• Altair Announces First Quarter 2021 Financial Results

    Source: Nasdaq GlobeNewswire / 06 May 2021 15:05:01   America/Chicago

    TROY, Mich., May 06, 2021 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global technology company providing software and cloud solutions in the areas of simulation, high-performance computing, data analytics and artificial intelligence today released its financial results for the first quarter ended March 31, 2021.

    “Altair had an excellent first quarter 2021, due in large measure to the strength of our constantly evolving software portfolio,” said James Scapa, Founder, Chairman and Chief Executive Officer of Altair. “Our vision of the convergence of simulation, HPC, and AI driving enterprise decisions is emerging as a clear imperative embraced by customers. This technical direction, which we identified early on and have invested in significantly, is important and manifest in all the markets we serve. We look forward to sharing our longer-term vision and strategy for the company at our virtual Investor Day on May 27.”

    “I’m pleased to report our second consecutive quarter of record software revenue and total revenue, which far exceeded our expectations, led by strong renewal business and expansion in software,” said Matt Brown, Chief Financial Officer of Altair. “We’re executing on our mission to transform enterprise decision making, while driving top line revenue growth and maintaining a disciplined approach to spending to expand our profitability.”

    First Quarter 2021 Financial Highlights

    • Software product revenue was $129.5 million compared to $108.4 million for the first quarter of 2020, an increase of 19.5%
    • Total revenue was $150.2 million compared to $131.5 million for the first quarter of 2020, an increase of 14.2%
    • Net income was $14.4 million compared to $6.0 million for the first quarter of 2020, an increase of 138%. Diluted net income per share was $0.18 based on 79.3 million diluted weighted average common shares outstanding, compared to diluted net income per share of $0.08 for the first quarter of 2020, based on 77.0 million diluted weighted average common shares outstanding
    • Adjusted EBITDA was $37.0 million compared to $21.7 million for the first quarter of 2020, an increase of 70.5%. Adjusted EBITDA margin was 24.6% compared to 16.5% for the first quarter of 2020.
    • Non-GAAP net income was $26.0 million, compared to Non-GAAP net income of $15.1 million for the first quarter of 2020, an increase of 72.4%. Non-GAAP diluted net income per share was $0.31 based on 83.4 million non-GAAP diluted common shares outstanding, compared to Non-GAAP diluted net income per share of $0.19 for the first quarter of 2020, based on 78.4 million non-GAAP diluted common shares outstanding
    • Free cash flow was $33.5 million, compared to $26.4 million for the first quarter of 2020, an increase of 27.1%

    Business Outlook

    Based on information available as of today, Altair is issuing guidance for the second quarter and full year 2021.

    (in millions)Second Quarter 2021 Full Year 2021 
    Software Product Revenue $92.0 to$95.0  $425.0 to$433.0 
    Total Revenue $111.0  $114.0  $504.0  $512.0 
    Net Loss $(23.7) $(21.8) $(37.6) $(29.8)
    Non-GAAP Net Income $0.1  $1.6  $38.0  $44.0 
    Adjusted EBITDA $2.0  $4.0  $59.0  $67.0 


    Conference Call Information 
    What:Altair’s First Quarter 2021 Financial Results Conference Call
    When:Thursday, May 6, 2021
    Time:5:00 p.m. ET
    Live Call:(866) 754-5204, Domestic
     (636) 812-6621, International
    Replay:(855) 859-2056, Conference ID 5262418, Domestic
     (404) 537-3406, Conference ID 5262418, 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 includes total outstanding shares plus outstanding equity awards under the Company’s equity award plans.

    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 technology company that provides software and cloud solutions in the areas of simulation, high-performance computing, data analytics and artificial intelligence. Altair enables organizations across broad industry segments to compete more effectively in a connected world while creating a 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 2021, our statements regarding our expectation for 2021, 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

