Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Altair Announces Third Quarter 2022 Financial Results By: Altair Engineering Inc. via GlobeNewswire November 03, 2022 at 16:05 PM EDT TROY, Mich., Nov. 03, 2022 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence (AI), today released its financial results for the third quarter ended September 30, 2022. “Altair had a solid third quarter, showing exceptional momentum despite significant macro-economic uncertainty, led by double digit growth in billings on a constant currency basis and strong demand across all geographies,” said James Scapa, founder, chairman and chief executive officer of Altair. “Our dedicated global teams continue to push forward with outstanding technology developments and applications.” “We're very pleased with the third quarter, continuing the success we had in the first half of the year,” said Matt Brown, chief financial officer of Altair. “Our third quarter revenue was at the high end of our guidance range, despite significant currency headwinds, while our profitability exceeded our expectations. These strong results give us the confidence to raise our full year 2022 guidance in constant currency.” Third Quarter 2022 Financial Highlights Software product revenue was $103.8 million compared to $102.3 million for the third quarter of 2021, an increase of 1.4% in reported currency and 10.1% in constant currencyTotal revenue was $119.4 million compared to $121.3 million for the third quarter of 2021, a decrease of 1.6% in reported currency and an increase of 6.3% in constant currencyNet loss was $(33.2) million compared to $(8.1) million for the third quarter of 2021. Diluted net loss per share was $(0.42) based on 79.2 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.11) for the third quarter of 2021, based on 75.8 million diluted weighted average common shares outstanding. Net loss margin was -27.9% compared to -6.7% for the third quarter of 2021Non-GAAP net income was $4.3 million, compared to non-GAAP net income of $9.6 million for the third quarter of 2021, a decrease of 55.7%. Non-GAAP diluted net income per share was $0.05 based on 88.1 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.12 for the third quarter of 2021, based on 81.1 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $6.8 million compared to $14.8 million for the third quarter of 2021, a decrease of 54.0%. Adjusted EBITDA margin was 5.7% compared to 12.2% for the third quarter of 2021Cash provided by operating activities was $8.5 million, compared to $0.9 million for the third quarter of 2021Free cash flow was $5.2 million, compared to $(0.5) million for the third quarter of 2021. Business Outlook Based on information available as of today, Altair is issuing the following guidance for the fourth quarter and full year 2022: (in millions)Fourth Quarter 2022 Full Year 2022 Software Product Revenue $126.0 to$131.0 $488.0 to$493.0 Total Revenue $143.0 $148.0 $555.0 $560.0 Net Loss $(15.0) $(12.1) $(70.3) $(67.4)Non-GAAP Net Income $15.5 $17.8 $63.8 $66.0 Adjusted EBITDA $22.0 $25.0 $92.0 $95.0 Net Cash Provided by Operating Activities $23.0 $27.0 Free Cash Flow $14.0 $18.0 The following table provides a reconciliation of 2022 Full Year guidance to the last guidance provided in August: (Unaudited) Full Year 2022 (in millions) Midpoint ofGuidance inAugust Increase/(Decrease) CurrencyFluctuationsfrom PriorGuidance Midpoint ofGuidance inNovember Software Product Revenue $492.5 $4.2 $(6.2) $490.5 Total Revenue $560.5 $3.7 $(6.7) $557.5 Adjusted EBITDA $94.0 $1.0 $(1.5) $93.5 Conference Call Information What: Altair’s Third Quarter 2022 Financial Results Conference CallWhen: Thursday, November 3, 2022Time: 5 p.m. ETWebcast: http://investor.altair.com (live & replay) Non-GAAP Financial Measures This press release contains the following non-GAAP financial measures: Non-GAAP Net Income, Non-GAAP Net Income Per Share, Adjusted EBITDA, Free Cash Flow, Non-GAAP Gross Profit and Non-GAAP Operating Expense. Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors. Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, restructuring charges, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period. Non-GAAP diluted common shares as defined starting with Q1 2022, includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position. All periods presented will be adjusted to align with this new definition. Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release. Free cash flow consists of cash flow from operations less capital expenditures. Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense, restructuring expense and other special items as identified by management and described elsewhere in this press release. Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release. Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release. About Altair Altair is a global leader in computational science and artificial intelligence (AI) that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. To learn more, please visit www.altair.com. Cautionary Language Concerning Forward-Looking Statements This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the fourth quarter and full year 2022, our statements regarding our expectations for 2022, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in our forward-looking statements due to a number of factors, including but not limited to, the risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release. Media RelationsAltairDave Simon248-614-2400 ext. 332dls@altair.com Investor RelationsThe Blueshirt GroupMonica Gould212-871-3927ir@altair.com ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS September 30, 2022 December 31, 2021 (In thousands) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $311,853 $413,743 Accounts receivable, net 119,921 137,561 Income tax receivable 10,465 9,388 Prepaid expenses and other current assets 23,492 27,529 Total current assets 465,731 588,221 Property and equipment, net 38,938 40,478 Operating lease right of use assets 32,627 28,494 Goodwill 455,211 370,178 Other intangible assets, net 86,080 99,057 Deferred tax assets 7,605 8,495 Other long-term assets 38,736 28,352 TOTAL ASSETS $1,124,928 $1,163,275 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $6,235 $6,647 Accrued compensation and benefits 37,036 42,307 Current portion of operating lease liabilities 9,996 9,933 Other accrued expenses and current liabilities 50,686 122,226 Deferred revenue 94,523 93,160 Convertible senior notes, net — 199,705 Total current liabilities 198,476 473,978 Operating lease liabilities, net of current portion 23,466 19,550 Deferred revenue, non-current 22,017 12,872 Convertible senior notes, net 305,158 — Other long-term liabilities 40,282 42,894 TOTAL LIABILITIES 589,399 549,294 Commitments and contingencies MEZZANINE EQUITY — 784 STOCKHOLDERS’ EQUITY: Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding — — Common stock ($0.0001 par value) Class A common stock, authorized 513,797 shares, issued and outstanding 52,377 and 51,524 shares as of September 30, 2022, and December 31, 2021, respectively 5 5 Class B common stock, authorized 41,203 shares, issued and outstanding 27,745 shares as of September 30, 2022, and December 31, 2021 3 3 Additional paid-in capital 715,736 724,226 Accumulated deficit (133,642) (102,087)Accumulated other comprehensive loss (46,573) (8,950)TOTAL STOCKHOLDERS’ EQUITY 535,529 613,197 TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $1,124,928 $1,163,275 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share data) 2022 2021 2022 2021 Revenue License $67,245 $67,603 $256,102 $230,630 Maintenance and other services 36,520 34,686 105,453 100,758 Total software 103,765 102,289 361,555 331,388 Software related services 6,706 7,650 23,143 23,229 Total software and related services 110,471 109,939 384,698 354,617 Client engineering services 7,355 10,060 22,414 31,005 Other 1,525 1,308 4,676 5,760 Total revenue 119,351 121,307 411,788 391,382 Cost of revenue License 2,579 4,694 11,386 13,706 Maintenance and other services 13,025 11,770 38,628 35,368 Total software * 15,604 16,464 50,014 49,074 Software related services 5,240 5,707 16,739 17,560 Total software and related services 20,844 22,171 66,753 66,634 Client engineering services 5,835 7,982 18,390 25,163 Other 1,230 1,348 3,892 5,072 Total cost of revenue 27,909 31,501 89,035 96,869 Gross profit 91,442 89,806 322,753 294,513 Operating expenses: Research and development * 48,781 35,839 138,352 112,872 Sales and marketing * 39,244 30,589 114,042 94,568 General and administrative * 24,677 22,196 72,613 67,983 Amortization of intangible assets 6,571 4,432 18,682 13,924 Other operating income, net (2,835) (1,324) (9,383) (2,526)Total operating expenses 116,438 91,732 334,306 286,821 Operating (loss) income (24,996) (1,926) (11,553) 7,692 Interest expense 1,566 3,037 2,851 8,998 Other expense, net 2,107 124 26,082 1,667 Loss before income taxes (28,669) (5,087) (40,486) (2,973)Income tax expense 4,579 3,022 15,008 4,424 Net loss $(33,248) $(8,109) $(55,494) $(7,397)Loss per share: Net loss per share attributable to common stockholders, basic $(0.42) $(0.11) $(0.70) $(0.10)Net loss per share attributable to common stockholders, diluted $(0.42) $(0.11) $(0.70) $(0.10)Weighted average shares outstanding: Weighted average number of shares used in computing net loss per share, basic 79,207 75,750 79,205 75,226 Weighted average number of shares used in computing net loss per share, diluted 79,207 75,750 79,205 75,226 * Amounts include stock-based compensation expense as follows (in thousands): (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Cost of revenue – software $2,332 $1,411 $6,265 $3,791 Research and development 10,243 3,894 26,580 11,223 Sales and marketing 7,806 3,673 22,505 10,800 General and administrative 2,329 1,955 7,174 5,415 Total stock-based compensation expense $22,710 $10,933 $62,524 $31,229 (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Employee stock-based compensation plans $15,490 $10,194 $43,622 $29,009 Equity issued in connection with acquisitions 7,220 739 18,902 2,220 Total stock-based compensation expense $22,710 $10,933 $62,524 $31,229 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOW(Unaudited) Nine Months Ended September 30, (In thousands) 2022 2021 OPERATING ACTIVITIES: Net loss $(55,494) $(7,397)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 24,092 19,355 Provision for credit loss 183 330 Amortization of debt discount and issuance costs 1,330 8,513 Stock-based compensation expense 62,524 31,229 Deferred income taxes 4 (510)Gain on mark-to-market adjustment of contingent consideration (7,482) — Expense on repurchase of convertible senior notes 16,621 — Other, net 153 40 Changes in assets and liabilities: Accounts receivable 13,859 26,770 Prepaid expenses and other current assets 1,906 (7,612)Other long-term assets 3,134 (5,018)Accounts payable (270) (2,432)Accrued compensation and benefits (3,639) 481 Other accrued expenses and current liabilities (48,698) 483 Deferred revenue 18,311 (8,638)Net cash provided by operating activities 26,534 55,594 INVESTING ACTIVITIES: Payments for acquisition of businesses, net of cash acquired (134,130) (5,472)Capital expenditures (6,721) (6,811)Other investing activities, net (10,322) (628)Net cash used in investing activities (151,173) (12,911)FINANCING ACTIVITIES: Proceeds from issuance of convertible senior notes, net of discounts and commissions 224,265 — Repurchase of convertible senior notes (192,422) — Proceeds from employee stock purchase plan contributions 6,549 2,110 Repurchase and retirement of common stock (4,387) — Proceeds from the exercise of common stock options 2,840 2,059 Payments of debt issuance costs (1,523) — Proceeds from private placement of common stock — 200,000 Payments on revolving commitment — (30,000)Other financing activities (170) (434)Net cash provided by financing activities 35,152 173,735 Effect of exchange rate changes on cash, cash equivalents and restricted cash (12,142) (1,951)Net (decrease) increase in cash, cash equivalents and restricted cash (101,629) 214,467 Cash, cash equivalents and restricted cash at beginning of year 414,012 241,547 Cash, cash equivalents and restricted cash at end of period $312,383 $456,014 Supplemental disclosure of cash flow: Interest paid $296 $344 Income taxes paid $6,818 $8,077 Supplemental disclosure of non-cash investing and financing activities: Property and equipment in accounts payable, other current liabilities and other liabilities $707 $480 Financial Results The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net loss and net loss per share – diluted, the most comparable GAAP financial measures: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share amounts) 2022 2021 2022 2021 Net loss $(33,248) $(8,109) $(55,494) $(7,397)Stock-based compensation expense 22,710 10,933 62,524 31,229 Amortization of intangible assets 6,571 4,432 18,682 13,924 Non-cash interest expense 501 2,876 1,339 8,513 Restructuring expense — (124) — 4,954 Impact of non-GAAP tax rate (1) 3,079 (366) (1,878) (10,044)Special adjustments and other (2) 4,657 — 22,886 — Non-GAAP net income $4,270 $9,642 $48,059 $41,179 Net loss per share, diluted $(0.42) $(0.11) $(0.70) $(0.10)Non-GAAP net income per share, diluted $0.05 $0.12 $0.55 $0.51 GAAP diluted shares outstanding 79,207 75,750 79,205 75,226 Non-GAAP diluted shares outstanding (3) 88,100 81,063 86,708 80,345 (1) The Company uses a non-GAAP effective tax rate of 26%. (2) The three months ended September 30, 2022, includes $6.8 million currency losses on acquisition-related intercompany loans and a $2.2 million gain