TROY, Mich., May 09, 2019 (GLOBE NEWSWIRE) --
Altair (Nasdaq:ALTR), a global technology company providing solutions in product development, high-performance computing and data intelligence, today released its financial results for the first quarter ended March 31, 2019.
“Altair delivered an excellent first quarter, with financial results above guidance,” said James Scapa, founder, chairman and chief executive officer. “We look forward to continued success throughout 2019 as we expand our footprint within our user base, industries and geographies. Our simulation-centric portfolio for design, data, cloud and AI is uniquely positioned for growth as these technologies converge.”
First Quarter 2019 Financial Highlights
- Software product revenue was $103.3 million.
- Non-GAAP software product revenue was $105.5 million. Non-GAAP software product revenue includes revenue not recognized under GAAP due to acquisition accounting adjustments associated with the accounting for deferred revenue in significant business combinations.
- Total revenue was $127.9 million.
- Non-GAAP total revenue was $130.1 million. Non-GAAP total revenue includes revenue not recognized under GAAP due to acquisition accounting adjustments associated with the accounting for deferred revenue in significant business combinations.
- Net income was $13.0 million. Diluted net income per share was $0.17 based on 76.7 million diluted weighted average common shares outstanding.
- Adjusted EBITDA was $24.0 million. 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 determined by management.
- Modified Adjusted EBITDA was $26.2 million. Modified Adjusted EBITDA represents Adjusted EBITDA adjusted for revenue not recognized under GAAP due to acquisition accounting adjustments associated with the accounting for deferred revenue in significant business combinations.
- Non-GAAP net income was $20.2 million. Non-GAAP diluted net income per share was $0.26 based on 77.7 million non-GAAP diluted common shares outstanding. Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, non-recurring adjustments, revenue not recognized under GAAP due to acquisition accounting and certain tax adjustments.
- Free cash flow, which consists of cash flow from operations less capital expenditures, was $20.7 million.
Business Outlook
Based on information available as of today, Altair is issuing guidance for the second quarter and full year 2019.
Second Quarter 2019 | Full Year 2019 | |||||||||||
Software Product Revenue | $ | 83.0 | to | $ | 85.0 | $ | 373.0 | to | $ | 377.0 | ||
Non-GAAP Software Product Revenue | $ | 85.2 | $ | 87.2 | $ | 382.0 | $ | 386.0 | ||||
Total Revenue | $ | 106.0 | $ | 108.0 | $ | 470.0 | $ | 474.0 | ||||
Non-GAAP Total Revenue | $ | 108.2 | $ | 110.2 | $ | 479.0 | $ | 483.0 | ||||
Net (Loss) Income | $ | (2.9 | ) | $ | (0.9 | ) | $ | 14.6 | $ | 18.6 | ||
Non-GAAP Net Income | $ | 5.6 | $ | 7.6 | $ | 47.8 | $ | 51.8 | ||||
Adjusted EBITDA | $ | 3.8 | $ | 5.8 | $ | 53.0 | $ | 57.0 | ||||
Modified Adjusted EBITDA | $ | 6.0 | $ | 8.0 | $ | 62.0 | $ | 66.0 |
(All figures in millions)
Conference Call Information
What: | Altair’s First Quarter 2019 Financial Results Conference Call |
When: | Thursday, May 9, 2019 |
Time: | 4:30 p.m. ET |
Live Call: | (866) 754-5204, Domestic
(636) 812-6621, International |
Replay: | (855) 859-2056, Conference ID 6894064, Domestic
(404) 537-3406, Conference ID 6894064, International |
Webcast: | http://investor.altair.com (live & replay) |
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: Non-GAAP Software Product Revenue, Non-GAAP Total Revenue, Adjusted EBITDA, Modified 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.
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 product design and development, high-performance computing (HPC) and data 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 2019, statements regarding our anticipated success, expected expansion of our footprint, positioning for growth and convergence of technologies, 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 forward-looking statements due to a number of factors, including but not limited to, 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.
