altair-announces-second-quarter-2021-financial-results

TROY, Mich., Aug. 05, 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 second quarter ended June 30, 2021.

“Altair had a strong second quarter 2021, with across-the-board success in multiple verticals, regions, and products, reflecting year on year software product revenue growth of 22%,” said James Scapa, Founder, Chairman and Chief Executive Officer of Altair. “Customers are investing to grow their businesses as we emerge from the pandemic, and Altair’s products, services, and business models are clearly resonating, gaining market awareness, and increasing market share.”

“Once again we saw customer demand exceed expectations in the second quarter 2021, which enabled us to achieve results above the high end of our guidance range for the third consecutive quarter,” said Matt Brown, Chief Financial Officer of Altair. “The second quarter 2021 reflects solid execution on our strategy of driving strong organic topline revenue growth and profit expansion.”

Second Quarter 2021 Financial Highlights

  • Software product revenue was $99.6 million compared to $81.8 million for the second quarter of 2020, an increase of 21.7%
  • Total revenue was $119.9 million compared to $98.6 million for the second quarter of 2020, an increase of 21.7%
  • Net loss was $13.6 million compared to a net loss of $10.2 million for the second quarter of 2020, an increase of 33.5%. Diluted net loss per share was $0.18 based on 75.3 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $0.14 for the second quarter of 2020, based on 73.0 million diluted weighted average common shares outstanding
  • Adjusted EBITDA was $9.5 million compared to $5.7 million for the second quarter of 2020, an increase of 65.2%. Adjusted EBITDA margin was 7.9% compared to 5.8% for the second quarter of 2020
  • Non-GAAP net income was $5.6 million, compared to Non-GAAP net income of $3.0 million for the second quarter of 2020, an increase of 86.8%. Non-GAAP diluted net income per share was $0.07 based on 83.4 million non-GAAP diluted common shares outstanding, compared to Non-GAAP diluted net income per share of $0.04 for the second quarter of 2020, based on 80.7 million non-GAAP diluted common shares outstanding
  • Free cash flow was $15.8 million, compared to $4.5 million for the second quarter of 2020, an increase of 252.7%

Business Outlook

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

(in millions) Third Quarter 2021   Full Year 2021  
Software Product Revenue   $ 94.0   to $ 97.0     $ 434.0   to $ 440.0  
Total Revenue   $ 112.0     $ 115.0     $ 512.0     $ 518.0  
Net Loss   $ (22.8 )   $ (20.9 )   $ (31.6 )   $ (26.8 )
Non-GAAP Net Income   $ 0.1     $ 1.6     $ 40.9     $ 44.6  
Adjusted EBITDA   $ 2.0     $ 4.0     $ 63.0     $ 68.0  
Net Cash Provided by Operating Activities                   $ 43.0     $ 48.0  
Free Cash Flow                   $ 34.0     $ 39.0  

Conference Call Information

What: Altair’s Second Quarter 2021 Financial Results Conference Call
   
When: Thursday, August 5, 2021
   
Time: 5:00 p.m. ET
   
Live Call: (866) 754-5204, Domestic
  (636) 812-6621, International
   
Replay: (855) 859-2056, Conference ID 4173813, Domestic
  (404) 537-3406, Conference ID 4173813, 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 that provides 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 third 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

[email protected]

Investor Relations

The Blueshirt Group

Monica Gould

212-871-3927

[email protected]

Lindsay Savarese

212-331-8417

[email protected]

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

    June 30, 2021     December 31, 2020  
(In thousands)   (Unaudited)          
ASSETS                
CURRENT ASSETS:                
Cash and cash equivalents   $ 260,098     $ 241,221  
Accounts receivable, net     91,570       117,878  
Income tax receivable     7,949       6,736  
Prepaid expenses and other current assets     23,030       21,100  
Total current assets     382,647       386,935  
Property and equipment, net     39,610       36,332  
Operating lease right of use assets     33,395       33,526  
Goodwill     262,963       264,481  
Other intangible assets, net     66,637       76,114  
Deferred tax assets     8,265       7,125  
Other long-term assets     26,699       25,389  
TOTAL ASSETS   $ 820,216     $ 829,902  
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY  
CURRENT LIABILITIES:                
Current portion of long-term debt   $     $ 29,962  
Accounts payable     6,515       8,594  
Accrued compensation and benefits     35,846       34,772  
Current portion of operating lease liabilities     10,770       10,331  
Other accrued expenses and current liabilities     27,810       31,404  
Deferred revenue     81,343       85,691  
Convertible senior notes, net     193,926        
Total current liabilities     356,210       200,754  
Convertible senior notes, net           188,300  
Operating lease liabilities, net of current portion     23,785       24,323  
Deferred revenue, non-current     7,236       9,388  
Other long-term liabilities     32,856       27,767  
TOTAL LIABILITIES     420,087       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 46,392

and 44,216 shares as of June 30, 2021, and December 31, 2020, respectively
    4       4  
Class B common stock, authorized 41,203 shares, issued and outstanding 29,091

and 30,111 shares as of June 30, 2021, and December 31, 2020, respectively
    3       3  
Additional paid-in capital     495,824       474,669  
Accumulated deficit     (92,581 )     (93,293 )
Accumulated other comprehensive loss     (3,905 )     (2,797 )
TOTAL STOCKHOLDERS’ EQUITY     399,345       378,586  
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY   $ 820,216     $ 829,902  

