• Altair Announces Second Quarter 2021 Financial Results

    Source: Nasdaq GlobeNewswire / 05 Aug 2021 16:05:04   America/New_York

    TROY, Mich., Aug. 05, 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 second quarter ended June 30, 2021.

    “Altair had a strong second quarter 2021, with across-the-board success in multiple verticals, regions, and products, reflecting year on year software product revenue growth of 22%,” said James Scapa, Founder, Chairman and Chief Executive Officer of Altair. “Customers are investing to grow their businesses as we emerge from the pandemic, and Altair’s products, services, and business models are clearly resonating, gaining market awareness, and increasing market share.”

    “Once again we saw customer demand exceed expectations in the second quarter 2021, which enabled us to achieve results above the high end of our guidance range for the third consecutive quarter,” said Matt Brown, Chief Financial Officer of Altair. “The second quarter 2021 reflects solid execution on our strategy of driving strong organic topline revenue growth and profit expansion.”

    Second Quarter 2021 Financial Highlights

    • Software product revenue was $99.6 million compared to $81.8 million for the second quarter of 2020, an increase of 21.7%
    • Total revenue was $119.9 million compared to $98.6 million for the second quarter of 2020, an increase of 21.7%
    • Net loss was $13.6 million compared to a net loss of $10.2 million for the second quarter of 2020, an increase of 33.5%. Diluted net loss per share was $0.18 based on 75.3 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $0.14 for the second quarter of 2020, based on 73.0 million diluted weighted average common shares outstanding
    • Adjusted EBITDA was $9.5 million compared to $5.7 million for the second quarter of 2020, an increase of 65.2%. Adjusted EBITDA margin was 7.9% compared to 5.8% for the second quarter of 2020
    • Non-GAAP net income was $5.6 million, compared to Non-GAAP net income of $3.0 million for the second quarter of 2020, an increase of 86.8%. Non-GAAP diluted net income per share was $0.07 based on 83.4 million non-GAAP diluted common shares outstanding, compared to Non-GAAP diluted net income per share of $0.04 for the second quarter of 2020, based on 80.7 million non-GAAP diluted common shares outstanding
    • Free cash flow was $15.8 million, compared to $4.5 million for the second quarter of 2020, an increase of 252.7%

    Business Outlook

    Based on information available as of today, Altair is issuing the following guidance for the third quarter and full year 2021:  

    (in millions)Third Quarter 2021 Full Year 2021 
    Software Product Revenue $94.0 to$97.0  $434.0 to$440.0 
    Total Revenue $112.0  $115.0  $512.0  $518.0 
    Net Loss $(22.8) $(20.9) $(31.6) $(26.8)
    Non-GAAP Net Income $0.1  $1.6  $40.9  $44.6 
    Adjusted EBITDA $2.0  $4.0  $63.0  $68.0 
    Net Cash Provided by Operating Activities         $43.0  $48.0 
    Free Cash Flow         $34.0  $39.0 

    Conference Call Information

    What:Altair’s Second Quarter 2021 Financial Results Conference Call
      
    When:Thursday, August 5, 2021
      
    Time:5:00 p.m. ET
      
    Live Call:(866) 754-5204, Domestic
     (636) 812-6621, International
      
    Replay:(855) 859-2056, Conference ID 4173813, Domestic
     (404) 537-3406, Conference ID 4173813, 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, 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 third 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 ENGINEERING INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS

      June 30, 2021  December 31, 2020 
    (In thousands) (Unaudited)     
    ASSETS        
    CURRENT ASSETS:        
    Cash and cash equivalents $260,098  $241,221 
    Accounts receivable, net  91,570   117,878 
    Income tax receivable  7,949   6,736 
    Prepaid expenses and other current assets  23,030   21,100 
    Total current assets  382,647   386,935 
    Property and equipment, net  39,610   36,332 
    Operating lease right of use assets  33,395   33,526 
    Goodwill  262,963   264,481 
    Other intangible assets, net  66,637   76,114 
    Deferred tax assets  8,265   7,125 
    Other long-term assets  26,699   25,389 
    TOTAL ASSETS $820,216  $829,902 
    LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY 
    CURRENT LIABILITIES:        
    Current portion of long-term debt $—  $29,962 
    Accounts payable  6,515   8,594 
    Accrued compensation and benefits  35,846   34,772 
    Current portion of operating lease liabilities  10,770   10,331 
    Other accrued expenses and current liabilities  27,810   31,404 
    Deferred revenue  81,343   85,691 
    Convertible senior notes, net  193,926   — 
    Total current liabilities  356,210   200,754 
    Convertible senior notes, net  —   188,300 
    Operating lease liabilities, net of current portion  23,785   24,323 
    Deferred revenue, non-current  7,236   9,388 
    Other long-term liabilities  32,856   27,767 
    TOTAL LIABILITIES  420,087   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 46,392
    and 44,216 shares as of June 30, 2021, and December 31, 2020, respectively    		  4   4 
    Class B common stock, authorized 41,203 shares, issued and outstanding 29,091
    and 30,111 shares as of June 30, 2021, and December 31, 2020, respectively    		  3   3 
    Additional paid-in capital  495,824   474,669 
    Accumulated deficit  (92,581)  (93,293)
    Accumulated other comprehensive loss  (3,905)  (2,797)
    TOTAL STOCKHOLDERS’ EQUITY  399,345   378,586 
    TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $820,216  $829,902 

