ALTR - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the Altair Q2 2022 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. to Simon, conference SVP like speaker to now Dave today, for would hand over the your I Investor Relations.

begin. may You

Dave Simon

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

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

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

and revenue results all of our you, welcome strong Thank in Dave, everyone Total product for second I on $XXX.X news. engineering, metrics and some ranges. second coming of quarter and has momentum, quarter equaled GenXD call. our will successes acquisitions the recent other second the Altair to Today, exciting with XXXX million. above discuss customer the concept our quarter key guidance in including

from reflecting from million, was Adjusted for in XXXX, XXXX. an of growth Software the up $XX.X XX% in QX QX the of $XXX.X $XX.X of product increase was year-on-year for compared of XXXX, million quarter quarter QX to constant XX% EBITDA million XXXX $X.X currency. or of second revenue XX% million in

$XXX.X Adjusted million, reflecting XXXX, in million XXXX, of of was HX growth up reflecting EBITDA growth HX in product Software XX.X%. XX.X%. million HX from $XX XXXX was revenue in $XX.X versus XXXX $XXX.X million for HX

of XXXX first XX% to continued XX% positive the compared in product Software during revenue the of XXXX. of at revenue half half total a trend strong first

generally where of businesses XXXX analytics notable these across had QX and software nicely XXXX, HBC XX% XX% are half continue less remains the for with compared all Data recurring Simulation outside of half of the as grow the the for in in first license software outstanding to XXXX. performance high at the and year-to-date regions. developed. Our rate quarter Americas, software success to first

X% growth be the XXXX first down first with for modestly grew months a XXXX. first engineering Our continues months with revenue of six software-related the services compared reduction six the of in Client XX% to to first to significantly XXXX and compared margin the of around reflecting the months shift six and services six accelerate activities. and own towards market tremendous months hyper our as higher the excitement towards we address. gross next feel our generation trends We pace development markets for strategic product the technology converging of of solutions XXXX, we of connected as

create Our easy solutions and in seamlessly are difficult moving to problems data share design, experiences, and fast visualization user operate the workflows products and cloud. modeling integrate for natively,

technology new we rapidly, in which beginning and solver promised like capabilities multi-physics maturing SimSolid, game-changing is Our electronics. markets at performance for are to look

available including current complex giving management. lattice working manufacturing risk class Altair highly highly design to our an industries, with underlying our Altair in action adding products of automotive, will in under performance are while solutions offerings U.K. manufacturing The and the of requirements [ph]. out during the geometry GenXD's designs family class performance analytics transform technology by a to implicit to and geometry, modeling Bath data Additive complex Inspire, HPC and on And and be solution and method efficient feasible the rapidly traditional highly for such simulation-driven minimizing geometries to be environment has integrated rapidly of for components powerful in for practical not and implicit focus product portfolio. solutions, not of achieve modeling exciting into a interim traditional shapes, new a complete manufacturing. design startup we support pioneer exascale continues and lattice's additive In will customers manufacturing simulation-driven scalability June, create geometry energy and units usability, designs, deliver optimum GenXD, private structures enterprise-level differentiated ability rapidly most potential a our methods. the aerospace, GenXD for fewer on allowing addition to University and Altair failures to traditional best Its products, processes. resource and support describing and Our algorithms of medical of as create our The [ph] and approaches. is efficient highly additive important number acquired and structures design with simulation-driven clouds. cloud features manufacturing. public design complex thermal cap designs additive techniques to the next-generation fluid implementing and

technologies Altair are evolving a and analysis of important electronics the the this. convergence increase focus of design IC importance Electronics prescriptive in Another mechanical towards with flexibility. is and for and controls associated with area semiconductors speed designs and systems and and predictive XD chiplet to are increasing

electronics designs are deliver investing experience and is in by Altair our truly leveraging solutions pursue prevent into and significantly optimize New new solutions problems this require ways. to excited to landscape, disruptive solve we deep technology to in novel and innovation. this behavior shift the technology and cutting-edge in expertise market about

complex electronic important been June, expertise our stand-alone In solutions ability engineering system design rendering leading more solutions. technology complex integrated generation wire solution and accelerates users the to technology we synthesize is provide than very over electronic acquired our electronic functionality with in and CAD harness for with Concept engineering extensive development technology, as Concept carefully to XX electrical service semiconductor and schematic software visualization technology. development, of circuit also includes new computer-aided automatic into have visualization system well highly last customer years the that platforms and the to and electronics and electronic three provide and visualization experience manufacture XX semiconductor tools as grow tools, and EDA electrical of capital while verification debugging of Engineering, time the electronic development as provider engineering and our that simulation Concept is end design visual We with primary systems. also and acquiring industries and months a together smart and EDA This mechanical knowledge markets, available saving teams. base, support electronics addresses design, systems.