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

    Three Months Ended

June 30,
    Six Months Ended

June 30,
 
(in thousands, except per share data)   2021     2020     2021     2020  
Revenue                                
License   $ 66,632     $ 51,018     $ 163,027     $ 128,561  
Maintenance and other services     32,926       30,815       66,072       61,715  
Total software     99,558       81,833       229,099       190,276  
Software related services     7,481       5,444       15,579       12,378  
Total software and related services     107,039       87,277       244,678       202,654  
Client engineering services     10,268       9,640       20,945       23,518  
Other     2,605       1,644       4,452       3,852  
Total revenue     119,912       98,561       270,075       230,024  
Cost of revenue                                
License     3,617       2,851       9,012       8,374  
Maintenance and other services     12,043       8,502       23,598       18,957  
Total software *     15,660       11,353       32,610       27,331  
Software related services     5,731       4,656       11,853       10,145  
Total software and related services     21,391       16,009       44,463       37,476  
Client engineering services     8,293       7,789       17,181       19,107  
Other     2,262       1,283       3,724       2,995  
Total cost of revenue     31,946       25,081       65,368       59,578  
Gross profit     87,966       73,480       204,707       170,446  
Operating expenses:                                
Research and development *     38,757       28,970       77,033       60,437  
Sales and marketing *     31,909       25,806       63,979       53,905  
General and administrative *     21,861       20,248       45,787       42,594  
Amortization of intangible assets     4,615       3,692       9,492       7,532  
Other operating income, net     (585 )     (944 )     (1,202 )     (1,835 )
Total operating expenses     96,557       77,772       195,089       162,633  
Operating (loss) income     (8,591 )     (4,292 )     9,618       7,813  
Interest expense     2,988       2,843       5,961       5,656  
Other expense (income), net     708       320       1,543       (1,070 )
(Loss) income before income taxes     (12,287 )     (7,455 )     2,114       3,227  
Income tax expense     1,361       2,768       1,402       7,420  
Net (loss) income   $ (13,648 )   $ (10,223 )   $ 712     $ (4,193 )
(Loss) income per share:                                
Net (loss) income per share attributable to common

stockholders, basic
  $ (0.18 )   $ (0.14 )   $ 0.01     $ (0.06 )
Net (loss) income per share attributable to common

stockholders, diluted
  $ (0.18 )   $ (0.14 )   $ 0.01     $ (0.06 )
Weighted average shares outstanding:                                
Weighted average number of shares used in computing

net (loss) income per share, basic
    75,263       72,999       74,959       72,811  
Weighted average number of shares used in computing

net (loss) income per share, diluted
    75,263       72,999       79,851       72,811  

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

    (Unaudited)  
    Three Months Ended

June 30,
    Six Months Ended

June 30,
 
    2021     2020     2021     2020  
Cost of revenue – software   $ 1,222     $ 552     $ 2,380     $ 918  
Research and development     4,143       1,830       7,329       3,258  
Sales and marketing     3,659       1,273       7,127       2,000  
General and administrative     1,624       879       3,460       1,529  
Total stock-based compensation expense   $ 10,648     $ 4,534     $ 20,296     $ 7,705  

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

    Six Months Ended June 30,  
(In thousands)   2021     2020  
OPERATING ACTIVITIES:                
Net income (loss)   $ 712     $ (4,193 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
Depreciation and amortization     13,180       11,293  
Provision for credit loss     205       589  
Amortization of debt discount and issuance costs     5,631       5,342  
Stock-based compensation expense     20,296       7,705  
Deferred income taxes     (1 )     (5,961 )
Other, net     34       3  
Changes in assets and liabilities:                
Accounts receivable     24,852       23,264  
Prepaid expenses and other current assets     (3,367 )     1,817  
Other long-term assets     (5,067 )     (960 )
Accounts payable     (967 )     (3,841 )
Accrued compensation and benefits     1,548       497  
Other accrued expenses and current liabilities     2,999       161  
Deferred revenue     (5,333 )     (2,315 )
Net cash provided by operating activities     54,722       33,401  
INVESTING ACTIVITIES:                
Capital expenditures     (5,391 )     (2,530 )
Payments for acquisition of developed technology     (344 )     (433 )
Payments for acquisition of businesses, net of cash acquired           (2,270 )
Other investing activities, net     (45 )     142  
Net cash used in investing activities     (5,780 )     (5,091 )
FINANCING ACTIVITIES:                
Payments on revolving commitment     (30,000 )      
Proceeds from the exercise of stock options     885       477  
Other financing activities     (206 )     (210 )
Net cash (used in) provided by financing activities     (29,321 )     267  
Effect of exchange rate changes on cash, cash equivalents and restricted cash     (847 )     (1,148 )
Net increase in cash, cash equivalents and restricted cash     18,774       27,429  
Cash, cash equivalents and restricted cash at beginning of year     241,547       223,497  
Cash, cash equivalents and restricted cash at end of period   $ 260,321     $ 250,926  
Supplemental disclosure of cash flow:                
Interest paid   $ 339     $ 306  
Income taxes paid   $ 3,744     $ 9,491  
Supplemental disclosure of non-cash investing and financing activities:                
Finance leases   $     $ 100  
Property and equipment in accounts payable, other current liabilities

