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 First Quarter 2023 Financial Results By: Altair Engineering Inc. via GlobeNewswire May 04, 2023 at 16:05 PM EDT TROY, Mich., May 04, 2023 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the first quarter ended March 31, 2023. “Altair had a very strong start to 2023, with software product revenue and total revenue above the high end of our guidance,” said James Scapa, founder, chairman and chief executive officer of Altair. “Q1 exceeded our expectations and represents an all-time high for revenue to continue our good momentum from 2022. Demand for our products continues to be strong and we’re seeing the investments we’ve made in product development and our approach to our customers’ success paying off.” “Coming right on the heels of a very strong fourth quarter to end last year, we had impressive performance in the first quarter,” said Matt Brown, chief financial officer of Altair. “We’re excited to be starting the year so well, which we feel gives us momentum and helps to achieve our financial goals for the year.” First Quarter 2023 Financial Highlights Software product revenue was $149.6 million compared to $140.9 million for the first quarter of 2022, an increase of 6.2% in reported currency and 10.0% in constant currencyTotal revenue was $166.0 million compared to $159.8 million for the first quarter of 2022, an increase of 3.9% in reported currency and 7.5% in constant currencyNet loss was $(2.0) million compared to net income of $11.5 million for the first quarter of 2022. Diluted net loss per share was $(0.02) based on 80.2 million diluted weighted average common shares outstanding, compared to diluted net income per share of $0.13 for the first quarter of 2022, based on 87.3 million diluted weighted average common shares outstanding. Net loss margin was -1.2% compared to net income margin 7.2% for the first quarter of 2022Non-GAAP net income was $31.8 million, compared to non-GAAP net income of $32.9 million for the first quarter of 2022, a decrease of 3.5%. Non-GAAP diluted net income per share was $0.36 based on 88.0 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.38 for the first quarter of 2022, based on 87.3 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $43.1 million compared to $46.6 million for the first quarter of 2022, a decrease of 7.6%. Adjusted EBITDA margin was 25.9% compared to 29.2% for the first quarter of 2022Cash provided by operating activities was $59.2 million, compared to $5.8 million for the first quarter of 2022Free cash flow was $57.5 million, compared to $3.6 million for the first quarter of 2022. Free cash flow in the first quarter of 2022 was impacted by the payment of a $65.9 million litigation judgement assumed as part of the World Programming acquisition. Business Outlook Based on information available as of today, Altair is issuing the following guidance for the second quarter and full year 2023: (in millions, except %) Second Quarter 2023 Full Year 2023 Software Product Revenue $123.0 to$125.0 $551.0 to$561.0 Growth Rate 5.2% 6.9% 8.8% 10.8%Growth Rate - Constant Currency 6.7% 8.4% 9.1% 11.0%Total Revenue $138.0 $140.0 $614.0 $624.0 Growth Rate 4.0% 5.5% 7.3% 9.0%Growth Rate - Constant Currency 5.4% 6.9% 7.5% 9.3%Net Loss $(15.8) $(13.9) $(19.7) $(10.0)Non-GAAP Net Income $11.5 $13.0 $89.8 $97.2 Adjusted EBITDA $15.0 $17.0 $120.0 $130.0 Net Cash Provided by Operating Activities $118.0 $126.0 Free Cash Flow $108.0 $116.0 The following table provides a reconciliation of Full Year 2023 guidance to the last guidance provided in February: (Unaudited) Full Year 2023 (in millions) Midpoint of Guidance in February Increase/ (Decrease) Currency Fluctuations from Prior Guidance Midpoint of Guidance in May Software Product Revenue $555.0 $— $1.0 $556.0 Total Revenue $618.0 $— $1.0 $619.0 Adjusted EBITDA $125.0 $— $— $125.0 Conference Call Information What:Altair’s First Quarter 2023 Financial Results Conference CallWhen:Thursday, May 4, 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, Billings, 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 includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position. Billings consists of total revenue plus the change in 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 second quarter and full year 2023, our statements regarding our expectations for 2023, 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 ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS March 31, 2023 December 31, 2022 (In thousands) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $378,377 $316,146 Accounts receivable, net 130,636 170,279 Income tax receivable 11,226 11,259 Prepaid expenses and other current assets 28,363 29,142 Total current assets 548,602 526,826 Property and equipment, net 38,260 37,517 Operating lease right of use assets 33,297 33,601 Goodwill 451,170 449,048 Other intangible assets, net 101,586 107,609 Deferred tax assets 9,675 9,727 Other long-term assets 43,582 40,410 TOTAL ASSETS $1,226,172 $1,204,738 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $6,014 $10,434 Accrued compensation and benefits 30,341 42,456 Current portion of operating lease liabilities 9,939 10,396 Other accrued expenses and current liabilities 58,673 56,371 Deferred revenue 114,423 113,081 2024 Convertible senior notes, net 81,004 — Total current liabilities 300,394 232,738 2027 Convertible senior notes, net 225,039 305,604 Operating lease liabilities, net of current portion 23,989 24,065 Deferred revenue, non-current 27,520 31,379 Other long-term liabilities 42,325 41,216 TOTAL LIABILITIES 619,267 635,002 Commitments and contingencies 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 53,153 and 52,277 shares as of March 31, 2023, and December 31, 2022, respectively 5 5 Class B common stock, authorized 41,203 shares, issued and outstanding 27,505 and 27,745 shares as of March 31, 2023, and December 31, 2022 3 3 Additional paid-in capital 753,184 721,307 Accumulated deficit (123,536) (121,577)Accumulated other comprehensive loss (22,751) (30,002)TOTAL STOCKHOLDERS’ EQUITY 606,905 569,736 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $1,226,172 $1,204,738 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Three Months EndedMarch 31, (in thousands, except per share data) 2023 2022 Revenue License $112,409 $106,169 Maintenance and other services 37,234 34,728 Total software 149,643 140,897 Software related services 7,100 9,061 Total software and related services 156,743 149,958 Client engineering services 7,776 8,012 Other 1,515 1,811 Total revenue 166,034 159,781 Cost of revenue License 4,824 4,687 Maintenance and other services 14,426 12,719 Total software * 19,250 17,406 Software related services 5,616 6,035 Total software and related services 24,866 23,441 Client engineering services 6,624 6,641 Other 1,245 1,521 Total cost of revenue 32,735 31,603 Gross profit 133,299 