Investor and Media Relations
Dave Simon
Altair
248-614-2400 ext. 332
pr@altair.com
Altair Engineering Inc. and Subsidiaries | |||||||||
Consolidated Balance Sheets | |||||||||
(unaudited) | |||||||||
March 31,
2019 | December 31,
2018 | ||||||||
(In thousands) | |||||||||
ASSETS | |||||||||
CURRENT ASSETS: | |||||||||
Cash and cash equivalents | $ | 39,771 | $ | 35,345 | |||||
Accounts receivable, net | 88,358 | 96,803 | |||||||
Inventory, net | 3,389 | 1,964 | |||||||
Income tax receivable | 8,137 | 4,431 | |||||||
Prepaid expenses and other current assets | 15,976 | 15,491 | |||||||
Total current assets | 155,631 | 154,034 | |||||||
Property and equipment, net | 33,524 | 30,153 | |||||||
Operating lease right of use assets | 29,892 | - | |||||||
Goodwill | 210,714 | 210,532 | |||||||
Other intangible assets, net | 68,469 | 69,836 | |||||||
Deferred tax assets | 1,978 | 1,373 | |||||||
Other long-term assets | 18,658 | 17,288 | |||||||
TOTAL ASSETS | $ | 518,866 | $ | 483,216 | |||||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | |||||||||
CURRENT LIABILITIES: | |||||||||
Current portion of long-term debt | $ | 453 | $ | 331 | |||||
Accounts payable | 6,569 | 8,357 | |||||||
Accrued compensation and benefits | 28,643 | 31,740 | |||||||
Current portion of operating lease liabilities | 9,464 | - | |||||||
Other accrued expenses and current liabilities | 31,910 | 27,565 | |||||||
Deferred revenue | 66,030 | 59,765 | |||||||
Total current liabilities | 143,069 | 127,758 | |||||||
Long-term debt, net of current portion | 15,686 | 31,417 | |||||||
Operating lease liabilities, net of current portion | 21,744 | - | |||||||
Deferred revenue, non-current | 6,511 | 6,754 | |||||||
Other long-term liabilities | 27,811 | 28,153 | |||||||
TOTAL LIABILITIES | 214,821 | 194,082 | |||||||
Commitments and contingencies | |||||||||
MEZZANINE EQUITY | 2,352 | 2,352 | |||||||
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
38,760 and 38,349 shares as of March 31, 2019 and December 31, 2018, respectively | 4 | 4 | |||||||
Class B common stock, authorized 41,203 shares, issued and outstanding
32,171 and 32,171 shares as of March 31, 2019 and December 31, 2018, respectively | 3 | 3 | |||||||
Additional paid-in capital | 381,159 | 379,832 | |||||||
Accumulated deficit | (68,986 | ) | (82,005 | ) | |||||
Accumulated other comprehensive loss | (10,487 | ) | (11,052 | ) | |||||
TOTAL STOCKHOLDERS’ EQUITY | 301,693 | 286,782 | |||||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY | $ | 518,866 | $ | 483,216 | |||||
Altair Engineering Inc. and Subsidiaries | ||||||||||
Consolidated Statements of Operations | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended
March 31, | ||||||||||
(in thousands, except per share data) | 2019 | 2018 | ||||||||
Revenue | ||||||||||
License | $ | 76,621 | $ | 66,935 | ||||||
Maintenance and other services | 26,670 | 22,734 | ||||||||
Total software | 103,291 | 89,669 | ||||||||
Software related services | 9,772 | 9,473 | ||||||||
Total software and related services | 113,063 | 99,142 | ||||||||
Client engineering services | 12,050 | 12,080 | ||||||||
Other | 2,746 | 2,035 | ||||||||
Total revenue | 127,859 | 113,257 | ||||||||
Cost of revenue | ||||||||||
License * | 5,821 | 3,730 | ||||||||
Maintenance and other services * | 8,531 | 7,192 | ||||||||
Total software | 14,352 | 10,922 | ||||||||
Software related services | 6,518 | 6,709 | ||||||||
Total software and related services | 20,870 | 17,631 | ||||||||
Client engineering services | 9,800 | 10,200 | ||||||||
Other | 2,215 | 1,211 | ||||||||
Total cost of revenue | 32,885 | 29,042 | ||||||||
Gross profit | 94,974 | 84,215 | ||||||||
Operating expenses: | ||||||||||
Research and development* | 27,516 | 22,703 | ||||||||
