Key PointsAnsys stock surged 18% on Synopsys acquisition news.Fellow software maker Altair, also seen as a potential acquisition target, advanced 11.48%.Analysts predict a 2024 M&A surge, despite potential antitrust challenges.5 stocks we like better than ANSYSShareholders of engineering simulation software maker Ansys Inc. NASDAQ: ANSS got a holiday gift as the stock rallied more than 18% on December 22 on news that Synopsys Inc. NASDAQ: SNPS was in discussions to acquire the company. According to a report ...

Core Viewpoint - Synopsys is in discussions to acquire Ansys, potentially creating a significant design-software entity and marking a notable merger in the new year [1] Group 1: Company Performance - Synopsys shares have increased over 70% this year, driven by investor interest in companies poised to benefit from the artificial intelligence boom [1] Group 2: Acquisition Details - Ansys has a market value of nearly $30 billion, and the acquisition could be finalized in early 2024 [1] - There is a possibility that the acquisition talks may not succeed, and other potential buyers could emerge [1]

ANSYS, Inc. (NASDAQ:ANSS) Q3 2023 Earnings Conference Call November 2, 2023 8:30 AM ET Company Participants Kelsey DeBriyn – Vice President-Investor Relations Ajei Gopal – President and Chief Executive Officer Nicole Anasenes – Chief Financial Officer Conference Call Participants Jay Vleeschhouwer – Griffin Securities Joe Vruwink – Baird Jason Celino – KeyBanc Capital Markets Ken Wong – Oppenheimer & Company Steven Tusa – JPMorgan Mike Richards – Stifel Tyler Radke – Citi Operator Ladies and gentlemen, than ...

Revenue Performance - Revenue declined by 2.9% (GAAP) and 3.1% (Non-GAAP) for the three months ended September 30, 2023, primarily due to reductions in subscription lease and perpetual license revenue[94] - Revenue increased by 6.8% (GAAP) and 6.3% (Non-GAAP) for the nine months ended September 30, 2023, driven by growth in maintenance and subscription lease license revenue[94] - In constant currency, revenue declined by 4.2% (GAAP) and 4.4% (Non-GAAP) for the three months ended September 30, 2023[98] - Total revenue for the nine months ended September 30, 2023, increased by 6.8%, with a 7.6% increase on a constant currency basis[106] - Revenue for the quarter ended September 30, 2023 decreased by 2.9% (or 4.2% in constant currency) compared to the same quarter in 2022, with total revenue at $458.8 million[114] - Total revenue for the nine months ended September 30, 2023 increased by 6.8% to $1.46 billion, or 7.6% in constant currency, driven by maintenance revenue growth of 10.5%[134] - Total GAAP revenue for the nine months ended September 30, 2023 was $1.46 billion, with a gross profit of $1.26 billion (86.3% gross margin)[155] Operating Income and Expenses - Operating income decreased by 43.4% (GAAP) and 19.5% (Non-GAAP) for the three months ended September 30, 2023, reflecting increased personnel costs[94] - In constant currency, operating income decreased by 45.4% (GAAP) and 21.0% (Non-GAAP) for the three months ended September 30, 2023[98] - Operating income decreased by 43.4% (or 45.4% in constant currency) to $69.8 million, primarily due to increased operating expenses[125] - Operating income for the nine months ended September 30, 2023 decreased by 11.9% to $293.1 million, primarily due to increased operating expenses[143] - Total non-GAAP operating income for the nine months ended September 30, 2023 was $539.70 million, with a 36.8% operating margin[155] Earnings and Profitability - Diluted earnings per share declined by 41.8% (GAAP) and 20.3% (Non-GAAP) for the three months ended September 30, 2023[94] - Net income for the three months ended September 30, 2023 decreased to $55.5 million from $96.0 million in the same period in 2022, with diluted earnings per share dropping to $0.64 from $1.10[131] - Net income for the nine months ended September 30, 2023 was $225.65 million, a decrease from $265.76 million in the same period in 2022[149] - Diluted earnings per share for the nine months ended September 30, 2023 was $2.58, down from $3.04 in the same period in 2022[149] - Non-GAAP net income for the nine months ended September 30, 2023 was $423.99 million, with non-GAAP diluted EPS of $4.85[155] Regional Revenue Performance - Americas region revenue grew by 