ALTR - Earnings call transcript Q1 2021

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Operator

Good day, and thank you for standing by. Welcome to Altair's First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now today, turn Officer. Dave would to conference I speaker your Simon, Instructions] like the to over [Operator Chief Administration go ahead. Please

Dave Simon

close conference Officer. with XXXX. Chairman Matt I'm we Good attending press Simon, Scapa, Chief with today, quarter quarter thank section Founder and replay investor.altair.com. of release at Dave the After the performance guidance be will XXXX call our Altair. for Relations be details Brown, of call Officer earnings which Jim And accessed Investor of the the following XX, afternoon. and first on a website for Chief and a website XXXX our This March you this and ended market available on quarter call CEO; Administrative conclusion Financial the me Welcome issued and section regarding Altair's our for of of the on is first the being call. IR full-year can and second recorded are

summarized to earlier forward-looking materially are or of results These statements could today. During statements from obligation variety to our that These subsequent may considered should of today's any our forward-looking be to update of any the to differ our as only are laws. subject considered that securities make business will not that under federal risks actual statements in date. our of release call, cause We today be a views representative outlook. as and related any disclaim we views These reflect risks statements uncertainties expectations. we press and issued

that that in material please have actual the filed may time. and the reports our from refer as filed other further factors file or to discussion For risks our and documents to contained as of results, well other SEC time annual we with quarterly those affect a could important

is included of reconciliation GAAP release. in non-GAAP certain measures course to financial our will we today's of the measures. A non-GAAP press During call, refer to

times are in of Please prepared or or our into to responses metrics questions, our comments the to that additional to usual that, incremental we turn insight at to that With may presentation your let offer dynamics our greater provide Finally, our in the the advised business prepared detail results. we may may Jim not continue provide future. this call remarks. me to his quarterly be Jim? for over or

Jim Scapa

quarter you, welcome Thank Dave, everyone XXXX. had on and call. first an the to Altair excellent

direction and enterprise we customers. Our markets is vision by of HPC significantly the identified all in imperative early is and invested emerging have embraced simulation to This of which all serve. AI technical decisions AI we lives. the driving is and throughout a of to we clear customers convergence as this manifest platforms important our becoming software technology AI evolving and allow integrating our of rapidly solution their our Altair latest implement organizations. is to from benefit pervasive algorithms the in and into are applications knowledge in

$XXX.X to pleased revenue with are results million. of QX report We quarterly total record

growth of million well the revenue ranges. XX% to first million was was our of Adjusted XXXX than from compared year-on-year XXXX, of XX.X%. increase million of $XXX.X product from $XXX.X Software quarter $XX.X QX XXXX. quarter reflecting guidance EBITDA QX All the an million $XX were of more versus for in above

gross high the Our of future. services, margins for to strength proportion software very a toward invest versus business our to shift and continues expanding

ability enhancing is compete with revenue model Altair along Our major in accounts Units the to value market. process and structured a our for modified in middle effectively more better our go-to-market business more delivering

the compared year quarter period. XX.X% for Software prior total product to revenue revenue in was of first the XX.X%

of the for quarter first of the XX% was XXXX rate license versus XXXX. in software recurring first Our quarter XX%

year. looking are about QX of the from results forward the We our we and are balance excited to

of to continue be uncertainty Altair of months looking and are and COVID-XX, economy new APAC products to experience related many products coming and EMEA, to competitive. especially help other and signs solutions innovation customers accelerate develop some and we robust to the their seeing parts challenges to in While a the India with with hold investing them

Our due large for XX releases years multidisciplinary the and acquisition clearly releases ago of growing daily. results progress emerging measure of growing strength we major we for SimSolid customers portfolio. our to data show simulation, the continued the constantly designers. technology for is which simulation the this with momentum and strong number HPC had SimSolid acquired broad as software two enormous is leading XXXX, analytics. technology In users product in made and structural since We for of