from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and a $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. (3) The Non-GAAP diluted shares outstanding for the three and nine months ended September 30, 2021, has been changed to align with the current definition. The following table provides a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Net loss $(33,248) $(8,109) $(55,494) $(7,397)Income tax expense 4,579 3,022 15,008 4,424 Stock-based compensation expense 22,710 10,933 62,524 31,229 Interest expense 1,566 3,037 2,851 8,998 Depreciation and amortization 8,273 6,175 24,092 19,355 Restructuring expense — (124) — 4,954 Special adjustments, interest income and other (1) 2,949 (102) 20,878 (275)Adjusted EBITDA $6,829 $14,832 $69,859 $61,288 (1) The three months ended September 30, 2022, includes $6.8 million currency losses on acquisition-related intercompany loans and a $2.2 million gain from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and a $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Net cash provided by operating activities (1) $8,493 $872 $26,534 $55,594 Capital expenditures (3,264) (1,420) (6,721) (6,811)Free cash flow (1) $5,229 $(548) $19,813 $48,783 (1) The nine months ended September 30, 2022, includes a $65.9 million payment in January 2022 for a legal judgement acquired in December 2021. The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Gross profit $91,442 $89,806 $322,753 $294,513 Stock-based compensation expense 2,332 1,411 6,265 3,791 Restructuring expense — (10) — 926 Non-GAAP gross profit $93,774 $91,207 $329,018 $299,230 Non-GAAP gross margin 78.6% 75.2% 79.9% 76.5% The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Total operating expense $116,438 $91,732 $334,306 $286,821 Stock-based compensation expense (20,378) (9,522) (56,259) (27,438)Amortization (6,571) (4,432) (18,682) (13,924)Gain on mark-to-market adjustment of contingent consideration 2,178 — 7,482 — Restructuring expense — 114 — (4,028)Non-GAAP operating expense $91,667 $77,892 $266,847 $241,431 The following table provides our revenue and Adjusted EBITDA on a constant currency basis: (Unaudited) Three Months Ended September 30, 2022 Three MonthsEndedSeptember 30, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constantcurrency Software revenue $103.8 $8.8 $112.6 $102.3 1.4% 10.1%Total revenue $119.4 $9.6 $129.0 $121.3 -1.6% 6.3%Adjusted EBITDA $6.8 $2.0 $8.8 $14.8 -53.9% -40.5% (Unaudited) Nine Months Ended September 30, 2022 Nine MonthsEndedSeptember 30, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted forconstant currency As reported As reported As adjusted for constantcurrency Software revenue $361.6 $18.3 $379.9 $331.4 9.1% 14.7%Total revenue $411.8 $20.2 $432.0 $391.4 5.2% 10.4%Adjusted EBITDA $69.9 $4.2 $74.1 $61.3 14.0% 20.9% Business OutlookThe following table provides a reconciliation of projected Non-GAAP net income to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingDecember 31, 2022 Year Ending December 31, 2022 (in thousands) Low High Low High Net loss $(15,000) $(12,100) $(70,300) $(67,400)Stock-based compensation expense 21,600 21,600 84,100 84,100 Amortization of intangible assets 10,100 10,100 28,800 28,800 Non-cash interest expense 400 400 1,800 1,800 Impact of non-GAAP tax rate (1,600) (2,200) (3,500) (4,200)Special adjustments and other(1) — — 22,900 22,900 Non-GAAP net income $15,500 $17,800 $63,800 $66,000 (1) Year ending December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The following table provides a reconciliation of projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingDecember 31, 2022 Year Ending December 31, 2022 (in thousands) Low High Low High Net loss $(15,000) $(12,100) $(70,300) $(67,400)Income tax expense 3,900 4,000 18,900 19,000 Stock-based compensation expense 21,600 21,600 84,100 84,100 Interest (income) expense (300) (300) 500 500 Depreciation and amortization 11,800 11,800 35,900 35,900 Special adjustments and other(1) — — 22,900 22,900 Adjusted EBITDA $22,000 $25,000 $92,000 $95,000 (1) Year ending December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition.The following table provides a reconciliation of projected Free Cash Flow to projected net cash provided by operating activities, the most comparable GAAP financial measure: (Unaudited) Year Ending December 31, 2022 (in thousands) Low High Net cash provided by operating activities (1) $23,000 $27,000 Capital expenditures (9,000) (9,000)Free cash flow (1) $14,000 $18,000 (1) Includes $65.9 million payment in January 2022 for legal judgement acquired in December 2021. 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Altair Announces Third Quarter 2022 Financial Results By: Altair Engineering Inc. via GlobeNewswire November 03, 2022 at 16:05 PM EDT TROY, Mich., Nov. 03, 2022 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence (AI), today released its financial results for the third quarter ended September 30, 2022. “Altair had a solid third quarter, showing exceptional momentum despite significant macro-economic uncertainty, led by double digit growth in billings on a constant currency basis and strong demand across all geographies,” said James Scapa, founder, chairman and chief executive officer of Altair. “Our dedicated global teams continue to push forward with outstanding technology developments and applications.” “We're very pleased with the third quarter, continuing the success we had in the first half of the year,” said Matt Brown, chief financial officer of Altair. “Our third quarter revenue was at the high end of our guidance range, despite significant currency headwinds, while our profitability exceeded our expectations. These strong results give us the confidence to raise our full year 2022 guidance in constant currency.” Third Quarter 2022 Financial Highlights Software product revenue was $103.8 million compared to $102.3 million for the third quarter of 2021, an increase of 1.4% in reported currency and 10.1% in constant currencyTotal revenue was $119.4 million compared to $121.3 million for the third quarter of 2021, a decrease of 1.6% in reported currency and an increase of 6.3% in constant currencyNet loss was $(33.2) million compared to $(8.1) million for the third quarter of 2021. Diluted net loss per share was $(0.42) based on 79.2 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.11) for the third quarter of 2021, based on 75.8 million diluted weighted average common shares outstanding. Net loss margin was -27.9% compared to -6.7% for the third quarter of 2021Non-GAAP net income was $4.3 million, compared to non-GAAP net income of $9.6 million for the third quarter of 2021, a decrease of 55.7%. Non-GAAP diluted net income per share was $0.05 based on 88.1 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.12 for the third quarter of 2021, based on 81.1 