14.0% for the nine months ended September 30, 2023, while Asia-Pacific revenue declined by 3.1%[106] - EMEA region revenue grew by 6.0% for the nine months ended September 30, 2023, but declined by 5.2% on a constant currency basis for the three months ended September 30, 2023[106] - International revenue accounted for 55.4% of total revenue in Q3 2023, down from 57.4% in Q3 2022[118] - International revenue accounted for 54.8% of total revenue for the nine months ended September 30, 2023, down from 57.3% in 2022[138] Subscription and License Revenue - Subscription lease licenses revenue decreased by 24.1% (or 25.0% in constant currency) to $103.6 million, driven by a $35.6 million decrease in multi-year licenses[114] - Perpetual license revenue decreased by 18.7% (or 19.8% in constant currency) to $58.8 million, primarily due to a 17.6% decrease in average deal size[114] - Maintenance revenue increased by 12.3% (or 10.7% in constant currency) to $278.1 million, driven by growth in maintenance associated with lease licenses[114] - Subscription lease license revenue increased by 6.5% to $386.5 million, while perpetual license revenue decreased by 5.8% to $200.0 million[134] - Maintenance revenue grew by $77.8 million, with $68.1 million attributed to lease licenses and $9.7 million to perpetual sales[134] Cash Flow and Financial Position - Cash, cash equivalents, and short-term investments increased by $24.9 million (4.1%) to $639.5 million as of September 30, 2023, compared to $614.6 million as of December 31, 2022[169] - Working capital increased by $38.8 million (4.5%) to $908.1 million as of September 30, 2023, compared to $869.3 million as of December 31, 2022[169] - Net cash provided by operating activities increased by $27.4 million (6.0%) to $484.4 million for the nine months ended September 30, 2023, compared to $457.0 million for the same period in 2022[173] - Net cash used in investing activities decreased by $38.5 million (14.9%) to $220.2 million for the nine months ended September 30, 2023, compared to $258.6 million for the same period in 2022[174] - Net cash used in financing activities increased by $34.6 million (17.5%) to $232.6 million for the nine months ended September 30, 2023, compared to $198.0 million for the same period in 2022[175] - The company repurchased 650,000 shares at an average price of $302.34 per share, totaling $196.5 million, during the nine months ended September 30, 2023[179] - The company has a $755.0 million unsecured term loan facility and a $500.0 million unsecured revolving loan facility under the 2022 Credit Agreement[176] - The company plans capital spending of $25.0 million to $30.0 million during fiscal year 2023, compared to $24.4 million spent in fiscal year 2022[174] - The company's operating lease commitments total $136.6 million, with $26.2 million due in the next twelve months[178] - The company's foreign cash, cash equivalents, and short-term investments increased by $24.8 million (8.6%) to $312.6 million as of September 30, 2023, compared to $287.8 million as of December 31, 2022[171] Currency and Interest Rate Impact - The U.S. Dollar was 3.1% weaker against foreign currencies in Q3 2023 compared to Q3 2022, impacting revenue[186] - The U.S. Dollar was 1.8% stronger against foreign currencies in the nine months ended September 30, 2023, compared to the same period in 2022[186] - Currency fluctuations resulted in a net adverse impact of $1.757 million on revenue from the Japanese Yen in Q3 2023[187] - Currency fluctuations resulted in a net adverse impact of $10.256 million on revenue from the Japanese Yen in the nine months ended September 30, 2023[187] - A hypothetical 10% strengthening in the U.S. Dollar would decrease revenue by $19.8 million in Q3 2023 and $63.6 million in the nine months ended September 30, 2023[188] - Interest income was $4.9 million in Q3 2023 and $12.4 million in the nine months ended September 30, 2023[189] - Interest expense was $12.3 million in Q3 2023 and $34.6 million in the nine months ended September 30, 2023[189] - Outstanding term loan borrowings as of September 30, 2023, were $755.0 million[190] - A hypothetical 100 basis point increase in interest rates would increase interest expense by $7.7 million over the next twelve months[190] - The Sustainability Rate Adjustment range is +/- 