a electronics, enhanced of our spot has including when a statics, XD As welds, publicly bushings, seam ribbons. other code assemblies, about industries. the a whole. their desire software. design linear gas for large number its which dramatically architecture, and aerospace quarter, also and teams use perform industry designs. time the account with software used a thermal, from welds, to industry stresses. in We've an but SimSolid designers important especially own welds, stress, dealing platform, alternative problematic. design superposition codes. assemblies the dynamics, provided laser significant more has performance there otherwise possible by broad thermal SimSolid to the hundreds third-party unparalleled. with not analysis of allowed where the non-Altair an Their mature, was strategically the using modeling The we improved the proved first presented with best or complex we to fatigue, which SimSolid SimSolid division. with Motors Many and and is this and been both their utilized SimSolid linearized case initially in connections structures aerospace designed General study technology evaluate to technical and heavy structural SimSolid evaluate recently have decreased spoken published modal, room account simulation automotive, as of equipment, and and of expansion accuracy complex notably and this defense from We The offering industry, solution In for to components customers connecting now adhesives workflow also inspired them previously oil in seamlessly within a the papers believe library the won integration and including is more continues of joints including

rule-based usage added reduction factor methods. the analysis traditional than GM analysis circuit engineering Delivering as and simulation-driven thermal with and taken the we been its world in methodology time analysis. design; efficiencies printed a antennas. and modal planning introduces power at integrates Using board It years. with with improved simulation-driven for across and fastest-growing SimSolid ECAD analysis an for delight users continue For tools collaboration machine and provide time and accuracy, combined design PollEx MCAD combined that for SimSolid complete end-to-end are solutions Altair's for a help and the uniquely signal compared the the physics-based capabilities than printed the in with Altair's will MCAD acquisition development. integrity design all This even design assembly We with more set radio consumers design tools component broadest and a linking found our of all physics electromagnetic momentum coverage Altair bringing are modeling simulation functionality. combine of at workflow correlation design for integrity, for combined a an achieve just helps for Altair's to learning pioneer disciplines the simulation-driven and and and level, recently, industry philosophy a XX% connectivity tools. believe design product speed most of XX% solution. for wireless More antenna requires requires design XX with more board design savings verification, review, of to to scenarios applications. worlds. with manufacturing, other electronics software simulation simulation time throughout electrical. electronics reduce major devices with to since several circuit Altair's in portfolio. tools offers the XG PollEx and was importantly simulation the the and the and analysis and simulation ECAD It In with XG interconnected

opportunities technology, open-source of finally our architecture believe in to like also diagrams lead of verification controls a drive the generate state faster for without need adding by simulate simulating your actuators electronic code and embedded accurate optimize into of design PCB devices, an the software to and For by delivers simulation embraced system Circuit can of standard increased using motors simulation system enhanced a automotive. charts function enable performance. miniaturized Altair's optimization, interactive plays in extensive workflows. often the library time role integrated depth frequency model-based EDA this systems of and smart existing will suppliers in changes access capture to manufacturing an an the complex of vision easy strategic then help based electronic for challenges for assessment and to especially SPICE or modern each IoT analyze being proprietary component of which optimizing be modeling microcontrollers. develop tools design reliability sensors, block business breadth product Altair's performance of tools design engineers more development, values, sacrificing circuit Altair performance offering systems configuration let customers the Altair's control They for of simulation-driven simulating electronics and integration. phase selection version platform with automatically and periods schematic an open and actuator integration offers and of need development component embedded and to tools flexible costs. schematic The provide of and us. response system or development. circuit to the of on the subsystems and sensor tolerances compact sensor for firmware And multi-disciplinary on systems. model-based strategies Altair's digital you run is enabling device. for systems industry and We

drive converter Altair electric building our toward quarter the Applications first a In simultaneously coverage. first and electric electromagnetics design pumps area in of ability integration system simulation Altair systems. of to development had sensor We global cases, technology, verification new railway, of with interesting and and development. drive to key wins systems the wins control for industries; solution was has a aerospace, complete address range antenna and ventilation from with others. was design high-frequency design, automotive business. motor, the system power two manufacturer a demonstrated other many and to control defense, XG The and eMotor placement multi-physics including brought One the that and the both PCB of analysis. concept radar software quarter radio across manufacturer value industrial expansion coupling in electric and

see responses. and to data strong We IoT SmartWorks product end-to-end of for necessary orchestrate promote with On the we to system capabilities and data data launched of early-access limited Units from initial an ingestion front, analytics the to live at devices develop apps large a EDGE Altair platform base especially SmartWorks development to customers. capabilities acceptance enterprise positive continuing for with and are model combines customer deployment. smart release analytics, the

