Earnings call transcript Q2 2023

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Operator

Good day, and thank you for standing by. Welcome to Altair’s Second Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference is being recorded.

I’d now like to hand the conference over to your speaker today, Dave Simon, Senior Vice President for Investor Relations. ahead. go Please

Dave Simon

And and Matt for Welcome, XX, for Altair’s Chairman Investor attending I’m are the Good Scapa, Chief Jim second thank Financial quarter call Founder Relations. for SVP the Simon, CEO; June me of earnings on Dave call and afternoon. and Altair’s you with Brown, XXXX XXXX. ended Officer.

Investor year issued performance XXXX, details Relations regarding quarter quarter website XXXX and website on After in for at with will call and can the of This market our the which release full closed be accessed a and investor.altair.com. press the today, available following recorded, a section of call. be third guidance our our is we this the being of conclusion IR second section replay

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

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

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

incremental business to this future. our the or greater Please our quarterly of comments our be in advised presentation our metrics may we additional offer may to in or or that dynamics times provide provide insight continue detail at Finally, into not questions, that to we your are usual responses prepared to results. may the

let With remarks. his the Jim? over Jim for that, to me prepared turn call

Jim Scapa

Thank on software total had adjusted the of revenue, everyone revenue quarter to Altair EBITDA, our and you, the second high solid with product all a guidance. and XXXX of Dave, end welcome above call.

our continued Our as our success QX well a QX the $XX.X performance Adjusted for demonstrates to aligns EBITDA for year with and full strength and grew company. year-over-year million. XXXX guidance

in at as of second for to compared product XX.X% a quarter of continued XXXX. XX.X% percentage revenue total the the positive strong quarter Software second trend revenue a

as revenue half Software in for revenue half XXXX product software XX.X% license a XXXX. compared XX.X% as The first half of XX% increase an in the XX%, was percentage of from the increased to XXXX. first the of of recurring to total rate of for half first first XXXX the

Total billings constant in of XX.X% reported year-over-year currency for in QX XXXX was XX.X% increase $XXX.X currency. million, and a

XXXX We well renew for many performance year. across We XXXX. base in technology rest of by was the and especially to This year Software the expand on strength choosing usage quarter second next and automotive aerospace, months basis X.X% in and the product for currency company units. a the with to positions for and Altair the products a our versus quarter growth in quarter six XXXX verticals. defense, saw our of grew X.X% their the ago believe customers renewal of first revenue in constant and compared second

and release excited the impact continues of and of to demonstrate simulation we new in QX potential beginning at and about for significant are are portfolio leadership software innovation. for products XXXX, and development Many stages for in market. the Altair’s engineering last planned their the

especially within to within continue AI simulation products, integrate solvers. our We our

and solution and other management and vendor-agnostic called whereas solutions requirements integrate for Last Motors engineers, week, It use, engineering requirements Jama and is and engineers. simulation making connectivity use geared enterprise Altair to The accessible by to tools, it of naturally OmniV exciting PLM DOORS OmniV two is NG requirements OmniV Cameo, more program development to test and is easy to product former MBSE easy designers into Teamcenter, executives. to connects for both and any MBSE Enovia other environment. including process learn system developers covers in are and OmniV General developed more solutions abstract achieve acquired and to goals. one IBM connects advantage an including MBSE OmniV solution. solutions, validation Software, Windchill to

fast-growing enhances our management will a offering simulation technology to set already comprehensive the open OmniV and traceable a digital OmniV cost powerful and the position Altair This digital AI Altair’s accessible track product. be and Cloud solutions, provides Altair helps of that twin the an use ability with data into integrated Altair via to the Gateway. digital twin One to mass architecture to available of in Innovation our believe units, market. ecosystem as performance, via twin addition solution support solution and of having We most Alters test

simulation in our some build its driving range analytics including while licensing we company year, increased seven-figure are portfolio, well the solutions. across scope XX%, access software data and physics Altair quarter. resulting broad several software had The future. commitment these than our long-term Altair in notable accounts as agreement. relationships units, space important AI licensing with disciplines, and This and engaging our the most which in annual wins on higher gives customers focusing at selling scale value entire Applications and enterprise from tremendous as more for more a vertical The levels by deepest aerospace technologies for to increased exploration to

engaged we variety opportunities consulting of simulation-driven a with new addition, forward leading-edge push product In to are design. in the projects company same with development

is seven-figure of using multiyear In software opportunity licensing certification, development. at a a both component it in over major to commercial aircraft Lewis aircraft another [ph] especially aerospace is forefront and win, in account for testing increase has a deal. the committed major a of is simulation challenge physical This meaningful as which supplier XX%

