Altair Announces First Quarter 2022 Financial Results


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.

Altair Engineering Inc



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