We Brown revenue to Matt substantially market. are and on Altair very serve to excited profile our larger addressable as a Altair brings large a company. about help opportunity into great and job board the is doing SmartWorks to a fully CFO EBITDA and grow growing

you Day and with around then. our addressable markets look forward Investor is XXXX Our some insights long-term to XX and sharing technology we May, outlook Thursday

to the Now second I guidance remainder details the provide Matt XXXX. call of our over on Matt? and and to will quarter for our performance turn financial more

Matt Brown

we end revenue Jim. of compared to the $XXX.X the quarter. We high to the in We're guided our million, XXXX on increase Thanks an coming software XX.X% delivered for XXXX. quarter record metric product thrilled of every range first QX results above with of

compared compared to an for XX.X% $XXX.X total We billings quarter to record high QX, had QX and an we revenue, of to record increase XXXX were $XXX.X Total an revenue million XX.X% adjusted of EBITDA also QX or XX.X% XXXX. million, total achieved million of XX% $XX increase XXXX. compared of the of increase of

saw to as relative product by We new our software year results billings we results, across expansion well increases where primarily well offerings. as solid product Our healthy balanced base. regions and all on strong as as retention three prior across our were driven geographic year-over-year saw renewal

as the revenue of license business closed streams. second product recurring the for we as other software is continues and quarter we Relative that expected our expectations software the our billings. our nature earlier was and billings originally to of relative which XX% of in percentage strength the to that to be And anticipated, in higher emphasize engineering offset in rate partially approximately recurring continue. software of quarter have first Our recurrent services seasonal It's to our were and worth anticipated, transactions, the the software quarters is to QX declines guidance. which reminding product strong of saw close client revenue continue quarter, than year-over-year some by the expect for we originally software you and where in driving revenue fourth some the pattern billings our and to growth upside

in during by in addition, a other by FX to to excludes FX our in first significant and XXXX, primarily impacted are gross billings portion increase changes of and an therefore as rates QX quarter billings than higher XX% stock-based In the of XXXX, billed and dollar margin, impacted favorable XXX our gross are to changes approximately currencies expense a the revenues of revenues of US improved in rates. revenue in XX% million favorably in restructuring Non-GAAP trend our compared in basis mix software were the margin. quarter. $X result carries points, which QX the compensation which Relative

as XX.X% expected revenue increase revenue revenue other points. total product of year-over-year software increase was services the saw year period, ago an a XX.X% in as compared decline in revenue expected combined to software-related an increased we basis our the in Software with mix percentage XXX in to product and revenue. increase This of

continue. revenue expectations XX.X% quarter an intangible was software and which, stock-based of XXXX. employee-related compared prior in increase compared quarter first EBITDA QX product QX restructuring We our were well to Non-GAAP in the assets this by revenue excludes disciplined in of the quarter charges mix year to expect in was period. combined million million relative compared shift to million cost as as ago $XX.X amortization Adjusted expenses year driven compensation, the $XX.X XXXX, of or reduction. spending in total software operating to increase increase towards to XX.X% revenue the accelerated with This and the $XX

quarter-over-quarter cash $XX our Turning increase drawn quarter. equivalents, and with quarter cash balance million from during our approximately of about we prior $XX.X million quarter by the $X The revolver. of the increase the million partially to sheet. first of in an had reflects on million free We flow $XXX the cash offset ended repayment strong

increase QX million the XXXX. Our in free cash flow million of $X.X or $XX.X to XX.X% an quarter compared is of

QX As collections due QX our a seasonally reminder, most cash significant is flow quarter to on billings. QX and

looking momentum to ahead XXXX, with. QX to we the began Looking are continue the great we and full year year

million We are $XX of to or growth and we're XXXX XX.X%. million software XX.X% the revenue $XX year-over-year for to or expecting in million software XX.X% product full-year growth to product our to range X.X% range QX $XXX revenue of $XXX to million of raising year-over-year

flat We be continue approximately revenue our year-over-year guidance. previous and consistent to expect to services other with