on capabilities. to including The in those an language access capitalize run We organizations analytics to long-time software suite. and data look are take market secure built Simulation of Electronic data-driven them. Altair data forward to and enterprise-wide of business to RXXX the gives SaaS net written analytics appliance with get Appliance this Appliance, unprecedented multi-language be that we an the users We turnkey Unlimited of the and is AI an seeing servers use partner, analytics engine designed their foster globally. integrate data. design Data Programming, for the pleased solutions, most the interactive PowerEdge to Altair's by how users a World results. box technology can to further infrastructure. recently deployment develop Altair's Unlimited production the is to growth the core level into all-in-one announced on level we business Analytics acquisition Technologies Systems Dell out from data and Unlimited continues managed and maximize the to analytics Altair Altair solution data to Analytics strategies technology are the drive excited and To power teams giving Dell and Organizations in

are months supported NASA to ingenuity. the Propulsion operation Jet Laboratories proud XX successful of We the have Mars helicopter of

Rover beyond base of communication the predictions using flight help and to mechanism. the Rover using to employed and helicopters FICO sight Martin of into used over ops the the weight the Altairs Our simultaneously integrating was paths to validated than two tool. flight per modeling landscape In method propagation WinProp the stimulate and of wave parabolic and line less software before plan process equation cases model account well telecom developed RF station. from and and scattering they refraction XX de-fraction, full accurately The weeks, this

base is XX part our excited after resume JPL successful efforts With flight are the to set June, to storms month plant. this of Altair operations understanding advancing completed in [ph] be to neighboring the of of margins the

these the along engineering where these for student we material structural Pedestrian timber advancements a and The expansion this are sustainability continue with Last electromagnetics Motor a systems. week, our has global a McMaster of high in for materials. carbon Bush, use the the Technology Congratulations of published of focus Partners, successfully Transport rail BASF, the Altair structural of And announced a We're We energy Annual Toyota target learning for honor Plaza, and the the by of agreement Enlighten Enlighten year's study is second growth of on new with engineering earlier mitigate rail Automotive British and a Research, University, S-FRAME Columbia substantially usage three around use application machine transport consumption monitoring web of recycling system excited products. construction Canadian its build see Nemak, use in to and and and our Ford and recently of manufacturer, in Walkway reduction, The footprint, growing this presented S-TIMBER rail digital reuse seven figure firm predictive construction Bauman optimizing and fundamentally real-time of the strength solvers winners our and enabling case to year's movement sustainable resulting applications but for building the Gateway. industry and XXth design. lines, reduce leverage lightweighting acquisition in toward presence account water civil carbon We for year of in from Shiloh footprint, Award the this expanded industry association And the winners, by Company, for increased just twins our maintenance. primarily and the a material sustainable our Institute leveraging software leader we the efforts. to market. in Center software products Public a not and Industries, LNL the utilize Award building engineering also driven applications. to

due reduce metal to global equipment sector, optimizing roll but include Awards maintenance. AI is the initiatives effort Altair an files As a have significant an up have not rate, accelerate now the competes and requirements. are learning automotive industry the very convergence The downtime Its over collaborative fully building hundreds award manufacturer by evaluated design celebrate more OEMs, commitment reducing process. net We products environment, transformation. and ramping development, zero embracing energy technology of an results seen challenge this APAC, player to achievements of collectively creating companies and showcasing companies to of research of all. its LG suppliers opportunity its is cooperation use vision of important the simulation improving using analytics to evolve with we technology memorandum and announced goals build continues software so at Also of lightweighting been simulation entries, substantially the to machine for CAE world major scrap to coil highlighting vehicles. team Altair's to and intelligence electronics inspection development, business for and the the outstanding a digital with technologies manufacturer incredible Enlighten in in apply around electric this we anniversary customers. acceleration made the to from operations, data materials manufacturing appreciative a vehicle In agricultural years, of a to machine AI-based improve product just in artificial also particularly and and success manufacturing for product the is of the closely as as and momentum predictive our our predictive on we LG This simulation using learning is work transitions taking it to on holes a XXth sustainability worthy has global the understanding reducing area. APAC analytics In time market. exciting, in [ph] promote

doing of their our of sharing June, the for forward around Highlights in Future.AI customers taking the the enterprise work, AI growth. event. future. I Our and convergence on and At more an are human-centered to strategy for we AI-first included stories the great look end held presentations

period. global and of attendance customer through will a changing uncertainty utilization, even revenue excellent customers banking exceptional rapidly manufacturing economic while strong solid with our power delighted alike, period and and this business engagement XXXX near-term record of of high-value geopolitical looks Altair's attendees. prospects and we exchange have impact both the technology interactive rates. recurring services weak foreign us with and are we of remainder and in model we're the The financial help currency For relationships, culture, with

for and to full third our Now call over the XXXX. guidance I the details financial will year more provide turn Matt to and quarter Matt? on performance our