0.05% and will go into effect in Q1 2024 based on 2023 KPIs[190] Legal and Regulatory Risks - The company is subject to various claims, investigations, and legal proceedings that could have a significant adverse effect on financial statements and cause reputational damage[196] - The resolution of pending legal matters is not expected to have a material adverse effect on the company's financial position, results of operations, or cash flows[196] Market and Industry Trends - The engineering simulation software market is growing, driven by trends such as electrification, autonomy, connectivity, and sustainability[89] - The company continues to see strong demand for simulation solutions in high-tech, aerospace, and automotive industries, particularly for advanced chips, 5G/6G technology, and electric vehicles[104] Strategic Initiatives - The company's strategy focuses on expanding product offerings, increasing user accessibility, and driving more computations through larger and more complex simulations[87] - The company is investing in global sales and marketing organizations and infrastructure to drive growth, despite challenges in the competitive labor market[111] Non-GAAP Financial Measures - The company uses non-GAAP financial measures to evaluate performance, set targets, allocate resources, and determine variable compensation[158] - Non-GAAP financial measures exclude items like acquisition-related deferred revenue adjustments, stock-based compensation, and amortization of intangible assets[159][160] - Stock-based compensation expense for the nine months ended September 30, 2023 was $158.53 million, representing 10.7% of operating income[155] - Amortization of intangible assets from acquisitions for the nine months ended September 30, 2023 was $77.00 million, representing 5.3% of operating income[155] Tax and Compensation - The effective tax rate for the three months ended September 30, 2023 decreased to 11.3% from 18.7% in 2022, primarily due to reduced U.S. federal tax expense on foreign earnings and increased R&D credits[130] - The effective tax rate for the nine months ended September 30, 2023 was 15.6%, down from 16.7% in the same period in 2022, primarily due to increased benefits from R&D credits and foreign tax planning[148] Deferred Revenue and Backlog - Deferred revenue and backlog as of September 30, 2023 totaled $1.21 billion, with $370.4 million in deferred revenue and $835.2 million in backlog[120] Internal Controls and Compliance - No changes in internal control over financial reporting during the three months ended September 30, 2023 that materially affected the company's internal control[194] U.S. Export Restrictions - The U.S. export restrictions on sales to certain Chinese entities negatively impacted revenue and annual contract value (ACV) by $20.0 million in Q3 2023, with an expected headwind of $25.0 million for fiscal year 2023[96] Annual Contract Value (ACV) - ACV for the nine months ended September 30, 2023, was $1,345,305, representing a 10.8% increase compared to the same period in 2022[102] - Recurring ACV for the trailing twelve months ended September 30, 2023, was $1,804,517, a 15.7% increase from the previous year[103] Revenue Fluctuations and Risks - Revenue fluctuations are influenced by the timing and duration of multi-year subscription lease contracts, which can cause significant quarterly variations[106] - The company faces risks from macroeconomic conditions, including inflation, recessionary pressures, and foreign exchange volatility, which could impact future results[110] - Cybersecurity threats and data breaches are identified as potential risks that could affect the company's operations and reputation[110] Employee Count - The company employed 6,100 people as of September 30, 2023, up from 5,600 as of December 31, 2022[86]

ANSYS, Inc. (NASDAQ:ANSS) Q2 2023 Earnings Conference Call August 3, 2023 8:30 AM ET Company Participants Kelsey DeBriyn - VP, IR Ajei Gopal - President and CEO Nicole Anasenes - CFO Conference Call Participants Joe Vruwink - Baird Jay Vleeschhouwer - Griffin Securities Andrew Obin - Bank of America Tyler Radke - Citi Andrew DeGasperi - Berenberg Steve Tusa - JPMorgan Operator Ladies and gentlemen, thank you for standing by, and welcome to the ANSYS Second Quarter 2023 Earnings Conference Call. With us toda ...

