• Altair Announces Third Quarter 2021 Financial Results

    Source: Nasdaq GlobeNewswire / 04 Nov 2021 15:05:01   America/Chicago

    TROY, Mich., Nov. 04, 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 third quarter ended September 30, 2021.

    “Altair continued its across-the-board momentum with an excellent third quarter 2021, highlighted by year-on-year software product revenue growth of 16.5%,” said James Scapa, Founder, Chairman and Chief Executive Officer of Altair. “Our products, services, and business models are clearly providing value and we continue to increase our market share as customers invest for growth.”

    “Our third quarter 2021 was another impressive quarter, with revenue and profit exceeding expectations and allowing us to raise our outlook for the full year,” said Matt Brown, Chief Financial Officer of Altair. “I’m extremely pleased with our financial results and our ability to continue expanding our margins while significantly growing revenue.”

    Third Quarter 2021 Financial Highlights

    • Software product revenue was $102.3 million compared to $87.8 million for the third quarter of 2020, an increase of 16.5%
    • Total revenue was $121.3 million compared to $106.5 million for the third quarter of 2020, an increase of 14.0%
    • Net loss was $8.1 million compared to a net loss of $8.5 million for the third quarter of 2020. Diluted net loss per share was $0.11 based on 75.8 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $0.12 for the third quarter of 2020, based on 73.3 million diluted weighted average common shares outstanding
    • Adjusted EBITDA was $14.8 million compared to $8.2 million for the third quarter of 2020, an increase of 81.4%. Adjusted EBITDA margin was 12.2% compared to 7.7% for the third quarter of 2020
    • Non-GAAP net income was $9.6 million, compared to Non-GAAP net income of $4.7 million for the third quarter of 2020, an increase of 107.1%. Non-GAAP diluted net income per share was $0.11 based on 86.3 million non-GAAP diluted common shares outstanding, compared to Non-GAAP diluted net income per share of $0.06 for the third quarter of 2020, based on 80.7 million non-GAAP diluted common shares outstanding
    • Free cash flow was $(0.5) million, compared to $(7.5) million for the third quarter of 2020

    Business Outlook

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

    (in millions)Fourth Quarter 2021 Full Year 2021 
    Software Product Revenue $106.0 to$109.0  $437.0 to$440.0 
    Total Revenue $124.0  $127.0  $515.0  $518.0 
    Net Loss $(13.1) $(10.2) $(20.8) $(17.9)
    Non-GAAP Net Income $6.8  $9.0  $47.7  $49.9 
    Adjusted EBITDA $11.0  $14.0  $72.0  $75.0 
    Net Cash Provided by Operating Activities         $49.6  $52.6 
    Free Cash Flow         $41.0  $44.0 


    Conference Call Information  
    What: Altair’s Third Quarter 2021 Financial Results Conference Call
    When: Thursday, November 4, 2021
    Time: 5:00 p.m. ET
    Live Call: (866) 754-5204, Domestic
      (636) 812-6621, International
    Replay: (855) 859-2056, Conference ID 7966437, Domestic
      (404) 537-3406, Conference ID 7966437, 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 providing 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 fourth 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

      September 30, 2021  December 31, 2020 
    (In thousands) (Unaudited)     
    ASSETS        
    CURRENT ASSETS:        
    Cash and cash equivalents $455,858  $241,221 
    Accounts receivable, net  88,701   117,878 
    Income tax receivable  8,929   6,736 
    Prepaid expenses and other current assets  26,017   21,100 
    Total current assets  579,505   386,935 
    Property and equipment, net  38,711   36,332 
    Operating lease right of use assets  30,916   33,526 
    Goodwill  268,888   264,481 
    Other intangible assets, net  61,540   76,114 
    Deferred tax assets  8,221   7,125 
    Other long-term assets  26,702   25,389 
    TOTAL ASSETS $1,014,483  $829,902 
    LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY        
    CURRENT LIABILITIES:        
    Current portion of long-term debt $—  $29,962 
    Accounts payable  4,900   8,594 
    Accrued compensation and benefits  35,999   34,772 
    Current portion of operating lease liabilities  10,342   10,331 
    Other accrued expenses and current liabilities  24,721   31,404 
    Deferred revenue  75,138   85,691 
    Convertible senior notes, net  196,796   — 
    Total current liabilities  347,896   200,754 
    Convertible senior notes, net  —   188,300 
    Operating lease liabilities, net of current portion  21,610   24,323 
    Deferred revenue, non-current  9,290   9,388 
    Other long-term liabilities  32,641   27,767 
    TOTAL LIABILITIES  411,437   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 50,558
    and 44,216 shares as of September 30, 2021, and December 31, 2020, respectively    		  5   4 
    Class B common stock, authorized 41,203 shares, issued and outstanding 28,206
    and 30,111 shares as of September 30, 2021, and December 31, 2020, respectively    		  3   3 
    Additional paid-in capital  711,082   474,669 
    Accumulated deficit  (100,690)  (93,293)
    Accumulated other comprehensive loss  (8,138)  (2,797)
    TOTAL STOCKHOLDERS’ EQUITY  602,262   378,586 
    TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $1,014,483  $829,902 
             