Matt Brown

in more strength growth billings for of first growth Thank half us. we were partially XX%. is heading across and Jim, resulted you, hello momentum primarily a Thank for of products continued The quarter, joining strength result XXXX. marking in for for Demand on second XXXX the other quarter the into decrease the QX and the in and XXXX. impressive our expectations exceeding our and in our including delivered as XXXX offset the second to in The CES you QX, revenue, an everyone in quarter. than services saw strong. compared XXXX, our our guided call. range Despite first generating supported both and above currency we geographies line billings, we quarter profit, a products the year-over-year of increase total, in declines our business, Software end of the and growth top was of which to on our billings was million, X.X% software $XXX.X quarter. to billings high Solution into strength the quarter by the was of software headwinds, every very particularly metric software in billings Total again In by in for total expected all significant once results growth an

to and XXXX. million was XX.X% XXXX. which product increase includes increase was $XXX.X an or other revenue, revenue, million compared Total Software of of an XX.X% services QX to compared $XXX.X QX revenue or

license the Our rate, of half. product continue strong approximately percentage recurring XX% are is for software be billings software recurring, that the at to first which

expense, basis, and in software higher FX rates. mix, constant total FX second revenue currency saw which As our and software changes of was million, strengthened changes increase compensation to year-over-year approximately therefore, $X currencies a XXXX, U.S. we revenue and rates XXX currencies. XX.X% saw million a second product prior by revenue our as the to major the our year, the are, and carried increased the excludes against unfavorably in we growth margin, portion growth QX months, a quarter true $X.X of of on over impacted impacted in the dollar revenue. XX.X% restructuring by basis respectively. revenues total are were of which other significantly gross as total Non-GAAP six quarter as particularly and Relative and XX.X% margins This percentage product respectively. stock-based in other an Therefore, software revenues XXXX, points, of in revenues significant XX.X%, gross than past of dollar compared the in reminder, billed a is

specific of continue In our product margin software addition, percentage improve, gross as revenue trended support non-GAAP revenue to as our a to costs down.

Software in revenue was XX.X% of XX.X% revenue total compared in year. QX to the prior XXXX

$XX.X QX increase the revenue, and of $X.X increase help Over X.X% revenue. our million of as or the total EBITDA This Adjusted the XXXX as growth or pay disciplined the assets $XX.X long term, general of XX.X% we a continue in the prior exclude our period. spending. in was ago will software and year by million stock-based quarter, towards compensation, to in product expectations XX.X%. amortization prior increase services restructuring well to compared mix revenue operating $XX.X other to combined Non-GAAP an revenue, expenses, compared year intangible million million charges which software shift with to compared were driven there was in quarter, year to as expect relative

drive continue revenue we of to We incremental higher bottom to percentage line. growth EBITDA our a adjusted as greater dropping the saw

This over X.XX% that notes have $XX.XX per At increase the The second generated a prior of is a with in share, Turning share. convertible convert the equivalents, in million to approximately to cash from a an base, XX% the primarily due $XX.X of approximately our a while our to of and $XXX.X the sheet. same increase management favorable money. existing net retired cash at and cash into price for premium, to million and by result notes offset of in price notes were per of we're We to primarily new $XXX balance with our our liability more terms was us new putting as outflows pleased extremely conversion cash in GenXD conversion Concept issue at is cash which convertible Engineering. million sheet. time, of adding the same partially quarter enter time a extended We our $XX million cash maturity with quarter. of the $XX.XX allowed we balance convertible new partial quarter. notes XX% repurchases coupon free efforts, ended increase The and the flow deeply and quarter-over-quarter and and convertible acquisition conversion the