Revenue Performance - Total revenue for the six months ended June 30, 2023, was $1,006,046 thousand, compared to $898,927 thousand for the same period in 2022, representing an increase of 11.9%[20] - Total revenue for the six months ended June 30, 2023 was $1,006.046 million, a 12% increase from $898.927 million in 2022[39] - Revenue growth for the three months ended June 30, 2023 was 4.8% GAAP and 4.4% non-GAAP, while for the six months ended June 30, 2023, it was 11.9% GAAP and 11.2% non-GAAP[103] - Revenue for the quarter ended June 30, 2023 increased by 4.8% (5.5% in constant currency) to $496.6 million compared to the same period in 2022[123] - Revenue for the six months ended June 30, 2023, increased by 11.9% to $1,006,046 thousand compared to the same period in 2022, with subscription lease license revenue growing by 24.9%[145] - Total GAAP revenue for the period was $473.85 million, with a gross profit of $411.36 million, representing a gross margin of 86.8%[167] - Non-GAAP revenue for the period was $475.89 million, with a non-GAAP gross profit of $433.10 million, representing a non-GAAP gross margin of 91.0%[167] - For the six months ended June 30, 2023, total GAAP revenue was $1.01 billion, with a gross profit of $870.05 million, representing a gross margin of 86.5%[169] - Non-GAAP revenue for the six months ended June 30, 2023 was $1.01 billion, with a non-GAAP gross profit of $916.41 million, representing a non-GAAP gross margin of 91.1%[169] Net Income and Earnings - Net income for the six months ended June 30, 2023, was $170,148 thousand, slightly higher than $169,788 thousand for the same period in 2022[20] - Net income for the six months ended June 30, 2023 was $98.8 million, compared to $70.988 million for the same period in 2022[30] - Net income for the six months ended June 30, 2023, was $170.1 million, with basic and diluted earnings per share of $1.96 and $1.95, respectively[57] - Net income for Q2 2023 decreased to $69,526 thousand, compared to $98,800 thousand in Q2 2022, with diluted earnings per share declining from $1.13 to $0.80[143] - Net income for the first six months of 2023 was $170.15 million, with diluted earnings per share of $1.95, compared to $169.79 million and $1.94 per share in the same period in 2022[162] - Total GAAP net income was $98.80 million, with diluted EPS of $1.13, while non-GAAP net income was $154.58 million, with non-GAAP diluted EPS of $1.77[167] - Total GAAP net income for the six months ended June 30, 2023 was $170.15 million, with diluted EPS of $1.95, while non-GAAP net income was $301.09 million, with non-GAAP diluted EPS of $3.45[169] Operating Income and Expenses - Operating income for the three months ended June 30, 2023 decreased by 25.3% GAAP and 6.8% non-GAAP, but increased by 6.8% GAAP and 12.1% non-GAAP for the six months ended June 30, 2023[103] - Operating income for Q2 2023 decreased by 25.3% to $95,624 thousand compared to Q2 2022, primarily due to increased operating expenses[136] - Operating income grew by 6.8% to $223.32 million in the first six months of 2023, with an operating margin of 22.2%, down from 23.3% in the same period in 2022[154] - Total GAAP operating income was $128.01 million, representing an operating margin of 27.0%, while non-GAAP operating income was $193.63 million, representing a non-GAAP operating margin of 40.7%[167] - Total GAAP operating income for the six months ended June 30, 2023 was $223.32 million, representing an operating margin of 22.2%, while non-GAAP operating income was $383.46 million, representing a non-GAAP operating margin of 38.1%[169] Cash Flow and Financial Position - Net cash provided by operating activities for the six months ended June 30, 2023, was $323,632 thousand, slightly lower than $329,880 thousand in the same period in 2022[26] - Net cash provided by operating activities decreased by $6.2 million (1.9%) to $323.6 million for the six months ended June 30, 2023[188] - Net cash used in investing activities decreased by $36.0 million (14.3%) to $215.6 million for the six months ended June 30, 2023[189] - Net cash used in financing activities increased by $36.4 million (17.5%) to $244.0 million for the six months ended June 30, 2023, primarily due to increased stock repurchases[190] - Cash, cash equivalents, and short-term investments decreased by $136.6 million (22.2%) from $614.6 million as of December 31, 2022, to $478.0 million as of June 30, 2023[184] - Domestic cash holdings decreased to 29.9% of total cash, while foreign cash holdings increased to 70.1% as of June 30, 2023[186] Acquisitions and Intangible Assets - The company completed the acquisition of Diakopto for $83.3 million and DYNAmore for $139.2 million in 2023 to expand its simulation