- Total Revenue: $148.8 million, a year-over-year increase of 5.4% in reported currency and 7.8% in constant currency.
- Software Revenue: $135.4 million, a year-over-year increase of 8.1% in reported currency and 10.6% in constant currency.
- Adjusted EBITDA: $17.3 million, above the midpoint of the guided range.
- Non-GAAP Gross Margin: 80.9%, an increase of 90 basis points from the prior year period.
- GAAP Operating Expenses: $128.2 million, reflecting growth of 1.2% year-over-year.
- Non-GAAP Operating Expenses: $105.3 million, reflecting planned investments in product development and sales capacity.
- Free Cash Flow: $97.0 million for the six months ended June 30th, an increase of 16.8% year-over-year.
- Cash and Cash Equivalents: $507.0 million, an increase of approximately $88.7 million from the prior year period.
- Q3 Software Revenue Guidance: $130 to $133 million, a year-over-year increase of 9.2% to 11.7% in reported currency.
- Full Year 2024 Software Revenue Guidance: $590 to $600 million, a year-over-year increase of 7.3% to 9.1% in reported currency.
- Q3 Total Revenue Guidance: $145 to $148 million, a year-over-year increase of 8.2% to 10.4% in reported currency.
- Full Year 2024 Total Revenue Guidance: $648 to $658 million, a year-over-year increase of 5.8% to 7.4% in reported currency.
- Q3 Adjusted EBITDA Guidance: $16 to $19 million, or 11.0% to 12.8% of total revenue.
- Full Year 2024 Adjusted EBITDA Guidance: $136 to $144 million, or 21.0% to 21.9% of total revenue.
- Full Year 2024 Free Cash Flow Guidance: $122 to $130 million.
Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Altair Engineering Inc (ALTR, Financial) reported total quarterly revenue of $148.8 million, surpassing the high end of their guidance.
- Software revenue accounted for $135.4 million, representing 91% of total revenue, up from 88.8% in the same quarter last year.
- The company unveiled significant product enhancements with the release of Altair HyperWorks 2024, which includes advancements in artificial intelligence.
- Altair was named a leader in the Gartner Magic Quadrant for data science and machine learning platforms, validating their comprehensive offerings.
- The acquisition of Metrix Design Automation is expected to transform the semiconductor space with a cloud-based simulation service, making high-caliber EDA design tools more accessible and affordable.
Negative Points
- Despite strong performance, Altair Engineering Inc (ALTR) faces risks and uncertainties that could cause actual results to differ materially from expectations.
- The company’s reported results may be impacted by changes in foreign exchange rates, which could affect revenue and expenses.
- Non-GAAP operating expenses increased to $105.3 million from $96.9 million in the prior year, reflecting planned investments in product development and sales capacity.
- Adjusted EBITDA margin slightly decreased to 11.7% from 12.1% in the prior year, indicating higher operational costs.
- The company’s guidance for full-year 2024 adjusted EBITDA has been impacted by changes in foreign currency exchange rates, leading to a revised outlook.
Q & A Highlights
Q: Can you talk about the go-to-market strategy for both traditional products like HyperMesh and newer data-focused products like RapidMiner?
A: (James R. Scapa, Chairman & CEO) We have moved to a vertical market orientation for strategic accounts, particularly in aerospace and defense. Our account teams are spread globally, and we are expanding from traditional products like HyperMesh to newer ones like RapidMiner. The sales teams are becoming more comfortable with these applications, and we bring in experts as needed. AI technology is a significant differentiator for us, and we see our position rising in many accounts due to this.
Q: How are customers reacting to the AI capabilities in HyperWorks 2024? Is it a must-have for new deals?
A: (James R. Scapa, Chairman & CEO) Customers are increasingly seeing AI as a critical component. Our AI technology is putting us in a strong position in many accounts, and it is becoming a significant factor in our competitive edge.
Q: Can you elaborate on the importance of the channel and new partnerships?
A: (James R. Scapa, Chairman & CEO) The channel is particularly important for our data side and in regions where we have not historically gone to market indirectly. We are focusing on small and medium accounts through indirect channels and leveraging systems integrators for data modernization programs and graph technology implementations.
Q: Is there a go-to-market component in the HP partnership for material solutions?
A: (James R. Scapa, Chairman & CEO) Currently, there is no specific go-to-market component other than HP's material data being available in our material database module. This partnership enhances the utility of our solutions for designers and engineers.
Q: Any initial thoughts on the macroeconomic environment for 2025, particularly in the automotive sector?
A: (James R. Scapa, Chairman & CEO) Companies need to continue innovating aggressively, and downturns might not necessarily be bad for our business. We bring significant value to customers, and I feel optimistic about 2025. Our product lineup is strong, and we are well-positioned across simulation, data, and HPC.
Q: Can you provide more details on the metrics design automation acquisition and its impact on the EDA space?
A: (James R. Scapa, Chairman & CEO) The groundbreaking aspect is the business model, which allows scaling up simulations in the cloud. This can significantly accelerate design cycles. The logic simulator is competitive, and the business model is transformative, making high-caliber EDA tools more accessible.
Q: How is the uptake rate for your Physics AI tools?
A: (James R. Scapa, Chairman & CEO) A significant percentage of our customers are beginning to use Physics AI tools, and the uptake rate is very positive.
Q: Can you provide additional color on the HyperWorks 2024 rollout and its impact on customer adoption?
A: (James R. Scapa, Chairman & CEO) HyperWorks 2024 includes a broad-based release with significant improvements in user experience, performance, and graphics. Products like Inspire continue to be groundbreaking for simulation-driven design, and we expect increased adoption over the next 6-12 months.
Q: How should we think about the evolution of new verticals and their potential?
A: (James R. Scapa, Chairman & CEO) Some verticals have matured faster and are hitting their stride, like aerospace and defense. Others are continuing to mature, and we are making adjustments as needed. Adding domain expertise has been crucial, especially in areas like life sciences.
Q: Is the margin tweak down in the guidance due to foreign exchange, or is there something else?
A: (Matthew Charles Brown, CFO) The only impact to EBITDA is due to foreign exchange. Our full-year guide in constant currency is unchanged.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