Turning to guidance for QX and XXXX. year full

to X% changes rates. $XX growth by expanded basis or rates. is approximately revenue product QX year of backdrop, We In to of are year or past for are dollar negatively FX range to to $XXX the impacted year, significant With other minus strengthened to exchange relative year our expecting full X.X%. full change $X be $XXX or being product million X.X% guidance. impact our by now growth a X.X%. that significant plus the on just million expecting negatively our the are year, in Compared in we $X our several And months, a of foreign QX product and foreign million $XX to be our due in prior drive XXXX revenue to expected of previous approximately on of seeing a against growth U.S. reported a of meaningfully to prior impact product currency. And is the currencies, in year-over-year million range results has being in due to X.X% revenue revenue XXXX $XXX which exchange prior to changes to software software year-over-year software compared million to million impacted software [ph] or X.X% major

compared in expect be XXXX, our revenue continue down guidance. consistent previous services to We and with to other XXXX to

million X.X% expected our basis X.X% to expecting XXXX a negatively is be of in million million year-over-year growth a and to million now expect year, $XXX we total QX to revenue in due range X.X%. XXXX being of full or due exchange impacted growth prior range $XXX total more the or million of foreign to total prior decrease year X.X% $XXX $XX or year compared expected in revenue exchange being in of to year, than foreign revenue our we're As X.X%. by X% the year-over-year $XXX Compared total of almost to changes revenue changes rates. to full than QX And more impacted on result, negatively to to or is XXXX our of $X by rates growth for

our XXXX For revenue, we and full at consistent midpoint the constant year the with product issued quarter in guidance currency. total software is last guidance

in However, due but in midpoint we're pressure, further at From seeing a changes cost benefits to rates. the the we're seeing to costs some in in reported time, in resulted FX increases due same in a FX currency. expense employee-related inflation-related changes perspective, have rates some offsetting and reduction

or million compared benefits. having XX.X% partial changes XX.X% to only $XX.X their adjusted $XX to X.X% QX total $X total in million or of and to impact on offset XXXX, range FX of rates The as EBITDA in range revenue of in revenue we EBITDA expecting zero we're in the adjusted XX.X% zero XXXX, expect to For XX% now $XX of we to seeing for impact a year of year are in adjusted revenue $XX.X ago the the million to of EBITDA in million revenue a or total full XXXX. be million period. expense to or to the And compared direct total revenue are

adjusted more For $X than negatively million. FX EBITDA impacting the are year, by rates

for We existing includes part expect payment a assumed litigation our million flow full in million, $XX.X the as paid $X range cash the and that was in the XXXX year acquisition WPL judgment million January. of free which to against $XX of we

after free our market this a inflow QX We're cash free pattern and half amount, to cash reconciliations of flow earnings guidance and the outflow comparable the billings half provided We've GAAP sensitive expectations reminder, billings of collection was collections from second tables the today. on to the seasonally. issued cash In close year. that a of and in primarily continue year, to which first smaller release, pattern patterns a has are our As fluctuates the particular, in historical which expecting QX in our shown year. detailed from including

rates changes currency in to happy confident on in your ever-expanding impact With take demand [ph] FX strength that, Altair our an the are be Operator? of competitive reporting from While questions. extremely and customers. having continued we'd are results, we

Operator

of Instructions] [Operator Khalil will first Ahmad our Oppenheimer. And question come from

is open. line Your

Ken Wong

from Wong Ken Oppenheimer. is This

Matt, a want terms It clarification. I question, year or the sales FX that, from then that any for accurate. purely movement, customer elections your base in And sure quick guide sounded like just Just cycles? is of full any to make just terms changes of revenue is the beyond in pressures you're seeing

Matt Brown

Yeah, that quarter-over-quarter. you you - guide, we Hey, the our I when FX line full saw so especially just appreciate year the question. meaningful Yes, get did right for revenue impact you

slightly And result, about of up or so a we its and actually software year product with product just sort guiding on revenue. map actually impact currency about so FX million time $XX revenue. to for we and $XX impact as FX revenue revenue had our on and million about basis, midpoint From there $XX on total of million a a an the constant on last at that forward, on when guidance total having negative software gave the flat of full

got you yeah, that So right.

customers, all elongated to unusual any patterns our Now there. at no, we're collection kind with and seeing not respect nothing of DSO

Ken Wong

what more you are for as one from that you, gone integration? maybe seeing then I And quick lower for in guess, seeing? or smoothly? what for on less going a little far the what's - than M&A have this market I'm to a just we’re as wondering lot a it. used a potentially Jim. And valuations recently. Got that Is given then little more appetite

Jim Scapa

that Getting question. new appreciate using I system use the Okay. this to Thanks, here. Ahmad. we're

really Now, most to in with as we of are acquire far and to as the M&A months. companies we able two integrate that usually integration, three

the high to comprised thing bit announcement it's generally primarily the bite. very, that continue is World and really - nicely, an similar. a even Programming I Durban We down Obviously, little a very of is that easily, So of look of appetite development us. been And But and integrated in a have the programming have coming right, for it's while. ph larger for so forward for we and in do very now. you to of culture personally quick a exceedingly valuations kind are M&A some was

Ken Wong

Thanks a Jim. lot,

Jim Scapa

Sure.

