• Altair Announces First Quarter 2024 Financial Results

    Source: Nasdaq GlobeNewswire / 02 May 2024 15:05:01   America/Chicago

    TROY, Mich., May 02, 2024 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational intelligence, today released its financial results for the first quarter ended March 31, 2024.

    “Altair continued its positive momentum into the start of 2024, with record-high quarterly software revenue and total revenue,” said James R. Scapa, founder, chairman, and chief executive officer, Altair. “The first quarter exceeded our expectations and demonstrates the strength of our product portfolio in bringing computational intelligence to our customers.”

    “The start of this year has been marked by strong execution, setting new records in software revenue and total revenue in the first quarter 2024,” said Matt Brown, chief financial officer, Altair. “Revenues and profit were ahead of expectations for the quarter, driven by growth across all three major geographies and multiple verticals.”

    First Quarter 2024 Financial Highlights

    • Software revenue was $158.4 million compared to $149.6 million for the first quarter of 2023, an increase of 5.9% in reported currency and 6.9% in constant currency
    • Total revenue was $172.9 million compared to $166.0 million for the first quarter of 2023, an increase of 4.1% in reported currency and 5.1% in constant currency
    • Net income was $16.5 million compared to a net loss of $(2.0) million for the first quarter of 2023. Net income per share, diluted was $0.20 based on 89.8 million diluted weighted average common shares outstanding, compared to net loss per share, diluted of $(0.02) for the first quarter of 2023, based on 80.2 million diluted weighted average common shares outstanding. Net income margin was 9.6% compared to net loss margin of -1.2% for the first quarter of 2023
    • Non-GAAP net income was $36.2 million, compared to non-GAAP net income of $31.8 million for the first quarter of 2023, an increase of 13.9%. Non-GAAP net income per share, diluted was $0.40 based on 89.8 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of $0.36 for the first quarter of 2023, based on 88.0 million non-GAAP diluted common shares outstanding
    • Adjusted EBITDA was $45.8 million compared to $43.1 million for the first quarter of 2023, an increase of 6.4%. Adjusted EBITDA margin was 26.5% compared to 25.9% for the first quarter of 2023
    • Cash provided by operating activities was $73.5 million, compared to $59.2 million for the first quarter of 2023
    • Free cash flow was $70.7 million, compared to $57.5 million for the first quarter of 2023.

    Business Outlook

    Based on information available as of today, Altair is issuing the following guidance for the second quarter and full year 2024:

    (in millions, except %) Second Quarter 2024  Full Year 2024 
    Software Revenue $131 to$134  $590 to$600 
    Growth Rate  4.5%  6.9%  7.3%  9.1%
    Growth Rate - Constant Currency  6.7%  9.2%  8.3%  10.1%
    Total Revenue $145  $148  $652  $662 
    Growth Rate  2.7%  4.8%  6.4%  8.0%
    Growth Rate - Constant Currency  4.7%  6.8%  7.5%  9.1%
    Net (Loss) Income $(12.3) $(9.4) $23.2  $30.9 
    Non-GAAP Net Income $12.7  $15.0  $109.9  $115.9 
    Adjusted EBITDA $15  $18  $138  $146 
    Net Cash Provided by Operating Activities       $135  $143 
    Free Cash Flow       $124  $132 
                   

    The following table provides a reconciliation of Full Year 2024 guidance to the last guidance provided in February

      (Unaudited) 
      Full Year 2024 
    (in millions) Midpoint of
    Guidance in February    		  Increase/
    (Decrease)    		  Currency Fluctuations
    from Prior Guidance    		  Midpoint of
    Guidance in May    		 
    Software Revenue $605.0  $—  $(10.0) $595.0 
    Total Revenue $668.0  $—  $(11.0) $657.0 
    Adjusted EBITDA $147.0  $—  $(5.0) $142.0 
                     

    Conference Call Information

    What:Altair’s First Quarter 2024 Financial Results Conference Call
    When:Thursday, May 2, 2024
    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, 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, 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 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, 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 intelligence 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 https://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 2024, our statements regarding our expectations for 2024, 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
    Jennifer Ristic
    216-849-3109
    jristic@altair.com 

    Investor Relations
    Altair
    Stephen Palmtag
    669-328-9111
    spalmtag@altair.com 