AI products platform In Altair of the Altair under software customer and city preparation two annual available applications exposure from for services annual analytics of signed to with its its its multiyear related the committed analyzing as U.S. finance new data six-figure suite for of has servicing area months goal a expand and on business six-figure social BFSI of Altair demographic a to applications, building A software a usage within to European to data of to license license loan SLC manufacturer wide solution units. a a accounting Altair major data tools. for to large teams signed RapidMiner in the improving and

the Altair years, in with manufacturer APAC expertise have and leader simulation has, simulation a two data major to has domain results We manufacturer for RapidMiner, weeks robust Using many design convergence of data and correlating analysis and science exploration optimization. reduce from a in in science simulation see Altair to just AI, additional to guidance. down more for for Altair drive licensed design use data few automotive data design significant using great minutes a been for antennas. we units, momentum test process we software specifically test development, with in rapid helped a antenna this

a engineers scientists. and inclusion education next generation with encourage Last to announced scholarship and of support Columbia diversity the to STEM we continue quarter, We program University.

we talent. to as pleased and Dearborn our is Scholarship #OnlyForward meaningful added These seek a which in especially on developing the have supporting and to University minorities are diverse scholarships Michigan play role recently We women, Altair outstanding of focus program. underrepresented to

will be faculty leadership $XX,XXX. or of STEM a a degree the of computer recipients chosen Women full-time These of with Engineers science and a Professional a support of computer fields. receiving Black member organizations; Society recipient nine engineering one this demonstrated Scholarship of interest scholarships Engineers, in Society and engineering of students student or each Engineers. Society in increasing must of diversity by college fall with and Each the following National in committee recipients, be a four-year pursuing in science Hispanic will

third work. named our for list string outstanding are foundational one stewards employee who of for Altair’s to management of by global consecutive to Loved goes year awards was Most the of Newsweek’s values. Credit companies the measured teams the happiness at Altair satisfaction top XXX as Workplaces and

workplace worked hard have We employees can environment. to a in create where our thrive a since supportive inclusive maintain and founding in XXXX

shifts is Our to we major ability maintain Altair’s these over years in XX of how technologies, and success. key to values geopolitics work

of Millennials. and the of workplace our balance. great workplace. with Altair internship purpose development Fortune was excel for awards, global STEM are indicators program talent award work-life that commitments as XXXX younger education employees one at and acknowledges Workplaces sustainable These our in the providing strong of a companies This sense focus with named on combined Best also

by overall the technology intelligence in evaluated Additionally, data normalization named equipment analytics that ABI and user and analytics, determined Altair with the data latest their sector of the core success report collection, vendors ABI data time industrial streaming optimize in experience, normalization, proactively their XX report The leader data and global Research manufacturing data data capabilities commercial Research advanced monitor capabilities. was evaluating enable and analytics value. operations to manufacturing for analytics, analytics by firms firm, analytics. use rankings for to collection, the

low-code more share of to and making. our wide modeling and options variety made complexities manufacturing of with Altair’s developed The display machine support have note and we effective With of applications versatility decision of and analytical expertise deep our IoT learning, faster, easily sensor build our data. and emphasizes report to platform, depth to and huge techniques array understanding platform solutions

technologies leading create Toyota, of the a Volteras, Earlier better, XXth US Automotive showcases ArcelorMittal, to Enlighten presented XXXX this the are applying with winners in the Farathane, for Enlighten AI Awards. Research, week, greener industry’s and minds how Marelli. Enlighten Polestar, the industry. advanced the Congratulations were program association the automotive Adient, and Award winners the Award of BASF, Multimatic announced, Nikola, responsible Altair Annual Center to

XXXX up of to a XXXX the and year transitions is in inflation an of macroeconomic for strong ourselves very uncertainty hampered in by and Altair for growth environment complex lackluster XXXX. midst important set

strategic years expenses a more our several XX% the We to organization markets share to margin to next to hyperscalers partnerships Shifting our wallet elevate of position with software and position years. and continued vertical key focus three are customers, key the integrators grow significant of for adjusted this key company achieve accounts. in five to portfolio development and selling and system establishing EBITDA entire our across EBITDA managing for aggressively on and adjusted the initiatives increases completing our and year

