or standpoint, multiyear your aerospace broad-based consistency remarks, We we had saw pretty industrial a kind of as And saw with metrics. tech. -- in And on you revenue on kind Asia in great German longer-term ACV a overall question and and -- of a an the as I machine that X-figure the But with we there. revenue to specifically, point that's market industrial just all key markets in QX high contracts deal with

in Europe consistently in and strength is growth across again, we auto. in APAC, industries, saw geography we industries. in broad-based. really mean multiple I of accounts. growth -- strong Pacific. the saw it another was And it And deals, momentum And in across large it multiple delivering APAC, our quarter also So was of Asia high-tech terms particularly was And

relationships through been in customer and APAC really the And into those so context, stuck one deeper put this has investing in management with team customers to pandemic. the

your of model the in really So from of really growth region. customers, them being to aligning and in need of time transformation for their Asia the the seeing go-to-market off the consistent paying is and strategic that maps road Pacific that there we're kind of

and XXXX lease automotive the and really compare In year-to-year perpetual high-tech large on There impacted in all the 'XX, And has did the Americas last QX performer ABB. was quarter, value decline, over growth company months customers. delivering had to a was was question the by sales. we're for a second grew as our Americas, revenue expecting -- I your will the multiyear expected. really be region of emphasize to strong again, but regions Now beyond. it grew, been and all several leading regions which XX and

So Americas very function across and accounting of again, a XXX performance seen just Overall, was the dynamic we've and the comparability. growth the in revenue really all consistent geos.

Tyler Radke

Thanks Look forward detail. to Day. for the Analyst the

Operator

Bank go ahead. Andrew Our next of with from question Please comes Obin America.

David Ridley-Lane

This morning. is Good Andrew. for Ridley-Lane David on

opportunity have months demo to ANSYS Twin Builder the a attend of We the a back. few

what market? from the product that is to internal kind how of relative growing is curious, getting And you're feedback your Just the plans?

Ajei Gopal

per provide don't financial you on we we concept But obviously, digital some on twins. Builder perspective a product Twin the broader breakdowns where me and So with let of basis. are give

be build of the models, that typically XD whole transition the where XD digital digital be of and digital is into phase to here from used things used simplified you're product. can equivalent of design, schedules full-fledged that maintenance, this for model where used twin, the for can that like digital something a the trying things a can And equipment is model twin So customers operation determining which that create the a for twin, replacement idea that's that with is nature. predictive design where uptime, phase, our

space. with respect techniques, that offerings, capabilities to together, put tremendous statistical what of with seen we're to them of with we encapsulate I just do, that It's physics-based into we've when predictive some lot days. essentially is provides demonstrating accuracy coupled mentioned. customers interest a So certainly understanding that we which that digital some still customer you that maintenance our twins, in of which What early is the

with see continue So in to -- customers. we interest

about a market. excited It's continue will small space. relatively then We to are well. Many the in the they'll we to They digital do transition It's still early lead of other customers can that that twins. see relatively momentum that conversation. still as days. with parts portfolio fact And

excited this So it's long-term the portfolio, piece of a we're and for product the area. great future about

David Ridley-Lane

Sounds maybe quick Nicole. just good. one And a for

the benefit tuck-in On have ACV much revenue or recent they acquisitions, to XXXX? did in

Nicole Anasenes

we're technology call. development we it. last it was aspect acquisitions, may play, acquisitions, complementary talked It's They're Yes. a excited really tuck-ins. to think very the -- small about in of the The I about that cloud. in have a really The organic on-scale native tuck-in space

OEM-ed. And acquisition we pretty Motor-CAD so contribution. product but a that immaterial the that's a actually -- And was

the And so on net as that top to well. increment line the immaterial was

is did a a this give Zemax, Zemax, on we year. which million reminder, of impact as guidance about $XX inorganic Just

would would be see -- what of that it of in in we've inorganic quarters And so seen to we impact prior Zemax terms consistent be. how the

answer does So question. that the

David Ridley-Lane

you. Thank

Operator

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

Saket Kalia

of you. just maybe you that for there. plays Thanks since of guys. of here. the And just can valuations algorithm? we're talk morning, can you if about that part good How growth the balance was Hi, how in about feel fitting into for talk opportunity me great. forward mean, as with I adjust number M&A, and and Okay, about just tuck-in kind out hopefully course, do I the of wondering Ajei, ANSYS' about total talking for strong strategy M&A. the you opportunities sheet,

Ajei Gopal

Yes.

about industry we of when and said, So as -- need organic think we've always the acquisitions. and go, the development, about as to think we combination where we -- future partnerships I about our we of think

obviously we're that's And equation that our the it's partner, We maybe always sure quality we about And are is considerations come always and we And opportunity. we buying -- is are there that future looking And M&A it's is opportunity. valuations, with buy. situation. believe But we're quality, -- consistent down, if to as strategy. opportunities that out Where in strategic the our build, have of that see there look portfolio. that we think overall to we with make context, about bring those think So an investors, the with go expensive. when into that always careful a the are disciplined that how we into M&A the need. that's the carefully are we valuations value

from we technology connection don't because we most have that the are pass. always look see analysis, that make to we We've buy. -- we too bringing to if want space, our deals or get got core, capability to position existing I And And a go-to market, sure great the -- look in. that we to that if technology far we the you a sure strategic we're products superficial right make we're they to is that for customer relationships. technology of evaluate and the technology. in mean connections, the evaluate position are we're we technology we -- relationships the that know us. in in we're see -- enough core We rigorous have when very to that we or strong customer or don't so stickiness see Look, are pass. of And process We the when that should And a or presented diligence. of we isn't we the our companies portfolio a obviously,

to order and So we our we're it's when disciplined strategy. continue about as M&A in to this. evaluate appropriate But will certainly, advance