    Lindsay Savarese
    212-331-8417
    ir@altair.com

    ALTAIR ENGINERING INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS

      March 31, 2021  December 31, 2020 
    (In thousands) (Unaudited)     
    ASSETS        
    CURRENT ASSETS:        
    Cash and cash equivalents $243,364  $241,221 
    Accounts receivable, net  107,112   117,878 
    Income tax receivable  5,985   6,736 
    Prepaid expenses and other current assets  22,295   21,100 
    Total current assets  378,756   386,935 
    Property and equipment, net  39,143   36,332 
    Operating lease right of use assets  33,568   33,526 
    Goodwill  262,090   264,481 
    Other intangible assets, net  70,912   76,114 
    Deferred tax assets  8,476   7,125 
    Other long-term assets  24,968   25,389 
    TOTAL ASSETS $817,913  $829,902 
    LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY 
    CURRENT LIABILITIES:        
    Current portion of long-term debt $394  $30,384 
    Accounts payable  6,671   8,594 
    Accrued compensation and benefits  36,785   34,772 
    Current portion of operating lease liabilities  10,471   10,331 
    Other accrued expenses and current liabilities  32,238   30,982 
    Deferred revenue  81,737   85,691 
    Convertible senior notes, net  191,094   — 
    Total current liabilities  359,390   200,754 
    Long-term debt, net of current portion  258   353 
    Convertible senior notes, net  —   188,300 
    Operating lease liabilities, net of current portion  24,319   24,323 
    Deferred revenue, non-current  8,992   9,388 
    Other long-term liabilities  25,141   27,414 
    TOTAL LIABILITIES  418,100   450,532 
    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 45,494
     and 44,216 shares as of March 31, 2021, and December 31, 2020, respectively    		  4   4 
    Class B common stock, authorized 41,203 shares, issued and outstanding 29,601
     and 30,111 shares as of March 31, 2021, and December 31, 2020, respectively    		  3   3 
    Additional paid-in capital  484,584   474,669 
    Accumulated deficit  (78,933)  (93,293)
    Accumulated other comprehensive loss  (6,629)  (2,797)
    TOTAL STOCKHOLDERS’ EQUITY  399,029   378,586 
    TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $817,913  $829,902 


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

      Three Months Ended
    March 31,    		 
    (in thousands, except per share data) 2021  2020 
    Revenue        
    License $96,395  $77,543 
    Maintenance and other services  33,146   30,900 
    Total software  129,541   108,443 
    Software related services  8,098   6,934 
    Total software and related services  137,639   115,377 
    Client engineering services  10,677   13,878 
    Other  1,847   2,208 
    Total revenue  150,163   131,463 
    Cost of revenue        
    License  5,395   5,523 
    Maintenance and other services  11,555   10,455 
    Total software *  16,950   15,978 
    Software related services  6,122   5,489 
    Total software and related services  23,072   21,467 
    Client engineering services  8,888   11,318 
    Other  1,462   1,712 
    Total cost of revenue  33,422   34,497 
    Gross profit  116,741   96,966 
    Operating expenses:        
    Research and development *  38,276   31,467 
    Sales and marketing *  32,070   28,099 
    General and administrative *  23,926   22,346 
    Amortization of intangible assets  4,877   3,840 
    Other operating income, net  (617)  (891)
    Total operating expenses  98,532   84,861 
    Operating income  18,209   12,105 
    Interest expense  2,973   2,813 
    Other expense (income), net  835   (1,390)
    Income before income taxes  14,401   10,682 
    Income tax expense  41   4,652 
    Net income $14,360  $6,030 
    Income per share:        
    Net income per share attributable to common
     stockholders, basic    		 $0.19  $0.08 
    Net income per share attributable to common
     stockholders, diluted    		 $0.18  $0.08 
    Weighted average shares outstanding:        
    Weighted average number of shares used in computing
     net income per share, basic    		  74,651   72,623 
    Weighted average number of shares used in computing
     net income per share, diluted    		  79,295   77,004 

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

      (Unaudited) 
      Three Months Ended
    March 31,    		 
      2021  2020 
    Cost of revenue – software $1,158  $366 
    Research and development  3,186   1,428 
    Sales and marketing  3,468   727 
    General and administrative  1,836   650 
    Total stock-based compensation expense $9,648  $3,171 