128,178 Operating expenses: Research and development * 53,251 47,079 Sales and marketing * 43,492 37,840 General and administrative * 17,951 17,426 Amortization of intangible assets 7,814 5,903 Other operating expense (income), net 5,605 (781)Total operating expenses 128,113 107,467 Operating income 5,186 20,711 Interest expense 1,526 585 Other (income) expense, net (3,613) 2,068 Income before income taxes 7,273 18,058 Income tax expense 9,232 6,530 Net (loss) income $(1,959) $11,528 (Loss) income per share: Net (loss) income per share attributable to commonstockholders, basic $(0.02) $0.15 Net (loss) income per share attributable to commonstockholders, diluted $(0.02) $0.13 Weighted average shares outstanding: Weighted average number of shares used in computingnet (loss) income per share, basic 80,191 79,462 Weighted average number of shares used in computingnet (loss) income per share, diluted 80,191 87,261 * Amounts include stock-based compensation expense as follows (in thousands): (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Cost of revenue – software $2,752 $1,903 Research and development 8,743 7,358 Sales and marketing 7,591 7,035 General and administrative 3,075 2,318 Total stock-based compensation expense $22,161 $18,614 (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Employee stock-based compensation plans $18,484 $13,259 Post combination expense in connection with acquisitions 3,677 5,355 Total stock-based compensation expense $22,161 $18,614 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOW(Unaudited) Three Months Ended March 31, (In thousands) 2023 2022 OPERATING ACTIVITIES: Net (loss) income $(1,959) $11,528 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 9,750 7,686 Stock-based compensation expense 22,161 18,614 Loss on mark-to-market adjustment of contingent consideration 7,006 — Other, net 640 506 Changes in assets and liabilities: Accounts receivable 39,872 21,735 Prepaid expenses and other current assets 1,981 (138)Other long-term assets (1,944) 2,139 Accounts payable (5,362) (302)Accrued compensation and benefits (12,283) (6,896)Other accrued expenses and current liabilities 2,015 (61,759)Deferred revenue (2,678) 12,673 Net cash provided by operating activities 59,199 5,786 INVESTING ACTIVITIES: Capital expenditures (1,727) (2,190)Payments for acquisition of businesses, net of cash acquired — (12,971)Other investing activities, net (1,405) (343)Net cash used in investing activities (3,132) (15,504)FINANCING ACTIVITIES: Proceeds from the exercise of common stock options 9,872 237 Payments for repurchase of common stock (6,255) — Proceeds from employee stock purchase plan contributions 1,868 2,362 Other financing activities (29) (90)Net cash provided by financing activities 5,456 2,509 Effect of exchange rate changes on cash, cash equivalents and restricted cash 379 (970)Net increase (decrease) in cash, cash equivalents and restricted cash 61,902 (8,179)Cash, cash equivalents and restricted cash at beginning of year 316,958 414,012 Cash, cash equivalents and restricted cash at end of period $378,860 $405,833 Financial Results The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net (loss) income and net (loss) income per share – diluted, the most comparable GAAP financial measures: (Unaudited) Three Months EndedMarch 31, (in thousands, except per share amounts) 2023 2022 Net (loss) income $(1,959) $11,528 Stock-based compensation expense 22,161 18,614 Amortization of intangible assets 7,814 5,903 Non-cash interest expense 465 417 Impact of non-GAAP tax rate(1) (1,933) (5,036)Special adjustments and other(2) 5,231 1,492 Non-GAAP net income $31,779 $32,918 Net (loss) income per share, diluted $(0.02) $0.13 Non-GAAP net income per share, diluted $0.36 $0.38 GAAP diluted shares outstanding 80,191 87,261 Non-GAAP diluted shares outstanding 88,041 87,261 (1) The Company uses a non-GAAP effective tax rate of 26%. (2) The three months ended March 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $1.8 million currency gains on acquisition-related intercompany loans. The three months ended March 31, 2022, includes $1.5 million currency losses on acquisition-related intercompany loans. The following table provides a reconciliation of Adjusted EBITDA to net (loss) income, the most comparable GAAP financial measure: (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Net (loss) income $(1,959) $11,528 Income tax expense 9,232 6,530 Stock-based compensation expense 22,161 18,614 Interest expense 1,526 585 Depreciation and amortization 9,750 7,686 Special adjustments, interest income and other(1) 2,345 1,647 Adjusted EBITDA $43,055 $46,590 (1) The three months ended March 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $2.9 million of interest income, and $1.8 million currency gains on acquisition-related intercompany loans. The three months ended March 31, 2022, includes $1.5 million currency losses on acquisition-related intercompany loans. 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 EndedMarch 31, (in thousands) 2023 2022 Net cash provided by operating activities(1) $59,199 $5,786 Capital expenditures (1,727) (2,190)Free cash flow(1) $57,472 $3,596 (1) The three months ended March 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 margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure: (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Gross profit $133,299 $128,178 Stock-based compensation expense 2,752 1,903 Non-GAAP gross profit $136,051 $130,081 Gross profit margin 80.3% 80.2%Non-GAAP gross margin 81.9% 81.4% The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure: (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Total operating expense $128,113 $107,467 Stock-based compensation expense (19,409) (16,711)Amortization (7,814) (5,903)Loss on mark-to-market adjustment of contingent consideration (7,006) — Non-GAAP operating expense $93,884 $84,853 The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure: (Unaudited) Three Months Ended March 31, (in thousands)2023 2022 Revenue$166,034 $159,781 Ending deferred revenue 141,943 118,403 Beginning deferred revenue (144,460) (106,032)Deferred revenue acquired — (815)Billings$163,517 $171,337 The following table provides revenue, Billings and Adjusted EBITDA on a constant currency basis: (Unaudited) Three Months EndedMarch 31, 2023 Three Months Ended March 31, 2022 Increase/(Decrease) % (in thousands) As reported Currencychanges As adjusted forconstant currency As reported As reported As adjusted forconstant currency Software revenue $149.6 $5.4 $155.0 $140.9 6.2% 10.0%Total revenue $166.0 $5.8 $171.8 $159.8 3.9% 7.5%Billings $163.5 $6.3 $169.8 $171.3 -4.6% -0.9%Adjusted EBITDA $43.1 $2.3 $45.4 $46.6 -7.6% -2.6% Change in Classification of Indirect Costs Beginning in the first quarter of 2023, the Company refined its classification of certain indirect costs to reflect the way management is now reviewing