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

      Three Months Ended
    June 30,    		  Six Months Ended
    June 30,    		 
    (in thousands, except per share data) 2021  2020  2021  2020 
    Revenue                
    License $66,632  $51,018  $163,027  $128,561 
    Maintenance and other services  32,926   30,815   66,072   61,715 
    Total software  99,558   81,833   229,099   190,276 
    Software related services  7,481   5,444   15,579   12,378 
    Total software and related services  107,039   87,277   244,678   202,654 
    Client engineering services  10,268   9,640   20,945   23,518 
    Other  2,605   1,644   4,452   3,852 
    Total revenue  119,912   98,561   270,075   230,024 
    Cost of revenue                
    License  3,617   2,851   9,012   8,374 
    Maintenance and other services  12,043   8,502   23,598   18,957 
    Total software *  15,660   11,353   32,610   27,331 
    Software related services  5,731   4,656   11,853   10,145 
    Total software and related services  21,391   16,009   44,463   37,476 
    Client engineering services  8,293   7,789   17,181   19,107 
    Other  2,262   1,283   3,724   2,995 
    Total cost of revenue  31,946   25,081   65,368   59,578 
    Gross profit  87,966   73,480   204,707   170,446 
    Operating expenses:                
    Research and development *  38,757   28,970   77,033   60,437 
    Sales and marketing *  31,909   25,806   63,979   53,905 
    General and administrative *  21,861   20,248   45,787   42,594 
    Amortization of intangible assets  4,615   3,692   9,492   7,532 
    Other operating income, net  (585)  (944)  (1,202)  (1,835)
    Total operating expenses  96,557   77,772   195,089   162,633 
    Operating (loss) income  (8,591)  (4,292)  9,618   7,813 
    Interest expense  2,988   2,843   5,961   5,656 
    Other expense (income), net  708   320   1,543   (1,070)
    (Loss) income before income taxes  (12,287)  (7,455)  2,114   3,227 
    Income tax expense  1,361   2,768   1,402   7,420 
    Net (loss) income $(13,648) $(10,223) $712  $(4,193)
    (Loss) income per share:                
    Net (loss) income per share attributable to common
    stockholders, basic    		 $(0.18) $(0.14) $0.01  $(0.06)
    Net (loss) income per share attributable to common
    stockholders, diluted    		 $(0.18) $(0.14) $0.01  $(0.06)
    Weighted average shares outstanding:                
    Weighted average number of shares used in computing
    net (loss) income per share, basic    		  75,263   72,999   74,959   72,811 
    Weighted average number of shares used in computing
    net (loss) income per share, diluted    		  75,263   72,999   79,851   72,811 

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

      (Unaudited) 
      Three Months Ended
    June 30,    		  Six Months Ended
    June 30,    		 
      2021  2020  2021  2020 
    Cost of revenue – software $1,222  $552  $2,380  $918 
    Research and development  4,143   1,830   7,329   3,258 
    Sales and marketing  3,659   1,273   7,127   2,000 
    General and administrative  1,624   879   3,460   1,529 
    Total stock-based compensation expense $10,648  $4,534  $20,296  $7,705 