    The Blueshirt Group
    Monica Gould
    212-871-3927
    ir@altair.com


    ALTAIR ENGINEERING INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS

      March 31, 2024  December 31, 2023 
    (In thousands) (Unaudited)    
    ASSETS      
    CURRENT ASSETS:      
    Cash and cash equivalents $557,605  $467,459 
    Accounts receivable, net  127,870   190,461 
    Income tax receivable  18,898   16,650 
    Prepaid expenses and other current assets  26,026   26,053 
    Total current assets  730,399   700,623 
    Property and equipment, net  38,837   39,803 
    Operating lease right of use assets  30,175   30,759 
    Goodwill  454,953   458,125 
    Other intangible assets, net  75,357   83,550 
    Deferred tax assets  9,699   9,955 
    Other long-term assets  40,491   40,678 
    TOTAL ASSETS $1,379,911  $1,363,493 
    LIABILITIES AND STOCKHOLDERS’ EQUITY 
    CURRENT LIABILITIES:      
    Accounts payable $6,522  $8,995 
    Accrued compensation and benefits  35,911   45,081 
    Current portion of operating lease liabilities  8,330   8,825 
    Other accrued expenses and current liabilities  43,820   48,398 
    Deferred revenue  120,554   131,356 
    Current portion of convertible senior notes, net  81,617   81,455 
    Total current liabilities  296,754   324,110 
    Convertible senior notes, net  226,223   225,929 
    Operating lease liabilities, net of current portion  22,508   22,625 
    Deferred revenue, non-current  24,385   32,347 
    Other long-term liabilities  47,113   47,151 
    TOTAL LIABILITIES  616,983   652,162 
    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 56,912
    and 55,240 shares as of March 31, 2024, and December 31, 2023, respectively    		  5   5 
    Class B common stock, authorized 41,203 shares, issued and outstanding 26,084
    and 26,814 shares as of March 31, 2024, and December 31, 2023, respectively    		  3   3 
    Additional paid-in capital  904,180   864,135 
    Accumulated deficit  (113,956)  (130,503)
    Accumulated other comprehensive loss  (27,304)  (22,309)
    TOTAL STOCKHOLDERS’ EQUITY  762,928   711,331 
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $1,379,911  $1,363,493 
             

    ALTAIR ENGINEERING INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (Unaudited)

      Three Months Ended
    March 31,    		 
    (in thousands, except per share data) 2024  2023 
    Revenue      
    License $117,707  $112,409 
    Maintenance and other services  40,722   37,234 
    Total software  158,429   149,643 
    Engineering services and other  14,483   16,391 
    Total revenue  172,912   166,034 
    Cost of revenue      
    License  4,490   4,824 
    Maintenance and other services  14,166   14,426 
    Total software *  18,656   19,250 
    Engineering services and other  12,237   13,485 
    Total cost of revenue  30,893   32,735 
    Gross profit  142,019   133,299 
    Operating expenses:      
    Research and development *  52,333   53,251 
    Sales and marketing *  44,434   43,492 
    General and administrative *  17,761   17,951 
    Amortization of intangible assets  7,438   7,814 
    Other operating (income) expense, net  (882)  5,605 
    Total operating expenses  121,084   128,113 
    Operating income  20,935   5,186 
    Interest expense  1,576   1,526 
    Other income, net  (3,957)  (3,613)
    Income before income taxes  23,316   7,273 
    Income tax expense  6,769   9,232 
    Net income (loss) $16,547  $(1,959)
    Income (loss) per share:      
    Net income (loss) per share attributable to common stockholders, basic $0.20  $(0.02)
    Net income (loss) per share attributable to common stockholders, diluted $0.20  $(0.02)
    Weighted average shares outstanding:      
    Weighted average number of shares used in computing net income (loss) per share, basic  82,587   80,191 
    Weighted average number of shares used in computing net income (loss) per share, diluted  89,806   80,191 
             

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

      (Unaudited) 
      Three Months Ended
    March 31,    		 
    (in thousands) 2024  2023 
    Cost of revenue – software $2,002  $2,752 
    Research and development  6,360   8,743 
    Sales and marketing  4,520   7,591 
    General and administrative  3,117   3,075 
    Total stock-based compensation expense $15,999  $22,161 
             

