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 Fourth Quarter and Full Year 2022 Financial Results By: Altair Engineering Inc. via GlobeNewswire February 23, 2023 at 16:05 PM EST TROY, Mich., Feb. 23, 2023 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the fourth quarter and full year ended December 31, 2022. “Altair had an outstanding fourth quarter, achieving record high software revenue, and showing exceptional momentum for the full year,” said James Scapa, founder, chairman and chief executive officer of Altair. “This performance is clearly well above expectations, and I am extremely proud of Altair's global team for their exceptional achievements.” “The fourth quarter was very strong, capping one of the most successful years in our long history,” said Matt Brown, chief financial officer of Altair. “We ended 2022 with record high annual revenue and exceeded our profit expectations. We’ve been successful in our disciplined approach to spending and expect to carry that approach into 2023, as we remain committed to exiting the year with 20% EBITDA margin, while continuing to add 200 to 300 basis points of margin per year into the future.” Fourth Quarter 2022 Financial Highlights Software product revenue was $145.0 million compared to $122.4 million for the fourth quarter of 2021, an increase of 18.5% in reported currency and 25.5% in constant currencyTotal revenue was $160.4 million compared to $140.8 million for the fourth quarter of 2021, an increase of 13.9% in reported currency and an increase of 20.6% in constant currencyNet income was $12.1 million compared to a net loss of $(1.4) million for the fourth quarter of 2021. Diluted net income per share was $0.14 based on 87.5 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.02) for the fourth quarter of 2021, based on 79.0 million diluted weighted average common shares outstanding. Net income margin was 7.5% compared to a net loss margin of -1.0% for the fourth quarter of 2021Non-GAAP net income was $27.5 million, compared to non-GAAP net income of $16.4 million for the fourth quarter of 2021, an increase of 67.5%. Non-GAAP diluted net income per share was $0.31 based on 87.5 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.19 for the fourth quarter of 2021, based on 84.6 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $38.7 million compared to $24.0 million for the fourth quarter of 2021, an increase of 61.7%. Adjusted EBITDA margin was 24.1% compared to 17.0% for the fourth quarter of 2021Cash provided by operating activities was $13.0 million, compared to $6.0 million for the fourth quarter of 2021Free cash flow was $10.1 million, compared to $5.0 million for the fourth quarter of 2021. Full Year 2022 Financial Highlights Software product revenue was $506.5 million compared to $453.7 million for the full year of 2021, an increase of 11.6% in reported currency and 17.6% in constant currencyTotal revenue was $572.2 million compared to $532.2 million for the full year of 2021, an increase of 7.5% in reported currency and an increase of 13.1% in constant currencyNet loss was $(43.4) million compared to $(8.8) million for the full year of 2021. Diluted net loss per share was $(0.55) based on 79.5 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.12) for the full year of 2021, based on 76.2 million diluted weighted average common shares outstanding. Net loss margin was -7.6% compared to -1.7% for the full year of 2021Non-GAAP net income was $75.6 million, compared to non-GAAP net income of $57.6 million for the full year of 2021, an increase of 31.2%. Non-GAAP diluted net income per share was $0.89 based on 85.4 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.71 for the full year of 2021, based on 81.2 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $108.6 million compared to $85.3 million for the full year of 2021, an increase of 27.4%. Adjusted EBITDA margin was 19.0% compared to 16.0% for the full year of 2021Cash provided by operating activities was $39.6 million, compared to $61.6 million for the full year of 2021Free cash flow was $29.9 million, compared to $53.8 million for the full year of 2021. Business Outlook Based on information available as of today, Altair is issuing the following guidance for the first quarter and full year 2023: (in millions, except %) First Quarter 2023 Full Year 2023 Software Product Revenue $139.0 to$142.0 $550.0 to$560.0 Growth Rate -1.3% 0.8% 8.6% 10.6%Growth Rate - Constant Currency 3.7% 5.9% 9.5% 11.4%Total Revenue $155.0 $158.0 $613.0 $623.0 Growth Rate -3.0% -1.1% 7.1% 8.9%Growth Rate - Constant Currency 2.0% 3.9% 8.0% 9.7%Net (Loss) Income $(0.4) $1.5 $(16.4) $(6.7)Non-GAAP Net Income $24.2 $25.7 $85.4 $92.8 Adjusted EBITDA $34.0 $36.0 $120.0 $130.0 Net Cash Provided by Operating Activities $118.0 $126.0 Free Cash Flow $108.0 $116.0 Conference Call Information What: Altair’s Fourth Quarter and Full Year 2022 Financial Results Conference CallWhen: Thursday, February 23, 2023Time: 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. Billings consists of our total revenue plus the change in our deferred revenue, excluding deferred revenue from acquisitions. 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 first quarter and full year 2023, our statements regarding our expectations for 2023 and impacts on margin in future years, 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 Relations Altair Dave Simon 248-614-2400 ext. 332 dls@altair.com Investor Relations The Blueshirt Group Monica Gould 212-871-3927 ir@altair.com ALTAIR ENGINERING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, (in thousands) 2022 2021 ASSETS CURRENT ASSETS Cash and cash equivalents $316,146 $413,743 Accounts receivable, net 170,279 137,561 Income tax receivable 11,259 9,388 Prepaid expenses and other current assets 29,142 27,529 Total current assets 526,826 588,221 Property and equipment, net 37,517 40,478 Operating lease right of use assets 33,601 28,494 Goodwill 449,048 370,178 Other intangible assets, net 107,609 99,057 Deferred tax assets 9,727 8,495 Other long-term assets 40,410 28,352 TOTAL ASSETS $1,204,738 $1,163,275 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $10,434 $6,647 Accrued compensation and benefits 42,456 42,307 Current portion of operating lease liabilities 10,396 9,933 Other accrued expenses and current liabilities 56,371 122,226 Deferred revenue 113,081 93,160 Convertible senior notes, net — 199,705 Total current liabilities 232,738 473,978 Convertible senior notes, net 305,604 — Operating lease liabilities, net of current portion 24,065 19,550 Deferred revenue, non-current 31,379 12,872 Other long-term liabilities 41,216 42,894 TOTAL LIABILITIES 635,002 549,294 Commitments and contingencies MEZZANINE EQUITY — 784 STOCKHOLDERS’ EQUITY Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued or outstanding — — Common stock ($0.0001 par value) Class A common stock, authorized 513,797 shares, issued and outstanding 52,277 and 51,524 shares as of December 