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $6.8 million compared to $14.8 million for the third quarter of 2021, a decrease of 54.0%. Adjusted EBITDA margin was 5.7% compared to 12.2% for the third quarter of 2021Cash provided by operating activities was $8.5 million, compared to $0.9 million for the third quarter of 2021Free cash flow was $5.2 million, compared to $(0.5) million for the third quarter of 2021. Business Outlook Based on information available as of today, Altair is issuing the following guidance for the fourth quarter and full year 2022: (in millions)Fourth Quarter 2022 Full Year 2022 Software Product Revenue $126.0 to$131.0 $488.0 to$493.0 Total Revenue $143.0 $148.0 $555.0 $560.0 Net Loss $(15.0) $(12.1) $(70.3) $(67.4)Non-GAAP Net Income $15.5 $17.8 $63.8 $66.0 Adjusted EBITDA $22.0 $25.0 $92.0 $95.0 Net Cash Provided by Operating Activities $23.0 $27.0 Free Cash Flow $14.0 $18.0 The following table provides a reconciliation of 2022 Full Year guidance to the last guidance provided in August: (Unaudited) Full Year 2022 (in millions) Midpoint ofGuidance inAugust Increase/(Decrease) CurrencyFluctuationsfrom PriorGuidance Midpoint ofGuidance inNovember Software Product Revenue $492.5 $4.2 $(6.2) $490.5 Total Revenue $560.5 $3.7 $(6.7) $557.5 Adjusted EBITDA $94.0 $1.0 $(1.5) $93.5 Conference Call Information What: Altair’s Third Quarter 2022 Financial Results Conference CallWhen: Thursday, November 3, 2022Time: 5 p.m. ETWebcast: http://investor.altair.com (live & replay) Non-GAAP Financial Measures This press release contains the following non-GAAP financial measures: Non-GAAP Net Income, Non-GAAP Net Income Per Share, Adjusted EBITDA, Free Cash Flow, Non-GAAP Gross Profit and Non-GAAP Operating Expense. Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors. Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, restructuring charges, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period. Non-GAAP diluted common shares as defined starting with Q1 2022, includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position. All periods presented will be adjusted to align with this new definition. Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release. Free cash flow consists of cash flow from operations less capital expenditures. Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense, restructuring expense and other special items as identified by management and described elsewhere in this press release. Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release. Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release. About Altair Altair is a global leader in computational science and artificial intelligence (AI) that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. To learn more, please visit www.altair.com. Cautionary Language Concerning Forward-Looking Statements This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the fourth quarter and full year 2022, our statements regarding our expectations for 2022, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in our forward-looking statements due to a number of factors, including but not limited to, the risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release. Media RelationsAltairDave Simon248-614-2400 ext. 332dls@altair.com Investor RelationsThe Blueshirt GroupMonica Gould212-871-3927ir@altair.com ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS September 30, 2022 December 31, 2021 (In thousands) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $311,853 $413,743 Accounts receivable, net 119,921 137,561 Income tax receivable 10,465 9,388 Prepaid expenses and other current assets 23,492 27,529 Total current assets 465,731 588,221 Property and equipment, net 38,938 40,478 Operating lease right of use assets 32,627 28,494 Goodwill 455,211 370,178 Other intangible assets, net 86,080 99,057 Deferred tax assets 7,605 8,495 Other long-term assets 38,736 28,352 TOTAL ASSETS $1,124,928 $1,163,275 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $6,235 $6,647 Accrued compensation and benefits 37,036 42,307 Current portion of operating lease liabilities 9,996 9,933 Other accrued expenses and current liabilities 50,686 122,226 Deferred revenue 94,523 93,160 Convertible senior notes, net — 199,705 Total current liabilities 198,476 473,978 Operating lease liabilities, net of current portion 23,466 19,550 Deferred revenue, non-current 22,017 12,872 Convertible senior notes, net 305,158 — Other long-term liabilities 40,282 42,894 TOTAL LIABILITIES 589,399 549,294 Commitments and contingencies MEZZANINE EQUITY — 784 STOCKHOLDERS’ EQUITY: Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding — — Common stock ($0.0001 par value) Class A common stock, authorized 513,797 shares, issued and outstanding 52,377 and 51,524 shares as of September 30, 2022, and December 31, 2021, respectively 5 5 Class B common stock, authorized 41,203 shares, issued and outstanding 27,745 shares as of September 30, 2022, and December 31, 2021 3 3 Additional paid-in capital 715,736 724,226 Accumulated deficit (133,642) (102,087)Accumulated other comprehensive loss (46,573) (8,950)TOTAL STOCKHOLDERS’ EQUITY 535,529 613,197 TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $1,124,928 $1,163,275 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share data) 2022 2021 2022 2021 Revenue License $67,245 $67,603 $256,102 $230,630 Maintenance and other services 36,520 34,686 105,453 100,758 Total software 103,765 102,289 361,555 331,388 Software related services 6,706 7,650 23,143 23,229 Total software and related services 110,471 109,939 384,698 354,617 Client engineering services 7,355 10,060 22,414 31,005 Other 1,525 1,308 4,676 5,760 Total revenue 119,351 121,307 411,788 391,382 Cost of revenue License 2,579 4,694 11,386 13,706 Maintenance and other services 13,025 11,770 38,628 35,368 Total software * 15,604 16,464 50,014 49,074 Software related services 5,240 5,707 16,739 17,560 Total software and related services 20,844 22,171 66,753 66,634 Client engineering services 5,835 7,982 18,390 25,163 Other 1,230 1,348 3,892 5,072 Total cost of revenue 27,909 31,501 89,035 96,869 Gross profit 91,442 89,806 322,753 294,513 Operating expenses: Research and development * 48,781 35,839 138,352 112,872 Sales and marketing * 39,244 30,589 114,042 94,568 General and administrative * 24,677 22,196 72,613 67,983 Amortization of intangible assets 6,571 4,432 18,682 13,924 Other operating income, net (2,835) (1,324) (9,383) (2,526)Total operating expenses 116,438 91,732 334,306 286,821 Operating (loss) income (24,996) (1,926) (11,553) 7,692 Interest expense 1,566 3,037 2,851 8,998 Other expense, net 2,107 124 26,082 1,667 Loss before income taxes (28,669) (5,087) (40,486) (2,973)Income tax expense 4,579 3,022 15,008 4,424 Net loss $(33,248) $(8,109) $(55,494) $(7,397)Loss per share: Net loss per share