XXXX. for stock have endeavors. these of been All halfway point quantitative we we are the we we where to that year, take satisfied we every extremely while of very financial at meet objectives one the in established in As are we the successful continue

we to a going the anticipate to of the XXXX. significant take As feel company demand well result, advantage in is strong positioned we be beginning

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

Matt Brown

us. everyone Altair, for Thank quarter solid total to range you, and call, Jim. guidance once again of software high you on revenue and adjusted QX end Hello EBITDA. product the was another thank on the revenue, for the joining exceeding

a Our across of technology automotive, growth products strong is demand for first half aerospace, and defense, in and performance where has robust. verticals particularly been our by fueled number

into As of rates. of To reference results our are our U.S. may the foreign expenses some constant other details will impacted aid and rates results, be in reported in I significantly in results, transacted financial therefore, in remember and review both revenues throughout growth I currencies the make my currency. reported exchange our the to by remarks, And dive dollar. than of our changes

impressive particular In increase of Total disciplines. several top-tier billings broadening accounts had meaningful quarter year-over-year reported an as are we physics constant in currency. strength in currency in renewals XX.X% in customers XXXX, base. some and of for expansions the saw their $XXX.X usage our of XX.X% across million, were applications We our QX

XXXX. to SLC a increase software are had platform. the notable million, in Altair year-over-year In data QX and strength wins customer X.X% RapidMiner of of currency power compared currency customers as and X.X% QX product products of $XXX.X Altair in revenue billings addition, reported realizing XXXX in constant new This the analytics to we in led for our

Total X.X% XXXX. constant currency in services includes other revenue QX was in to and X.X% compared $XXX.X XXXX, year-over-year a of and revenue QX increase in reported which currency million,

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

quarter basis gross which points. stock-based year, was Non-GAAP XX.X% excludes in the XX of XX.X% the margin, compensation, an in increase compared second prior to

increase. in margin increase drove product an and this our mix product gross Software software

revenue, in product carried prior higher year. in of software QX gross which compared the XX.X% XX.X% total Our revenue XXXX margins to was

revenue mix non-GAAP towards the a and we term, modestly expect software there result, margin expect revenue. Over near to term. as gross other to the increase we to long continue shift will as product services growth a outpace continue And general our in

Non-GAAP and with and research development were by capacity, administrative million or to QX EBITDA was or by operating driven in assets, million compared general in decreases expenses, our intangible expectations $XX.X offset XX.X% sales million The ago in year-over-year in the which revenue excludes year $XX.X XX.X% $XX.X amortization stock-based QX Adjusted $XX.X partially and was costs. in of line XXXX in total of million compared XXXX. increases and increase to period. was and compensation

was and cash from cash and we from increase generation. our cash an to with primarily ended of by the activities, We million $XX.X prior continue be million equivalents, increase in pleased quarter our The balance Turning sheet. driven to with cash quarter. operating approximately the flow $XXX.X

of the $XX.X Free cash flow through first was million. XXXX half

Let’s QX for to XXXX. turn and provided including GAAP guidance our detailed earnings release, comparable tables press guidance to amounts. We’ve reconciliations in year full

the impact an reported growth year. in last rates rates provided to on as and relative continue To to expectations, changed our we’ve FX continuing see provide more are foreign FX throughout XXXX currency currency tables. exchange to both in We impact constant our guidance have to clarity

constant software to to of to currency. product million, reported the expect in million $XXX and a we in in QX, For X.X% revenue increase range of X.X% currency year-over-year X.X% X.X% $XXX

to slightly due XX.X% year currency. are constant currency we For currencies revenue a previous million to to maintaining our currency our in reported in software $XXX reported a outlook of $XXX rates in exchange in increase and product X.X% range in for of constant changes million, decreasing XXXX, outlook full and to X.X% year-over-year foreign XX.X% to

to begun stabilize XXXX has expected, in revenue As services sharp XXXX. and to we in other declines compared the saw

the in and of to the it was revenue of we in be year-over-year second this year. down other the services expect While first roughly flat year, half half