31, 2022 and 2021, respectively 5 5 Class B common stock, authorized 41,203 shares, issued and outstanding 27,745 shares as of December 31, 2022 and 2021 3 3 Additional paid-in capital 721,307 724,226 Accumulated deficit (121,577) (102,087)Accumulated other comprehensive loss (30,002) (8,950)TOTAL STOCKHOLDERS’ EQUITY 569,736 613,197 TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $1,204,738 $1,163,275 ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended December 31, Year Ended December 31, (in thousands, except per share data) 2022 2021 2022 2021 Revenue License $107,418 $94,178 $363,520 $324,808 Maintenance and other services 37,535 28,180 142,988 128,938 Total software 144,953 122,358 506,508 453,746 Software related services 7,518 8,594 30,661 31,823 Total software and related services 152,471 130,952 537,169 485,569 Client engineering services 6,469 8,277 28,883 39,282 Other 1,493 1,568 6,169 7,328 Total revenue 160,433 140,797 572,221 532,179 Cost of revenue License 9,111 6,223 20,497 19,929 Maintenance and other services 13,318 12,494 51,946 47,862 Total software * 22,429 18,717 72,443 67,791 Software related services 5,119 5,645 21,858 23,205 Total software and related services 27,548 24,362 94,301 90,996 Client engineering services 5,187 6,547 23,577 31,710 Other 1,119 1,888 5,011 6,960 Total cost of revenue 33,854 32,797 122,889 129,666 Gross profit 126,579 108,000 449,332 402,513 Operating expenses: Research and development * 47,511 38,177 185,863 151,049 Sales and marketing * 41,203 38,182 155,245 132,750 General and administrative * 24,993 23,517 97,606 91,500 Amortization of intangible assets 8,828 4,433 27,510 18,357 Other operating income, net (572) (956) (9,955) (3,482)Total operating expenses 121,963 103,353 456,269 390,174 Operating income (loss) 4,616 4,647 (6,937) 12,339 Interest expense 1,526 3,067 4,377 12,065 Other (income) loss, net (9,183) (1,105) 16,899 562 Income (loss) before income taxes 12,273 2,685 (28,213) (288)Income tax expense 208 4,082 15,216 8,506 Net income (loss) $12,065 $(1,397) $(43,429) $(8,794)Income (loss) per share: Net income (loss) per share attributable to common stockholders, basic $0.15 $(0.02) $(0.55) $(0.12)Net income (loss) per share attributable to common stockholders, diluted $0.14 $(0.02) $(0.55) $(0.12)Weighted average shares outstanding: Weighted average number of shares used in computing net income (loss) per share, basic 80,266 79,008 79,472 76,179 Weighted average number of shares used in computing net income (loss) per share, diluted 87,498 79,008 79,472 76,179 * Amounts include stock-based compensation expense as follows (in thousands): (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Cost of revenue-software $2,086 $1,828 $8,351 $5,619 Research and development 9,670 5,338 36,250 16,561 Sales and marketing 7,865 4,244 30,370 15,044 General and administrative 2,642 1,910 9,816 7,325 Total stock-based compensation expense $22,263 $13,320 $84,787 $44,549 (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Employee stock-based compensation plans $15,933 $11,792 $59,555 $40,801 Post combination expense in connection with acquisitions 6,330 1,528 25,232 3,748 Total stock-based compensation expense $22,263 $13,320 $84,787 $44,549 ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) Year Ended December 31, (in thousands) 2022 2021 OPERATING ACTIVITIES: Net loss $(43,429) $(8,794)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 35,504 25,644 Amortization of debt discount and issuance costs 1,792 11,428 Stock-based compensation expense 84,787 44,549 Deferred income taxes (4,164) (1,502)Gain on mark-to-market adjustment of contingent consideration (7,153) — Expense on repurchase of convertible senior notes 16,621 — Other, net 387 1,271 Changes in assets and liabilities: Accounts receivable (34,175) (15,645)Prepaid expenses and other current assets 1,014 (9,026)Other long-term assets 2,852 (6,682)Accounts payable 3,771 (3,857)Accrued compensation and benefits 280 7,761 Other accrued expenses and current liabilities (59,463) 6,365 Deferred revenue 40,946 10,111 Net cash provided by operating activities 39,570 61,623 INVESTING ACTIVITIES: Payments for acquisition of businesses, net of cash acquired (134,541) (53,983)Capital expenditures (9,648) (7,849)Other investing activities, net (10,322) (650)Net cash used in investing activities (154,511) (62,482)FINANCING ACTIVITIES: Proceeds from issuance of convertible senior notes, net of underwriters' discounts and commissions 224,265 — Repurchase of convertible senior notes (192,422) — Repurchase and retirement of common stock (19,659) — Proceeds from employee stock purchase plan contributions 8,976 4,222 Proceeds from the exercise of common stock options 3,577 2,262 Payments for issuance costs of convertible senior notes (1,523) — Proceeds from private placement of common stock — 200,000 Payments on revolving commitment — (30,000)Other financing activities (233) (537)Net cash provided by financing activities 22,981 175,947 Effect of exchange rate changes on cash, cash equivalents and restricted cash (5,094) (2,623)Net (decrease) increase in cash, cash equivalents and restricted cash (97,054) 172,465 Cash, cash equivalents and restricted cash at beginning of year 414,012 241,547 Cash, cash equivalents and restricted cash at end of period $316,958 $414,012 Financial Results The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net income (loss) and net income (loss) per share – diluted, the most comparable GAAP financial measures: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands, except per share amounts) 2022 2021 2022 2021 Net income (loss) $12,065 $(1,397) $(43,429) $(8,794)Stock-based compensation expense 22,263 13,320 84,787 44,549 Amortization of intangible assets 8,828 4,433 27,510 18,357 Non-cash interest expense 467 2,915 1,806 11,428 Restructuring expense — 99 — 5,053 Impact of non-GAAP tax rate(1) (9,468) (1,696) (11,346) (11,740)Special adjustments and other(2) (6,614) (1,229) 16,272 (1,229)Non-GAAP net income $27,541 $16,445 $75,600 $57,624 Net income (loss) per share, diluted $0.14 $(0.02) $(0.55) $(0.12)Non-GAAP net income per share, diluted $0.31 $0.19 $0.89 $0.71 GAAP diluted shares outstanding: 87,498 79,008 79,472 76,179 Non-GAAP diluted shares outstanding:(3) 87,498 84,604 85,392 81,159 (1) The Company uses a non-GAAP effective tax rate of 26%.