attributable to common stockholders, basic $(0.42) $(0.11) $(0.70) $(0.10)Net loss per share attributable to common stockholders, diluted $(0.42) $(0.11) $(0.70) $(0.10)Weighted average shares outstanding: Weighted average number of shares used in computing net loss per share, basic 79,207 75,750 79,205 75,226 Weighted average number of shares used in computing net loss per share, diluted 79,207 75,750 79,205 75,226 * Amounts include stock-based compensation expense as follows (in thousands): (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Cost of revenue – software $2,332 $1,411 $6,265 $3,791 Research and development 10,243 3,894 26,580 11,223 Sales and marketing 7,806 3,673 22,505 10,800 General and administrative 2,329 1,955 7,174 5,415 Total stock-based compensation expense $22,710 $10,933 $62,524 $31,229 (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Employee stock-based compensation plans $15,490 $10,194 $43,622 $29,009 Equity issued in connection with acquisitions 7,220 739 18,902 2,220 Total stock-based compensation expense $22,710 $10,933 $62,524 $31,229 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOW(Unaudited) Nine Months Ended September 30, (In thousands) 2022 2021 OPERATING ACTIVITIES: Net loss $(55,494) $(7,397)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 24,092 19,355 Provision for credit loss 183 330 Amortization of debt discount and issuance costs 1,330 8,513 Stock-based compensation expense 62,524 31,229 Deferred income taxes 4 (510)Gain on mark-to-market adjustment of contingent consideration (7,482) — Expense on repurchase of convertible senior notes 16,621 — Other, net 153 40 Changes in assets and liabilities: Accounts receivable 13,859 26,770 Prepaid expenses and other current assets 1,906 (7,612)Other long-term assets 3,134 (5,018)Accounts payable (270) (2,432)Accrued compensation and benefits (3,639) 481 Other accrued expenses and current liabilities (48,698) 483 Deferred revenue 18,311 (8,638)Net cash provided by operating activities 26,534 55,594 INVESTING ACTIVITIES: Payments for acquisition of businesses, net of cash acquired (134,130) (5,472)Capital expenditures (6,721) (6,811)Other investing activities, net (10,322) (628)Net cash used in investing activities (151,173) (12,911)FINANCING ACTIVITIES: Proceeds from issuance of convertible senior notes, net of discounts and commissions 224,265 — Repurchase of convertible senior notes (192,422) — Proceeds from employee stock purchase plan contributions 6,549 2,110 Repurchase and retirement of common stock (4,387) — Proceeds from the exercise of common stock options 2,840 2,059 Payments of debt issuance costs (1,523) — Proceeds from private placement of common stock — 200,000 Payments on revolving commitment — (30,000)Other financing activities (170) (434)Net cash provided by financing activities 35,152 173,735 Effect of exchange rate changes on cash, cash equivalents and restricted cash (12,142) (1,951)Net (decrease) increase in cash, cash equivalents and restricted cash (101,629) 214,467 Cash, cash equivalents and restricted cash at beginning of year 414,012 241,547 Cash, cash equivalents and restricted cash at end of period $312,383 $456,014 Supplemental disclosure of cash flow: Interest paid $296 $344 Income taxes paid $6,818 $8,077 Supplemental disclosure of non-cash investing and financing activities: Property and equipment in accounts payable, other current liabilities and other liabilities $707 $480 Financial Results The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net loss and net loss per share – diluted, the most comparable GAAP financial measures: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share amounts) 2022 2021 2022 2021 Net loss $(33,248) $(8,109) $(55,494) $(7,397)Stock-based compensation expense 22,710 10,933 62,524 31,229 Amortization of intangible assets 6,571 4,432 18,682 13,924 Non-cash interest expense 501 2,876 1,339 8,513 Restructuring expense — (124) — 4,954 Impact of non-GAAP tax rate (1) 3,079 (366) (1,878) (10,044)Special adjustments and other (2) 4,657 — 22,886 — Non-GAAP net income $4,270 $9,642 $48,059 $41,179 Net loss per share, diluted $(0.42) $(0.11) $(0.70) $(0.10)Non-GAAP net income per share, diluted $0.05 $0.12 $0.55 $0.51 GAAP diluted shares outstanding 79,207 75,750 79,205 75,226 Non-GAAP diluted shares outstanding (3) 88,100 81,063 86,708 80,345 (1) The Company uses a non-GAAP effective tax rate of 26%. (2) The three months ended September 30, 2022, includes $6.8 million currency losses on acquisition-related intercompany loans and a $2.2 million gain from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and a $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. (3) The Non-GAAP diluted shares outstanding for the three and nine months ended September 30, 2021, has been changed to align with the current definition. The following table provides a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Net loss $(33,248) $(8,109) $(55,494) $(7,397)Income tax expense 4,579 3,022 15,008 4,424 Stock-based compensation expense 22,710 10,933 62,524 31,229 Interest expense 1,566 3,037 2,851 8,998 Depreciation and amortization 8,273 6,175 24,092 19,355 Restructuring expense — (124) — 4,954 Special adjustments, interest income and other (1) 2,949 (102) 20,878 (275)Adjusted EBITDA $6,829 $14,832 $69,859 $61,288 (1) The three months ended September 30, 2022, includes $6.8 million currency losses on acquisition-related intercompany loans and a $2.2 million gain from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and a $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Net cash provided by operating activities (1) $8,493 $872 $26,534 $55,594 Capital expenditures (3,264) (1,420) (6,721) (6,811)Free cash flow (1) $5,229 $(548) $19,813 $48,783 (1) The nine months ended September 30, 2022, includes a $65.9 million payment in January 2022 for a legal judgement acquired in December 2021. The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Gross profit $91,442 $89,806 $322,753 $294,513 Stock-based compensation expense 2,332 1,411 6,265 3,791 Restructuring expense — (10) — 926 Non-GAAP gross profit $93,774 $91,207 $329,018 $299,230 Non-GAAP gross margin 78.6% 75.2% 79.9% 76.5% The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Total operating expense $116,438 $91,732 $334,306 $286,821 Stock-based compensation expense (20,378) (9,522) (56,259) (27,438)Amortization (6,571) (4,432) (18,682) (13,924)Gain on mark-to-market adjustment of contingent consideration 2,178 — 7,482 — Restructuring expense — 114 — (4,028)Non-GAAP operating expense $91,667 $77,892 $266,847 $241,431 The following table provides our revenue and Adjusted EBITDA on a constant currency basis: (Unaudited) Three Months Ended September 30, 2022 Three MonthsEndedSeptember 30, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constantcurrency