portfolio[45] - Acquisition-related expenses for the six months ended June 30, 2023 were $4.3 million[46] - The fair value of consideration for the combined acquisitions in 2023 was $222.448 million, including $217.392 million in cash[47] - Developed software and core technologies acquired in 2023 have a weighted-average useful life of 5 years and were valued using the relief-from-royalty or multiperiod excess earnings method[51] - Trade names acquired in 2023 have a weighted-average useful life of 5 years and were valued using the relief-from-royalty method with a royalty rate of 1.0% to 2.0%[51] - The company completed acquisitions totaling $401.7 million in 2022, with a net purchase price of $390.8 million after deducting cash acquired[52] - Intangible assets subject to amortization totaled $883.7 million as of June 30, 2023, with estimated future amortization expenses of $53.3 million for the remainder of 2023 and $112.0 million for 2024[60] - Goodwill increased from $3.66 billion at the beginning of 2023 to $3.79 billion by June 30, 2023, due to acquisitions and currency translation adjustments[63] Foreign Currency Impact - Foreign currency translation adjustments for the six months ended June 30, 2023, were $21,287 thousand, compared to a loss of $70,735 thousand in the same period in 2022[22] - The company's revenue and operating income were negatively impacted by a stronger U.S. Dollar, with adverse impacts of $3.452 million on revenue and $1.740 million on operating income for the three months ended June 30, 2023[105] - The U.S. Dollar was 1.5% stronger against foreign currencies in Q2 2023 compared to Q2 2022, resulting in a $3.5 million adverse currency impact[123][124] - The impact of currency fluctuations resulted in a $17,343 thousand adverse effect on revenue for the six months ended June 30, 2023, with the Japanese Yen contributing the largest negative impact[147] - The U.S. Dollar was 4.0% stronger against foreign currencies for the six months ended June 30, 2023, resulting in a $17.3 million adverse impact on revenue[200][201] - A hypothetical 10% strengthening in the U.S. Dollar would decrease revenue by $43.8 million and operating income by $15.2 million for the six months ended June 30, 2023[202] Stock-Based Compensation and Share Repurchases - Stock-based compensation expense for the six months ended June 30, 2023, was $100,472 thousand, up 33.7% from $75,149 thousand in the same period in 2022[26] - The company repurchased 650,000 shares during the six months ended June 30, 2023 at an average price of $302.34 per share, for a total cost of $196.5 million[84] - The company repurchased 650,000 shares at an average price of $302.34 per share, totaling $196.5 million, during the six months ended June 30, 2023[194] - Stock-based compensation expense for the six months ended June 30, 2023 was $100.47 million, representing 10.0% of revenue[169] Legal and Regulatory Matters - The company is subject to various legal proceedings, including commercial disputes, labor matters, and intellectual property claims, which could have adverse financial or reputational impacts[210] - Resolution of pending legal matters is not expected to have a material adverse effect on the company's financial position, results of operations, or cash flows[210] Market and Strategic Outlook - The company's strategy of Pervasive Insights focuses on deepening the use of simulation in its core market, extending accessibility to a broader set of users, and driving growth through more products, users, and computations[96] - The engineering simulation software market is growing, driven by trends such as electrification, autonomy, connectivity, the industrial internet of things, and sustainability[98] - The company plans to continue its strategic and disciplined acquisition strategy to grow its business and extend simulation into other ecosystems and customer R&D workflows[99] Regional Revenue Performance - Revenue from the United States for the six months ended June 30, 2023 was $457.1 million, up from $384.8 million in the same period in 2022[88] - Americas region revenue grew by 12.5% (12.5% in constant currency) for the three months ended June 30, 2023[114] - Asia-Pacific region revenue decreased by 3.2% but grew by 0.3% in constant currency for the three months ended June 30, 2023[114] - International revenue accounted for 57.6% of total revenue in Q2 2023, down from 60.5% in Q2 2022[127] - International revenue accounted for 54.6% of total revenue in the first six months of 2023, down from 57.2% in the same period in 2022, while domestic revenue increased to 45.4% from 42.8%[150] Cost of Sales and Gross Profit - Total cost of sales for Q2 2023 was $68,340 thousand, representing 13.8% of revenue, an increase of 9.4% compared