(2) The three months ended December 31, 2022, includes $6.9 million currency gains on acquisition-related intercompany loans and a $0.3 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The twelve months ended December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $6.8 million currency losses on acquisition-related intercompany loans, and a $7.2 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 twelve months ended December 31, 2021, has been changed to align with the current definition. The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Net income (loss) $12,065 $(1,397) $(43,429) $(8,794)Income tax expense 208 4,082 15,216 8,506 Stock-based compensation expense 22,263 13,320 84,787 44,549 Interest expense 1,526 3,067 4,377 12,065 Depreciation and amortization 11,412 6,289 35,504 25,644 Restructuring expense — 99 — 5,053 Special adjustments, interest income and other(1) (8,733) (1,495) 12,145 (1,770)Adjusted EBITDA $38,741 $23,965 $108,600 $85,253 (1) The three months ended December 31, 2022, includes $6.9 million currency gains on acquisition-related intercompany loans, a $0.3 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $2.1 million of interest income. The twelve months ended December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $6.8 million currency losses on acquisition-related intercompany loans, a $7.2 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $4.1 million of interest income. 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 EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Net cash provided by operating activities(1) $13,036 $6,029 $39,570 $61,623 Capital expenditures (2,927) (1,038) (9,648) (7,849)Free Cash Flow(1) $10,109 $4,991 $29,922 $53,774 (1) The twelve months ended December 31, 2022, includes a $65.9 million payment in January 2022 for a damages judgement assumed as part of an acquisition in December 2021. The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross profit margin (gross profit as a percentage of total revenue) the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Gross profit $126,579 $108,000 $449,332 $402,513 Stock-based compensation expense 2,086 1,828 8,351 5,619 Restructuring expense — 99 — 1,025 Non-GAAP gross profit $128,665 $109,927 $457,683 $409,157 Gross profit margin 78.9% 76.7% 78.5% 75.6%Non-GAAP gross margin 80.2% 78.1% 80.0% 76.9% The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Total operating expense $121,963 $103,353 $456,269 $390,174 Stock-based compensation expense (20,177) (11,492) (76,436) (38,930)Amortization (8,828) (4,433) (27,510) (18,357)Gain on mark-to-market adjustment of contingent consideration (329) — 7,153 — Restructuring expense — — — (4,028)Non-GAAP operating expense $92,629 $87,428 $359,476 $328,859 The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Revenue $160,433 $140,797 $572,221 $532,179 Ending deferred revenue 144,460 106,032 144,460 106,032 Beginning deferred revenue (116,540) (84,428) (106,032) (95,079)Deferred revenue acquired (449) (3,277) (3,047) (3,277)Billings $187,904 $159,124 $607,602 $539,855 The following tables provide our revenue, Billings and Adjusted EBITDA on a constant currency basis: (Unaudited) Three Months EndedDecember 31, 2022 Three Months Ended December 31, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constant currency Software revenue $145.0 $8.5 $153.5 $122.4 18.5% 25.5%Total revenue $160.4 $9.3 $169.7 $140.8 13.9% 20.6%Billings $187.9 $8.2 $196.1 $159.1 18.1% 23.2%Adjusted EBITDA $38.7 $3.0 $41.7 $24.0 61.7% 73.9% (Unaudited) Twelve Months EndedDecember 31, 2022 Twelve Months Ended December 31, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constant currency Software revenue $506.5 $27.0 $533.5 $453.7 11.6% 17.6%Total revenue $572.2 $29.5 $601.7 $532.2 7.5% 13.1%Billings $607.6 $32.0 $639.6 $539.9 12.5% 18.5%Adjusted EBITDA $108.6 $7.2 $115.8 $85.3 27.4% 35.8% Business Outlook The following table provides a reconciliation of projected Non-GAAP net income to projected net (loss) income, the most comparable GAAP financial measure: (Unaudited) Three Months EndingMarch 31, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net (loss) income $(400) $1,500 $(16,400) $(6,700)Stock-based compensation expense 20,700 20,700 82,800 82,800 Amortization of intangible assets 7,700 7,700 30,100 30,100 Non-cash interest expense 400 400 1,800 1,800 Impact of non-GAAP tax rate (4,200) (4,600) (12,900) (15,200)Non-GAAP net income $24,200 $25,700 $85,400 $92,800 The following table provides a reconciliation of projected Adjusted EBITDA to projected net (loss) income, the most comparable GAAP financial measure: (Unaudited) Three Months EndingMarch 31, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net (loss) income $(400) $1,500 $(16,400) $(6,700)Income tax expense 4,300 4,400 17,100 17,400 Stock-based compensation expense 20,700 20,700 82,800 82,800 Interest (income) expense (900) (900) (3,900) (3,900)Depreciation and amortization 10,300 10,300 40,400 40,400 Adjusted EBITDA $34,000 $36,000 $120,000 $130,000 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 EndingDecember 31, 2023 (in thousands) Low High Net cash provided by operating activities $118,000 $126,000 Capital expenditures (10,000) (10,000)Free cash flow $108,000 $116,000 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Altair Announces Fourth Quarter and Full Year 2022 Financial Results By: Altair Engineering Inc. via GlobeNewswire February 23, 2023 at 16:05 PM EST TROY, Mich., Feb. 23, 2023 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the fourth quarter and full year ended December 31, 2022. “Altair had an outstanding fourth quarter, achieving record high software revenue, and showing exceptional momentum for the full year,” said James Scapa, founder, chairman and chief executive officer of Altair. “This performance is clearly well above expectations, and I am extremely proud of Altair's global team for their exceptional achievements.” “The fourth quarter was very strong, capping one of the most successful years in our long history,” said Matt Brown, chief financial officer of Altair. “We ended 2022 with record high annual revenue and exceeded our profit expectations. We’ve been successful in our disciplined approach to spending and expect to carry that approach into 2023, as we remain committed to exiting the year with 20% EBITDA margin, while continuing to add 200 to 300 basis points of margin per year into the future.” Fourth Quarter 2022 Financial Highlights Software product revenue was $145.0 million compared to $122.4 million for the fourth quarter of 2021, an increase of 18.5% in reported currency and 25.5% in constant currencyTotal revenue was $160.4 million compared to $140.8 million for the fourth quarter of 2021, an increase of 13.9% in reported currency and an increase of 20.6% in constant currencyNet income was $12.1 million compared to a net loss of $(1.4) million for the fourth quarter of 2021. Diluted net income per share was $0.14 based on 87.5 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.02) for the fourth quarter of 2021, based on 79.0 million diluted weighted average common shares outstanding. Net income margin was 7.5% compared to a net loss margin of -1.0% for the fourth quarter of 2021Non-GAAP net income was $27.5 million, compared to non-GAAP net income of $16.4 million for the fourth quarter of 2021, an increase of 67.5%. Non-GAAP diluted net income per share was $0.31 based on 87.5 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.19 for the fourth quarter of 2021, based on 84.6 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $38.7 