the information in decision making and to improve comparability with peers. These indirect costs include certain IT, facilities, and depreciation expenses that were previously reported primarily in General and administrative expense. These indirect costs have now been reclassified to Research and development, Sales and marketing, and General and administrative expenses based on global headcount. Management believes this refined methodology better reflects the nature of the costs and financial performance of the Company. As a result, the Company’s Consolidated Statements of Operations have been recast for prior periods presented to reflect the effects of the changes to Research and development, Sales and marketing, and General and administrative expense. There was no net impact to total operating expenses, income from operations, net income or net income per share for any periods presented. The consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in stockholders’ equity, and the consolidated statements of cash flows were not affected by changes in the presentation of these costs. Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to current period presentation. The following tables provide the relevant financial results as previously reported, as recast for the current period and forthcoming filings, and the associated impacts of the changes. Within these tables, the references to periods such as “FY 2021” and “Q1 2022” refer to the corresponding periods as reported in the applicable Form 10-K, Form 10-Q, or Form 8-K filings. The following table summarizes the changes made to the consolidated statements of income (in thousands): Previously Reported FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $151,049 $43,094 $46,477 $48,781 $47,511 $185,863 Sales and marketing 132,750 35,682 39,116 39,244 41,203 155,245 General and administrative 91,500 23,569 24,367 24,677 24,993 97,606 Amortization of intangible assets 18,357 5,903 6,208 6,571 8,828 27,510 Other operating income, net (3,482) (781) (5,767) (2,835) (572) (9,955)Total operating expenses $390,174 $107,467 $110,401 $116,438 $121,963 $456,269 Recast FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $167,341 $47,079 $50,437 $53,092 $51,934 $202,542 Sales and marketing 141,484 37,840 41,153 41,352 43,539 163,884 General and administrative 66,474 17,426 18,370 18,258 18,234 72,288 Amortization of intangible assets 18,357 5,903 6,208 6,571 8,828 27,510 Other operating income, net (3,482) (781) (5,767) (2,835) (572) (9,955)Total operating expenses $390,174 $107,467 $110,401 $116,438 $121,963 $456,269 Change FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $16,292 $3,985 $3,960 $4,311 $4,423 $16,679 Sales and marketing 8,734 2,158 2,037 2,108 2,336 8,639 General and administrative (25,026) (6,143) (5,997) (6,419) (6,759) (25,318)Amortization of intangible assets — — — — — — Other operating income, net — — — — — — Total operating expenses $— $— $— $— $— $— Business Outlook The following table provides a reconciliation of projected Non-GAAP net income to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingJune 30, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net loss $(15,800) $(13,900) $(19,700) $(10,000)Stock-based compensation expense 21,000 21,000 85,200 85,200 Amortization of intangible assets 7,600 7,600 30,200 30,200 Non-cash interest expense 500 500 1,800 1,800 Impact of non-GAAP tax rate (1,800) (2,200) (12,900) (15,200)Special adjustments and other(1) — — 5,200 5,200 Non-GAAP net income $11,500 $13,000 $89,800 $97,200 (1) The year ending December 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $1.8 million currency gains on acquisition-related intercompany loans. The following table provides a reconciliation of projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingJune 30, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net loss $(15,800) $(13,900) $(19,700) $(10,000)Income tax expense 2,300 2,400 18,700 19,000 Stock-based compensation expense 21,000 21,000 85,200 85,200 Interest (income) expense (2,000) (2,000) (7,300) (7,300)Depreciation and amortization 9,500 9,500 37,900 37,900 Special adjustments and other(1) — — 5,200 5,200 Adjusted EBITDA $15,000 $17,000 $120,000 $130,000 (1) The year ending December 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $1.8 million currency gains on acquisition-related intercompany loans. 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, 2023 (in thousands)Low High Net cash provided by operating activities$117,700 $125,700 Capital expenditures (9,700) (9,700)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. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Altair Announces First Quarter 2023 Financial Results By: Altair Engineering Inc. via GlobeNewswire May 04, 2023 at 16:05 PM EDT TROY, Mich., May 04, 2023 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the first quarter ended March 31, 2023. “Altair had a very strong start to 2023, with software product revenue and total revenue above the high end of our guidance,” said James Scapa, founder, chairman and chief executive officer of Altair. “Q1 exceeded our expectations and represents an all-time high for revenue to continue our good momentum from 2022. Demand for our products continues to be strong and we’re seeing the investments we’ve made in product development and our approach to our customers’ success paying off.” “Coming right on the heels of a very strong fourth quarter to end last year, we had impressive performance in the first quarter,” said Matt Brown, chief financial officer of Altair. “We’re excited to be starting the year so well, which we feel gives us momentum and helps to achieve our financial goals for the year.” First Quarter 2023 Financial Highlights Software product revenue was $149.6 million compared to $140.9 million for the first quarter of 2022, an increase of 6.2% in reported currency and 10.0% in constant currencyTotal revenue was $166.0 million compared to $159.8 million for the first quarter of 2022, an increase of 3.9% in reported currency and 7.5% in constant currencyNet loss was $(2.0) million compared to net income of $11.5 million for the first quarter of 2022. Diluted net loss per share was $(0.02) based on 80.2 million diluted weighted average common shares outstanding, compared to diluted net income per share of $0.13 for the first quarter of 2022, based on 87.3 million diluted weighted average common shares outstanding. Net loss margin was -1.2% compared to net income margin 7.2% for the first quarter of 2022Non-GAAP net income was $31.8 million, compared to non-GAAP net income of $32.9 million for the first quarter of 2022, a decrease of 3.5%. Non-GAAP diluted net income per share was $0.36 based on 88.0 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.38 for the first quarter of 2022, based on 87.3 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $43.1 million