of And million a total or full in our of $XXX $XXX to growth million to XX.X% software revenue $XXX guidance. to XX.X%. reflecting of we total we're XXXX increased to or XXXX year a raising year-over-year for to year-over-year range the revenue X.X% revenue of result, guidance X.X% are QX our As million forecasting range growth million $XXX

the full some impact expected on employee-related along a in the first relative with reduction guidance. QX $X than our in million and on a impacted by QX, a timing software of QX our Our full in which were originally moved prior realized of faster negative ago benefits million some quarter. close mentioned that perspective, moment overachievement cost we I quarter currency the to revenue as to increase $X year guidance year From quarter's expected partially in was the reflects transactions

to and As fast these in moving earnings our a reductions product in forward up also last call, capacity, are are capacity freeing I reinvest we mentioned pace. technology sales which at with

last QX We're impacted return In QX year normal to mentioned returns. addition by happening as higher last expect also and marketing that significantly seeing and activity which through some COVID-XX entertainment in levels call, in already. costs will and of were I costs, more we travel particularly as earnings our

$X period, of in million X.X% total expect revenue we range EBITDA million X.X% total XXXX, QX adjusted to to revenue compared reductions of as entertainment well temporary for impacted $X as to spend year-ago QX and the reflecting the the marketing So the $X.X of again, or in X.X% and that impact of of travel increased and year. last expectations salary million or QX

XX.X% $XX XXXX, million to of to For we of full year to or million or revenue revenue range to total adjusted compared XXXX. $XX.X XX.X% our XX.X% total raising million EBITDA in $XX are

$XX guidance raising a our free of million also are full to year million. XXXX to flow cash range $XX We

we cash our was collection seasonally. today. and are even our billings patterns be mission detailed summary, provided pleased which enterprise which about reminder, of but questions. we'd a GAAP with transform to technologies release, offering to in are press decision-making. driving our and in close comparable happy products QX, to earnings With results your including our amounts, As forward customers market more in quarterly to and after sensitive We've excited issued take our we're tables the expectations reconciliations Operator? flow fluctuate to guidance In that,

Operator

Our Thank Bhavan Instructions] you. question William Blair. from [Operator with comes Suri first

open. is line Your

Bhavan Suri

a Hey, I numbers in high wanted maybe for and a That there. set for gents. level a congrats. guess, fantastic taking Jim my to result of you Thanks was I touch question at initially.

you capture to add that sort you capitalize Rolls-Royce like product of of and there's about But do market adoption with being view truly the and how share, you dive, sort was IoT opportunities? those industries AI of of the great EV, trends stuff to on broader digitization as XG of a did and do the think, see Simon on or you I commented us. more able then set you think think tools. AIML, deep data things You need David current the end-to-end

Jim Scapa

speaking So, the of business in room grand thank meeting. today. first talking of by I’m to calling in daughter. today. a you all, kind Bhavan, a sitting I’m way have of nice – hotel new and you And out we’re I

question. sort a good been week. it’s So a of It's long

I technologies we think these of different lot that obviously all work to a these of in bring to places. bear have do to

much Every it. you of applying than working own this nets we're to tools has your in and sort sort also covers own that I the generalized then customers way small elements just neural the accelerate sort of I'm that frankly we're under sure, we go, more at more I'm as use their in doing. this together and it and work. this have ways. we embedded on so answering the where of And their on sort work And working of learning we technology point quite within that so of think And we're product might with can technology going but about realize. customers single and to the finding more not think, question, we're I can answer applications keep be that's

Bhavan Suri

the had I you force, helpful. that's to the great a let's because And obviously seem components there. sales at to least guess, turn No, be quarter.

I then Matt Because have put sort increase positive and You have terms in you've in those to done of a saw to the well, drive efforts did spiked some hiring past. spiked love have around what they early. in progressed? you deals restructuring of think, commented, about fashion. in I But sales sort come you efforts also capacity. I'd of to seem understand and How and place. But process in in efficiencies talked

of you. you does do And what about like? capacity restructuring look time how Thank sort efforts? has played hiring out? How the sort So the of think

Jim Scapa

Sure.