million compared to $24.0 million for the fourth quarter of 2021, an increase of 61.7%. Adjusted EBITDA margin was 24.1% compared to 17.0% for the fourth quarter of 2021Cash provided by operating activities was $13.0 million, compared to $6.0 million for the fourth quarter of 2021Free cash flow was $10.1 million, compared to $5.0 million for the fourth quarter of 2021. Full Year 2022 Financial Highlights Software product revenue was $506.5 million compared to $453.7 million for the full year of 2021, an increase of 11.6% in reported currency and 17.6% in constant currencyTotal revenue was $572.2 million compared to $532.2 million for the full year of 2021, an increase of 7.5% in reported currency and an increase of 13.1% in constant currencyNet loss was $(43.4) million compared to $(8.8) million for the full year of 2021. Diluted net loss per share was $(0.55) based on 79.5 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.12) for the full year of 2021, based on 76.2 million diluted weighted average common shares outstanding. Net loss margin was -7.6% compared to -1.7% for the full year of 2021Non-GAAP net income was $75.6 million, compared to non-GAAP net income of $57.6 million for the full year of 2021, an increase of 31.2%. Non-GAAP diluted net income per share was $0.89 based on 85.4 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.71 for the full year of 2021, based on 81.2 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $108.6 million compared to $85.3 million for the full year of 2021, an increase of 27.4%. Adjusted EBITDA margin was 19.0% compared to 16.0% for the full year of 2021Cash provided by operating activities was $39.6 million, compared to $61.6 million for the full year of 2021Free cash flow was $29.9 million, compared to $53.8 million for the full year of 2021. Business Outlook Based on information available as of today, Altair is issuing the following guidance for the first quarter and full year 2023: (in millions, except %) First Quarter 2023 Full Year 2023 Software Product Revenue $139.0 to$142.0 $550.0 to$560.0 Growth Rate -1.3% 0.8% 8.6% 10.6%Growth Rate - Constant Currency 3.7% 5.9% 9.5% 11.4%Total Revenue $155.0 $158.0 $613.0 $623.0 Growth Rate -3.0% -1.1% 7.1% 8.9%Growth Rate - Constant Currency 2.0% 3.9% 8.0% 9.7%Net (Loss) Income $(0.4) $1.5 $(16.4) $(6.7)Non-GAAP Net Income $24.2 $25.7 $85.4 $92.8 Adjusted EBITDA $34.0 $36.0 $120.0 $130.0 Net Cash Provided by Operating Activities $118.0 $126.0 Free Cash Flow $108.0 $116.0 Conference Call Information What: Altair’s Fourth Quarter and Full Year 2022 Financial Results Conference CallWhen: Thursday, February 23, 2023Time: 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. Billings consists of our total revenue plus the change in our deferred revenue, excluding deferred revenue from acquisitions. 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 first quarter and full year 2023, our statements regarding our expectations for 2023 and impacts on margin in future years, 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 Relations Altair Dave Simon 248-614-2400 ext. 332 dls@altair.com Investor Relations The Blueshirt Group Monica Gould 212-871-3927 ir@altair.com ALTAIR ENGINERING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, (in thousands) 2022 2021 ASSETS CURRENT ASSETS Cash and cash equivalents $316,146 $413,743 Accounts receivable, net 170,279 137,561 Income tax receivable 11,259 9,388 Prepaid expenses and other current assets 29,142 27,529 Total current assets 526,826 588,221 Property and equipment, net 37,517 40,478 Operating lease right of use assets 33,601 28,494 Goodwill 449,048 370,178 Other intangible assets, net 107,609 99,057 Deferred tax assets 9,727 8,495 Other long-term assets 40,410 28,352 TOTAL ASSETS $1,204,738 $1,163,275 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $10,434 $6,647 Accrued compensation and benefits 42,456 42,307 Current portion of operating lease liabilities 10,396 9,933 Other accrued expenses and current liabilities 56,371 122,226 Deferred revenue 113,081 93,160 Convertible senior notes, net — 199,705 Total current liabilities 232,738 473,978 Convertible senior notes, net 305,604 — Operating lease liabilities, net of current portion 24,065 19,550 Deferred revenue, non-current 31,379 12,872 Other long-term liabilities 41,216 42,894 TOTAL LIABILITIES 635,002 549,294 Commitments and contingencies MEZZANINE EQUITY — 784 STOCKHOLDERS’ EQUITY Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued or outstanding — — Common stock ($0.0001 par value) Class A common stock, authorized 513,797 shares, issued and outstanding 52,277 and 51,524 shares as of December 31, 2022 and 2021, respectively 5 5 Class B common stock, authorized 41,203 shares, issued and outstanding 27,745 shares as of December 31, 2022 and 2021 3 3 Additional paid-in capital 721,307 724,226 Accumulated deficit (121,577) (102,087)Accumulated other comprehensive loss (30,002) (8,950)TOTAL STOCKHOLDERS’ EQUITY 569,736 613,197 TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $1,204,738 $1,163,275 ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended December 31, Year Ended December 31, (in thousands, except per share data) 2022 2021 2022 2021 Revenue License $107,418 $94,178 $363,520 $324,808 Maintenance and other services 37,535 28,180 142,988 128,938 Total software 144,953 122,358 506,508 453,746 Software related services 7,518 8,594 30,661 31,823 Total software and related services 152,471 130,952 537,169 485,569 Client engineering services 6,469 8,277 28,883 39,282 Other 1,493 1,568 6,169 7,328 Total revenue 160,433 140,797 572,221 532,179 Cost of revenue License 9,111 6,223 20,497 19,929 Maintenance and other services 13,318 12,494 51,946 47,862 Total software * 22,429 18,717 72,443 67,791 Software related services 5,119 5,645 21,858 23,205 Total software and related services 27,548 24,362 94,301 90,996 Client engineering services 5,187 6,547 23,577 31,710 Other 1,119 1,888 5,011 6,960 Total cost of revenue 33,854 32,797 122,889 129,666 Gross profit 126,579 108,000 449,332 402,513 Operating expenses: Research and development * 47,511 38,177 185,863 151,049 Sales and marketing * 41,203 38,182 155,245 132,750 General and administrative * 24,993 23,517 97,606 91,500 Amortization of intangible assets 8,828 4,433 27,510 18,357 Other operating income, net (572) (956) (9,955) (3,482)Total operating expenses 121,963 103,353 456,269 390,174 Operating income (loss) 4,616 4,647 (6,937) 12,339 Interest expense 1,526 3,067 4,377 12,065 Other (income) loss, net (9,183) (1,105) 16,899 562 Income (loss) before income taxes 12,273 2,685 (28,213) (288)Income tax expense 208 4,082 15,216 8,506 Net income (loss) $12,065 $(1,397) $(43,429) $(8,794)Income (loss) per share: Net income (loss) per share attributable to common stockholders, basic $0.15 $(0.02) $(0.55) $(0.12)Net income (loss) per share attributable to common stockholders, diluted $0.14 $(0.02) $(0.55) $(0.12)Weighted average shares