compared to $46.6 million for the first quarter of 2022, a decrease of 7.6%. Adjusted EBITDA margin was 25.9% compared to 29.2% for the first quarter of 2022Cash provided by operating activities was $59.2 million, compared to $5.8 million for the first quarter of 2022Free cash flow was $57.5 million, compared to $3.6 million for the first quarter of 2022. Free cash flow in the first quarter of 2022 was impacted by the payment of a $65.9 million litigation judgement assumed as part of the World Programming acquisition. Business Outlook Based on information available as of today, Altair is issuing the following guidance for the second quarter and full year 2023: (in millions, except %) Second Quarter 2023 Full Year 2023 Software Product Revenue $123.0 to$125.0 $551.0 to$561.0 Growth Rate 5.2% 6.9% 8.8% 10.8%Growth Rate - Constant Currency 6.7% 8.4% 9.1% 11.0%Total Revenue $138.0 $140.0 $614.0 $624.0 Growth Rate 4.0% 5.5% 7.3% 9.0%Growth Rate - Constant Currency 5.4% 6.9% 7.5% 9.3%Net Loss $(15.8) $(13.9) $(19.7) $(10.0)Non-GAAP Net Income $11.5 $13.0 $89.8 $97.2 Adjusted EBITDA $15.0 $17.0 $120.0 $130.0 Net Cash Provided by Operating Activities $118.0 $126.0 Free Cash Flow $108.0 $116.0 The following table provides a reconciliation of Full Year 2023 guidance to the last guidance provided in February: (Unaudited) Full Year 2023 (in millions) Midpoint of Guidance in February Increase/ (Decrease) Currency Fluctuations from Prior Guidance Midpoint of Guidance in May Software Product Revenue $555.0 $— $1.0 $556.0 Total Revenue $618.0 $— $1.0 $619.0 Adjusted EBITDA $125.0 $— $— $125.0 Conference Call Information What:Altair’s First Quarter 2023 Financial Results Conference CallWhen:Thursday, May 4, 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, Billings, 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 includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position. Billings consists of total revenue plus the change in 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 second quarter and full year 2023, our statements regarding our expectations for 2023, 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 ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS March 31, 2023 December 31, 2022 (In thousands) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $378,377 $316,146 Accounts receivable, net 130,636 170,279 Income tax receivable 11,226 11,259 Prepaid expenses and other current assets 28,363 29,142 Total current assets 548,602 526,826 Property and equipment, net 38,260 37,517 Operating lease right of use assets 33,297 33,601 Goodwill 451,170 449,048 Other intangible assets, net 101,586 107,609 Deferred tax assets 9,675 9,727 Other long-term assets 43,582 40,410 TOTAL ASSETS $1,226,172 $1,204,738 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $6,014 $10,434 Accrued compensation and benefits 30,341 42,456 Current portion of operating lease liabilities 9,939 10,396 Other accrued expenses and current liabilities 58,673 56,371 Deferred revenue 114,423 113,081 2024 Convertible senior notes, net 81,004 — Total current liabilities 300,394 232,738 2027 Convertible senior notes, net 225,039 305,604 Operating lease liabilities, net of current portion 23,989 24,065 Deferred revenue, non-current 27,520 31,379 Other long-term liabilities 42,325 41,216 TOTAL LIABILITIES 619,267 635,002 Commitments and contingencies 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 53,153 and 52,277 shares as of March 31, 2023, and December 31, 2022, respectively 5 5 Class B common stock, authorized 41,203 shares, issued and outstanding 27,505 and 27,745 shares as of March 31, 2023, and December 31, 2022 3 3 Additional paid-in capital 753,184 721,307 Accumulated deficit (123,536) (121,577)Accumulated other comprehensive loss (22,751) (30,002)TOTAL STOCKHOLDERS’ EQUITY 606,905 569,736 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $1,226,172 $1,204,738 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Three Months EndedMarch 31, (in thousands, except per share data) 2023 2022 Revenue License $112,409 $106,169 Maintenance and other services 37,234 34,728 Total software 149,643 140,897 Software related services 7,100 9,061 Total software and related services 156,743 149,958 Client engineering services 7,776 8,012 Other 1,515 1,811 Total revenue 166,034 159,781 Cost of revenue License 4,824 4,687 Maintenance and other services 14,426 12,719 Total software * 19,250 17,406 Software related services 5,616 6,035 Total software and related services 24,866 23,441 Client engineering services 6,624 6,641 Other 1,245 1,521 Total cost of revenue 32,735 31,603 Gross profit 133,299 128,178 Operating expenses: Research and development * 53,251 47,079 Sales and marketing * 43,492 37,840 General and administrative * 17,951 17,426 Amortization of intangible assets 7,814 5,903 Other operating expense (income), net 5,605 (781)Total operating expenses 128,113 107,467 Operating income 5,186 20,711 Interest expense 1,526 585 Other (income) expense, net (3,613) 2,068 Income before income taxes 7,273 18,058 Income tax expense 9,232 6,530 Net (loss) income $(1,959) $11,528 (Loss) income per share: Net (loss) income per share attributable to commonstockholders, basic $(0.02) $0.15 Net (loss) income per share attributable to commonstockholders, diluted $(0.02) $0.13 Weighted average shares outstanding: Weighted average number of shares used in computingnet (loss) income per share, basic 80,191 79,462 Weighted average number of shares used in computingnet (loss) income per share, diluted 80,191 87,261 * Amounts include stock-based compensation expense as follows (in thousands): (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Cost of revenue – software $2,752 $1,903 Research and development 8,743 7,358 Sales and marketing 7,591 7,035 General and administrative 3,075 2,318 Total stock-based compensation expense $22,161 $18,614 (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Employee stock-based compensation plans $18,484 $13,259 Post combination expense in connection with acquisitions 3,677 5,355 Total stock-based compensation expense $22,161 $18,614 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOW(Unaudited) Three Months Ended March 31, (In thousands) 2023 2022 OPERATING ACTIVITIES: Net (loss) income $(1,959) $11,528 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 9,750 7,686 Stock-based compensation expense 22,161 18,614 Loss on mark-to-market adjustment of contingent consideration 7,006 — Other, net 640 506 Changes in assets and liabilities: Accounts receivable 39,872 21,735 Prepaid expenses and other current assets 1,981 (138)Other long-term assets (1,944) 2,139 Accounts payable (5,362) (302)Accrued compensation and benefits (12,283) (6,896)Other accrued expenses and current liabilities 2,015 (61,759)Deferred revenue (2,678) 12,673 Net cash provided by operating activities 59,199 5,786 INVESTING ACTIVITIES: Capital