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

      Three Months Ended March 31, 
    (In thousands) 2021  2020 
    OPERATING ACTIVITIES:        
    Net income $14,360  $6,030 
    Adjustments to reconcile net income to net cash provided by operating activities:        
    Depreciation and amortization  6,686   5,660 
    Provision for credit loss  89   338 
    Amortization of debt discount and issuance costs  2,800   2,653 
    Stock-based compensation expense  9,648   3,171 
    Deferred income taxes  (687)  (6,001)
    Other, net  (18)  7 
    Changes in assets and liabilities:        
    Accounts receivable  8,768   14,463 
    Prepaid expenses and other current assets  (805)  1,184 
    Other long-term assets  (3,628)  (321)
    Accounts payable  (767)  (3,001)
    Accrued compensation and benefits  2,626   (2,581)
    Other accrued expenses and current liabilities  183   8,580 
    Operating lease right-of-use assets and liabilities, net  126   (17)
    Deferred revenue  (2,810)  (2,129)
    Net cash provided by operating activities  36,571   28,036 
    INVESTING ACTIVITIES:        
    Capital expenditures  (3,039)  (1,644)
    Payments for acquisition of developed technology  (344)  (433)
    Other investing activities, net  (68)  62 
    Net cash used in investing activities  (3,451)  (2,015)
    FINANCING ACTIVITIES:        
    Payments on revolving commitment  (30,000)  — 
    Proceeds from the exercise of stock options  271   194 
    Other financing activities  (107)  (118)
    Net cash (used in) provided by financing activities  (29,836)  76 
    Effect of exchange rate changes on cash, cash equivalents and restricted cash  (1,331)  (2,113)
    Net increase in cash, cash equivalents and restricted cash  1,953   23,984 
    Cash, cash equivalents and restricted cash at beginning of year  241,547   223,497 
    Cash, cash equivalents and restricted cash at end of period $243,500  $247,481 
    Supplemental disclosure of cash flow:        
    Interest paid $47  $15 
    Income taxes paid $2,381  $1,831 
    Supplemental disclosure of non-cash investing and financing activities:        
    Finance leases $—  $29 
    Property and equipment in accounts payable, other current liabilities
     and other liabilities    		 $619  $382 


    Financial Results

    The following table provides a reconciliation of 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) 2021  2020 
    Net income $14,360  $6,030 
    Stock-based compensation expense  9,648   3,171 
    Amortization of intangible assets  4,877   3,840 
    Non-cash interest expense  2,800   2,648 
    Restructuring expense  3,346   — 
    Impact of non-GAAP tax rate  (9,077)  (637)
    Non-GAAP net income $25,954  $15,052 
             
    Net income per share - diluted $0.18  $0.08 
    Non-GAAP net income per share - diluted $0.31  $0.19 
             
    GAAP diluted shares outstanding:  79,295   77,004 
    Non-GAAP diluted shares outstanding:  83,400   78,400 

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

      (Unaudited) 
      Three Months Ended
    March 31,    		 
    (in thousands) 2021  2020 
    Net income $14,360  $6,030 
    Income tax expense  41   4,652 
    Stock-based compensation expense  9,648   3,171 
    Interest expense  2,973   2,813 
    Depreciation and amortization  6,686   5,660 
    Restructuring expense  3,346   — 
    Special adjustments, interest income and other  (94)  (654)
    Adjusted EBITDA $36,960  $21,672 

    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) 2021  2020 
    Net cash provided by operating activities $36,571  $28,036 
    Capital expenditures  (3,039)  (1,644)
    Free cash flow $33,532  $26,392 

    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, 2021    		  Year Ending
    December 31, 2021    		 
    (in thousands) Low  High  Low  High 
    Net loss $(23,700) $(21,800) $(37,600) $(29,800)
    Stock-based compensation expense  11,100   11,100   44,200   44,200 
    Amortization of intangible assets  4,700   4,700   17,700   17,700 
    Non-cash interest expense  2,800   2,800   11,400   11,400 
    Restructuring expense  2,000   2,000   5,300   5,300 
    Impact of non-GAAP tax rate  3,200   2,800   (3,000)  (4,800)
    Non-GAAP net income $100  $1,600  $38,000  $44,000 

    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, 2021    		  Year Ending
    December 31, 2021    		 
    (in thousands) Low  High  Low  High 
    Net loss $(23,700) $(21,800) $(37,600) $(29,800)
    Income tax expense  3,200   3,300   10,400   10,600 
    Stock-based compensation expense  11,100   11,100   44,200   44,200 
    Interest expense  3,000   3,000   12,000   12,000 
    Depreciation and amortization  6,500   6,500   24,900   24,900 
    Restructuring expense  2,000   2,000   5,300   5,300 
    Special adjustments, interest income and other  (100)  (100)  (200)  (200)
    Adjusted EBITDA $2,000  $4,000  $59,000  $67,000 

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