Operator

Thank from you. Blair of Rosenblatt. Abernethy And our next question will come

Your open. line is

Blair Abernethy

Hi. Can you hear me?

Jim Scapa

Yes, Blair.

Blair Abernethy

Hi.

a little bit. out cutting questions. Quick Sorry,

first data Just the on science business.

just through portfolio? the walk and sort how now you starting if consumption broader wondering in you're data to of at of is where of have adoption of Altair with science the can your impact Just Units just terms an analytics

Jim Scapa

So we progress. are making

The sell now. we're internally, that I successful very think at to first thing is and

really whole sales model. the So excited very really, organization the is supportive, about

products it. couple accelerate the that to moved couple essentially business. certain the sort to were got personally dramatically analysis the the kind need As in we of actually [indiscernible] solutions, and want continue I in like the that some model I beginning that move here And understand some There on XXX% changes drop accelerate will. finally doing of it moment, capabilities it to the change, units I to to mall. or happen. I we’re looking model have more sales be are have do accelerate would to to make of sort at make more for expect customers faster, really if leaning I of the to are adoption of customers But the momentum and letting that. same a to to again we catch starts doing planning you of [p] and of actually. internally it just would force and to toward to Everyone When more same simulation, sense and we at because we things the more going and I'm things we doing am that a and

Blair Abernethy

is Great. traction on And is the the Programming the - business? Jim, coming how World

Jim Scapa

some very is had grown really about longer pipeline So wins sort process. say will of strongly. good. the pretty traction nice the learning And tremendous we're I interest, very, Actually, its is we’ve cycle. of all that sales

pipeline that the here. interest to going it it we're is doing think things getting more because some of start to make lot year is get to going I a easier in succeed are to full and next

So companies, these we I home, my to interesting remain Outside and yes, so very of do that's where [Indiscernible] apologize things are. from window there's… your it's if

Blair Abernethy

I them at no. can't hear other yelling each

around shift right high-performance last segment. now My is for second. Just just computing one gears the question

Just in all any - disruption terms hardware? you're of this it's macro still seeing end demand, to there impacting steady because at what still tied markets, segment wondering from

Jim Scapa

coming grow of actually that the quality interesting extremely lot technology that actually we've the in the business a At is doesn't team an basically if take the overseas in is some particularly is software. things lot results overall, – of some and the now. a were It's of business. time, there a that hardware from there we're expectations good exceeding of don't been and because that, delays sector out mix doing robust, delivery they - right as to on customer result And and seeing need of frankly same work that. business But some a speaking,

doing So great. it's you. Thank just

Blair Abernethy

very Thanks Great. much.

Operator

Becker will next [Operator And come from our of Blair. William question Dylan Instructions]

is line open. Your

Unidentified Analyst

platform stitching that on units how your But on touch, of your don't the of impacts seeing as any It's spend your kind Just multiple well?\ consolidate I versus placing and mentioned just you kind across deliver integrate value vendors much from model to ability to kind the Hey. customers are to together [Indiscernible] customer briefly, macro conversations. know of near looking term into wanted not emphasis you're

Jim Scapa

of very we're often organization. and choose offer. we're continue of because deep all so product know Altair, and more We the Altair and expertise. partnering We think not little certain things customers is they integrity for the value customer in evolved it's really, about model, and will us. as the now that And accounts. the specialized start customers other the strategic with become that very really get becomes for more see and tend years, I'll a more more And in of interesting enterprise the through tactical customers tighter engagement then as decisions really a portfolio say, becoming has more to make But to and value and just value we're I were strategic. to more customers, us certain actually broad a strong especially technically talking So and

Unidentified Analyst

color. Thanks the Okay. for

Jim Scapa

you. Thank

Operator

call for Thank would Jim turn like now the you. I back remarks. Scapa closing to to

Jim Scapa

Altair I in support Well, community. appreciate from everybody's our investor interest Okay. the and

So thank all. you

supported as that So my well. team here me

So I it. appreciate Thank you.

Operator

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

disconnect. now You may

Altair Engineering (ALTR) 7 Aug 222022 Q2 Earnings call transcript