expenditures (1,727) (2,190)Payments for acquisition of businesses, net of cash acquired — (12,971)Other investing activities, net (1,405) (343)Net cash used in investing activities (3,132) (15,504)FINANCING ACTIVITIES: Proceeds from the exercise of common stock options 9,872 237 Payments for repurchase of common stock (6,255) — Proceeds from employee stock purchase plan contributions 1,868 2,362 Other financing activities (29) (90)Net cash provided by financing activities 5,456 2,509 Effect of exchange rate changes on cash, cash equivalents and restricted cash 379 (970)Net increase (decrease) in cash, cash equivalents and restricted cash 61,902 (8,179)Cash, cash equivalents and restricted cash at beginning of year 316,958 414,012 Cash, cash equivalents and restricted cash at end of period $378,860 $405,833 Financial Results The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net (loss) income and net (loss) income per share – diluted, the most comparable GAAP financial measures: (Unaudited) Three Months EndedMarch 31, (in thousands, except per share amounts) 2023 2022 Net (loss) income $(1,959) $11,528 Stock-based compensation expense 22,161 18,614 Amortization of intangible assets 7,814 5,903 Non-cash interest expense 465 417 Impact of non-GAAP tax rate(1) (1,933) (5,036)Special adjustments and other(2) 5,231 1,492 Non-GAAP net income $31,779 $32,918 Net (loss) income per share, diluted $(0.02) $0.13 Non-GAAP net income per share, diluted $0.36 $0.38 GAAP diluted shares outstanding 80,191 87,261 Non-GAAP diluted shares outstanding 88,041 87,261 (1) The Company uses a non-GAAP effective tax rate of 26%. (2) The three months ended March 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $1.8 million currency gains on acquisition-related intercompany loans. The three months ended March 31, 2022, includes $1.5 million currency losses on acquisition-related intercompany loans. The following table provides a reconciliation of Adjusted EBITDA to net (loss) income, the most comparable GAAP financial measure: (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Net (loss) income $(1,959) $11,528 Income tax expense 9,232 6,530 Stock-based compensation expense 22,161 18,614 Interest expense 1,526 585 Depreciation and amortization 9,750 7,686 Special adjustments, interest income and other(1) 2,345 1,647 Adjusted EBITDA $43,055 $46,590 (1) The three months ended March 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $2.9 million of interest income, and $1.8 million currency gains on acquisition-related intercompany loans. The three months ended March 31, 2022, includes $1.5 million currency losses on acquisition-related intercompany loans. 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 EndedMarch 31, (in thousands) 2023 2022 Net cash provided by operating activities(1) $59,199 $5,786 Capital expenditures (1,727) (2,190)Free cash flow(1) $57,472 $3,596 (1) The three months ended March 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 margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure: (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Gross profit $133,299 $128,178 Stock-based compensation expense 2,752 1,903 Non-GAAP gross profit $136,051 $130,081 Gross profit margin 80.3% 80.2%Non-GAAP gross margin 81.9% 81.4% The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure: (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Total operating expense $128,113 $107,467 Stock-based compensation expense (19,409) (16,711)Amortization (7,814) (5,903)Loss on mark-to-market adjustment of contingent consideration (7,006) — Non-GAAP operating expense $93,884 $84,853 The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure: (Unaudited) Three Months Ended March 31, (in thousands)2023 2022 Revenue$166,034 $159,781 Ending deferred revenue 141,943 118,403 Beginning deferred revenue (144,460) (106,032)Deferred revenue acquired — (815)Billings$163,517 $171,337 The following table provides revenue, Billings and Adjusted EBITDA on a constant currency basis: (Unaudited) Three Months EndedMarch 31, 2023 Three Months Ended March 31, 2022 Increase/(Decrease) % (in thousands) As reported Currencychanges As adjusted forconstant currency As reported As reported As adjusted forconstant currency Software revenue $149.6 $5.4 $155.0 $140.9 6.2% 10.0%Total revenue $166.0 $5.8 $171.8 $159.8 3.9% 7.5%Billings $163.5 $6.3 $169.8 $171.3 -4.6% -0.9%Adjusted EBITDA $43.1 $2.3 $45.4 $46.6 -7.6% -2.6% Change in Classification of Indirect Costs Beginning in the first quarter of 2023, the Company refined its classification of certain indirect costs to reflect the way management is now reviewing the information in decision making and to improve comparability with peers. These indirect costs include certain IT, facilities, and depreciation expenses that were previously reported primarily in General and administrative expense. These indirect costs have now been reclassified to Research and development, Sales and marketing, and General and administrative expenses based on global headcount. Management believes this refined methodology better reflects the nature of the costs and financial performance of the Company. As a result, the Company’s Consolidated Statements of Operations have been recast for prior periods presented to reflect the effects of the changes to Research and development, Sales and marketing, and General and administrative expense. There was no net impact to total operating expenses, income from operations, net income or net income per share for any periods presented. The consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in stockholders’ equity, and the consolidated statements of cash flows were not affected by changes in the presentation of these costs. Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to current period presentation. The following tables provide the relevant financial results as previously reported, as recast for the current period and forthcoming filings, and the associated impacts of the changes. Within these tables, the references to periods such as “FY 2021” and “Q1 2022” refer to the corresponding periods as reported in the applicable Form 10-K, Form 10-Q, or Form 8-K filings. The following table summarizes the changes made to the consolidated statements of income (in thousands): Previously Reported FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $151,049 $43,094 $46,477 $48,781 $47,511 $185,863 Sales and marketing 132,750 35,682 39,116 39,244 41,203 155,245 General and administrative 91,500 23,569 24,367 24,677 24,993 97,606 Amortization of intangible assets 18,357 5,903 6,208 6,571 8,828 27,510 Other operating income, net (3,482) (781) (5,767) (2,835) (572) (9,955)Total operating expenses $390,174 $107,467 $110,401 $116,438 $121,963 $456,269 Recast FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $167,341 $47,079 $50,437 $53,092 $51,934 $202,542 Sales and marketing 141,484 37,840 