Sales and marketing* | 26,451 | 18,627 | ||||||||
General and administrative* | 20,329 | 16,990 | ||||||||
Amortization of intangible assets | 3,528 | 1,940 | ||||||||
Other operating income | (617 | ) | (2,191 | ) | ||||||
Total operating expenses | 77,207 | 58,069 | ||||||||
Operating income | 17,767 | 26,146 | ||||||||
Interest expense | 270 | 16 | ||||||||
Other expense (income), net | 390 | (900 | ) | |||||||
Income before income taxes | 17,107 | 27,030 | ||||||||
Income tax expense | 4,088 | 2,346 | ||||||||
Net income | $ | 13,019 | $ | 24,684 | ||||||
Income per share: | ||||||||||
Net income per share attributable to common stockholders, basic | $ | 0.18 | $ | 0.39 | ||||||
Net income per share attributable to common stockholders, diluted | $ | 0.17 | $ | 0.34 | ||||||
Weighted average shares outstanding: | ||||||||||
Weighted average number of shares used in computing net income per share,
basic | 70,786 | 63,638 | ||||||||
Weighted average number of shares used in computing net income per share,
diluted | 76,720 | 72,390 | ||||||||
*Amounts include stock-based compensation expense as follows (in thousands): | ||||||
(Unaudited) | ||||||
Three Months Ended
March 31, | ||||||
2019 | 2018 | |||||
Cost of revenue – software | $ | 64 | $ | 8 | ||
Research and development | 358 | 47 | ||||
Sales and marketing | 462 | 41 | ||||
General and administrative | 328 | 120 | ||||
Total stock-based compensation expense | $ | 1,212 | $ | 216 | ||
Altair Engineering Inc. and Subsidiaries | |||||||||
Consolidated Statements of Cash Flows | |||||||||
(Unaudited) | |||||||||
Three Months Ended
March 31, | |||||||||
(In thousands) | 2019 | 2018 | |||||||
OPERATING ACTIVITIES: | |||||||||
Net income | $ | 13,019 | $ | 24,684 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 5,194 | 3,543 | |||||||
Provision for bad debt | 120 | 65 | |||||||
Stock-based compensation expense | 1,212 | 216 | |||||||
Deferred income taxes | (654 | ) | 271 | ||||||
Other, net | 4 | (7 | ) | ||||||
Changes in assets and liabilities: | |||||||||
Accounts receivable | 7,678 | 4,492 | |||||||
Prepaid expenses and other current assets | (5,755 | ) | (1,091 | ) | |||||
Other long-term assets | (1,516 | ) | 116 | ||||||
Accounts payable | (1,792 | ) | 510 | ||||||
Accrued compensation and benefits | (2,815 | ) | (1,560 | ) | |||||
Other accrued expenses and current liabilities | 4,093 | (3,545 | ) | ||||||
Operating lease right-of-use assets and liabilities, net | 286 | - | |||||||
Deferred revenue | 6,241 | (1,005 | ) | ||||||
Net cash provided by operating activities | 25,315 | 26,689 | |||||||
INVESTING ACTIVITIES: | |||||||||
Capital expenditures | (4,583 | ) | (1,684 | ) | |||||
Payments for acquisition of developed technology | (344 | ) | (353 | ) | |||||
Payments for acquisition of businesses, net of cash acquired | — | (1,199 | ) | ||||||
Other investing activities, net | 2 | 23 | |||||||
Net cash used in investing activities | (4,925 | ) | (3,213 | ) | |||||
FINANCING ACTIVITIES: | |||||||||
Payments on revolving commitment | (68,395 | ) | — | ||||||
Borrowings under revolving commitment | 52,289 | — | |||||||
Proceeds from the exercise of stock options | 458 | 302 | |||||||
Payments for initial public offering costs | — | (186 | ) | ||||||
Other financing activities | (119 | ) | (111 | ) | |||||
Net cash (used in) provided by financing activities | (15,767 | ) | 5 | ||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (176 | ) | 495 | ||||||
Net increase in cash, cash equivalents and restricted cash | 4,447 | 23,976 | |||||||
Cash, cash equivalents and restricted cash at beginning of year | 35,685 | 39,578 | |||||||
Cash, cash equivalents and restricted cash at end of period | $ | 40,132 | $ | 63,554 | |||||
Supplemental disclosure of cash flow: | |||||||||
