• Altair Announces First Quarter 2022 Financial Results

    Source: Nasdaq GlobeNewswire / 05 May 2022 15:05:02   America/Chicago

    TROY, Mich., May 05, 2022 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence (AI) that provides software and cloud solutions in the areas of simulation, high-performance computing (HPC), data analytics and AI, today released its financial results for the first quarter ended March 31, 2022.

    “Altair had a very strong first quarter 2022 with all our key metrics coming in above our guidance ranges,” said James Scapa, Founder, Chairman and Chief Executive Officer of Altair. “We deliver high value products and expertise to help our customers increase efficiency and competitiveness by driving smarter decisions with computational science and artificial intelligence, and our business momentum continues to be robust globally and across industry verticals.”

    “We’re off to a great start for the year, achieving all-time highs for software product revenue and total revenue in the first quarter 2022,” said Matt Brown, Chief Financial Officer of Altair. “Revenues and profit were ahead of expectations for the quarter, putting us in a strong position to meet our financial goals for the year.”

    First Quarter 2022 Financial Highlights

    • Software product revenue was $140.9 million compared to $129.5 million for the first quarter of 2021, an increase of 8.8%
    • Total revenue was $159.8 million compared to $150.2 million for the first quarter of 2021, an increase of 6.4%
    • Net income was $11.5 million compared to $14.4 million for the first quarter of 2021. Diluted net income per share was $0.13 based on 87.3 million diluted weighted average common shares outstanding, compared to diluted net income per share of $0.18 for the first quarter of 2021, based on 79.3 million diluted weighted average common shares outstanding
    • Adjusted EBITDA was $46.6 million compared to $37.0 million for the first quarter of 2021, an increase of 26.1%. Adjusted EBITDA margin was 29.2% compared to 24.6% for the first quarter of 2021
    • Non-GAAP net income was $32.9 million, compared to Non-GAAP net income of $26.0 million for the first quarter of 2021, an increase of 26.8%. Non-GAAP diluted net income per share was $0.38 based on 87.3 million non-GAAP diluted common shares outstanding, compared to Non-GAAP diluted net income per share of $0.33 for the first quarter of 2021, based on 79.3 million non-GAAP diluted common shares outstanding
    • Free cash flow was $3.6 million, compared to $33.5 million for the first quarter of 2021. Free cash flow in the first quarter 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 2022:  

    (in millions)Second Quarter 2022 Full Year 2022 
    Software Product Revenue $111.0 to$114.0  $496.0 to$508.0 
    Total Revenue $128.0  $131.0  $568.0  $582.0 
    Net Loss $(19.0) $(17.1) $(29.5) $(22.0)
    Non-GAAP Net Income $7.7  $9.2  $67.5  $73.4 
    Adjusted EBITDA $12.0  $14.0  $98.0  $106.0 
    Net Cash Provided by Operating Activities         $17.6  $24.6 
    Free Cash Flow         $10.0  $17.0 

    Conference Call Information

    What:  Altair’s First Quarter 2022 Financial Results Conference Call
    When:  Thursday, May 5, 2022
    Time:  5 p.m. ET
    Live Call: (866) 754-5204, Domestic
     (636) 812-6621, International
    Replay: (855) 859-2056, Conference ID 4167474, Domestic
     (404) 537-3406, Conference ID 4167474, International
    Webcast: http://investor.altair.com (live & replay)
      

    Non-GAAP Financial Measures

    This press release contains the following non-GAAP financial measures: Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Net Income Per Share and Free Cash Flow.

    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.

    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.

    Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, restructuring charges, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period.

    Non-GAAP diluted common shares as defined starting with Q1 2022, includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position. All periods presented will be adjusted to align with this new definition.

    Free cash flow consists of cash flow from operations less capital expenditures.

    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 the areas of 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 2022, our statements regarding our expectations for 2022, and our reconciliations of projected non-GAAP financial measures.   These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in our forward-looking statements due to a number of factors, including but not limited to, the risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.