41,153 41,352 43,539 163,884 General and administrative 66,474 17,426 18,370 18,258 18,234 72,288 Amortization of intangible assets 18,357 5,903 6,208 6,571 8,828 27,510 Other operating income, net (3,482) (781) (5,767) (2,835) (572) (9,955)Total operating expenses $390,174 $107,467 $110,401 $116,438 $121,963 $456,269 Change FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $16,292 $3,985 $3,960 $4,311 $4,423 $16,679 Sales and marketing 8,734 2,158 2,037 2,108 2,336 8,639 General and administrative (25,026) (6,143) (5,997) (6,419) (6,759) (25,318)Amortization of intangible assets — — — — — — Other operating income, net — — — — — — Total operating expenses $— $— $— $— $— $— Business Outlook The following table provides a reconciliation of projected Non-GAAP net income to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingJune 30, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net loss $(15,800) $(13,900) $(19,700) $(10,000)Stock-based compensation expense 21,000 21,000 85,200 85,200 Amortization of intangible assets 7,600 7,600 30,200 30,200 Non-cash interest expense 500 500 1,800 1,800 Impact of non-GAAP tax rate (1,800) (2,200) (12,900) (15,200)Special adjustments and other(1) — — 5,200 5,200 Non-GAAP net income $11,500 $13,000 $89,800 $97,200 (1) The year ending December 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $1.8 million currency gains on acquisition-related intercompany loans. The following table provides a reconciliation of projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingJune 30, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net loss $(15,800) $(13,900) $(19,700) $(10,000)Income tax expense 2,300 2,400 18,700 19,000 Stock-based compensation expense 21,000 21,000 85,200 85,200 Interest (income) expense (2,000) (2,000) (7,300) (7,300)Depreciation and amortization 9,500 9,500 37,900 37,900 Special adjustments and other(1) — — 5,200 5,200 Adjusted EBITDA $15,000 $17,000 $120,000 $130,000 (1) The year ending December 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $1.8 million currency gains on acquisition-related intercompany loans. 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, 2023 (in thousands)Low High Net cash provided by operating activities$117,700 $125,700 Capital expenditures (9,700) (9,700)Free cash flow$108,000 $116,000
TROY, Mich., May 04, 2023 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the first quarter ended March 31, 2023. “Altair had a very strong start to 2023, with software product revenue and total revenue above the high end of our guidance,” said James Scapa, founder, chairman and chief executive officer of Altair. “Q1 exceeded our expectations and represents an all-time high for revenue to continue our good momentum from 2022. Demand for our products continues to be strong and we’re seeing the investments we’ve made in product development and our approach to our customers’ success paying off.” “Coming right on the heels of a very strong fourth quarter to end last year, we had impressive performance in the first quarter,” said Matt Brown, chief financial officer of Altair. “We’re excited to be starting the year so well, which we feel gives us momentum and helps to achieve our financial goals for the year.” First Quarter 2023 Financial Highlights Software product revenue was $149.6 million compared to $140.9 million for the first quarter of 2022, an increase of 6.2% in reported currency and 10.0% in constant currencyTotal revenue was $166.0 million compared to $159.8 million for the first quarter of 2022, an increase of 3.9% in reported currency and 7.5% in constant currencyNet loss was $(2.0) million compared to net income of $11.5 million for the first quarter of 2022. Diluted net loss per share was $(0.02) based on 80.2 million diluted weighted average common shares outstanding, compared to diluted net income per share of $0.13 for the first quarter of 2022, based on 87.3 million diluted weighted average common shares outstanding. Net loss margin was -1.2% compared to net income margin 7.2% for the first quarter of 2022Non-GAAP net income was $31.8 million, compared to non-GAAP net income of $32.9 million for the first quarter of 2022, a decrease of 3.5%. Non-GAAP diluted net income per share was $0.36 based on 88.0 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.38 for the first quarter of 2022, based on 87.3 million non-GAAP diluted common shares outstandingAdjusted EBITDA was $43.1 million compared to $46.6 million for the first quarter of 2022, a decrease of 7.6%. Adjusted EBITDA margin was 25.9% compared to 29.2% for the first quarter of 2022Cash provided by operating activities was $59.2 million, compared to $5.8 million for the first quarter of 2022Free cash flow was $57.5 million, compared to $3.6 million for the first quarter of 2022. Free cash flow in the first quarter of 2022 was impacted by the payment of a $65.9 million litigation judgement assumed as part of the World Programming acquisition. Business Outlook Based on information available as of today, Altair is issuing the following guidance for the second quarter and full year 2023: (in millions, except %) Second Quarter 2023 Full Year 2023 Software Product Revenue $123.0 to$125.0 $551.0 to$561.0 Growth Rate 5.2% 6.9% 8.8% 10.8%Growth Rate - Constant Currency 6.7% 8.4% 9.1% 11.0%Total Revenue $138.0 $140.0 $614.0 $624.0 Growth Rate 4.0% 5.5% 7.3% 9.0%Growth Rate - Constant Currency 5.4% 6.9% 7.5% 9.3%Net Loss $(15.8) $(13.9) $(19.7) $(10.0)Non-GAAP Net Income $11.5 $13.0 $89.8 $97.2 Adjusted EBITDA $15.0 $17.0 $120.0 $130.0 Net Cash Provided by Operating Activities $118.0 $126.0 Free Cash Flow $108.0 $116.0 The following table provides a reconciliation of Full Year 2023 guidance to the last guidance provided in February: (Unaudited) Full Year 2023 (in millions) Midpoint of Guidance in February Increase/ (Decrease) Currency Fluctuations from Prior Guidance Midpoint of Guidance in May Software Product Revenue $555.0 $— $1.0 $556.0 Total Revenue $618.0 $— $1.0 $619.0 Adjusted EBITDA $125.0 $— $— $125.0 Conference Call Information What:Altair’s First Quarter 2023 Financial Results Conference CallWhen:Thursday, May 4, 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, Billings, 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 includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position. Billings consists of total revenue plus the change in 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 second quarter and full year 2023, our statements regarding our expectations for 2023, 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 ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS March 31, 2023 December 31, 2022 (In thousands) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $378,377 $316,146 Accounts receivable, net 130,636 170,279 Income tax receivable 11,226 11,259 Prepaid expenses and other current assets 28,363 29,142 Total current assets 