to Q2 2022[132] - Gross profit for Q2 2023 was $428,259 thousand, an increase of 4.1% compared to Q2 2022, driven by higher revenue partially offset by increased cost of sales[132] - Total cost of sales increased by 6.9% to $135.99 million in the first six months of 2023, driven by higher software license costs ($3.6 million increase in third-party royalties) and amortization expenses ($5.03 million increase due to newly acquired intangible assets)[152] - Gross profit increased by 12.7% to $870.05 million in the first six months of 2023, with a gross margin of 86.5%, up from 85.8% in the same period in 2022[152] Research and Development Expenses - Research and development expenses for the six months ended June 30, 2023, were $245,358 thousand, up 14.5% from $214,215 thousand in the same period in 2022[20] - Research and development expenses increased by 14.8% to $125,023 thousand in Q2 2023, driven by higher salaries and stock-based compensation[136] Tax and Interest Expenses - The effective tax rate for Q2 2023 decreased to 17.2% from 19.6% in Q2 2022, primarily due to lower U.S. federal tax expense on foreign earnings and increased R&D credits[142] - The effective tax rate increased to 16.9% in the first six months of 2023, up from 15.5% in the same period in 2022, primarily due to decreased benefits related to stock-based compensation[160] - Interest income increased significantly to $7.5 million in the first six months of 2023, compared to $0.8 million in the same period in 2022, driven by higher interest rates[156] - Interest income was $7.5 million, and interest expense was $22.3 million for the six months ended June 30, 2023[203] Lease and Debt Obligations - The company's lease liability cost for the six months ended June 30, 2023, was $14.1 million, with total lease costs reaching $16.7 million[72] - Operating cash flows from operating leases for the three months ended June 30, 2023 were $(6.9 million), compared to $(6.6 million) in the same period in 2022[73] - The weighted-average remaining lease term of operating leases as of June 30, 2023 was 6.6 years, down from 7.3 years as of June 30, 2022[73] - Total future lease payments as of June 30, 2023 were $142.7 million, with a present value of $128.5 million after discounting[74] - The company had $755.0 million in borrowings outstanding under the term loan facility as of June 30, 2023, with a carrying value of $753.7 million[79] - The weighted average interest rate under the 2022 Credit Agreement was 5.88% for the three months ended June 30, 2023, up from 1.90% in the same period in 2022[78] - Outstanding term loan borrowings of $755.0 million as of June 30, 2023, with variable interest rates based on Term SOFR or base rate plus applicable margin[204] - A hypothetical 100 basis points increase in interest rates would result in an additional $7.7 million in interest expense over the next twelve months[204] Employee and Workforce - The company employed 6,000 people as of June 30, 2023, up from 5,600 as of December 31, 2022[95] Financial Controls and Reporting - Disclosure controls and procedures evaluated as effective by the Chief Executive Officer and Chief Financial Officer[206] - Financial statements and other financial information fairly present the company's financial condition, results of operations, and cash flows[207] - No changes in internal control over financial reporting during the three months ended June 30, 2023, that materially affected financial reporting[208] Capital Spending and Market Risk - The company plans capital spending of $28.0 million to $38.0 million during fiscal year 2023, compared to $24.4 million spent in fiscal year 2022[189] - No material changes in market risk since December 31, 2022[204] Deferred Revenue and Backlog - Deferred revenue balance as of June 30, 2023 was $396.506 million, compared to $383.622 million in 2022[41] - Total revenue allocated to remaining performance obligations as of June 30, 2023 was $1,295.798 million, with $810.219 million expected to be recognized in the next 12 months[42] - Deferred revenue and backlog as of June 30, 2023, totaled $1,295,798 thousand, with $810,219 thousand classified as current and $485,579 thousand as long-term[129] Maintenance and Service Revenue - Maintenance and service revenue for the six months ended June 30, 2023, was $581,997 thousand, an increase of 9.3% from $532,501 thousand in the same period in 2022[20] - Maintenance revenue grew by 10.5% (11.1% in constant currency) to $273.7 million, driven by existing customer base[123] - Maintenance revenue for the six months ended June 30, 2023, increased by 9.6% to $542,285 thousand, driven by growth in maintenance associated with lease licenses[145] - Service revenue increased by 4.5% (4.3% in