    Media Relations
    Altair
    Dave Simon
    248-614-2400 ext. 332
    ir@altair.com

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


    ALTAIR ENGINERING INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS

      March 31, 2022  December 31, 2021 
    (In thousands) (Unaudited)     
    ASSETS        
    CURRENT ASSETS:        
    Cash and cash equivalents $405,578  $413,743 
    Accounts receivable, net  112,444   137,561 
    Income tax receivable  12,185   9,388 
    Prepaid expenses and other current assets  25,467   27,529 
    Total current assets  555,674   588,221 
    Property and equipment, net  40,188   40,478 
    Operating lease right of use assets  27,910   28,494 
    Goodwill  379,320   370,178 
    Other intangible assets, net  93,345   99,057 
    Deferred tax assets  8,228   8,495 
    Other long-term assets  29,025   28,352 
    TOTAL ASSETS $1,133,690  $1,163,275 
    LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY 
    CURRENT LIABILITIES:        
    Accounts payable $6,061  $6,647 
    Accrued compensation and benefits  35,038   42,307 
    Current portion of operating lease liabilities  9,948   9,933 
    Other accrued expenses and current liabilities  56,978   122,226 
    Deferred revenue  96,529   93,160 
    Convertible senior notes, net  226,187   199,705 
    Total current liabilities  430,741   473,978 
    Operating lease liabilities, net of current portion  18,847   19,550 
    Deferred revenue, non-current  21,874   12,872 
    Other long-term liabilities  43,019   42,894 
    TOTAL LIABILITIES  514,481   549,294 
    Commitments and contingencies        
    MEZZANINE EQUITY  784   784 
    STOCKHOLDERS’ EQUITY:        
    Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding  —   — 
    Common stock ($0.0001 par value)        
    Class A common stock, authorized 513,797 shares, issued and outstanding 52,011
    and 51,524 shares as of March 31, 2022, and December 31, 2021, respectively    		  5   5 
    Class B common stock, authorized 41,203 shares, issued and outstanding 27,745
    shares as of March 31, 2022, and December 31, 2021    		  3   3 
    Additional paid-in capital  698,045   724,226 
    Accumulated deficit  (66,620)  (102,087)
    Accumulated other comprehensive loss  (13,008)  (8,950)
    TOTAL STOCKHOLDERS’ EQUITY  618,425   613,197 
    TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $1,133,690  $1,163,275 
             

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

      Three Months Ended
    March 31,    		 
    (in thousands, except per share data) 2022  2021 
    Revenue        
    License $106,169  $96,395 
    Maintenance and other services  34,728   33,146 
    Total software  140,897   129,541 
    Software related services  9,061   8,098 
    Total software and related services  149,958   137,639 
    Client engineering services  8,012   10,677 
    Other  1,811   1,847 
    Total revenue  159,781   150,163 
    Cost of revenue        
    License  4,687   5,395 
    Maintenance and other services  12,719   11,555 
    Total software *  17,406   16,950 
    Software related services  6,035   6,122 
    Total software and related services  23,441   23,072 
    Client engineering services  6,641   8,888 
    Other  1,521   1,462 
    Total cost of revenue  31,603   33,422 
    Gross profit  128,178   116,741 
    Operating expenses:        
    Research and development *  43,094   38,276 
    Sales and marketing *  35,682   32,070 
    General and administrative *  23,569   23,926 
    Amortization of intangible assets  5,903   4,877 
    Other operating income, net  (781)  (617)
    Total operating expenses  107,467   98,532 
    Operating income  20,711   18,209 
    Interest expense  585   2,973 
    Other expense, net  2,068   835 
    Income before income taxes  18,058   14,401 
    Income tax expense  6,530   41 
    Net income $11,528  $14,360 
    Income per share:        
    Net income per share attributable to common
    stockholders, basic    		 $0.15  $0.19 
    Net income per share attributable to common
    stockholders, diluted    		 $0.13  $0.18 
    Weighted average shares outstanding:        
    Weighted average number of shares used in computing
    net income per share, basic    		  79,462   74,651 
    Weighted average number of shares used in computing
    net income per share, diluted    		  87,261   79,295 

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

      (Unaudited) 
      Three Months Ended
    March 31,    		 
      2022  2021 
    Cost of revenue – software $1,903  $1,158 
    Research and development  7,358   3,186 
    Sales and marketing  7,035   3,468 
    General and administrative  2,318   1,836 
    Total stock-based compensation expense $18,614  $9,648 
             