548,602 526,826 Property and equipment, net 38,260 37,517 Operating lease right of use assets 33,297 33,601 Goodwill 451,170 449,048 Other intangible assets, net 101,586 107,609 Deferred tax assets 9,675 9,727 Other long-term assets 43,582 40,410 TOTAL ASSETS $1,226,172 $1,204,738 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $6,014 $10,434 Accrued compensation and benefits 30,341 42,456 Current portion of operating lease liabilities 9,939 10,396 Other accrued expenses and current liabilities 58,673 56,371 Deferred revenue 114,423 113,081 2024 Convertible senior notes, net 81,004 — Total current liabilities 300,394 232,738 2027 Convertible senior notes, net 225,039 305,604 Operating lease liabilities, net of current portion 23,989 24,065 Deferred revenue, non-current 27,520 31,379 Other long-term liabilities 42,325 41,216 TOTAL LIABILITIES 619,267 635,002 Commitments and contingencies 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 53,153 and 52,277 shares as of March 31, 2023, and December 31, 2022, respectively 5 5 Class B common stock, authorized 41,203 shares, issued and outstanding 27,505 and 27,745 shares as of March 31, 2023, and December 31, 2022 3 3 Additional paid-in capital 753,184 721,307 Accumulated deficit (123,536) (121,577)Accumulated other comprehensive loss (22,751) (30,002)TOTAL STOCKHOLDERS’ EQUITY 606,905 569,736 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $1,226,172 $1,204,738 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Three Months EndedMarch 31, (in thousands, except per share data) 2023 2022 Revenue License $112,409 $106,169 Maintenance and other services 37,234 34,728 Total software 149,643 140,897 Software related services 7,100 9,061 Total software and related services 156,743 149,958 Client engineering services 7,776 8,012 Other 1,515 1,811 Total revenue 166,034 159,781 Cost of revenue License 4,824 4,687 Maintenance and other services 14,426 12,719 Total software * 19,250 17,406 Software related services 5,616 6,035 Total software and related services 24,866 23,441 Client engineering services 6,624 6,641 Other 1,245 1,521 Total cost of revenue 32,735 31,603 Gross profit 133,299 128,178 Operating expenses: Research and development * 53,251 47,079 Sales and marketing * 43,492 37,840 General and administrative * 17,951 17,426 Amortization of intangible assets 7,814 5,903 Other operating expense (income), net 5,605 (781)Total operating expenses 128,113 107,467 Operating income 5,186 20,711 Interest expense 1,526 585 Other (income) expense, net (3,613) 2,068 Income before income taxes 7,273 18,058 Income tax expense 9,232 6,530 Net (loss) income $(1,959) $11,528 (Loss) income per share: Net (loss) income per share attributable to commonstockholders, basic $(0.02) $0.15 Net (loss) income per share attributable to commonstockholders, diluted $(0.02) $0.13 Weighted average shares outstanding: Weighted average number of shares used in computingnet (loss) income per share, basic 80,191 79,462 Weighted average number of shares used in computingnet (loss) income per share, diluted 80,191 87,261 * Amounts include stock-based compensation expense as follows (in thousands): (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Cost of revenue – software $2,752 $1,903 Research and development 8,743 7,358 Sales and marketing 7,591 7,035 General and administrative 3,075 2,318 Total stock-based compensation expense $22,161 $18,614 (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Employee stock-based compensation plans $18,484 $13,259 Post combination expense in connection with acquisitions 3,677 5,355 Total stock-based compensation expense $22,161 $18,614 ALTAIR ENGINEERING INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOW(Unaudited) Three Months Ended March 31, (In thousands) 2023 2022 OPERATING ACTIVITIES: Net (loss) income $(1,959) $11,528 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 9,750 7,686 Stock-based compensation expense 22,161 18,614 Loss on mark-to-market adjustment of contingent consideration 7,006 — Other, net 640 506 Changes in assets and liabilities: Accounts receivable 39,872 21,735 Prepaid expenses and other current assets 1,981 (138)Other long-term assets (1,944) 2,139 Accounts payable (5,362) (302)Accrued compensation and benefits (12,283) (6,896)Other accrued expenses and current liabilities 2,015 (61,759)Deferred revenue (2,678) 12,673 Net cash provided by operating activities 59,199 5,786 INVESTING ACTIVITIES: Capital expenditures (1,727) (2,190)Payments for acquisition of businesses, net of cash acquired — (12,971)Other investing activities, net (1,405) (343)Net cash used in investing activities (3,132) (15,504)FINANCING ACTIVITIES: Proceeds from the exercise of common stock options 9,872 237 Payments for repurchase of common stock (6,255) — Proceeds from employee stock purchase plan contributions 1,868 2,362 Other financing activities (29) (90)Net cash provided by financing activities 5,456 2,509 Effect of exchange rate changes on cash, cash equivalents and restricted cash 379 (970)Net increase (decrease) in cash, cash equivalents and restricted cash 61,902 (8,179)Cash, cash equivalents and restricted cash at beginning of year 316,958 414,012 Cash, cash equivalents and restricted cash at end of period $378,860 $405,833 Financial Results The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net (loss) income and net (loss) income per share – diluted, the most comparable GAAP financial measures: (Unaudited) Three Months EndedMarch 31, (in thousands, except per share amounts) 2023 2022 Net (loss) income $(1,959) $11,528 Stock-based compensation expense 22,161 18,614 Amortization of intangible assets 7,814 5,903 Non-cash interest expense 465 417 Impact of non-GAAP tax rate(1) (1,933) (5,036)Special adjustments and other(2) 5,231 1,492 Non-GAAP net income $31,779 $32,918 Net (loss) income per share, diluted $(0.02) $0.13 Non-GAAP net income per share, diluted $0.36 $0.38 GAAP diluted shares outstanding 80,191 87,261 Non-GAAP diluted shares outstanding 88,041 87,261 (1) The Company uses a non-GAAP effective tax rate of 26%. (2) The three months ended March 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $1.8 million currency gains on acquisition-related intercompany loans. The three months ended March 31, 2022, includes $1.5 million currency losses on acquisition-related intercompany loans. The following table provides a reconciliation of Adjusted EBITDA to net (loss) income, the most comparable GAAP financial measure: (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Net (loss) income $(1,959) $11,528 Income tax expense 9,232 6,530 Stock-based compensation expense 22,161 18,614 Interest expense 1,526 585 Depreciation and amortization 9,750 7,686 Special adjustments, interest income and other(1) 2,345 1,647 Adjusted EBITDA $43,055 $46,590 (1) The three months ended March 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $2.9 million of interest income, and $1.8 million currency gains on acquisition-related intercompany loans. The three months ended March 31, 2022, includes $1.5 million currency losses on acquisition-related intercompany loans. 