Interest paid | $ | 225 | $ | 10 | |||||
Income taxes paid | $ | 2,327 | $ | 2,143 | |||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||||
Finance leases | $ | 488 | $ | 565 | |||||
Property and equipment in accounts payable | $ | 295 | $ | 736 | |||||
Financial Results
The following table provides a reconciliation of Non-GAAP net income and Non-GAAP diluted income per share to net income and income per share - diluted, the most comparable GAAP financial measures (in thousands, except per share amounts): | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended
March 31, | ||||||||||||
2019 | 2018 | |||||||||||
Net income | $ | 13,019 | $ | 24,684 | ||||||||
Stock-based compensation expense | 1,212 | 216 | ||||||||||
Amortization of intangible assets | 3,528 | 1,940 | ||||||||||
Acquisition related deferred revenue (1) | 2,250 | - | ||||||||||
Special adjustments (2) | 228 | (1,152 | ) | |||||||||
Income tax effect of non-GAAP adjustments (3) | (54 | ) | - | |||||||||
Non-GAAP net income | $ | 20,183 | $ | 25,688 | ||||||||
Income per share - diluted | $ | 0.17 | $ | 0.34 | ||||||||
Non-GAAP income per share - diluted | $ | 0.26 | $ | 0.35 | ||||||||
GAAP diluted shares outstanding: | 76,720 | 72,390 | ||||||||||
Non-GAAP diluted shares outstanding: | 77,700 | 72,800 | ||||||||||
(1 | ) | Represents revenue not recognized under GAAP due to acquisition accounting adjustment associated with the accounting for deferred revenue in significant business combinations.
| ||||||||||
(2 | ) | Includes an impairment charge for royalty contracts resulting in $0.2 million and $0.9 million of expense for the three months ended March 31, 2019 and 2018, respectively. Includes a non-recurring adjustment for a change in estimated legal expenses resulting in $2.0 million of income for the three months ended March 31, 2018.
| ||||||||||
(3 | ) | The income tax effect of non-GAAP adjustments for 2018 is affected by the U.S. valuation allowance. |
The following table provides a reconciliation of Adjusted EBITDA and Modified Adjusted EBITDA to net income, the most comparable GAAP financial measure (in thousands): | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended
March 31, | |||||||||||
2019 | 2018 | ||||||||||
Net income | $ | 13,019 | $ | 24,684 | |||||||
Income tax expense | 4,088 | 2,346 | |||||||||
Stock-based compensation expense | 1,212 | 216 | |||||||||
Interest expense | 270 | 16 | |||||||||
Interest income and other(1) | 201 | (1,255 | ) | ||||||||
Depreciation and amortization | 5,194 | 3,543 | |||||||||
Adjusted EBITDA | $ | 23,984 | $ | 29,550 | |||||||
Acquisition related deferred revenue (2) | $ | 2,250 | $ | - | |||||||
Modified Adjusted EBITDA | $ | 26,234 | $ | 29,550 | |||||||
(1 | ) | Includes an impairment charge for royalty contracts resulting in $0.2 million and $0.9 million of expense for the three months ended March 31, 2019 and 2018, respectively. Includes a non-recurring adjustment for a change in estimated legal expenses resulting in $2.0 million of income for the three months ended March 31, 2018. | |||||||||
(2 | ) | Represents revenue not recognized under GAAP due to acquisition accounting adjustment associated with the accounting for deferred revenue in significant business combinations. | |||||||||
The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure (in thousands): | |||||||||
(Unaudited) | |||||||||
Three Months Ended
March 31, | |||||||||
2019 | 2018 | ||||||||
Net cash provided by operating activities | $ | 25,315 | $ | 26,689 | |||||
Capital expenditures | (4,583 | ) | (1,684 | ) | |||||
Free cash flow | $ | 20,732 | $ | 25,005 | |||||
Business Outlook
The following table provides a reconciliation of projected Non-GAAP net income to projected net (loss) income, the most comparable GAAP financial measure (in thousands): | ||||||||||||||