constant currency) to $18.0 million in Q2 2023[123] Software Licenses Revenue - Software licenses revenue for the six months ended June 30, 2023, was $424,049 thousand, up 15.7% from $366,426 thousand in the same period in 2022[20] - Perpetual license revenue decreased by 5.5% (4.9% in constant currency) to $69.9 million due to a 4.5% decrease in deal volume and 1.0% decrease in average deal size[123] - Subscription lease licenses revenue remained stable at $135.0 million, with a 1.1% increase in constant currency[123] Comprehensive Income and Other Financial Metrics - Comprehensive income for the six months ended June 30, 2023, was $191,435 thousand, significantly higher than $99,053 thousand in the same period in 2022[22] - The company's Annual Contract Value (ACV) for the three months ended June 30,

ANSYS, Inc. (NASDAQ:ANSS) Q1 2023 Earnings Conference Call May 4, 2023 8:30 AM ET Company Participants Alex Di Ruzza - Investor Relations Manager Ajei Gopal - President & Chief Executive Officer Nicole Anasenes - Chief Financial Officer & Senior Vice President-Finance\ Conference Call Participants Jay Vleeschhouwer - Griffin Securities Jason Celino - KeyBanc Capital Markets Steve Tusa - JPMorgan Ken Wong - Oppenheimer Mike Richards - Stifel Joe Vruwink - Baird Blair Abernethy - Rosenblatt Securities Josh Ti ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number: 0-20853 ANSYS, Inc. | --- | --- | --- | |---------------------------------------------------------------------- ...

ANSYS, Inc. (NASDAQ:ANSS) Q4 2022 Earnings Conference Call February 23, 2023 8:30 AM ET Company Participants Alex Deruta - IR Ajei Gopal - President, CEO & Director Nicole Anasenes - CFO & SVP, Finance Conference Call Participants Ken Wong - Oppenheimer Joseph Vruwink - Robert W. Baird & Co. Jay Vleeschhouwer - Griffin Securities Tyler Radke - Citigroup Saket Kalia - Barclays Bank Steve Tusa - JPMorgan Operator Welcome to the ANSYS Fourth Quarter and Fiscal Year 2022 Earnings Results Conference Call. [Oper ...

Customer and Revenue Distribution - No single customer accounted for more than 5% of the company's revenue in 2022, 2021, or 2020[51] - International revenue represented 54.9% of total revenue in 2022, with the largest geographic revenue bases being the United States, Germany, and Japan[94] - Channel partners accounted for 23.9%, 23.7%, and 22.2% of revenue in 2022, 2021, and 2020, respectively, with significant dependence in APAC and EMEA regions[123] Strategic Partnerships and Alliances - The company has strategic alliances with leading CAD vendors like Autodesk, PTC, and Siemens Digital Industries, enabling direct data transfer between CAD systems and its products[53] - A partnership with Microsoft was executed to develop Ansys Access powered by Azure, enabling customers to launch Ansys products using Azure and connect third-party tools[54] - Ansys Gateway powered by AWS was launched in 2022, facilitating seamless access and deployment of Ansys products on AWS[55] - The company has technical relationships with Intel and AMD, optimizing solver performance and scalability, with AMD GPU acceleration providing speedups of up to 8x or 14x depending on the application[56] - The company has over 350 technology partnerships, extending the depth and breadth of its technology offerings across various solution areas[57] Financial Metrics and Risks - Deferred revenue and backlog as of December 31, 2022, totaled $1,416,846 thousand, with $846,312 thousand classified as current[71][72] - Outstanding borrowings of $755.0 million under a term loan facility maturing on June 30, 2027, with a $500.0 million revolving loan facility including a $50.0 million sublimit for letters of credit[155] - Consolidated net leverage ratio must not exceed 3.50 to 1.00, with a temporary increase to 4.00 to 1.00 allowed for qualified acquisitions of at least $250.0 million[155] - U.S. Dollar was 11.4% stronger against foreign currencies in 2022 compared to 2021, resulting in a net adverse impact of $112.7 million on revenue[261][262] - Currency fluctuations decreased operating income by $63.7 million in 2022 compared to 2021[262] - A hypothetical 10% strengthening in the U.S. Dollar would decrease revenue by $99.2 million and operating income by $47.9 million[263] - Interest income was $5.7 million and interest expense was $22.7 million for the year ended December 31, 2022[264] - A hypothetical 100 basis point increase in interest rates would increase interest expense by $7.7 million based on outstanding borrowings of $755.0 million[266] Workforce and Employee Engagement - As of December 31, 2022, the company employed 5,600 people, with 45% located in the Americas, 28% in EMEA, and 27% in APAC[74] - The company's global employee gender diversity as of December 31, 2022, was 75% male, 23% female, and 2% other/not indicated[76] - The company's U.S.