X.X% currency. expect a year-over-year currency million, As to $XXX in of X.X% increase result, reported of X.X% and the to QX in total we range a $XXX X.X% to constant XXXX million revenue for in

currency foreign $XXX X.X% $XXX of constant For maintaining a total previous to full and are year-over-year rates decreasing currency. changes due to reported in X.X% currency slightly to revenue for a in constant in we year XXXX, in currency to our outlook outlook exchange of reported to and million, range our X.X% increase in million X.X%

Moving to adjusted EBITDA.

the million For of in $X.X or QX to range adjusted XXXX, total to revenue revenue total expect XXXX. $X to of in million we QX X.X% million or of compared EBITDA $X X.X% X.X%

compared total for For XX.X% $XXX.X XX.X% our of to rates revenue million outlook we currency full million a $XXX total reported decreasing range our XXXX, constant to slightly or XXXX. and or foreign adjusted revenue year of to currency changes XX.X% exchange EBITDA due previous are in outlook in of in $XXX to in maintaining to million

year for which $XXX to free from we range XXXX, outlook to quarter year-over-year. for substantial represents the a $XXX of expect cash we are maintaining and full flow, And million the million our increase in be finally, last the

half billings As a year, which reminder, free cash historical shown year. in second from and the has collections seasonally. and the half smaller expectations sensitive cash a first cash flow to in of collections QX and inflow inflow are the our fluctuate from our of primarily In pattern larger billings particular, free patterns, a on the QX

to pattern continue year. We’re expecting this that

with second to half the a strong look we’ve and half. the first outperformance seen We pleased of are forward the in year

Operator? be to With your take questions. happy we’d that,

Operator

comes RBC Hedberg first is line Our with the Capital Matt Matt from open. now Markets. of Instructions] line question your [Operator

Matt Swanson

Jim, think Swanson Yes. PMI. right reflected This And I is you question Matt lackluster describe Matt. mentioned actually of macro word kind the been now. was of for on a But used in environment Jim for This is – kind think Matt. I and the that’s to you

R&D maybe, macro? you of how bit type more guidance. a I could you’re mean, you the thinking into bit extrapolate in then how this a you’re And for macro on resilient selling little could are So the budgets budgets, little about if talk Matt, that about those

Jim Scapa

Sure. really off. from Hi view, point Yes, just fireworks Matt Swanson. lackluster, means of aren’t my going

the a sense kind tends not costs market they dynamic my it’s but frankly. in is more cycle. XXXX Again, And see a cyclical We are general and So basically it’s about I and mean it’s of little XXXX it’s think on that And when lower I’m down I in sideways XXXX had think I XXXX, everybody bit. of in And numbers. – the that anticipating why budgets, market I a to market, from be watching you the of than billings our part flow solid and not is economy ebb think view. a more growth. think very can of to It’s I cycle. point R&D

towards a in lot and actually actually market the of increasing the potential half potential seeing year. this second of We’re

that we As customers a lackluster from I of start every is if customer you very I our think a closely; But think we our managing costs little well. will, doing are to as bit are certainly just feeling. emerge, as

For in results And interested a us, to were significant I very customers longer. more many us, going coming start little seeing the very, opportunities; making very than of a we’re in to seeing promising. so course, than think to take that’s much before creates platform. switch XXXX, more we’re very XXXX. our those they and And But that that maybe of bit

was hope yes, I So clear. that

Matt Brown

embedded there. What question the And second just the Jim of to just add would I on Matt, the for is described guide your in part Yes. year. answer

we the about pipeline, product right for way XX%. midpoint things having that us seeing well. we it’s our very And time as I pipeline the shaping all is growth at guiding and for said to about good bit. the and doing saw think we’re not But in a quite particular, fantastic that looking last the feel That’s and at out the So So future a in year. up make investing really constant coming software year, right? the for where our what positioning revenue reflected little sure you’re currency we’re we’re all that,

far continue forward that to very, in feel the we we’re and So good position very on the about to capitalize future. that looking into

Matt Swanson

No, the thank additional color then, are you’re really of and trying seeing Yes. might could simulation business the that any some if general. the it the now that conversations on a does the AI right But... what this Jim, sometime different HPC you answers And out pace just moment, through know One right way parts helpful. see AI about being, would I in generative catalyst are you at If benefits. for compute some ask is a slightly which for second increase going increased of figure finally And to lot to to start designs, be, I both your mean a initiatives we’re indirect business? possibly now. design on more that cycle, side? maybe Is of the we the extrapolating more on design, then people the