    ALTAIR ENGINEERING INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOW
    (Unaudited)

      Three Months Ended
    March 31,    		 
    (In thousands) 2024  2023 
    OPERATING ACTIVITIES:      
    Net income (loss) $16,547  $(1,959)
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
    Depreciation and amortization  9,619   9,750 
    Stock-based compensation expense  15,999   22,161 
    Loss on mark-to-market adjustment of contingent consideration  145   7,006 
    Other, net  580   640 
    Changes in assets and liabilities:      
    Accounts receivable, net  60,245   39,872 
    Prepaid expenses and other current assets  (2,679)  1,981 
    Other long-term assets  9   (1,944)
    Accounts payable  (1,667)  (5,362)
    Accrued compensation and benefits  (8,503)  (12,283)
    Other accrued expenses and current liabilities  (199)  2,015 
    Deferred revenue  (16,646)  (2,678)
    Net cash provided by operating activities  73,450   59,199 
    INVESTING ACTIVITIES:      
    Capital expenditures  (2,766)  (1,727)
    Other investing activities, net  2   (1,405)
    Net cash used in investing activities  (2,764)  (3,132)
    FINANCING ACTIVITIES:      
    Proceeds from the exercise of common stock options  19,844   9,872 
    Proceeds from employee stock purchase plan contributions  2,182   1,868 
    Payments for repurchase and retirement of common stock  —   (6,255)
    Other financing activities  —   (29)
    Net cash provided by financing activities  22,026   5,456 
    Effect of exchange rate changes on cash, cash equivalents and restricted cash  (2,592)  379 
    Net increase in cash, cash equivalents and restricted cash  90,120   61,902 
    Cash, cash equivalents and restricted cash at beginning of year  467,576   316,958 
    Cash, cash equivalents and restricted cash at end of period $557,696  $378,860 
             

    Change in Presentation of Revenue and Cost of Revenue

    Effective in the first quarter of 2024, the Company changed the presentation of revenue and cost of revenue in its Consolidated Statements of Operations to combine the financial statement line items (“FSLIs”) labeled “Software related services”, “Client engineering services” and “Other” into one FSLI labeled “Engineering services and other”. The change in presentation has been applied retrospectively and does not affect the software revenue, total revenue, software cost of revenue or total cost of revenue amounts previously reported or have any effect on segment reporting.

    Financial Results

    The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net income (loss) and net income (loss) per share – diluted, the most comparable GAAP financial measures:

      (Unaudited) 
      Three Months Ended
    March 31,    		 
    (in thousands, except per share amounts) 2024  2023 
    Net income (loss) $16,547  $(1,959)
    Stock-based compensation expense  15,999   22,161 
    Amortization of intangible assets  7,438   7,814 
    Non-cash interest expense  472   465 
    Impact of non-GAAP tax rate (1)  (5,295)  (1,933)
    Special adjustments and other (2)  1,030   5,231 
    Non-GAAP net income $36,191  $31,779 
           
    Net income (loss) per share, diluted $0.20  $(0.02)
    Non-GAAP net income per share, diluted $0.40  $0.36 
           
    GAAP diluted shares outstanding  89,806   80,191 
    Non-GAAP diluted shares outstanding  89,806   88,041 
             


    (1)For the three months ended March 31, 2024 and 2023, the Company used a non-GAAP effective tax rate of 25% and 26%, respectively.
    (2)The three months ended March 31, 2024, includes a $0.1 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $0.9 million of currency losses on acquisition-related intercompany loans. The three months ended March 31, 2023, includes a $7.0 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $1.8 million of currency gains on acquisition-related intercompany loans.
      

    The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure:

      (Unaudited) 
      Three Months Ended
    March 31,    		 
    (in thousands) 2024  2023 
    Net income (loss) $16,547  $(1,959)
    Income tax expense  6,769   9,232 
    Stock-based compensation expense  15,999   22,161 
    Interest expense  1,576   1,526 
    Depreciation and amortization  9,619   9,750 
    Special adjustments, interest income and other (1)  (4,692)  2,345 
    Adjusted EBITDA $45,818  $43,055 
             