outstanding: Weighted average number of shares used in computing net income (loss) per share, basic 80,266 79,008 79,472 76,179 Weighted average number of shares used in computing net income (loss) per share, diluted 87,498 79,008 79,472 76,179 * Amounts include stock-based compensation expense as follows (in thousands): (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Cost of revenue-software $2,086 $1,828 $8,351 $5,619 Research and development 9,670 5,338 36,250 16,561 Sales and marketing 7,865 4,244 30,370 15,044 General and administrative 2,642 1,910 9,816 7,325 Total stock-based compensation expense $22,263 $13,320 $84,787 $44,549 (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Employee stock-based compensation plans $15,933 $11,792 $59,555 $40,801 Post combination expense in connection with acquisitions 6,330 1,528 25,232 3,748 Total stock-based compensation expense $22,263 $13,320 $84,787 $44,549 ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) Year Ended December 31, (in thousands) 2022 2021 OPERATING ACTIVITIES: Net loss $(43,429) $(8,794)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 35,504 25,644 Amortization of debt discount and issuance costs 1,792 11,428 Stock-based compensation expense 84,787 44,549 Deferred income taxes (4,164) (1,502)Gain on mark-to-market adjustment of contingent consideration (7,153) — Expense on repurchase of convertible senior notes 16,621 — Other, net 387 1,271 Changes in assets and liabilities: Accounts receivable (34,175) (15,645)Prepaid expenses and other current assets 1,014 (9,026)Other long-term assets 2,852 (6,682)Accounts payable 3,771 (3,857)Accrued compensation and benefits 280 7,761 Other accrued expenses and current liabilities (59,463) 6,365 Deferred revenue 40,946 10,111 Net cash provided by operating activities 39,570 61,623 INVESTING ACTIVITIES: Payments for acquisition of businesses, net of cash acquired (134,541) (53,983)Capital expenditures (9,648) (7,849)Other investing activities, net (10,322) (650)Net cash used in investing activities (154,511) (62,482)FINANCING ACTIVITIES: Proceeds from issuance of convertible senior notes, net of underwriters' discounts and commissions 224,265 — Repurchase of convertible senior notes (192,422) — Repurchase and retirement of common stock (19,659) — Proceeds from employee stock purchase plan contributions 8,976 4,222 Proceeds from the exercise of common stock options 3,577 2,262 Payments for issuance costs of convertible senior notes (1,523) — Proceeds from private placement of common stock — 200,000 Payments on revolving commitment — (30,000)Other financing activities (233) (537)Net cash provided by financing activities 22,981 175,947 Effect of exchange rate changes on cash, cash equivalents and restricted cash (5,094) (2,623)Net (decrease) increase in cash, cash equivalents and restricted cash (97,054) 172,465 Cash, cash equivalents and restricted cash at beginning of year 414,012 241,547 Cash, cash equivalents and restricted cash at end of period $316,958 $414,012 Financial Results The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net income (loss) and net income (loss) per share – diluted, the most comparable GAAP financial measures: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands, except per share amounts) 2022 2021 2022 2021 Net income (loss) $12,065 $(1,397) $(43,429) $(8,794)Stock-based compensation expense 22,263 13,320 84,787 44,549 Amortization of intangible assets 8,828 4,433 27,510 18,357 Non-cash interest expense 467 2,915 1,806 11,428 Restructuring expense — 99 — 5,053 Impact of non-GAAP tax rate(1) (9,468) (1,696) (11,346) (11,740)Special adjustments and other(2) (6,614) (1,229) 16,272 (1,229)Non-GAAP net income $27,541 $16,445 $75,600 $57,624 Net income (loss) per share, diluted $0.14 $(0.02) $(0.55) $(0.12)Non-GAAP net income per share, diluted $0.31 $0.19 $0.89 $0.71 GAAP diluted shares outstanding: 87,498 79,008 79,472 76,179 Non-GAAP diluted shares outstanding:(3) 87,498 84,604 85,392 81,159 (1) The Company uses a non-GAAP effective tax rate of 26%.(2) The three months ended December 31, 2022, includes $6.9 million currency gains on acquisition-related intercompany loans and a $0.3 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The twelve months ended December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $6.8 million currency losses on acquisition-related intercompany loans, and a $7.2 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 twelve months ended December 31, 2021, has been changed to align with the current definition. The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Net income (loss) $12,065 $(1,397) $(43,429) $(8,794)Income tax expense 208 4,082 15,216 8,506 Stock-based compensation expense 22,263 13,320 84,787 44,549 Interest expense 1,526 3,067 4,377 12,065 Depreciation and amortization 11,412 6,289 35,504 25,644 Restructuring expense — 99 — 5,053 Special adjustments, interest income and other(1) (8,733) (1,495) 12,145 (1,770)Adjusted EBITDA $38,741 $23,965 $108,600 $85,253 (1) The three months ended December 31, 2022, includes $6.9 million currency gains on acquisition-related intercompany loans, a $0.3 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $2.1 million of interest income. The twelve months ended December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $6.8 million currency losses on acquisition-related intercompany loans, a $7.2 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $4.1 million of interest income. 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 EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Net cash provided by operating activities(1) $13,036 $6,029 $39,570 $61,623 Capital expenditures (2,927) (1,038) (9,648) (7,849)Free Cash Flow(1) $10,109 $4,991 $29,922 $53,774 (1) The twelve months ended December 31, 2022, includes a $65.9 million payment in January 2022 for a damages judgement assumed as part of an acquisition in December 2021. The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross profit margin (gross profit as a percentage of total revenue) the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Gross profit $126,579 $108,000 $449,332 $402,513 Stock-based compensation expense 2,086 1,828 8,351 5,619 Restructuring expense — 99 — 1,025 Non-GAAP gross profit $128,665 $109,927 $457,683 $409,157 Gross profit margin 78.9% 76.7% 78.5% 75.6%Non-GAAP gross margin 80.2% 78.1% 80.0% 76.9% The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Total operating expense $121,963 $103,353 $456,269 $390,174 Stock-based compensation expense (20,177) (11,492) (76,436) (38,930)Amortization (8,828) (4,433) (27,510) (18,357)Gain on mark-to-market adjustment of contingent consideration (329) — 7,153 — Restructuring expense — — — (4,028)Non-GAAP operating expense $92,629 $87,428 $359,476 $328,859 The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Revenue $160,433 $140,797 $572,221 $532,179 Ending deferred revenue 144,460 106,032 144,460 106,032 Beginning deferred revenue (116,540) (84,428) (106,032) (95,079)Deferred revenue acquired (449) (3,277) (3,047) (3,277)Billings $187,904 $159,124 $607,602 $539,855 The following tables provide our revenue, Billings and Adjusted EBITDA on a constant currency basis: (Unaudited) Three Months EndedDecember 31, 2022 Three Months Ended December 31, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constant currency Software revenue $145.0 $8.5 $153.5 $122.4 18.5% 25.5%Total revenue $160.4 $9.3 $169.7 $140.8 13.9% 20.6%Billings $187.9 $8.2 $196.1 $159.1 18.1% 23.2%Adjusted EBITDA $38.7 $3.0 $41.7 $24.0 61.7% 73.9% (Unaudited) Twelve Months EndedDecember 31, 2022 Twelve Months Ended December 31, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constant currency Software revenue $506.5 $27.0 $533.5 $453.7 11.6% 17.6%Total revenue $572.2 $29.5 $601.7 $532.2 7.5% 13.1%Billings $607.6 $32.0 $639.6 $539.9 12.5% 18.5%Adjusted EBITDA $108.6 $7.2 $115.8 $85.3 27.4% 35.8% Business Outlook The following table provides a reconciliation of projected Non-GAAP net income to projected net (loss) income, the most comparable GAAP financial measure: (Unaudited) Three Months EndingMarch 31, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net (loss) income $(400) $1,500 $(16,400) $(6,700)Stock-based compensation expense 20,700 20,700 82,800 82,800 Amortization of intangible assets 7,700 7,700 30,100 30,100 Non-cash interest expense 400 400 1,800 1,800 Impact of non-GAAP tax rate (4,200) (4,600) (12,900) (15,200)Non-GAAP net income $24,200 $25,700 $85,400 $92,800 The following table provides a reconciliation of projected Adjusted EBITDA to projected net (loss) income, the most comparable GAAP financial measure: (Unaudited) Three Months EndingMarch 31, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net (loss) income $(400) $1,500 $(16,400) $(6,700)Income tax expense 4,300 4,400 17,100 17,400 Stock-based compensation expense 20,700 20,700 82,800 82,800 Interest (income) expense (900) (900) (3,900) (3,900)Depreciation and amortization 10,300 10,300 40,400 40,400 Adjusted EBITDA $34,000 $36,000 $120,000 $130,000 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 EndingDecember 31, 2023 (in thousands) Low High Net cash provided by operating activities $118,000 $126,000 Capital expenditures (10,000) (10,000)Free cash flow $108,000 $116,000
TROY, Mich., Feb. 23, 2023 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the fourth quarter and full year ended December 31, 2022. “Altair had an outstanding fourth quarter, achieving record high software revenue, and showing exceptional momentum for the full year,” said James Scapa, founder, chairman and chief executive officer of Altair. “This performance is clearly well above expectations, and I am extremely proud of Altair's global team for their exceptional achievements.” “The fourth quarter was very strong, capping one of the most successful years in our long history,” said Matt Brown, chief financial officer of Altair. “We ended 2022 with record high annual revenue and exceeded our profit expectations. We’ve been successful in our disciplined approach to spending and expect to carry that approach into 2023, as we remain committed to exiting the year with 20% EBITDA margin, while continuing to add 200 to 300 basis points of margin per year into the future.” Fourth Quarter 2022 Financial Highlights Software product revenue was $145.0 million compared to $122.4 million for the fourth quarter of 2021, an increase of 18.5% in reported currency and 25.5% in constant currencyTotal revenue was $160.4 million compared to $140.8 million for the fourth quarter of 2021, an increase of 13.9% in reported currency and an increase of 20.6% in constant currencyNet income was $12.1 million compared to a net loss of $(1.4) million for the fourth quarter of 2021. Diluted net income per share was $0.14 based on 87.5 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.02) for the fourth quarter of 2021, based on 79.0 million diluted weighted average common shares outstanding. Net income margin was 7.5% compared to a net loss margin of -1.0% for the fourth quarter of 2021Non-GAAP net income was $27.5 million, compared to non-GAAP net income of $16.4 million for the fourth quarter of 2021, an increase of 67.5%. Non-GAAP diluted net income per share was $0.31 based on 87.5 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.19 for the fourth quarter of 2021, based on 84.6 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $38.7 million compared to $24.0 million for the fourth quarter of 2021, an increase of 61.7%. Adjusted EBITDA margin was 24.1% compared to 17.0% for the fourth quarter of 2021Cash provided by operating activities was $13.0 million, compared to $6.0 million for the fourth quarter of 2021Free cash flow was $10.1 million, compared to $5.0 million for the fourth quarter of 2021. Full Year 2022 Financial Highlights Software product revenue was $506.5 million compared to $453.7 million for the full year of 2021, an increase of 11.6% in reported currency and 17.6% in constant currencyTotal revenue was $572.2 million compared to $532.2 million for the full year of 2021, an increase of 7.5% in reported currency and an increase of 13.1% in constant currencyNet loss was $(43.4) million compared to $(8.8) million for the full year of 2021. Diluted net loss per share was $(0.55) based on 79.5 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.12) for the full year of 2021, based on 76.2 million diluted weighted average common shares outstanding. Net loss margin was -7.6% compared to -1.7% for the full year of 2021Non-GAAP net income was $75.6 million, compared to non-GAAP net income of $57.6 million for the full year of 2021, an increase of 31.2%. Non-GAAP diluted net income per share was $0.89 based on 85.4 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.71 for the full year of 2021, based on 81.2 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $108.6 million compared to $85.3 million for the full year of 2021, an increase of 27.4%. Adjusted EBITDA margin was 19.0% compared to 16.0% for the full year of 2021Cash provided by operating activities was $39.6 million, compared to $61.6 million for the full year of 2021Free cash flow was $29.9 million, compared to $53.8 million for the full year of 2021. Business Outlook Based on information available as of today, Altair is issuing the following guidance for the first quarter and full year 2023: (in millions, except %) First Quarter 2023 Full Year 2023 Software Product Revenue $139.0 to$142.0 $550.0 to$560.0 Growth Rate -1.3% 0.8% 8.6% 10.6%Growth Rate - Constant Currency 3.7% 5.9% 9.5% 11.4%Total Revenue $155.0 $158.0 $613.0 $623.0 Growth Rate -3.0% -1.1% 7.1% 8.9%Growth Rate - Constant Currency 2.0% 3.9% 8.0% 9.7%Net (Loss) Income $(0.4) $1.5 $(16.4) $(6.7)Non-GAAP Net Income $24.2 $25.7 $85.4 $92.8 Adjusted EBITDA $34.0 $36.0 $120.0 $130.0 Net Cash Provided by Operating Activities $118.0 $126.0 Free Cash Flow $108.0 $116.0 Conference Call Information What: Altair’s Fourth Quarter and Full Year 2022 Financial Results Conference CallWhen: Thursday, February 23, 2023Time: 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. Billings consists of our total revenue plus the change in our deferred revenue, excluding deferred revenue from acquisitions. 