Jim Scapa

think actually little asked our ago first space players AI have because number solutions a technology. of bigger ago, the technology, solution then But because I of asked, lead, or like reduce the simulation AI Altair are because quarters this Yes. did we’re question. and time a said it, which asked was No, answer. to the more but or a it’s it’s a us our is clearly a solutions, said, no, that select I to absolutely great because he whole of I coming that And or in of that they too the and because – launched I I hearing physics-based to answer is, benchmark out of through And loved it he with we the validate the model that takes there’s two designs a make that units’ selected are which in the of answer. and I going hear, amount the us. morning answer. a question – true we I just is they not. because we They’re went quarter physics dramatically reducing obviously doing customer great question want AI

I of to to going simulation, are continuing going to has, think is mean, and AI to I whether the continue is I or part as and my they’re to it, get of of people in So use algorithmic technology think always just more kind technology do this better or integrated more the embedded – grow going they’re only view. it using as

So in we’re spot. I think a great

if This swing investing, will, then of lot really has to year you come of what absolute stuff amazing a lackluster been in coming. I out have is an We tend in. which do cycles and these,

So yes, product very as the excited about well. we’re

Matt Swanson

Thank you.

Jim Scapa

Sure.

Operator

with comes question next of Oppenheimer. line from Our Wong the Ken

Ken Wong

for question. my a macro Thanks Jim, just taking bit. the Great. little just touching on

in think just out you you’ll prepared your comfort there you in expectations again, take that you XXXX. Was something I you is start that that in like something that fireworks? XXXX. the anticipate in, mentioned in you’re demand strong more to general, your are gives that internally Or saying see that strong advantage guys of remarks, pipeline, closing kind when demand of

Jim Scapa

this I think doing time. been long a for both. it’s I’ve

bit And macro take do But you about a to see that are a what Altair, feel happens longer, where And lot really so I longer pipeline in to that little feel have things are big a for a will. if of we building little are going. bit pretty opportunities the we gel. good excited

So it’s a combination.

Ken Wong

let’s than, a I Okay. look Matt, look But just then, I the SaaS if dynamic? that walk say, we QX. just that your as little I timing help stuff more XQ through us back-end company. some at a a little thinking help does outlook, could, is And or realize XQ the lighter, revenue little probably traditional into loaded Perfect. slippage, XQ, a guess Any lumpier behind

Matt Brown

problem. Yes. Hey no Ken,

been playing been the we’ve out so of year since has off, the first guiding generally seeing this what year. So beginning how we’re

at midpoint we’ve revenue growth XX% of guiding currency. software been So constant about product in the

constant of about in about been so half, And seen half. in growth at midpoint X.X% far, and the the XX.X% second we’re we’ve we’ve expecting first – currency the

So half, second half pretty actually a reasonable dynamic first there.

loaded, at QX specifically with words, specifically first it So you just QX, look of not other down nature when to the not to in guiding certainly a difficult dynamic, second And back-end half, really half. comes respect QX. then somewhat

So in been you’ve the It’s smallest quarter summer QX, the got historically holiday. our year. of

a percentages. only we’re seemingly can $X So million large impact make on

And look shaping But second sometimes you and so year get is in again, half feel for how second up. we’re a in good strange total, when set there. the what of about comparisons seeing pipeline the half the you at the really we

than So more read into it nothing to that.

Ken Wong

Thank Okay, fantastic. guys. you

Operator

Our next comes Dylan of line Blair. from with William Becker the question

Dylan Becker

you the teams core across drivers design Jim, elevated of on obviously, kind compute it help of some are expansion us if – could momentum there? us model. renewals. you parse team to, But the and think customers Yep. I play that maybe taking thanks the vendor guys customer different through seeing Wondering kind Hey love it healthy the of I Is again, the for out? the question. guys coming through intensity? what maybe units are seeing dynamic help of consolidation is guess from, that Is consolidation new for switching workflows. guess, kind design

Jim Scapa

now to a right two. and overarching to – in probably strongest I sector that number there’s to our now in there’s but right general, So may be activity active of happening see and drive and markets. defense most in very aerospace that. very, the get get mean Aerospace is And of an important is we competitive lot electric to technology new products, still even automotive, all

of people overarching was because customers our trying So part there’s to Sorry. question? to of – just your What products. second new still get are a sort lot demand the of