(Unaudited) | ||||||||||||||
Three months ending | Year ending | |||||||||||||
June 30, 2019 | December 31, 2019 | |||||||||||||
low | high | low | high | |||||||||||
Net (loss) income | $ | (2,900 | ) | $ | (900 | ) | $ | 14,600 | $ | 18,600 | ||||
Stock-based compensation expense | 2,000 | 2,000 | 7,000 | 7,000 | ||||||||||
Amortization of intangible assets | 3,800 | 3,800 | 15,200 | 15,200 | ||||||||||
Software licenses deferred revenue fair value adjustment (1) | 2,200 | 2,200 | 9,000 | 9,000 | ||||||||||
Non-recurring adjustments | 500 | 500 | 2,000 | 2,000 | ||||||||||
Non-GAAP net income | $ | 5,600 | $ | 7,600 | $ | 47,800 | $ | 51,800 | ||||||
(1) Adjustments for revenue not recognized under GAAP due to acquisition accounting adjustment associated with the accounting for deferred revenue in significant business combinations. | ||||||||||||||
The following table provides a reconciliation of projected Adjusted EBITDA to projected net (loss) income, the most comparable GAAP financial measure (in thousands): | ||||||||||||||
(Unaudited) | ||||||||||||||
Three months ending | Year ending | |||||||||||||
June 30, 2019 | December 31, 2019 | |||||||||||||
low | high | low | high | |||||||||||
Net (loss) income | $ | (2,900 | ) | $ | (900 | ) | $ | 14,600 | $ | 18,600 | ||||
Income tax expense | (1,000 | ) | (1,000 | ) | 7,200 | 7,200 | ||||||||
Stock-based compensation expense | 2,000 | 2,000 | 7,000 | 7,000 | ||||||||||
Interest expense | - | - | - | - | ||||||||||
Depreciation and amortization | 5,200 | 5,200 | 22,200 | 22,200 | ||||||||||
Interest income and other non-recurring adjustments | 500 | 500 | 2,000 | 2,000 | ||||||||||
Adjusted EBITDA | $ | 3,800 | $ | 5,800 | $ | 53,000 | $ | 57,000 | ||||||
Software licenses deferred revenue fair value adjustment (1) | 2,200 | 2,200 | 9,000 | 9,000 | ||||||||||
Modified Adjusted EBITDA | $ | 6,000 | $ | 8,000 | $ | 62,000 | $ | 66,000 | ||||||
(1) Adjustments for revenue not recognized under GAAP due to acquisition accounting adjustment associated with the accounting for deferred revenue in significant business combinations. | ||||||||||||||
The following table provides a reconciliation of Non-GAAP Total Revenue to Total Revenue, the most comparable GAAP financial measure (in millions): | ||||||||||||||
(Unaudited) | ||||||||||||||
Three months ending | Year ending | |||||||||||||
June 30, 2019 | December 31, 2019 | |||||||||||||
low | high | low | high | |||||||||||
Total Revenue (GAAP) | $ | 106.0 | $ | 108.0 | $ | 470.0 | $ | 474.0 | ||||||
Software licenses deferred revenue fair value adjustment (1) | 2.2 | 2.2 | 9.0 | 9.0 | ||||||||||
Non-GAAP Total Revenue | $ | 108.2 | $ | 110.2 | $ | 479.0 | $ | 483.0 | ||||||
(1) Adjustments for revenue not recognized under GAAP due to acquisition accounting adjustment associated with the accounting for deferred revenue in significant business combinations. | ||||||||||||||
The following table provides a reconciliation of Non-GAAP Software Product Revenue to Total Software Product Revenue, the most comparable GAAP financial measure (in millions): | ||||||||||||||
(Unaudited) | ||||||||||||||
Three months ending | Year ending | |||||||||||||
June 30, 2019 | December 31, 2019 | |||||||||||||
low | high | low | high | |||||||||||
Total Software Product Revenue (GAAP) | $ | 83.0 | $ | 85.0 | $ | 373.0 | $ | 377.0 | ||||||
Software licenses deferred revenue fair value adjustment (1) | 2.2 | 2.2 | 9.0 | 9.0 | ||||||||||
Non-GAAP Total Software Product Revenue | $ | 85.2 | $ | 87.2 | $ | 382.0 | $ | 386.0 | ||||||
(1) Adjustments for revenue not recognized under GAAP due to acquisition accounting adjustment associated with the accounting for deferred revenue in significant business combinations. |