Altair Announces First Quarter 2023 Financial Results
[ Back ]   [ More News ]   [ Home ]
Altair Announces First Quarter 2023 Financial Results

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

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 Call
When:Thursday, May 4, 2023
Time:5 p.m. ET
Webcast: 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 SUBSIDIARIES
CONSOLIDATED 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 SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
  Three Months Ended
March 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 common
stockholders, basic
 $(0.02) $0.15 
Net (loss) income per share attributable to common
stockholders, diluted
 $(0.02) $0.13 
Weighted average shares outstanding:      
Weighted average number of shares used in computing
net (loss) income per share, basic
  80,191   79,462 
Weighted average number of shares used in computing
net (loss) income per share, diluted
  80,191   87,261 

* Amounts include stock-based compensation expense as follows (in thousands):

  (Unaudited) 
  Three Months Ended
March 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 Ended
March 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 SUBSIDIARIES
CONSOLIDATED 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 Ended
March 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 Ended
March 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 Ended
March 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 Ended
March 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 Ended
March 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 Ended
March 31, 2023
  Three Months Ended March 31, 2022  Increase/
(Decrease) %
 
(in thousands) As reported  Currency
changes
  As adjusted for
constant currency
  As reported  As reported  As adjusted for
constant 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 Ending
June 30, 2023
  Year Ending
December 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 Ending
June 30, 2023
  Year Ending
December 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 

 


Primary Logo