Dylan Becker

I guess, the that of unit spending too… – how plays and consolidation model think I kind into

Jim Scapa

Yes. consolidation The piece.

all of our So more part a bit and we There’s of do, do cycle deeper, do it world this all while. to more how of the effectively. as takes technical we simulation in I customers are and that. a effectively, But looking we work religion it it, how lot efficiently, do mean the down of as when do you’re need describing computing I’m in more but a little cost

with? looking As the more we partner accounts we’re that start accounts a sort gets the deciding, one for end, should Is All competitively? cycle us. there be competitive. towards And really think these closely right in do customers more of we what the opportunity they so very of can better are at there’s different who’s right? But now already. every these more partner, And are I working

Dylan Becker

of again, that. Okay. year touching Super on then for kind model is of a kind Thanks kind – framework. decision the And All purchasing more aligning decisioning the of this of kind made larger Jim helpful. think of looks right. I of the like an the in a of with enterprise period. those of maybe, a Matt, function seasonality maybe comment back guidance the It bit with naturally shift And aligning emphasis prior kind little around customers? a from scale the sales that force. to for Is just

Matt Brown

in close early smaller that actually. September quarter, to going fairly really some a It dynamics. are late is of and, least our timing it’s of to I you’re really, when of those drive not seasonal dynamic, when versus with October deals respect just smallest can base, just again, some from function a at trying QX us, mean project no, QX, deals the to

So dynamic Jim no, the to it with much on. have that actually do touched doesn’t

Dylan Becker

guys. Thanks helpful. Nice Super job. right. All Okay.

Matt Brown

you. Thank Okay.

Operator

Tilton of line from comes Our with next the Research. Wolfe question Josh

Luke Mott

is question. Luke Thanks Josh. on Hi. for This my Mott taking for

And details the you you. five can magnitude next would it? of You said years. those will very drive earlier increase Thank be Any around any helpful. you I give then that? And the follow-up. expect you could provide three a adjusted EBITDA what Or to to have on more color increases for

Jim Scapa

sorry. one, that get Matt, You

Matt Brown

No problem. Yes.

a next over So beyond. is a last we’re which we’ve to that EBITDA to three proportion continue our believe something non-GAAP doing we lot of But gross is able ability continue the as margins, and increase year-over-year. to expect the way gross the the that to were we where been of our we’re continuing future, margin a we couple around our into is here reflected, software to saying our to increase And certainly that total. of And revenue can of going frankly, we adjusted just that benefit is continue. having years, but years add what in that’s our incrementally in margins example, that, five this to quarter, percentage to for

that’s helpful So driver. one

course, the other of expenses. And then, OpEx we’re is manage our continuing to

of metrics without – game continue plan on costs drive last growth through the Really, kind as this we, revenue couple where end putting you’ve and the we’ll in any check. it, our years to do we growth we’re to what by is fueled software going revenue after quantifiable So primarily keep of over year. of get seen the we which here,

Luke Mott

Great. much of kind just or existing with there? those then And within the side, you there more how products? was to simulation the of automotive to the earlier your is some of Thank data more how customers, around circling cross-sell room questions for legacy run you room much just upsell for not also so some see much. back I commentary and but And accounts. wondering

Jim Scapa

Yes.

opportunity like side, for as SimSolid to huge the XX, of lot on on we’ve – continue. to designer large a a Detroit a think XX at continues And OEMs there’s year-on-year I that’s There’s the Inspire. the and opportunity business amount lot products looking well in and years. our of of for been going with like customers just think I data side years, grow

it’s one. number at of So the engineers, five, the number if designers six, compared of to you look seven to simulation

as survey. the well So data ABI and A floor, on of lot there. lots side the plant even you our saw of manufacturing opportunity on opportunity

were If against. you at, a have you that we they we’re compared do and a like of companies, know should right-hand space the Magic Quadrant, at you of but we Magic look if might if corner of out. Quadrant, way well-known that kind there’s that lot upper say in and the I thought beat And at look don’t I names

there’s And I of amount so there. think huge a opportunity

Luke Mott

you. Thank

Jim Scapa

Sure.