-based employee racial/ethnic diversity as of December 31, 2022, was 55% White, 25% Asian, 2% Hispanic or Latino, 2% Black or African American, 1% Other, and 15% Not Indicated[78] - Annual turnover rate for 2022 was 10%, with voluntary turnover at 8%[81] - Employee engagement score in 2022 remained steady compared to 2021, exceeding external norms across all dimensions of engagement[86] - 92% of employees responded favorably to managing work responsibilities with flexibility in a remote and hybrid work environment[85] - Over half of employees receive equity grants annually, aligning long-term financial interests with stockholders[83] - Global internship, co-op, and new college graduate programs emphasize hiring emerging talent, with outreach events doubled in volume over the last year[79] - Annual talent reviews, succession planning, and leadership development programs were implemented in 2022, including individualized coaching and high-potential assessments[80] Operational and Compliance Risks - Compliance with global data privacy laws requires substantial resources and may increase costs due to evolving regulations[106] - Non-compliance with privacy laws could result in monetary penalties, reputational damage, and increased expenses to achieve compliance[107] - The company operates in high-risk environments for corruption, exposing it to financial and reputational risks despite having anti-corruption compliance programs[109] - COVID-19 has led to remote and hybrid work arrangements, increasing risks of cyber incidents and potential delays in work due to limited access to technology[111] - Acquisitions may pose risks such as integration challenges, failure to achieve synergies, and potential impairment of goodwill or intangible assets[126] - The company is undergoing digital transformation, but delays or failures in implementation could lead to increased costs and write-offs of capitalized expenditures[129] - The software business faces long sales cycles, making accurate short- and long-term sales forecasts challenging and subject to external economic factors[133] - Product quality issues or non-compliance with ISO 9001 standards could result in reputational damage and adverse impacts on financial statements[132] - The company faces competitive pressures, including price reductions and increased operating costs, which could lower revenues, margins, and net income[117] - Research and development expenses may not correlate with revenue, potentially leading to declines in operating profits if investments do not yield expected returns[120] - Global market disruptions may significantly impact the accuracy of sales forecasts, potentially leading to variations between actual sales and forecasts, which could adversely affect the company's business and financial statements[135] - The company relies on intellectual property protection, but software piracy and inadequate enforcement in certain countries may lead to revenue loss[138] - Cybersecurity risks, including cyberattacks and data breaches, could result in reduced revenue, increased costs, and reputational damage[142] - The company uses third-party service providers for cloud-based products, exposing it to risks such as service interruptions and security vulnerabilities[147] - Foreign exchange rate fluctuations, particularly involving the Euro and Japanese Yen, may adversely affect the company's consolidated financial statements[149] - Changes in tax laws, including the OECD's Pillar Two proposals, could impact the company's tax provision, net income, and cash flows[152] - The company faces risks related to third-party software licenses, including potential disruptions in product development and customer usage if licenses are not renewed or obtained on reasonable terms[141] - The company has experienced cybersecurity attacks in the past, and while none have had a material impact, future attacks could disrupt operations and harm financial performance[145] Environmental, Social, and Governance (ESG) - The company has established greenhouse gas emission reduction targets, but achieving these targets is subject to external factors such as evolving regulations, technological developments, and financing availability[136] - Environmental, social, and governance (ESG) considerations are increasingly important to stakeholders, and failure to meet ESG targets or comply with regulations could result in legal proceedings and reputational harm[137] Trade and Export Control Risks - Trade restrictions and export control regulations, particularly involving China, could limit the company's ability to sell products and services to certain customers[97]