and other liabilities
  $ 631     $ 343  

Financial Results

The following table provides a reconciliation of 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

June 30,
    Six Months Ended

June 30,
 
(in thousands, except per share amounts)   2021     2020     2021     2020  
Net (loss) income   $ (13,648 )   $ (10,223 )   $ 712     $ (4,193 )
Stock-based compensation expense     10,648       4,534       20,296       7,705  
Amortization of intangible assets     4,615       3,692       9,492       7,532  
Non-cash interest expense     2,837       2,689       5,637       5,337  
Restructuring expense     1,732             5,078        
Special adjustments and other           578             578  
Impact of non-GAAP tax rate     (601 )     1,718       (9,678 )     1,081  
Non-GAAP net income   $ 5,583     $ 2,988     $ 31,537     $ 18,040  
                                 
Net (loss) income per share – diluted   $ (0.18 )   $ (0.14 )   $ 0.01     $ (0.06 )
Non-GAAP net income per share – diluted   $ 0.07     $ 0.04     $ 0.38     $ 0.22  
                                 
GAAP diluted shares outstanding:     75,263       72,999       79,851       72,811  
Non-GAAP diluted shares outstanding:     83,400       80,700       83,400       80,700  

The following table provides a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP financial measure:

    (Unaudited)  
    Three Months Ended

June 30,
    Six Months Ended

June 30,
 
(in thousands)   2021     2020     2021     2020  
Net (loss) income   $ (13,648 )   $ (10,223 )   $ 712     $ (4,193 )
Income tax expense     1,361       2,768       1,402       7,420  
Stock-based compensation expense     10,648       4,534       20,296       7,705  
Interest expense     2,988       2,843       5,961       5,656  
Depreciation and amortization     6,494       5,633       13,180       11,293  
Restructuring expense     1,732             5,078        
Special adjustments, interest income and other     (79 )     194       (173 )     (460 )
Adjusted EBITDA   $ 9,496     $ 5,749     $ 46,456     $ 27,421  

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

June 30,
    Six Months Ended

June 30,
 
(in thousands)   2021     2020     2021     2020  
Net cash provided by operating activities   $ 18,151     $ 5,365     $ 54,722     $ 33,401  
Capital expenditures     (2,352 )     (886 )     (5,391 )     (2,530 )
Free cash flow   $ 15,799     $ 4,479     $ 49,331     $ 30,871  

Business Outlook

The following table provides a reconciliation of projected Non-GAAP net income to projected net loss, the most comparable GAAP financial measure:

    (Unaudited)  
    Three Months Ending

September 30, 2021
    Year Ending

December 31, 2021
 
(in thousands)   Low     High     Low     High  
Net loss   $ (22,800 )   $ (20,900 )   $ (31,600 )   $ (26,800 )
Stock-based compensation expense     11,700       11,700       43,700       43,700  
Amortization of intangible assets     4,500       4,500       17,600       17,600  
Non-cash interest expense     2,900       2,900       11,400       11,400  
Restructuring expense     500       500       5,600       5,600  
Impact of non-GAAP tax rate     3,300       2,900       (5,800 )     (6,900 )
Non-GAAP net income   $ 100     $ 1,600     $ 40,900     $ 44,600  

The following table provides a reconciliation of projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure:

    (Unaudited)  
    Three Months Ending

September 30, 2021
    Year Ending

December 31, 2021
 
(in thousands)   Low     High     Low     High  
Net loss   $ (22,800 )   $ (20,900 )   $ (31,600 )   $ (26,800 )
Income tax expense     3,300       3,400       8,600       8,800  
Stock-based compensation expense     11,700       11,700       43,700       43,700  
Interest expense     3,000       3,000       12,000       12,000  
Depreciation and amortization     6,400       6,400       25,000       25,000  
Restructuring expense     500       500       5,600       5,600  
Special adjustments, interest income and other     (100 )     (100 )     (300 )     (300 )
Adjusted EBITDA   $ 2,000     $ 4,000     $ 63,000     $ 68,000  

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           $ 43,000     $ 48,000  
Capital expenditures             (9,000 )     (9,000 )
Free cash flow           $ 34,000     $ 39,000  

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