Operator

Company. & Charles line from of comes question Needham next Our with the Shi

Charles Shi

afternoon. good Hi,

I that looks guidance, [ph] three foreign the little was maybe is? and your to the I of, a terms exchange-related and quarter still the there I that guess, two rate maybe will to are like little as the lower want foreign currencies headwind? accounting clarify Matt. How assumption you. but back, is let’s this seems a in say, guidance was to? tailwind, bit you’re exchange Thank foreign to question It the exchange do exposed a annual third seeing bit some First, of be it What ago reconcile months an

Matt Brown

I that. you of from year sure change midpoint in quarter guidance not all this gave the caught Charles, at to to full Are that quarter? Hey referring I’m last the we guidance

Charles Shi

Yes.

Matt Brown

Okay. Got it.

of that we over constant $X gave software on witnessed currency product there out revenue the quarter, so reported yes, and by a pointing on total now last guidance we currency revenue currency result that FX last we’re it down the but a what exactly as is change in basis that is So what reported perspective a from rates a in changes quarter. was million basis, in it’s

EBITDA, it’s down expenses. in change constant but get some by currency. offset actually flows impact FX benefit partially you no in to So that That

And Again, guide In is the quarter EBITDA currency, reported only impact same so is while adjusted hedge sort currency. constant to that all the full you year. revenue to a guide is get million, the of gave there natural for in $X last $X that’s the we because million impact in expenses.

Charles Shi

Got it.

largest about – fireworks XXXX question. hear that response but question my be is go to lower, another terms ask are of every bit and what may want Direction to of little want lackluster a Jim, XXXX But I one, still in favorite terms is vertical although your maybe you want more question do see discussion a to Well, that. This think automotive. about quarter. the you contributions very up. a really or of will So be Thank you. to versus you question lackluster heard color to specific high-level next coming going the I a is going I in be this fireworks up. your Jim. with to

Jim Scapa

for should to I think, of an the these we’re I spending in start use I that word. Well, uptick mean, companies. a never seeing lot generally, going

not But on they the little are it’s their this think spend play through very is now. actually to the that make budgets expenses total restricted. holding right – been think have game of and just revenue even. been next total think a they’re tiny amount They’re I year, data bit more out percentage do and I I a a year. the little how also bit loosen figuring engineering tighter sales because And to up going they’ve about that they

selecting of for So solution corporate-wide a science. analytics data companies and lot data are their

lot companies. of in We’re in these lot a a conversations of

to as placed AI, cycle their the a are real and hype impact this start we’re that there big can how really And is figure businesses. to opportunities an understanding have impact. and really There’s think I they technology a their applications hype, generative domain. but lot I apply around And meaningful there’s out of an think have what well they on

coming and think than of more I going crystal out ball more don’t you any we’re do. So personally. have start more I to growth year seeing a this

results continue coming seeing next pipeline this a of in the So I as a big opportunity. company not for together well. is into much organized products just going that, products us I and our think, I lot wrong do sort A to nice go-to-market the approach. very work we’re our position really are grow to to towards that could a be All we’re and have way I experience. and developing to year And think going going us really We’ve of it’s of more the reorient just lot specific meaningfully coming but but just year, that’s here, on the verticals. that it of

Charles Shi

That’s forward my to looking Really XXXX. Jim. Thank Thanks, questions. you. all

Jim Scapa

you. Thank

Operator

from Rosenblatt of next question Our comes Abernethy line Securities. Blair with the

Blair Abernethy

very much. Thanks

color if can it know how market. launched that’s you is to Just April, just want the wonder I how I Jim, in SimSolid just but in Cloud about give sense get a us doing. doing some of

Jim Scapa

Okay.

well, example, really of days a to lot going beginning it’s is all evaluation. more adaptivity tuning around for that. for do designers, SimSolid the that Cloud, for the A that really lot power have we’ve there’s recognize how significant concerns early done So and but so and we have, companies understand that SimSolid of automation companies they very SimSolid. very, still actually. really a that And are have we of been setting and just lot parameters We

So we’re seeing before. about excited of the really places to this off, us that we take into been is continuing of a lot take continuing products to haven’t we’re one

good accounts. small, SimSolid the in opportunity a Cloud, medium So it’s

with still, quickly bigger around the great evaluate to you quite cloud. for They even opportunity for a models now, It’s business corporation. some of us frankly. for hyperscalers that. We’re trying partner couple large the is to on-prem, in think the want of also of the software sort to will, a But opportunity I a if run

Blair Abernethy

Great. question acquisition the of Okay. Thank announced last OmniV on And you. recent then week. a just

rationale just in did as maybe the or purchased customers to they much have this? Just why some you prior And acquisition? of way to revenue the

Jim Scapa

Sure.