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

      Three Months Ended
    September 30,    		  Nine Months Ended
    September 30,    		 
    (in thousands, except per share data) 2021  2020  2021  2020 
    Revenue                
    License $67,603  $55,023  $230,630  $183,584 
    Maintenance and other services  34,686   32,787   100,758   94,502 
    Total software  102,289   87,810   331,388   278,086 
    Software related services  7,650   6,170   23,229   18,548 
    Total software and related services  109,939   93,980   354,617   296,634 
    Client engineering services  10,060   10,868   31,005   34,386 
    Other  1,308   1,608   5,760   5,460 
    Total revenue  121,307   106,456   391,382   336,480 
    Cost of revenue                
    License  4,694   4,477   13,706   12,851 
    Maintenance and other services  11,770   9,626   35,368   28,583 
    Total software *  16,464   14,103   49,074   41,434 
    Software related services  5,707   4,996   17,560   15,141 
    Total software and related services  22,171   19,099   66,634   56,575 
    Client engineering services  7,982   8,510   25,163   27,617 
    Other  1,348   1,427   5,072   4,422 
    Total cost of revenue  31,501   29,036   96,869   88,614 
    Gross profit  89,806   77,420   294,513   247,866 
    Operating expenses:                
    Research and development *  35,839   30,678   112,872   91,115 
    Sales and marketing *  30,589   26,998   94,568   80,903 
    General and administrative *  22,196   20,905   67,983   63,499 
    Amortization of intangible assets  4,432   3,858   13,924   11,390 
    Other operating income, net  (1,324)  (1,596)  (2,526)  (3,431)
    Total operating expenses  91,732   80,843   286,821   243,476 
    Operating (loss) income  (1,926)  (3,423)  7,692   4,390 
    Interest expense  3,037   2,934   8,998   8,590 
    Other expense (income), net  124   (782)  1,667   (1,852)
    Loss before income taxes  (5,087)  (5,575)  (2,973)  (2,348)
    Income tax expense  3,022   2,930   4,424   10,350 
    Net loss $(8,109) $(8,505) $(7,397) $(12,698)
    Loss per share:                
    Net loss per share attributable to common
    stockholders, basic    		 $(0.11) $(0.12) $(0.10) $(0.17)
    Net loss per share attributable to common
    stockholders, diluted    		 $(0.11) $(0.12) $(0.10) $(0.17)
    Weighted average shares outstanding:                
    Weighted average number of shares used in computing
    net loss per share, basic    		  75,750   73,311   75,226   72,979 
    Weighted average number of shares used in computing
    net loss per share, diluted    		  75,750   73,311   75,226   72,979 

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

      (Unaudited) 
      Three Months Ended
    September 30,    		  Nine Months Ended
    September 30,    		 
      2021  2020  2021  2020 
    Cost of revenue – maintenance and other services $1,411  $684  $3,791  $1,602 
    Research and development  3,894   2,428   11,223   5,686 
    Sales and marketing  3,673   1,949   10,800   3,949 
    General and administrative  1,955   1,173   5,415   2,702 
    Total stock-based compensation expense $10,933  $6,234  $31,229  $13,939 
                     