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 EndedMarch 31, (in thousands) 2023 2022 Net cash provided by operating activities(1) $59,199 $5,786 Capital expenditures (1,727) (2,190)Free cash flow(1) $57,472 $3,596 (1) The three months ended March 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 margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure: (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Gross profit $133,299 $128,178 Stock-based compensation expense 2,752 1,903 Non-GAAP gross profit $136,051 $130,081 Gross profit margin 80.3% 80.2%Non-GAAP gross margin 81.9% 81.4% The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure: (Unaudited) Three Months EndedMarch 31, (in thousands) 2023 2022 Total operating expense $128,113 $107,467 Stock-based compensation expense (19,409) (16,711)Amortization (7,814) (5,903)Loss on mark-to-market adjustment of contingent consideration (7,006) — Non-GAAP operating expense $93,884 $84,853 The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure: (Unaudited) Three Months Ended March 31, (in thousands)2023 2022 Revenue$166,034 $159,781 Ending deferred revenue 141,943 118,403 Beginning deferred revenue (144,460) (106,032)Deferred revenue acquired — (815)Billings$163,517 $171,337 The following table provides revenue, Billings and Adjusted EBITDA on a constant currency basis: (Unaudited) Three Months EndedMarch 31, 2023 Three Months Ended March 31, 2022 Increase/(Decrease) % (in thousands) As reported Currencychanges As adjusted forconstant currency As reported As reported As adjusted forconstant currency Software revenue $149.6 $5.4 $155.0 $140.9 6.2% 10.0%Total revenue $166.0 $5.8 $171.8 $159.8 3.9% 7.5%Billings $163.5 $6.3 $169.8 $171.3 -4.6% -0.9%Adjusted EBITDA $43.1 $2.3 $45.4 $46.6 -7.6% -2.6% Change in Classification of Indirect Costs Beginning in the first quarter of 2023, the Company refined its classification of certain indirect costs to reflect the way management is now reviewing the information in decision making and to improve comparability with peers. These indirect costs include certain IT, facilities, and depreciation expenses that were previously reported primarily in General and administrative expense. These indirect costs have now been reclassified to Research and development, Sales and marketing, and General and administrative expenses based on global headcount. Management believes this refined methodology better reflects the nature of the costs and financial performance of the Company. As a result, the Company’s Consolidated Statements of Operations have been recast for prior periods presented to reflect the effects of the changes to Research and development, Sales and marketing, and General and administrative expense. There was no net impact to total operating expenses, income from operations, net income or net income per share for any periods presented. The consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in stockholders’ equity, and the consolidated statements of cash flows were not affected by changes in the presentation of these costs. Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to current period presentation. The following tables provide the relevant financial results as previously reported, as recast for the current period and forthcoming filings, and the associated impacts of the changes. Within these tables, the references to periods such as “FY 2021” and “Q1 2022” refer to the corresponding periods as reported in the applicable Form 10-K, Form 10-Q, or Form 8-K filings. The following table summarizes the changes made to the consolidated statements of income (in thousands): Previously Reported FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $151,049 $43,094 $46,477 $48,781 $47,511 $185,863 Sales and marketing 132,750 35,682 39,116 39,244 41,203 155,245 General and administrative 91,500 23,569 24,367 24,677 24,993 97,606 Amortization of intangible assets 18,357 5,903 6,208 6,571 8,828 27,510 Other operating income, net (3,482) (781) (5,767) (2,835) (572) (9,955)Total operating expenses $390,174 $107,467 $110,401 $116,438 $121,963 $456,269 Recast FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $167,341 $47,079 $50,437 $53,092 $51,934 $202,542 Sales and marketing 141,484 37,840 41,153 41,352 43,539 163,884 General and administrative 66,474 17,426 18,370 18,258 18,234 72,288 Amortization of intangible assets 18,357 5,903 6,208 6,571 8,828 27,510 Other operating income, net (3,482) (781) (5,767) (2,835) (572) (9,955)Total operating expenses $390,174 $107,467 $110,401 $116,438 $121,963 $456,269 Change FY 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 Operating expenses: Research and development $16,292 $3,985 $3,960 $4,311 $4,423 $16,679 Sales and marketing 8,734 2,158 2,037 2,108 2,336 8,639 General and administrative (25,026) (6,143) (5,997) (6,419) (6,759) (25,318)Amortization of intangible assets — — — — — — Other operating income, net — — — — — — Total operating expenses $— $— $— $— $— $— Business Outlook The following table provides a reconciliation of projected Non-GAAP net income to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingJune 30, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net loss $(15,800) $(13,900) $(19,700) $(10,000)Stock-based compensation expense 21,000 21,000 85,200 85,200 Amortization of intangible assets 7,600 7,600 30,200 30,200 Non-cash interest expense 500 500 1,800 1,800 Impact of non-GAAP tax rate (1,800) (2,200) (12,900) (15,200)Special adjustments and other(1) — — 5,200 5,200 Non-GAAP net income $11,500 $13,000 $89,800 $97,200 (1) The year ending December 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $1.8 million currency gains on acquisition-related intercompany loans. The following table provides a reconciliation of projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure: (Unaudited) Three Months EndingJune 30, 2023 Year EndingDecember 31, 2023 (in thousands) Low High Low High Net loss $(15,800) $(13,900) $(19,700) $(10,000)Income tax expense 2,300 2,400 18,700 19,000 Stock-based compensation expense 21,000 21,000 85,200 85,200 Interest (income) expense (2,000) (2,000) (7,300) (7,300)Depreciation and amortization 9,500 9,500 37,900 37,900 Special adjustments and other(1) — — 5,200 5,200 Adjusted EBITDA $15,000 $17,000 $120,000 $130,000 (1) The year ending December 31, 2023, includes $7.0 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $1.8 million currency gains on acquisition-related intercompany loans. 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, 2023 (in thousands)Low High Net cash provided by operating activities$117,700 $125,700 Capital expenditures (9,700) (9,700)Free cash flow$108,000 $116,000