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

      Six Months Ended June 30, 
    (In thousands) 2021  2020 
    OPERATING ACTIVITIES:        
    Net income (loss) $712  $(4,193)
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
    Depreciation and amortization  13,180   11,293 
    Provision for credit loss  205   589 
    Amortization of debt discount and issuance costs  5,631   5,342 
    Stock-based compensation expense  20,296   7,705 
    Deferred income taxes  (1)  (5,961)
    Other, net  34   3 
    Changes in assets and liabilities:        
    Accounts receivable  24,852   23,264 
    Prepaid expenses and other current assets  (3,367)  1,817 
    Other long-term assets  (5,067)  (960)
    Accounts payable  (967)  (3,841)
    Accrued compensation and benefits  1,548   497 
    Other accrued expenses and current liabilities  2,999   161 
    Deferred revenue  (5,333)  (2,315)
    Net cash provided by operating activities  54,722   33,401 
    INVESTING ACTIVITIES:        
    Capital expenditures  (5,391)  (2,530)
    Payments for acquisition of developed technology  (344)  (433)
    Payments for acquisition of businesses, net of cash acquired  —   (2,270)
    Other investing activities, net  (45)  142 
    Net cash used in investing activities  (5,780)  (5,091)
    FINANCING ACTIVITIES:        
    Payments on revolving commitment  (30,000)  — 
    Proceeds from the exercise of stock options  885   477 
    Other financing activities  (206)  (210)
    Net cash (used in) provided by financing activities  (29,321)  267 
    Effect of exchange rate changes on cash, cash equivalents and restricted cash  (847)  (1,148)
    Net increase in cash, cash equivalents and restricted cash  18,774   27,429 
    Cash, cash equivalents and restricted cash at beginning of year  241,547   223,497 
    Cash, cash equivalents and restricted cash at end of period $260,321  $250,926 
    Supplemental disclosure of cash flow:        
    Interest paid $339  $306 
    Income taxes paid $3,744  $9,491 
    Supplemental disclosure of non-cash investing and financing activities:        
    Finance leases $—  $100 
    Property and equipment in accounts payable, other current liabilities
    and other liabilities    		 $631  $343 

    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
    June 30,    		  Six Months Ended
    June 30,    		 
    (in thousands, except per share amounts) 2021  2020  2021  2020 
    Net (loss) income $(13,648) $(10,223) $712  $(4,193)
    Stock-based compensation expense  10,648   4,534   20,296   7,705 
    Amortization of intangible assets  4,615   3,692   9,492   7,532 
    Non-cash interest expense  2,837   2,689   5,637   5,337 
    Restructuring expense  1,732   —   5,078   — 
    Special adjustments and other  —   578   —   578 
    Impact of non-GAAP tax rate  (601)  1,718   (9,678)  1,081 
    Non-GAAP net income $5,583  $2,988  $31,537  $18,040 
                     
    Net (loss) income per share - diluted $(0.18) $(0.14) $0.01  $(0.06)
    Non-GAAP net income per share - diluted $0.07  $0.04  $0.38  $0.22 
                     
    GAAP diluted shares outstanding:  75,263   72,999   79,851   72,811 
    Non-GAAP diluted shares outstanding:  83,400   80,700   83,400   80,700 

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

      (Unaudited) 
      Three Months Ended
    June 30,    		  Six Months Ended
    June 30,    		 
    (in thousands) 2021  2020  2021  2020 
    Net (loss) income $(13,648) $(10,223) $712  $(4,193)
    Income tax expense  1,361   2,768   1,402   7,420 
    Stock-based compensation expense  10,648   4,534   20,296   7,705 
    Interest expense  2,988   2,843   5,961   5,656 
    Depreciation and amortization  6,494   5,633   13,180   11,293 
    Restructuring expense  1,732   —   5,078   — 
    Special adjustments, interest income and other  (79)  194   (173)  (460)
    Adjusted EBITDA $9,496  $5,749  $46,456  $27,421 

    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
    June 30,    		  Six Months Ended
    June 30,    		 
    (in thousands) 2021  2020  2021  2020 
    Net cash provided by operating activities $18,151  $5,365  $54,722  $33,401 
    Capital expenditures  (2,352)  (886)  (5,391)  (2,530)
    Free cash flow $15,799  $4,479  $49,331  $30,871 

    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
    September 30, 2021    		  Year Ending
    December 31, 2021    		 
    (in thousands) Low  High  Low  High 
    Net loss $(22,800) $(20,900) $(31,600) $(26,800)
    Stock-based compensation expense  11,700   11,700   43,700   43,700 
    Amortization of intangible assets  4,500   4,500   17,600   17,600 
    Non-cash interest expense  2,900   2,900   11,400   11,400 
    Restructuring expense  500   500   5,600   5,600 
    Impact of non-GAAP tax rate  3,300   2,900   (5,800)  (6,900)
    Non-GAAP net income $100  $1,600  $40,900  $44,600 

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

      (Unaudited) 
      Three Months Ending
    September 30, 2021    		  Year Ending
    December 31, 2021    		 
    (in thousands) Low  High  Low  High 
    Net loss $(22,800) $(20,900) $(31,600) $(26,800)
    Income tax expense  3,300   3,400   8,600   8,800 
    Stock-based compensation expense  11,700   11,700   43,700   43,700 
    Interest expense  3,000   3,000   12,000   12,000 
    Depreciation and amortization  6,400   6,400   25,000   25,000 
    Restructuring expense  500   500   5,600   5,600 
    Special adjustments, interest income and other  (100)  (100)  (300)  (300)
    Adjusted EBITDA $2,000  $4,000  $63,000  $68,000 

    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, 2021    		 
    (in thousands)     Low  High 
    Net cash provided by operating activities     $43,000  $48,000 
    Capital expenditures      (9,000)  (9,000)
    Free cash flow     $34,000  $39,000 


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