Software revenue $103.8 $8.8 $112.6 $102.3 1.4% 10.1%Total revenue $119.4 $9.6 $129.0 $121.3 -1.6% 6.3%Adjusted EBITDA $6.8 $2.0 $8.8 $14.8 -53.9% -40.5% (Unaudited) Nine Months Ended September 30, 2022 Nine MonthsEndedSeptember 30, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted forconstant currency As reported As reported As adjusted for constantcurrency Software revenue $361.6 $18.3 $379.9 $331.4 9.1% 14.7%Total revenue $411.8 $20.2 $432.0 $391.4 5.2% 10.4%Adjusted EBITDA $69.9 $4.2 $74.1 $61.3 14.0% 20.9% Business OutlookThe following table provides a reconciliation of projected Non-GAAP net income to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingDecember 31, 2022 Year Ending December 31, 2022 (in thousands) Low High Low High Net loss $(15,000) $(12,100) $(70,300) $(67,400)Stock-based compensation expense 21,600 21,600 84,100 84,100 Amortization of intangible assets 10,100 10,100 28,800 28,800 Non-cash interest expense 400 400 1,800 1,800 Impact of non-GAAP tax rate (1,600) (2,200) (3,500) (4,200)Special adjustments and other(1) — — 22,900 22,900 Non-GAAP net income $15,500 $17,800 $63,800 $66,000 (1) Year ending December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The following table provides a reconciliation of projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingDecember 31, 2022 Year Ending December 31, 2022 (in thousands) Low High Low High Net loss $(15,000) $(12,100) $(70,300) $(67,400)Income tax expense 3,900 4,000 18,900 19,000 Stock-based compensation expense 21,600 21,600 84,100 84,100 Interest (income) expense (300) (300) 500 500 Depreciation and amortization 11,800 11,800 35,900 35,900 Special adjustments and other(1) — — 22,900 22,900 Adjusted EBITDA $22,000 $25,000 $92,000 $95,000 (1) Year ending December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition.The following table provides a reconciliation of projected Free Cash Flow to projected net cash provided by operating activities, the most comparable GAAP financial measure: (Unaudited) Year Ending December 31, 2022 (in thousands) Low High Net cash provided by operating activities (1) $23,000 $27,000 Capital expenditures (9,000) (9,000)Free cash flow (1) $14,000 $18,000 (1) Includes $65.9 million payment in January 2022 for legal judgement acquired in December 2021.
TROY, Mich., Nov. 03, 2022 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence (AI), today released its financial results for the third quarter ended September 30, 2022. “Altair had a solid third quarter, showing exceptional momentum despite significant macro-economic uncertainty, led by double digit growth in billings on a constant currency basis and strong demand across all geographies,” said James Scapa, founder, chairman and chief executive officer of Altair. “Our dedicated global teams continue to push forward with outstanding technology developments and applications.” “We're very pleased with the third quarter, continuing the success we had in the first half of the year,” said Matt Brown, chief financial officer of Altair. “Our third quarter revenue was at the high end of our guidance range, despite significant currency headwinds, while our profitability exceeded our expectations. These strong results give us the confidence to raise our full year 2022 guidance in constant currency.” Third Quarter 2022 Financial Highlights Software product revenue was $103.8 million compared to $102.3 million for the third quarter of 2021, an increase of 1.4% in reported currency and 10.1% in constant currencyTotal revenue was $119.4 million compared to $121.3 million for the third quarter of 2021, a decrease of 1.6% in reported currency and an increase of 6.3% in constant currencyNet loss was $(33.2) million compared to $(8.1) million for the third quarter of 2021. Diluted net loss per share was $(0.42) based on 79.2 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.11) for the third quarter of 2021, based on 75.8 million diluted weighted average common shares outstanding. Net loss margin was -27.9% compared to -6.7% for the third quarter of 2021Non-GAAP net income was $4.3 million, compared to non-GAAP net income of $9.6 million for the third quarter of 2021, a decrease of 55.7%. Non-GAAP diluted net income per share was $0.05 based on 88.1 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.12 for the third quarter of 2021, based on 81.1 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $6.8 million compared to $14.8 million for the third quarter of 2021, a decrease of 54.0%. Adjusted EBITDA margin was 5.7% compared to 12.2% for the third quarter of 2021Cash provided by operating activities was $8.5 million, compared to $0.9 million for the third quarter of 2021Free cash flow was $5.2 million, compared to $(0.5) million for the third quarter of 2021. Business Outlook Based on information available as of today, Altair is issuing the following guidance for the fourth quarter and full year 2022: (in millions)Fourth Quarter 2022 Full Year 2022 Software Product Revenue $126.0 to$131.0 $488.0 to$493.0 Total Revenue $143.0 $148.0 $555.0 $560.0 Net Loss $(15.0) $(12.1) $(70.3) $(67.4)Non-GAAP Net Income $15.5 $17.8 $63.8 $66.0 Adjusted EBITDA $22.0 $25.0 $92.0 $95.0 Net Cash Provided by Operating Activities $23.0 $27.0 Free Cash Flow $14.0 $18.0 The following table provides a reconciliation of 2022 Full Year guidance to the last guidance provided in August: (Unaudited) Full Year 2022 (in millions) Midpoint ofGuidance inAugust Increase/(Decrease) CurrencyFluctuationsfrom PriorGuidance Midpoint ofGuidance inNovember Software Product Revenue $492.5 $4.2 $(6.2) $490.5 Total Revenue $560.5 $3.7 $(6.7) $557.5 Adjusted EBITDA $94.0 $1.0 $(1.5) $93.5 Conference Call Information What: Altair’s Third Quarter 2022 Financial Results Conference CallWhen: Thursday, November 3, 2022Time: 5 p.m. ETWebcast: http://investor.altair.com (live & replay) Non-GAAP Financial Measures This press release contains the following non-GAAP financial measures: Non-GAAP Net Income, Non-GAAP Net Income Per Share, Adjusted EBITDA, Free Cash Flow, Non-GAAP Gross Profit and Non-GAAP Operating Expense. Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors. Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, restructuring charges, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period. Non-GAAP diluted common shares as defined starting with Q1 2022, includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position. All periods presented will be adjusted to align with this new definition. Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release. Free cash flow consists of cash flow from operations less capital expenditures. Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense, restructuring expense and other special items as identified by management and described elsewhere in this press release. Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release. Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business. Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release. About Altair Altair is a global leader in computational science and artificial intelligence (AI) that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. To learn more, please visit www.altair.com. Cautionary Language Concerning Forward-Looking Statements This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the fourth quarter and full year 2022, our statements regarding our expectations for 2022, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in our forward-looking statements due to a number of factors, including but not limited to, the risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release. Media RelationsAltairDave Simon248-614-2400 ext. 332dls@altair.com Investor RelationsThe Blueshirt GroupMonica Gould212-871-3927ir@altair.com ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS September 30, 2022 December 31, 2021 (In thousands) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $311,853 $413,743 Accounts receivable, net 119,921 137,561 Income tax receivable 10,465 9,388 Prepaid expenses and other current assets 23,492 27,529 Total current assets 465,731 588,221 Property and equipment, net 38,938 40,478 Operating lease right of use assets 32,627 28,494 Goodwill 455,211 370,178 Other intangible assets, net 86,080 99,057 Deferred tax assets 7,605 8,495 Other long-term assets 38,736 28,352 TOTAL ASSETS $1,124,928 $1,163,275 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $6,235 $6,647 Accrued compensation and benefits 37,036 42,307 Current portion of operating lease liabilities 9,996 9,933 Other accrued expenses and current liabilities 50,686 122,226 Deferred revenue 94,523 93,160 Convertible senior notes, net — 199,705 Total current liabilities 198,476 473,978 Operating lease liabilities, net of current portion 23,466 19,550 Deferred revenue, non-current 22,017 12,872 Convertible senior notes, net 305,158 — Other long-term liabilities 40,282 42,894 TOTAL LIABILITIES 589,399 549,294 Commitments and contingencies MEZZANINE EQUITY — 784 STOCKHOLDERS’ EQUITY: Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding — — Common stock ($0.0001 par value) Class A common stock, authorized 513,797 shares, issued and outstanding 52,377 and 51,524 shares as of September 30, 2022, and December 31, 2021, respectively 5 5 Class B common stock, authorized 41,203 shares, issued and outstanding 27,745 shares as of September 30, 2022, and December 31, 2021 3 3 Additional paid-in capital 715,736 724,226 Accumulated deficit (133,642) (102,087)Accumulated other comprehensive loss (46,573) (8,950)TOTAL STOCKHOLDERS’ EQUITY 535,529 613,197 TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $1,124,928 $1,163,275 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share data) 2022 2021 2022 2021 Revenue License $67,245 $67,603 $256,102 $230,630 Maintenance and other services 36,520 34,686 105,453 100,758 Total software 103,765 102,289 361,555 331,388 Software related services 6,706 7,650 23,143 23,229 Total software and related services 110,471 109,939 384,698 354,617 Client engineering services 7,355 10,060 22,414 31,005 Other 1,525 1,308 4,676 5,760 Total revenue 119,351 121,307 411,788 391,382 Cost of revenue License 2,579 4,694 11,386 13,706 Maintenance and other services 13,025 11,770 38,628 35,368 Total software * 15,604 16,464 50,014 49,074 Software related services 5,240 5,707 16,739 17,560 Total software and related services 20,844 22,171 66,753 66,634 Client engineering services 5,835 7,982 18,390 25,163 Other 1,230 1,348 3,892 5,072 Total cost of revenue 27,909 31,501 89,035 96,869 Gross profit 91,442 89,806 322,753 294,513 Operating expenses: Research and development * 48,781 35,839 138,352 112,872 Sales and marketing * 39,244 30,589 114,042 94,568 General and administrative * 24,677 22,196 72,613 67,983 Amortization of intangible assets 6,571 4,432 18,682 13,924 Other operating income, net (2,835) (1,324) (9,383) (2,526)Total operating expenses 116,438 91,732 334,306 286,821 Operating (loss) income (24,996) (1,926) (11,553) 7,692 Interest expense 1,566 3,037 2,851 8,998 Other expense, net 2,107 124 26,082 1,667 Loss before income taxes (28,669) (5,087) (40,486) (2,973)Income tax expense 4,579 3,022 15,008 4,424 Net loss $(33,248) $(8,109) $(55,494) $(7,397)Loss per share: Net loss per share attributable to common stockholders, basic $(0.42) $(0.11) $(0.70) $(0.10)Net loss per share attributable to common stockholders, diluted $(0.42) $(0.11) $(0.70) $(0.10)Weighted average shares outstanding: Weighted average number of shares used in computing net loss per share, basic 79,207 75,750 79,205 75,226 Weighted average number of shares used in computing net loss per share, diluted 79,207 75,750 79,205 75,226 * Amounts include stock-based compensation expense as follows (in thousands): (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Cost of revenue – software $2,332 $1,411 $6,265 $3,791 Research and development 10,243 3,894 26,580 11,223 Sales and marketing 7,806 3,673 22,505 10,800 General and administrative 2,329 1,955 7,174 5,415 Total stock-based compensation expense $22,710 $10,933 $62,524 $31,229 (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Employee stock-based compensation plans $15,490 $10,194 $43,622 $29,009 Equity issued in connection with acquisitions 7,220 739 18,902 2,220 Total stock-based compensation expense $22,710 $10,933 $62,524 $31,229 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOW(Unaudited) Nine Months Ended September 30, (In thousands) 2022 2021 OPERATING ACTIVITIES: Net loss $(55,494) $(7,397)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 24,092 19,355 Provision for credit loss 183 330 Amortization of debt discount and issuance costs 1,330 8,513 Stock-based compensation expense 62,524 31,229 Deferred income taxes 4 (510)Gain on mark-to-market adjustment of contingent consideration (7,482) — Expense on repurchase of convertible senior notes 16,621 — Other, net 153 40 Changes in assets and liabilities: Accounts receivable 13,859 26,770 Prepaid expenses and other current assets 1,906 (7,612)Other long-term assets 3,134 (5,018)Accounts payable (270) (2,432)Accrued compensation and benefits (3,639) 481 Other accrued expenses and current liabilities (48,698) 483 Deferred revenue 18,311 (8,638)Net cash provided by operating activities 26,534 55,594 INVESTING ACTIVITIES: Payments for acquisition of businesses, net of cash acquired (134,130) (5,472)Capital expenditures (6,721) (6,811)Other investing activities, net (10,322) (628)Net cash used in investing activities (151,173) (12,911)FINANCING ACTIVITIES: Proceeds from issuance of convertible senior notes, net of discounts and commissions 224,265 — Repurchase