    (1)The three months ended March 31, 2024, primarily includes $5.7 million of interest income and $0.9 million of currency losses on acquisition-related intercompany loans. The three months ended March 31, 2023, includes a $7.0 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, $2.9 million of interest income, and $1.8 million of currency gains 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) 2024  2023 
    Net cash provided by operating activities $73,450  $59,199 
    Capital expenditures  (2,766)  (1,727)
    Free cash flow $70,684  $57,472 
             

    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) 2024  2023 
    Gross profit $142,019  $133,299 
    Stock-based compensation expense  2,002   2,752 
    Non-GAAP gross profit $144,021  $136,051 
           
    Gross profit margin  82.1%  80.3%
    Non-GAAP gross margin  83.3%  81.9%
             

    The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure:

      (Unaudited) 
      Three Months Ended
    March 31,    		 
    (in thousands) 2024  2023 
    Total operating expense $121,084  $128,113 
    Stock-based compensation expense  (13,997)  (19,409)
    Amortization  (7,438)  (7,814)
    Loss on mark-to-market adjustment of contingent consideration  (145)  (7,006)
    Non-GAAP operating expense $99,504  $93,884 
             

    The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:

      (Unaudited) 
      Three Months Ended
    March 31,    		 
    (in thousands) 2024  2023 
    Revenue $172,912  $166,034 
    Ending deferred revenue  144,939   141,943 
    Beginning deferred revenue  (163,703)  (144,460)
    Billings $154,148  $163,517 
             

    The following table provides Software revenue, Total revenue, Billings and Adjusted EBITDA on a constant currency basis:

      (Unaudited) 
      Three Months Ended
    March 31, 2024    		  Three Months Ended
    March 31, 2023    		  Increase/
    (Decrease) %    		 
    (in thousands) As reported  Currency changes  As adjusted for
    constant currency    		  As reported  As reported  As adjusted for
    constant currency    		 
    Software revenue $158.4  $1.5  $159.9  $149.6   5.9%  6.9%
    Total revenue $172.9  $1.6  $174.5  $166.0   4.1%  5.1%
    Billings $154.1  $0.8  $154.9  $163.5   -5.7%  -5.3%
    Adjusted EBITDA $45.8  $1.3  $47.1  $43.1   6.4%  9.5%
                             

    Business Outlook

    The following table provides a reconciliation of projected Non-GAAP net income to projected net (loss) income, the most comparable GAAP financial measure:

      (Unaudited) 
      Three Months Ending
    June 30, 2024    		  Year Ending
    December 31, 2024    		 
    (in thousands) Low  High  Low  High 
    Net (loss) income $(12,300) $(9,400) $23,200  $30,900 
    Stock-based compensation expense  17,800   17,800   72,500   72,500 
    Amortization of intangible assets  7,300   7,300   28,900   28,900 
    Non-cash interest expense  400   400   1,500   1,500 
    Impact of non-GAAP tax rate(1)  (500)  (1,100)  (17,200)  (18,900)
    Special adjustments and other(2)  —   —   1,000   1,000 
    Non-GAAP net income $12,700  $15,000  $109,900  $115,900 
                     


    (1)The Company uses a non-GAAP effective tax rate of 25%.
    (2)The year ending December 31, 2024, includes a $0.1 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $0.9 million of currency losses on acquisition-related intercompany loans.
      

    The following table provides a reconciliation of projected Adjusted EBITDA to projected net (loss) income, the most comparable GAAP financial measure:

      (Unaudited) 
      Three Months Ending
    June 30, 2024    		  Year Ending
    December 31, 2024    		 
    (in thousands) Low  High  Low  High 
    Net (loss) income $(12,300) $(9,400) $23,200  $30,900 
    Income tax expense  3,800   3,900   19,500   19,800 
    Stock-based compensation expense  17,800   17,800   72,500   72,500 
    Interest (income) expense  (3,800)  (3,800)  (15,800)  (15,800)
    Depreciation and amortization  9,500   9,500   37,600   37,600 
    Special adjustments and other(1)  —   —   1,000   1,000 
    Adjusted EBITDA $15,000  $18,000  $138,000  $146,000 
                     


    (1) The year ending December 31, 2024, includes a $0.1 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $0.9 million of currency losses 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, 2024    		 
    (in thousands)Low  High 
    Net cash provided by operating activities$135,300  $143,300 
    Capital expenditures (11,300)  (11,300)
    Free cash flow$124,000  $132,000 

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