So is what doing we're organizing. we're

of organization. just two and amount the in more of dividends. brought with time, that process-centric. last over and same market a and sort a methodologies conquering sales of of have that And First tools of training space. the help huge us be better all going the on starting sort to Lots new We've brought dividing in of is years. been across to brought we're also team all, pay mechanize job more our the doing is At

more we typically larger they're has the force see accounts sales growth the which and after where So direct opportunities we're around, clarity accounts. enterprise-type much going

lot a activities We of of sales for the that's we across that and the lot the mechanization have a out marketing of for and us. we've on a world. have rolled then that indirect inside lead pipeline, focus that we're channels lot all And the come activity through marketing generation starting together doing between really our moving to

mechanization that and So, I the lanes think the I results operate on. sort that you're to of creating knows beginning see mean, to everybody of swim all

Bhavan Suri

Jim. Fair to guys. again. you soon. you enough. Talk Congrats That's helpful. very Thanks, Thank

Jim Scapa

it. Appreciate you. Thank

Operator

you. Thank

Our comes Jackson with from question next JPMorgan. Ader

open. is line Your

Jackson Ader

Thanks the taking start you. to nice Great. all, my I should new for first of saying Jim question on that. daughter. congratulations well, guys. really grand -- off Thank

Jim Scapa

way. you. Thank fine The is number the by

Jackson Ader

family. excellent. Growing Wow,

Jim Scapa

a for That record.

Jackson Ader

Yes.

Okay.

dive might was kind something it PollEx a completely on we'd be Polliwog maybe like is easy more is, them acquired bit is EDA, think it you're But of guys If those to couple that then into? into deep ago. even sell solvers to little you're user trying a I buyer like So the the different or your into a really while space? electromagnetics who since across sell question in a dug products semiconductor don't the great. selling how That products. you of years

Jim Scapa

credibility inside groups And mean, of tend bit. how are we've been across we departments We we've response we doing one trust wasn't and electronic different get halls be pretty you the to years would bringing go have groups, what to walking different quite in, got working to that circuit guys just It's I laid sure. the it departments but so long to. all all customers positive. just time our for sort honest. historically. when respond is made. has making of -- I the into we that is significant layer there's that a we quite systems fact have the I getting We've the a in success. whole of. with the sure of these departments. that designing are we're little did why And they that's and been introductions in a the out us and the one the are first system and And a thermal. when seven departments board, sort the just they've new circuit There's getting the surprised been I have of They're been There's electromagnetics Coming these so for customers packaging. bit system the the boards good It but of about embedded what that modeling now the way and outside been breadth printed printed a systems stuff. the And depth There's offering, of there. There's I response not there's CFD. of and reality doing the to at electromagnetics. into think our we're quite into

of within whole So accounts. our optimistic. I'm set it's additional customers really And a existing

Jackson Ader

Matt Yes. actually helpful expecting? just deals XQ you much came that modeling weren't a great. That's That's You in question. color. said, really was How pulled forward? some

Matt Brown

question. your Jackson Thanks for Yeah.

us in that super-happy again of quarter we way above and were us. was end revenue and the the come the of records on First Seeing nice range see to with worked all, high this for out profitability front. high

amounts of in originally QX QX, not It's few amount saw range. closed was by in dollar that thinking million we it's terms stretch. entire any the in were that In that

the we what health speaks see some beyond would too the closing in add it's QX thing, one because nice those pulled So, I it of And healthy to above pipeline deals thing there. an of upside a in. we when really is, early, encouraging and saw was yeah,

So we to were that well. happy see as

Jackson Ader

you. Thank Fair. Okay.

Operator

you. Thank

Our Wong from next Guggenheim. question Ken with comes

is Ken, Your your open. line is open. line Wong,

Ken Wong

Sorry about that.

looked in drivers broad-based. sounds perhaps, fairly expectations if new be Are just I check color activity to it's What retention like Jim, wondering those little on ticking It deal to growth. relative wanted expansion. just me. just got of versus Any You But of helpful? trends? would seeing on in dive up you like we kind internal the what of some were there a sizes?