of convertible senior notes (192,422) — Proceeds from employee stock purchase plan contributions 6,549 2,110 Repurchase and retirement of common stock (4,387) — Proceeds from the exercise of common stock options 2,840 2,059 Payments of debt issuance costs (1,523) — Proceeds from private placement of common stock — 200,000 Payments on revolving commitment — (30,000)Other financing activities (170) (434)Net cash provided by financing activities 35,152 173,735 Effect of exchange rate changes on cash, cash equivalents and restricted cash (12,142) (1,951)Net (decrease) increase in cash, cash equivalents and restricted cash (101,629) 214,467 Cash, cash equivalents and restricted cash at beginning of year 414,012 241,547 Cash, cash equivalents and restricted cash at end of period $312,383 $456,014 Supplemental disclosure of cash flow: Interest paid $296 $344 Income taxes paid $6,818 $8,077 Supplemental disclosure of non-cash investing and financing activities: Property and equipment in accounts payable, other current liabilities and other liabilities $707 $480 Financial Results The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net loss and net loss per share – diluted, the most comparable GAAP financial measures: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share amounts) 2022 2021 2022 2021 Net loss $(33,248) $(8,109) $(55,494) $(7,397)Stock-based compensation expense 22,710 10,933 62,524 31,229 Amortization of intangible assets 6,571 4,432 18,682 13,924 Non-cash interest expense 501 2,876 1,339 8,513 Restructuring expense — (124) — 4,954 Impact of non-GAAP tax rate (1) 3,079 (366) (1,878) (10,044)Special adjustments and other (2) 4,657 — 22,886 — Non-GAAP net income $4,270 $9,642 $48,059 $41,179 Net loss per share, diluted $(0.42) $(0.11) $(0.70) $(0.10)Non-GAAP net income per share, diluted $0.05 $0.12 $0.55 $0.51 GAAP diluted shares outstanding 79,207 75,750 79,205 75,226 Non-GAAP diluted shares outstanding (3) 88,100 81,063 86,708 80,345 (1) The Company uses a non-GAAP effective tax rate of 26%. (2) The three months ended September 30, 2022, includes $6.8 million currency losses on acquisition-related intercompany loans and a $2.2 million gain from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and a $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. (3) The Non-GAAP diluted shares outstanding for the three and nine months ended September 30, 2021, has been changed to align with the current definition. The following table provides a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Net loss $(33,248) $(8,109) $(55,494) $(7,397)Income tax expense 4,579 3,022 15,008 4,424 Stock-based compensation expense 22,710 10,933 62,524 31,229 Interest expense 1,566 3,037 2,851 8,998 Depreciation and amortization 8,273 6,175 24,092 19,355 Restructuring expense — (124) — 4,954 Special adjustments, interest income and other (1) 2,949 (102) 20,878 (275)Adjusted EBITDA $6,829 $14,832 $69,859 $61,288 (1) The three months ended September 30, 2022, includes $6.8 million currency losses on acquisition-related intercompany loans and a $2.2 million gain from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and a $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Net cash provided by operating activities (1) $8,493 $872 $26,534 $55,594 Capital expenditures (3,264) (1,420) (6,721) (6,811)Free cash flow (1) $5,229 $(548) $19,813 $48,783 (1) The nine months ended September 30, 2022, includes a $65.9 million payment in January 2022 for a legal judgement acquired in December 2021. The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Gross profit $91,442 $89,806 $322,753 $294,513 Stock-based compensation expense 2,332 1,411 6,265 3,791 Restructuring expense — (10) — 926 Non-GAAP gross profit $93,774 $91,207 $329,018 $299,230 Non-GAAP gross margin 78.6% 75.2% 79.9% 76.5% The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure: (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2022 2021 2022 2021 Total operating expense $116,438 $91,732 $334,306 $286,821 Stock-based compensation expense (20,378) (9,522) (56,259) (27,438)Amortization (6,571) (4,432) (18,682) (13,924)Gain on mark-to-market adjustment of contingent consideration 2,178 — 7,482 — Restructuring expense — 114 — (4,028)Non-GAAP operating expense $91,667 $77,892 $266,847 $241,431 The following table provides our revenue and Adjusted EBITDA on a constant currency basis: (Unaudited) Three Months Ended September 30, 2022 Three MonthsEndedSeptember 30, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constantcurrency Software revenue $103.8 $8.8 $112.6 $102.3 1.4% 10.1%Total revenue $119.4 $9.6 $129.0 $121.3 -1.6% 6.3%Adjusted EBITDA $6.8 $2.0 $8.8 $14.8 -53.9% -40.5% (Unaudited) Nine Months Ended September 30, 2022 Nine MonthsEndedSeptember 30, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted forconstant currency As reported As reported As adjusted for constantcurrency Software revenue $361.6 $18.3 $379.9 $331.4 9.1% 14.7%Total revenue $411.8 $20.2 $432.0 $391.4 5.2% 10.4%Adjusted EBITDA $69.9 $4.2 $74.1 $61.3 14.0% 20.9% Business OutlookThe following table provides a reconciliation of projected Non-GAAP net income to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingDecember 31, 2022 Year Ending December 31, 2022 (in thousands) Low High Low High Net loss $(15,000) $(12,100) $(70,300) $(67,400)Stock-based compensation expense 21,600 21,600 84,100 84,100 Amortization of intangible assets 10,100 10,100 28,800 28,800 Non-cash interest expense 400 400 1,800 1,800 Impact of non-GAAP tax rate (1,600) (2,200) (3,500) (4,200)Special adjustments and other(1) — — 22,900 22,900 Non-GAAP net income $15,500 $17,800 $63,800 $66,000 (1) Year ending December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The following table provides a reconciliation of projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingDecember 31, 2022 Year Ending December 31, 2022 (in thousands) Low High Low High Net loss $(15,000) $(12,100) $(70,300) $(67,400)Income tax expense 3,900 4,000 18,900 19,000 Stock-based compensation expense 21,600 21,600 84,100 84,100 Interest (income) expense (300) (300) 500 500 Depreciation and amortization 11,800 11,800 35,900 35,900 Special adjustments and other(1) — — 22,900 22,900 Adjusted EBITDA $22,000 $25,000 $92,000 $95,000 (1) Year ending December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition.The following table provides a reconciliation of projected Free Cash Flow to projected net cash provided by operating activities, the most comparable GAAP financial measure: (Unaudited) Year Ending December 31, 2022 (in thousands) Low High Net cash provided by operating activities (1) $23,000 $27,000 Capital expenditures (9,000) (9,000)Free cash flow (1) $14,000 $18,000 (1) Includes $65.9 million payment in January 2022 for legal judgement acquired in December 2021.