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

      Three Months Ended March 31, 
    (In thousands) 2022  2021 
    OPERATING ACTIVITIES:        
    Net income $11,528  $14,360 
    Adjustments to reconcile net income to net cash provided by operating activities:        
    Depreciation and amortization  7,686   6,686 
    Provision for credit loss  48   89 
    Amortization of debt discount and issuance costs  418   2,800 
    Stock-based compensation expense  18,614   9,648 
    Deferred income taxes  (67)  (687)
    Other, net  107   (18)
    Changes in assets and liabilities:        
    Accounts receivable  21,735   8,768 
    Prepaid expenses and other current assets  (138)  (805)
    Other long-term assets  2,139   (3,628)
    Accounts payable  (302)  (767)
    Accrued compensation and benefits  (6,896)  2,626 
    Other accrued expenses and current liabilities  (61,759)  309 
    Deferred revenue  12,673   (2,810)
    Net cash provided by operating activities  5,786   36,571 
    INVESTING ACTIVITIES:        
    Payments for acquisition of businesses, net of cash acquired  (12,971)  — 
    Capital expenditures  (2,190)  (3,039)
    Other investing activities, net  (343)  (412)
    Net cash used in investing activities  (15,504)  (3,451)
    FINANCING ACTIVITIES:        
    Proceeds from employee stock purchase plan contributions  2,362   — 
    Proceeds from the exercise of common stock options  237   271 
    Payments on revolving commitment  —   (30,000)
    Other financing activities  (90)  (107)
    Net cash provided by (used in) financing activities  2,509   (29,836)
    Effect of exchange rate changes on cash, cash equivalents and restricted cash  (970)  (1,331)
    Net (decrease) increase in cash, cash equivalents and restricted cash  (8,179)  1,953 
    Cash, cash equivalents and restricted cash at beginning of year  414,012   241,547 
    Cash, cash equivalents and restricted cash at end of period $405,833  $243,500 
    Supplemental disclosure of cash flow:        
    Interest paid $1  $47 
    Income taxes paid $3,187  $2,381 
    Supplemental disclosure of non-cash investing and financing activities:        
    Property and equipment in accounts payable, other current liabilities
    and other liabilities    		 $772  $619 
             

    Financial Results

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

      (Unaudited) 
      Three Months Ended
    March 31,    		 
    (in thousands, except per share amounts) 2022  2021 
    Net income $11,528  $14,360 
    Stock-based compensation expense  18,614   9,648 
    Amortization of intangible assets  5,903   4,877 
    Non-cash interest expense  417   2,800 
    Restructuring expense  —   3,346 
    Impact of non-GAAP tax rate  (5,036)  (9,077)
    Special adjustments and other (1)  1,492   — 
    Non-GAAP net income  32,918   25,954 
    Depreciation expense  1,783   1,809 
    Cash interest expense, net  323   79 
    Income tax expense, net of non-GAAP impact  11,566   9,118 
    Adjusted EBITDA $46,590  $36,960 
             
    Net income per share, diluted $0.13  $0.18 
    Non-GAAP net income per share, diluted $0.38  $0.33 
             
    GAAP diluted shares outstanding  87,261   79,295 
    Non-GAAP diluted shares outstanding (2)  87,261   79,295 

    (1)  The three months ended March 31, 2022, includes $1.5 million currency losses on acquisition-related intercompany loans.
    (2)  The Non-GAAP diluted shares outstanding for the three months ended March 31, 2021, has been changed to align with the current definition.

    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) 2022  2021 
    Net cash provided by operating activities (1) $5,786  $36,571 
    Capital expenditures  (2,190)  (3,039)
    Free cash flow (1) $3,596  $33,532 

    (1)  The three months ended March 31, 2022, includes a $65.9 million payment in January 2022 for a legal judgement acquired in December 2021.

    Business Outlook

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

      (Unaudited) 
      Three Months Ending
    June 30, 2022    		  Year Ending
    December 31, 2022    		 
    (in thousands) Low  High  Low  High 
    Net loss $(19,000) $(17,100) $(29,500) $(22,000)
    Stock-based compensation expense  19,900   19,900   77,400   77,400 
    Amortization of intangible assets  5,800   5,800   23,000   23,000 
    Non-cash interest expense  300   300   1,400   1,400 
    Impact of non-GAAP tax rate  700   300   (6,300)  (7,900)
    Special adjustments and other(1)  —   —   1,500   1,500 
    Non-GAAP net income  7,700   9,200   67,500   73,400 
    Depreciation expense  1,800   1,800   7,100   7,100 
    Cash interest income, net  (200)  (200)  (300)  (300)
    Income tax expense, net of non-GAAP impact  2,700   3,200   23,700   25,800 
    Adjusted EBITDA $12,000  $14,000  $98,000  $106,000 

    (1)  Year ending December 31, 2022, includes $1.5 million 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, 2022    		 
    (in thousands)     Low  High 
    Net cash provided by operating activities (1)     $17,600  $24,600 
    Capital expenditures      (7,600)  (7,600)
    Free cash flow (1)     $10,000  $17,000 

    (1)  Includes $65.9 million payment in January 2022 for legal judgement acquired in December 2021.


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