So model that we’re I twins entire level many systems an starting think thick accounts. building about more and digital mean, in to customers to in system, of are out many, all design the and

you now. was you fill, piece what with questions for I guys management that And But tool to there, we those And we quite a just solution. really requirements this me, several answer been now. that’s want trying is a of had working We have the that’s ask often a to you. years never a didn’t this gap. are We So a believe gap and differentiated have business. important do

that nicely test the you system it validation, with that learn to these it It exactly to helps up you started is use for which very, very love does very easy see then It’s the tools. and need. what customers need auto And creation set it how Customers do and and it. connects process things to to data very, main have of two to your And models. to simulation implement.

So how the and validate you’re going you’re setting here to requirements upfront these up are then here’s requirements.

a it’s just key So element.

going out for take going And are product engineers the think I are products really to is actually. the grasp to there this I say. in I’m today to off product market think that difficult somewhat

Blair Abernethy

very for much That’s call. great. Thanks the

Jim Scapa

Sure. Thank you.

Operator

Markets. Loop next with Our Schappel from line of Mark Capital question comes the

Mark Schappel

customers becoming at how it’s with taking cross-selling to, say, analytics? you changes of the with for you see thank I my the you your teams would the of and or wondering Jim, nice more simulation just with if the sales your attribute comfortable that data year beginning you question. into this installed give combining – success much base. of growing could you’re a made Hi, us simulation data to having products the was versus to sense analytics success

Jim Scapa

things. great organization, within to it Yes, learn I combination of question. do. then it’s you what your require teams these have of things a any a have sell own the It’s actually mean these to – tools

mostly been RapidMiner Monarch Our technical now teams with with Panopticon. have trained with

We cases from leadership how that. where all So difference. applying I even tools. teams And years can similarly products. the very making some that and versed come the they leadership verticals. these teams did different think into the some guys the are way big simulation of crossing sell using do a X.X is in last the do data these and crossing creating I vertical a think the we’ve in pretty to need use these well to long guys And and understand The sales

be can is as that of a sort Could implement, products or us the extremely beginning Oh, a to apply no and And code. no unless platform. code you lot And real code of to it’s a But lot is platform. writing they’re It’s the program power deep. a other There’s never get true to and some really you will for claim just no easy RapidMiner other Python RapidMiner that platform nameless. is code end and of remain and very broad get products a get this But the the we go, they thing it’s and customers it. get it saved wow, a just or are So to that to grasp we’re there? over also thing. two apply sort level, could into the doing you starting it customers it the here at of we customers two as from we see and we us. grassroots to went – hours solve weeks problem here, We

that the in starting We we’ve traction. So organization and happening all got great I an crossing in cross-training it’s a we’re think that just and domain, to spot. offer understand that of just our get

Mark Schappel

Great. helpful. Thank you. That’s

Jim Scapa

you. Thank

Operator

with comes Berenberg. Andrew question from next Our line of DeGasperi the

Unidentified Analyst

on Thank Stephanie question. for for you taking is the Andrew. this Hi,

In and about you way specifically looking think terms at? in acquisitions of you Thank what your do you. areas you any are further acquisition the shift strategy, expect

Jim Scapa

continue think but just attention. for a well. that Sure. Thank I’m to mean, the at right to are are and side. big change. look to companies. And we’re we’re see going you me. of – And very focused for us, of I solution in to continue not of what a looking very of the a work at, quite mostly looking the at. generally same also have the paying we’re quality as value [indiscernible] at you tuck time, interesting things try and frankly, different that we’re usually We question. internally so players on lot now, probably the stuffs I lot different lot grow to the we technology tell we don’t culture opportunities. And in and we’re of areas And doesn’t I That I a the clear

question, not answering the the do. I can that’s for probably best sorry So but

Unidentified Analyst

it. Thank you. Got

Jim Scapa

you. Thank

Operator

today’s concludes concludes This question-and-answer call. today’s conference That for participating. Thank you session.

You may now disconnect.

Altair Engineering (ALTR) 3 Aug 232023 Q2 Earnings call transcript