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 first quarter and full year 2023, our statements regarding our expectations for 2023 and impacts on margin in future years, 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 Relations Altair Dave Simon 248-614-2400 ext. 332 dls@altair.com Investor Relations The Blueshirt Group Monica Gould 212-871-3927 ir@altair.com ALTAIR ENGINERING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, (in thousands) 2022 2021 ASSETS CURRENT ASSETS Cash and cash equivalents $316,146 $413,743 Accounts receivable, net 170,279 137,561 Income tax receivable 11,259 9,388 Prepaid expenses and other current assets 29,142 27,529 Total current assets 526,826 588,221 Property and equipment, net 37,517 40,478 Operating lease right of use assets 33,601 28,494 Goodwill 449,048 370,178 Other intangible assets, net 107,609 99,057 Deferred tax assets 9,727 8,495 Other long-term assets 40,410 28,352 TOTAL ASSETS $1,204,738 $1,163,275 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $10,434 $6,647 Accrued compensation and benefits 42,456 42,307 Current portion of operating lease liabilities 10,396 9,933 Other accrued expenses and current liabilities 56,371 122,226 Deferred revenue 113,081 93,160 Convertible senior notes, net — 199,705 Total current liabilities 232,738 473,978 Convertible senior notes, net 305,604 — Operating lease liabilities, net of current portion 24,065 19,550 Deferred revenue, non-current 31,379 12,872 Other long-term liabilities 41,216 42,894 TOTAL LIABILITIES 635,002 549,294 Commitments and contingencies MEZZANINE EQUITY — 784 STOCKHOLDERS’ EQUITY Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued or outstanding — — Common stock ($0.0001 par value) Class A common stock, authorized 513,797 shares, issued and outstanding 52,277 and 51,524 shares as of December 31, 2022 and 2021, respectively 5 5 Class B common stock, authorized 41,203 shares, issued and outstanding 27,745 shares as of December 31, 2022 and 2021 3 3 Additional paid-in capital 721,307 724,226 Accumulated deficit (121,577) (102,087)Accumulated other comprehensive loss (30,002) (8,950)TOTAL STOCKHOLDERS’ EQUITY 569,736 613,197 TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $1,204,738 $1,163,275 ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended December 31, Year Ended December 31, (in thousands, except per share data) 2022 2021 2022 2021 Revenue License $107,418 $94,178 $363,520 $324,808 Maintenance and other services 37,535 28,180 142,988 128,938 Total software 144,953 122,358 506,508 453,746 Software related services 7,518 8,594 30,661 31,823 Total software and related services 152,471 130,952 537,169 485,569 Client engineering services 6,469 8,277 28,883 39,282 Other 1,493 1,568 6,169 7,328 Total revenue 160,433 140,797 572,221 532,179 Cost of revenue License 9,111 6,223 20,497 19,929 Maintenance and other services 13,318 12,494 51,946 47,862 Total software * 22,429 18,717 72,443 67,791 Software related services 5,119 5,645 21,858 23,205 Total software and related services 27,548 24,362 94,301 90,996 Client engineering services 5,187 6,547 23,577 31,710 Other 1,119 1,888 5,011 6,960 Total cost of revenue 33,854 32,797 122,889 129,666 Gross profit 126,579 108,000 449,332 402,513 Operating expenses: Research and development * 47,511 38,177 185,863 151,049 Sales and marketing * 41,203 38,182 155,245 132,750 General and administrative * 24,993 23,517 97,606 91,500 Amortization of intangible assets 8,828 4,433 27,510 18,357 Other operating income, net (572) (956) (9,955) (3,482)Total operating expenses 121,963 103,353 456,269 390,174 Operating income (loss) 4,616 4,647 (6,937) 12,339 Interest expense 1,526 3,067 4,377 12,065 Other (income) loss, net (9,183) (1,105) 16,899 562 Income (loss) before income taxes 12,273 2,685 (28,213) (288)Income tax expense 208 4,082 15,216 8,506 Net income (loss) $12,065 $(1,397) $(43,429) $(8,794)Income (loss) per share: Net income (loss) per share attributable to common stockholders, basic $0.15 $(0.02) $(0.55) $(0.12)Net income (loss) per share attributable to common stockholders, diluted $0.14 $(0.02) $(0.55) $(0.12)Weighted average shares outstanding: Weighted average number of shares used in computing net income (loss) per share, basic 80,266 79,008 79,472 76,179 Weighted average number of shares used in computing net income (loss) per share, diluted 87,498 79,008 79,472 76,179 * Amounts include stock-based compensation expense as follows (in thousands): (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Cost of revenue-software $2,086 $1,828 $8,351 $5,619 Research and development 9,670 5,338 36,250 16,561 Sales and marketing 7,865 4,244 30,370 15,044 General and administrative 2,642 1,910 9,816 7,325 Total stock-based compensation expense $22,263 $13,320 $84,787 $44,549 (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Employee stock-based compensation plans $15,933 $11,792 $59,555 $40,801 Post combination expense in connection with acquisitions 6,330 1,528 25,232 3,748 Total stock-based compensation expense $22,263 $13,320 $84,787 $44,549 ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) Year Ended December 31, (in thousands) 2022 2021 OPERATING ACTIVITIES: Net loss $(43,429) $(8,794)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 35,504 25,644 Amortization of debt discount and issuance costs 1,792 11,428 Stock-based compensation expense 84,787 44,549 Deferred income taxes (4,164) (1,502)Gain on mark-to-market adjustment of contingent consideration (7,153) — Expense on repurchase of convertible senior notes 16,621 — Other, net 387 1,271 Changes in assets and liabilities: Accounts receivable (34,175) (15,645)Prepaid expenses and other current assets 1,014 (9,026)Other long-term assets 2,852 (6,682)Accounts payable 3,771 (3,857)Accrued compensation and benefits 280 7,761 Other accrued expenses and current liabilities (59,463) 6,365 Deferred revenue 40,946 10,111 Net cash provided by operating activities 39,570 61,623 INVESTING ACTIVITIES: Payments for acquisition of businesses, net of cash acquired (134,541) (53,983)Capital expenditures (9,648) (7,849)Other investing activities, net (10,322) (650)Net cash used in investing activities (154,511) (62,482)FINANCING ACTIVITIES: Proceeds from issuance of convertible senior notes, net of underwriters' discounts and commissions 224,265 — Repurchase of convertible senior notes (192,422) — Repurchase and retirement of common stock (19,659) — Proceeds from employee stock purchase plan contributions 8,976 4,222 Proceeds from the exercise of common stock options 3,577 2,262 Payments for issuance costs of convertible senior notes (1,523) — Proceeds from private placement of common