Saket Kalia

Got it, a maybe Nicole, got my sense. of lot follow-up for you. it. That makes for

seen, Just many obviously, license which to the successful we've earlier points multiyear transition model, over very on a the years.

you've Now those of sort to looked that this qualitatively. renewals? data good we've model net even that, if retention of And on you if renewals, had with rate talk years at revenue of I'm on of retention sort wondering several a sort net or can

Nicole Anasenes

Yes.

give you give can you kind don't why I that. So two -- I lenses to of

renewal -- why of just we around talk we new the rates overall of top when right? that, high talking of the again, rates net it be growth retention And don't the original that. of what So retention we about includes So we drives start with description the kind about the kind have. of kind . renewal the would just which XX%, on of renewal, content, qualitative overall we're not of

relationship of multiyear kind just the And bit little kind strategic around leases. maybe start strategy so of a with

work to those of them, of we kind to lease map. kind it's aligned as solutions on signed the with going them with agreements the with against that physics engage we the road map road may that that product and mix And we to able is customers, So forward, road for engage whether required our overall map. what outlook multiyear be be of

it doesn't mean be they The three-year change, may -- buy changes. renewal Now don't doesn't it ahead They or as a And don't competitive two needs dynamics customers' just that change. companies. because world the you know, grow.

renewal are that clients on basis ongoing of in And year-after-year so comes preparing relationship constantly we with in a those kind a that for up.

on base renewal from so the about road conversations of have up into of will we next when the top is of of but a that renew, we three-year of only at are what extend of growth agreement. clarity And continue about had new chapter kind of multiyear customers think the years they'll license, to areas not we around have it lot the the with them end renewal that what the that, those the And content already map. their kind multiple coming of that

and those customer the time. customers transition past supporting conversations segmentations over that the selling a go-to-market of was those five channel have practices of this and subset made over even and with well. as into model best the so the the relationships small really base we having initially we broader was -- years, have And strategic It enterprise the part translated that, through of our teams

it up, on high And those of not that only strategic also to talk so top selling but the does mode is grow support -- those about we of really rates that went that that. continue to retention ability the very

Saket Kalia

it. helpful, thanks. Got Very

Kelsey DeBriyn

time have for we question. more Operator, one

Operator

Thank you.

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

Adam Borg

Great. just Ajei, for the the Thanks taking week. and including I'm for referenced. and Thanks ambition, much so too updates on sure cloud. about about more so fitting cloud Maybe I much. question just a any lot talk we'll acquisition next just was that But on me the today, in. your haven't it heard on-scale recent much that various

Ajei Gopal

we And a quite So our yes, market nodes this you'll in could in, obviously, an hear across -- the different about hours. that computing more previous that for engineer participated applications. users. importance think quickly And is call, enterprise high-performance from remember week. hundreds I talked multiple a simulation of traditional single very ANSYS But engineering that to compute I run about we simulation how runs a of talked next the about software,

-- we our And I a it's and simulation -- as insights or very in I the the to from that of think, classes and strategy scale existing as to so two length, to our to the needs offerings have We've customers. And in of previous at in Cloud the benefit past the addresses the support think, in cloud. cloud to calls, to of some of got that. Marketplace got offerings, new, before out thoughtful capabilities Native. very is able be be Cloud and one distinct approach quarter and scale-out of both what able our well Cloud as -- the We've physics-based a customers, enable part talked Marketplace really about think, I optimization,

when users that skip that's the develop of ability simulation, workflows. the a they cloud-based acquisition, that. use to you targeting combination. of respect we're our deployment and new will integration platform that accelerating doing new able what development said, is OnScale with critical for creating the new in powerful And in And new I'll time. cases. in Cloud bring leader ANSYS is our as interest And But a And that's and the be us allow a a to So of is frankly, do of to which recent Native, OnScale, they set we're brought cloud-based the services. host of capabilities to -- of

end. So one industry-leading example simulation the interface connected our to is OnScale's cloud-native user solvers in back

customers We days. the still they need able offer It's a as very So scalable. capabilities a believe early think, need of it. level We frankly, around we're will thoughtful our And that be -- It's do variety that excited of have, robust about I innovation are world. we we it, and unlock cloud. when flexible and a every industry strategy. they capabilities believe we across to

Kelsey DeBriyn

Thank Ajei you. it his will the And for turn all have that's over today. I we closing time remarks. to

Ajei Gopal

our leadership to their more you and with my by excellent giving achieve investor our forward and our first half in confident our of attending execution goals. long-term ability our and pipeline, today's I the excited that, financial I thank their to update, successes. And business the ever you. our and all remain year, look commitment, more am next I and for in I want expanding ambitious week's than you to thank their want product for to at thank focus robust colleagues goals call, ANSYS details many on I at

Operator

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

may disconnect. You now

ANSYS (ANSS) 4 Aug 222022 Q2 Earnings call transcript