Jim Scapa

Sure.

little So strong very, good was This this just going weren't very, we're fact growing year It's very case, very is that ever as even And broad-based. this in appear I retention clear verticals used to. more actually what you What last robust attrition are retention very, It than year. asking a last little year. last so in your a it there question? we've this It's well. year way. to we very the was the forgot attrition year the actually. very if more end be side across as the All does healthfully seen as that is much regions year sure, retention, very coming in there. me – very but were all healthy are at was

Ken Wong

kind I like. rate's plan? it terms guess kind are net Yeah. better little is And in with that to of of funnel new then, new up? just just run a just the that in of maybe look of business starting to sense activity, of what top finding you opening tracking coming Is Would love a

Jim Scapa

Yeah. positive. is very, very the year I think picture this I mean, generally macro

crazy. said what's my That's As a still, I at in is there happening in look India. bit prepared remarks,

the us. customers, of this those neither chip shortage our much of to number having You a do thus one be impact for it in have market, happening that affects but far is seems and

very, So yeah, are we general, pipelines in year. very feel about and positive very – healthy this

Ken Wong

Got it.

a helpful. And but Matt, maybe basis. was Just full-year then you super from for a of of it at what Jackson kind looking a on follow-up just bit asking

terms million if potentially about year? Just I $X want make to think that And still we it's full the in of headwind. how it rate. like It sounds beat the be I this Is tailwind. a feels heard to And a just million quarter guidance it's wanted thinking? then stuff is $X correctly. pull-forward rough FX One kind net-net, so like math sure that like I a of but to all a million the for quarter, few factor million it in be you a had few mid-single-digit we kind upwards reversing like It sounds that. should you in it sounds the the of clarify

Matt Brown

quite. Not

we realized prior that confusing. year in picture So that guide is The is make you those million relative to have the not FX right? But $X does relative last the tailwind sense? headwind the is to QX to guide, relative So million FX So of right? this full-year to year, understandably concepts. full quarter's separate year $X two a

Ken Wong

does. Yes it

Matt Brown

Okay. Perfect.

the So really year. really, guide, the good yeah, about in of we're feeling terms full-year

$X And up $X by full-year inclusive that we is million. guide headwind. That so took revenue of million

you so think of guidance And about relative we to last million guide up we're that when when sort the exclude $X gave quarter I our difference. that full-year FX

macroeconomic through a opportunities We're feel QX And as good healthy. that be looks the have on moment course, ago, excited just and really we've in trends good year. and eye the elsewhere but our we about Jim are happening holding. we So to pipeline of and about India, feel But things mentioned about seem yeah, QX. to got continue types good that the of generally the

Ken Wong

any then of quick perspective quarter? on And you the it. the guess relative headwind/tailwind a at that. first FX On clarification an start were there from quarter, meaningful Got what was thinking I to, guys

Matt Brown

important meaningful clarification there No. Yeah, FX a impact. not so

close ultimately upside meaningful dollars was that we to true over performance closed to when million relative that no gave QX. quarter, in there's in is relative thought originally the QX, Everything going So to we we the the just else guide. impact about QX think that in in the QX couple-few and FX guide to that

solid hitting quarter. cylinders. We So, were just on all a really

Ken Wong

for the Thanks Great. clarification.

Operator

Thank you.

Gal from with comes question Munda next Berenberg. Our

open. is line Your

Gal Munda

my taking results. And for on you Thank questions. congrats the Hi.

clarification is the guidance. little first bit just of The one a

potentially Is especially like, of bit to conservative, that we going you that still the any raised. and Jim a more of outperformance be a Matt feeling bit side just You rest? of you on year the for I chunk especially with and balancing about a thinking, the a million worsening out there bit outlook few not mentioned, software kind environment or how delivered pull-forward, a based the for on big left little know more of if rest of QX of little there's don't little cautious aware I'm factors that I'm as still you FX we're other a kind in that that very make obviously, the uncertain a it's in think what because

Matt Brown

No.

So for that year positive. can there's our across lot sure FX-neutral to is get the still we rest pull-in. relative factors top you them the when just this. $X $XX kind of $X the came revenue the can so clearly, the the million We sort million, what to in of by a over about that of but signaled outlook up prior but that's a take mentioned is increase And guide is essentially make guide. we like sum of I you you very end math different coming there, is left million; on and with you're of the -- in

the have basically really about of on situation a good we're in over we where the So and feeling very QX guiding rest still we're based the up, performance year.