stock — 200,000 Payments on revolving commitment — (30,000)Other financing activities (233) (537)Net cash provided by financing activities 22,981 175,947 Effect of exchange rate changes on cash, cash equivalents and restricted cash (5,094) (2,623)Net (decrease) increase in cash, cash equivalents and restricted cash (97,054) 172,465 Cash, cash equivalents and restricted cash at beginning of year 414,012 241,547 Cash, cash equivalents and restricted cash at end of period $316,958 $414,012 Financial Results The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net income (loss) and net income (loss) per share – diluted, the most comparable GAAP financial measures: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands, except per share amounts) 2022 2021 2022 2021 Net income (loss) $12,065 $(1,397) $(43,429) $(8,794)Stock-based compensation expense 22,263 13,320 84,787 44,549 Amortization of intangible assets 8,828 4,433 27,510 18,357 Non-cash interest expense 467 2,915 1,806 11,428 Restructuring expense — 99 — 5,053 Impact of non-GAAP tax rate(1) (9,468) (1,696) (11,346) (11,740)Special adjustments and other(2) (6,614) (1,229) 16,272 (1,229)Non-GAAP net income $27,541 $16,445 $75,600 $57,624 Net income (loss) per share, diluted $0.14 $(0.02) $(0.55) $(0.12)Non-GAAP net income per share, diluted $0.31 $0.19 $0.89 $0.71 GAAP diluted shares outstanding: 87,498 79,008 79,472 76,179 Non-GAAP diluted shares outstanding:(3) 87,498 84,604 85,392 81,159 (1) The Company uses a non-GAAP effective tax rate of 26%.(2) The three months ended December 31, 2022, includes $6.9 million currency gains on acquisition-related intercompany loans and a $0.3 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The twelve months ended December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $6.8 million currency losses on acquisition-related intercompany loans, and a $7.2 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 twelve months ended December 31, 2021, has been changed to align with the current definition. The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Net income (loss) $12,065 $(1,397) $(43,429) $(8,794)Income tax expense 208 4,082 15,216 8,506 Stock-based compensation expense 22,263 13,320 84,787 44,549 Interest expense 1,526 3,067 4,377 12,065 Depreciation and amortization 11,412 6,289 35,504 25,644 Restructuring expense — 99 — 5,053 Special adjustments, interest income and other(1) (8,733) (1,495) 12,145 (1,770)Adjusted EBITDA $38,741 $23,965 $108,600 $85,253 (1) The three months ended December 31, 2022, includes $6.9 million currency gains on acquisition-related intercompany loans, a $0.3 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $2.1 million of interest income. The twelve months ended December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $6.8 million currency losses on acquisition-related intercompany loans, a $7.2 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $4.1 million of interest income. 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 EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Net cash provided by operating activities(1) $13,036 $6,029 $39,570 $61,623 Capital expenditures (2,927) (1,038) (9,648) (7,849)Free Cash Flow(1) $10,109 $4,991 $29,922 $53,774 (1) The twelve months ended December 31, 2022, includes a $65.9 million payment in January 2022 for a damages judgement assumed as part of an acquisition in December 2021. The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross profit margin (gross profit as a percentage of total revenue) the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Gross profit $126,579 $108,000 $449,332 $402,513 Stock-based compensation expense 2,086 1,828 8,351 5,619 Restructuring expense — 99 — 1,025 Non-GAAP gross profit $128,665 $109,927 $457,683 $409,157 Gross profit margin 78.9% 76.7% 78.5% 75.6%Non-GAAP gross margin 80.2% 78.1% 80.0% 76.9% The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Total operating expense $121,963 $103,353 $456,269 $390,174 Stock-based compensation expense (20,177) (11,492) (76,436) (38,930)Amortization (8,828) (4,433) (27,510) (18,357)Gain on mark-to-market adjustment of contingent consideration (329) — 7,153 — Restructuring expense — — — (4,028)Non-GAAP operating expense $92,629 $87,428 $359,476 $328,859 The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure: (Unaudited) Three Months EndedDecember 31, Twelve Months EndedDecember 31, (in thousands) 2022 2021 2022 2021 Revenue $160,433 $140,797 $572,221 $532,179 Ending deferred revenue 144,460 106,032 144,460 106,032 Beginning deferred revenue (116,540) (84,428) (106,032) (95,079)Deferred revenue acquired (449) (3,277) (3,047) (3,277)Billings $187,904 $159,124 $607,602 $539,855 The following tables provide our revenue, Billings and Adjusted EBITDA on a constant currency basis: (Unaudited) Three Months EndedDecember 31, 2022 Three Months Ended December 31, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constant currency Software revenue $145.0 $8.5 $153.5 $122.4 18.5% 25.5%Total revenue $160.4 $9.3 $169.7 $140.8 13.9% 20.6%Billings $187.9 $8.2 $196.1 $159.1 18.1% 23.2%Adjusted EBITDA $38.7 $3.0 $41.7 $24.0 61.7% 73.9% (Unaudited) Twelve Months EndedDecember 31, 2022 Twelve Months Ended December 31, 2021 Increase/(Decrease) % (in thousands) As reported Currency changes As adjusted for constant currency As reported As reported As adjusted for constant currency Software revenue $506.5 $27.0 $533.5 $453.7 11.6% 17.6%Total revenue $572.2 $29.5 $601.7 $532.2 7.5% 13.1%Billings $607.6 $32.0 $639.6 $539.9 12.5% 18.5%Adjusted EBITDA $108.6 $7.2 $115.8 $85.3 27.4% 35.8% Business Outlook The following table provides a reconciliation of projected Non-GAAP net income to projected net (loss) income, the most comparable GAAP financial measure: (Unaudited) Three Months EndingMarch 31, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net (loss) income $(400) $1,500 $(16,400) $(6,700)Stock-based compensation expense 20,700 20,700 82,800 82,800 Amortization of intangible assets 7,700 7,700 30,100 30,100 Non-cash interest expense 400 400 1,800 1,800 Impact of non-GAAP tax rate (4,200) (4,600) (12,900) (15,200)Non-GAAP net income $24,200 $25,700 $85,400 $92,800 The following table provides a reconciliation of projected Adjusted EBITDA to projected net (loss) income, the most comparable GAAP financial measure: (Unaudited) Three Months EndingMarch 31, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net (loss) income $(400) $1,500 $(16,400) $(6,700)Income tax expense 4,300 4,400 17,100 17,400 Stock-based compensation expense 20,700 20,700 82,800 82,800 Interest (income) expense (900) (900) (3,900) (3,900)Depreciation and amortization 10,300 10,300 40,400 40,400 Adjusted EBITDA $34,000 $36,000 $120,000 $130,000 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 EndingDecember 31, 2023 (in thousands) Low High Net cash provided by operating activities $118,000 $126,000 Capital expenditures (10,000) (10,000)Free cash flow $108,000 $116,000