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

      Nine Months Ended September 30, 
    (In thousands) 2021  2020 
    OPERATING ACTIVITIES:        
    Net loss $(7,397) $(12,698)
    Adjustments to reconcile net loss to net cash provided by operating activities:        
    Depreciation and amortization  19,355   16,916 
    Provision for credit loss  330   930 
    Amortization of debt discount and issuance costs  8,513   8,067 
    Stock-based compensation expense  31,229   13,939 
    Deferred income taxes  (510)  (5,441)
    Other, net  40   13 
    Changes in assets and liabilities:        
    Accounts receivable  26,770   16,213 
    Prepaid expenses and other current assets  (7,612)  (1,055)
    Other long-term assets  (5,018)  867 
    Accounts payable  (2,432)  (3,321)
    Accrued compensation and benefits  481   1,274 
    Other accrued expenses and current liabilities  483   (5,873)
    Deferred revenue  (8,638)  (2,452)
    Net cash provided by operating activities  55,594   27,379 
    INVESTING ACTIVITIES:        
    Capital expenditures  (6,811)  (4,006)
    Payments for acquisition of businesses, net of cash acquired  (5,472)  (32,279)
    Payments for acquisition of developed technology  (344)  (433)
    Other investing activities, net  (284)  152 
    Net cash used in investing activities  (12,911)  (36,566)
    FINANCING ACTIVITIES:        
    Proceeds from private placement of common stock  200,000   — 
    Payments on revolving commitment  (30,000)  — 
    Proceeds from employee stock purchase plan contributions  2,110   — 
    Proceeds from the exercise of common stock options  2,059   1,094 
    Borrowings under revolving commitment  —   30,000 
    Other financing activities  (434)  (401)
    Net cash provided by financing activities  173,735   30,693 
    Effect of exchange rate changes on cash, cash equivalents and restricted cash  (1,951)  676 
    Net increase in cash, cash equivalents and restricted cash  214,467   22,182 
    Cash, cash equivalents and restricted cash at beginning of year  241,547   223,497 
    Cash, cash equivalents and restricted cash at end of period $456,014  $245,679 
    Supplemental disclosure of cash flow:        
    Interest paid $344  $320 
    Income taxes paid $8,077  $12,142 
    Supplemental disclosure of non-cash investing and financing activities:        
    Finance leases $—  $117 
    Property and equipment in accounts payable, other current liabilities
    and other liabilities    		 $480  $208 

    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
    September 30,    		  Nine Months Ended
    September 30,    		 
    (in thousands, except per share amounts) 2021  2020  2021  2020 
    Net loss $(8,109) $(8,505) $(7,397) $(12,698)
    Stock-based compensation expense  10,933   6,234   31,229   13,939 
    Amortization of intangible assets  4,432   3,858   13,924   11,390 
    Non-cash interest expense  2,876   2,725   8,513   8,062 
    Restructuring expense  (124)  —   4,954   — 
    Impact of non-GAAP tax rate  (366)  1,294   (10,044)  2,375 
    Special adjustments and other (1)  —   (950)  —   (372)
    Non-GAAP net income  9,642   4,656   41,179   22,696 
    Depreciation expense  1,743   1,765   5,431   5,526 
    Cash interest expense (income)  59   118   210   (601)
    Income tax expense, net of non-GAAP impact  3,388   1,636   14,468   7,975 
    Adjusted EBITDA $14,832  $8,175  $61,288  $35,596 
                     
    Net loss per share - diluted $(0.11) $(0.12) $(0.10) $(0.17)
    Non-GAAP net income per share - diluted $0.11  $0.06  $0.48  $0.28 
                     
    GAAP diluted shares outstanding:  75,750   73,311   75,226   72,979 
    Non-GAAP diluted shares outstanding:  86,300   80,700   86,300   80,700 

         (1)  Included in 2020 are a) $1.0 million of proceeds from settlements related to a historical acquisition for both the three and nine months ended September 30, 2020, and b) $0.6 million of severance expense for the nine months ended September 30, 2020.

    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
    September 30,    		  Nine Months Ended
    September 30,    		 
    (in thousands) 2021  2020  2021  2020 
    Net cash provided by (used in) operating activities $872  $(6,022) $55,594  $27,379 
    Capital expenditures  (1,420)  (1,476)  (6,811)  (4,006)
    Free cash flow $(548) $(7,498) $48,783  $23,373 
                     

    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
    December 31, 2021    		  Year Ending
    December 31, 2021    		 
    (in thousands) Low  High  Low  High 
    Net loss $(13,100) $(10,200) $(20,800) $(17,900)
    Stock-based compensation expense  11,500   11,500   42,700   42,700 
    Amortization of intangible assets  4,200   4,200   18,100   18,100 
    Non-cash interest expense  2,900   2,900   11,400   11,400 
    Restructuring expense  —   —   5,000   5,000 
    Impact of non-GAAP tax rate  1,300   600   (8,700)  (9,400)
    Non-GAAP net income  6,800   9,000   47,700   49,900 
    Depreciation expense  1,700   1,700   7,200   7,200 
    Cash interest expense, net  100   100   300   300 
    Income tax expense, net of non-GAAP impact  2,400   3,200   16,800   17,600 
    Adjusted EBITDA $11,000  $14,000  $72,000  $75,000 
                     

    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     $49,600  $52,600 
    Capital expenditures      (8,600)  (8,600)
    Free cash flow     $41,000  $44,000 
                 

     


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