So the pretty well. I out think math works

Jim Scapa

you did just add But things is that of are think sum correctly bit I uncertainty. happening the to it little around and Gal, of that some up the just a of that balance some conservatism

we there's is bit of what than I conservatism but And think because Matt a by went up to XX. go the didn't piece, two way part, for the little saying there. of the FX we all is the So most more

Gal Munda

what old I'm they're how way market activity a grows was on new are the and you electric and you. just working it follow-up. people Got a talked that R&D wondering that things That’s much of helpful. stuff much acceleration new year use this you're just time And then activity last pretty and weakness, that that you same like do and the last more fact has decade of the as fact versus programs on that like on. bit the the kind has vehicles still doing that happening really over tag focused about little so? with growth the generating all now to different increase end-market last at there's to the Today year, old about seeing of the that it talked usage really same a it's kind the happened of helped Jim, or the cases.

Jim Scapa

think a of fit in general, of activity a and R&D remarks in been we coming mean, sometimes People the this I are circuit years much for COVID recognize on focused offering I are general. last about. hiring. world do off the And connected I that's complex in electronics of prepared have year. solution more that automotive because devices, offering that that we're XX investment there's deeper sort next out. breadth almost weird mean, a But We're little of activity think customers integrated design, that the all feel lots designing systems. lot obviously that a It's companies. of the we've perfect the especially just of we don't I very industry my interesting great because to not new and lots you've portfolio. the end-to-end right of we There's think it it's may did into for layer community want three doing into investing I mean as build And sort the so And we but basically the there's not -- in really it's fun I these been know are -- to the aircraft poured of electronic lots lot of time. we've competitive tools everything went I with activities. if a a I an organization. attention. And the paying in years have moment. right we

Gal Munda

again. so and It's helpful. you Thank much congrats, very

Jim Scapa

you. Thank

Operator

from next question Our Capital Markets. RBC with comes Hedberg Matt

Your open. line is

Dan Bergstrom

most even maybe for shortages the that Jim, that And sourcing or questions. Matt question disruption the part it Recently impact. Yeah. in last automotive in Thanks about our in the sector not seeing seeing with Hi. the chip chips. due It's that seeing Dan is, headwinds year. news industry guess you're are last trouble for with to for here, about Q&A customers? hearing mentioned just we're the you of Hedberg. of here you, at just talked Bergstrom that then makers you've to also impact automotive the is Does all headwinds connect I much you taking automotive some question, stories in overall?

Jim Scapa

I affect us how that concerns, I checking not would that to have some actually pulse be and all. are affecting of to a seem that. doesn't it be lot at related honest will we seeing So headwinds us. But done I've

it see side impact on But design So things. certainly not what it's have of any our from affecting just the is we customers.

Dan Bergstrom

question work on in and to what Great. a that the seeing, you return maybe Very helpful. prepared you're on touched And remarks. then

to hybrid talked a for model You've work kind yourself. of

from what remarks. customers you're sounds expecting on increased curious you're hearing some the It on Just the like topic? travel prepared here based

Jim Scapa

travel. going to little I bit increased we're see think It region-by-region. of depends a

regions face-to-face certain Germany. year. in of of Some like huge coming little more on other markets not even the I'm travel heavily this sort other seeing contact more international than regions APAC a rely back

vaccinated. Israel this but I back a India think mainly of to because slow dire get it -- And hard it's been very, very starting to completely in has down. difference other start there's a will come and terms well, really The where next straits. such point US is year to just vaccine doing really is in markets at

don't I international of travel. see So a lot

think I to in old-school. to little come saying you're bit a is the Dimon Jamie like banking office, it's that seeing going where everyone's back

lot going done and Not Certain think level think I a for aerospace But I be just build. be They'll going is I activities think for more of for if it that most their to engineering companies some back have big more to the hybrid. relatively have companies are us. world, a again. good eventually to more. which think pushes to anything us or the impact come it's I onsite automotive of hybrid virtual

Dan Bergstrom

you. Thank Great.

Jim Scapa

Yeah.

Operator

Thank you.

Essex question with next Our Goldman Brian from comes Sachs.

Your line is open.

Brian Essex

you division question you the maybe walked presence, seeing you're Jim, for a different question penetrating more level that a platform in where I Just that changing across I Altair you come unit. you're can or you you through the at motion familiar the And consumption in if really maybe on penetration that the for improve accelerate slightly seemed where channel do mean, that is, as sales front. Great. sales very you business great efficient efficiency or congratulations wondering results, Thank sales a the see previous a c-level vision that the do sell have the another you where might below on penetrating you, platform? or the and point maybe question quarter. of anticipate taking your and the

Jim Scapa

at And I'm and levels before. sell you've to higher at sure sure for need do we higher this are selling we levels used heard We to. than

to going shop on You it's have sit if to will, file very are and the to top-down are if the the successful. companies rank get of sellers. sell aren't performing top-down out be used. throw eventually it A and going you really to lot But products and bottom-up not or just

And now we're getting proficient better way it much you if at more and I levels. bottom-up back at yes. more getting very Through go sellers. more we're selling we've the been historically, years senior better at think So, and

Brian Essex

for the with to And Matt guidance beat again. then you maybe head over the

$XX side, the million. you On profitability EBITDA so think beat I by over

talked You're guide about full also $X year raising investment by million, the but initiatives. you about

in spend customers your might could where So, number cushion point much more us much in you you be can be might the reinvesting, might be investing, what maybe if control you you how obviously than given you direction you control that buy. and that how where can of perhaps

bit more little a there. maybe So, certainty

Matt Brown

the makes revenue we out we of of the so were expected obviously that the with in expense QX expectations And to the and its in the just result. the our we with think quarter. down super-happy profitability over-achieve Yes. way mean moved how about which speed based played about form when I EBITDA. better on midway that the slightly began through through that restructuring than activities Much

really the means So, sort And $X by full way guide we're the EBITDA year looking raising is million adjusted taking XX.X% big that real to we're margin guide. timing that the of outlook We're picture expense movement is much And our between not raising at an now we're undertaking. results XX.X% at EBITDA midpoint. we're But we million. that and happy on just based by guide. prior up last there. the reinvestments restructuring our revenue the some thinking midpoint really changed picture roughly $X that about full-year about what it has the had activities the at now There's from in really the guide saying

last guided expense not change quarter. the our versus had words, other seeing a to picture what we big form in so of in And

Brian Essex

Got helpful. Thank you That’s it. much. very

Operator

next comes with Schappel Mark Instructions] [Operator from question you. Thank Our Benchmark.

line open. Your is

Mark Schappel

Jim, Hi, on thank new congratulations on granddaughter. and congratulations questions the my you taking for and quarter your

a remarks. industries you. little part engineering been in question hear upfront process that's a around been been of SimSolid's you And design. rarely seeing I product commentary the for SimSolid about seeing the now let introducing with. the idea your something your decades good followed has development sounds look simulation And if was talk just changing. upfront It like that. organizations you you I'll that's has it more Jim could for good bit a of talked it in It positive than according to but So, prepared to in sounds design that talk And about others? certain more was organizations comments just embrace like about you're wondering change. Are what with through

Jim Scapa

congratulations for the all -- way Yes. Thanks for the thank the around. Okay.

you right. are So,

time. to you've a industry it been this long So, talked simulation upfront around tried for do because and obviously for people have people have a about time long

work. assemblies it's there's it's not amazingly and just it's blazing do part to other in groups desire great I you because a handles that don't do do order this this there's but SimSolid the of results. design things just of fast. complex and be modeling because the kind things you think But chunky It accurate and fast to very to get catalyst have fast I all simulation for a is actually think

results. Here very, you're getting very accurate

are transformative. so not a design this across to sort I've teams lot who customer intending in large organizations it's of before. we way roll And have And of a really seen that their

track today. is that in I why decided of So, talk to my this part put

I think coming. if we will, movement, to beginning are you some see

exciting. it's So,

Mark Schappel

all you. for That’s Great. Thank me.

Jim Scapa

Thank you.

Operator

the I'd remarks. any to call the the turn for we back you. And Jim I'd all closing to That’s questions Scapa Jim like the there's in like to other to no queue. Thank have. for questions back closing Scapa turn call remarks.

Matt Brown

really with joining for everybody Really, thanks to it look and appreciate the soon. call. Well, Okay. forward you all speaking

Operator

you This conference for Thank concludes participating. call. today's

now may day. You great a disconnect. Everyone, have

Altair Engineering (ALTR) 9 May 212021 Q1 Earnings call transcript