Core Insights - Altair has announced a technical integration with NVIDIA, enhancing its capabilities in simulation-driven design, AI-powered engineering, and computational intelligence [1][2] - The integration allows users to visualize, build, edit, and interact with complex simulations and digital twins in a shared environment, leveraging GPU acceleration and NVIDIA technologies [1][3] Integration Details - The integration combines NVIDIA Omniverse Blueprint for Real-Time Digital Twins with Altair One, enabling real-time collaboration and simulation in a virtual environment [3][4] - Users can benefit from high-end rendering and streaming capabilities, simplifying the interaction of software components in large systems, particularly for AI and data processing [3][4] Performance Enhancements - Altair is utilizing NVIDIA technology to enhance performance across its products, including the introduction of the cuDSS GPU-accelerated Direct Sparse Solver library in Altair OptiStruct [5] - Performance improvements have been noted, with Altair ultraFluidX, nanoFluidX, and EDEM demonstrating up to 1.6x improvement on NVIDIA DGX B200, and EDEM showing a 40x speed increase compared to 32 CPUs [6] Industry Impact - Digital twin technology is transforming industries by enabling real-time design and faster optimization, providing engineers and designers with advanced tools [4] - The integration supports the development of models in tools like Altair PhysicsAI, significantly reducing analysis time from hours or days to seconds or minutes [4]

Altair, supported by NVIDIA technology, will further drive innovation in simulation-driven design, AI-powered engineering, and computational intelligenceTROY, Mich., March 19, 2025 /PRNewswire/ -- Altair (Nasdaq: ALTR), a global leader in computational intelligence, has announced a technical integration between the NVIDIA Omniverse Blueprint for Real Time Digital Twins and the Altair One® cloud innovation gateway. The integration takes advantage of GPU acceleration, NVIDIA NIM microservices, and NVIDIA Omni ...

Group 1 - Altair has appointed Var Group as a channel partner for the EMEA region to offer its simulation, data analytics, and AI solutions [1][2] - The partnership aims to optimize operations, drive innovation, and unlock new opportunities for organizations [1][2] - Var Group's expertise in digital transformation aligns with Altair's vision of empowering businesses through advanced technology [2] Group 2 - The collaboration will enhance Var Group's portfolio with advanced AI, data analytics, and simulation solutions to meet complex industry needs [2] - Altair is recognized as a global leader in computational intelligence, providing software and cloud solutions across various industries [3] - The partnership is expected to accelerate innovation and enhance efficiency in an evolving market [2]

Core Insights - Altair will showcase its advanced AI and simulation technologies at Hannover Messe 2025, highlighting their role in transforming industries and driving sustainable success [1][3] - The company emphasizes the importance of AI and machine learning in enhancing speed, performance, quality, and cost-effectiveness for organizations [3] AI-Powered Solutions - Altair's AI-powered engineering solutions provide deeper insights, accelerate design processes, and improve decision-making, contributing to a safer and more sustainable future [3] - A notable use case from CNH Industrial demonstrates how Altair's AI-augmented simulation tools enabled the creation of a digital twin, significantly reducing time to market and optimizing workflows [3] Event Participation - Altair will have a booth at Hall 17, Booth D35, and will participate in four speaking sessions during the event [4] - The sessions will cover topics such as AI in smart factories, engineering efficiency, materials transition for a net-zero future, and anomaly detection in industrial applications [4] Company Overview - Altair is recognized as a global leader in computational intelligence, providing software and cloud solutions in simulation, high-performance computing (HPC), data analytics, and AI [5] - The company offers scalable AI solutions for smart manufacturing, AI-powered engineering, digital twins, knowledge graphs, AI fabric, and AI agents [5]

Core Insights - Altair has been selected to join the Piedmont Aerospace Cluster, enhancing its role in driving innovation within the aerospace sector [1][2] - The Cluster aims to improve the competitiveness of Piedmont's aerospace industry through coordination and long-term investment in technological innovation [3] Company Contributions - Altair will provide essential tools and expertise in digital engineering and AI for the development, production, and maintenance of aircraft and subsystems [2][3] - The company has established strong relationships with leading aerospace firms over its 20 years in the region, indicating a deep-rooted presence in the aerospace ecosystem [3] Industry Context - The Piedmont Aerospace Cluster is a nonprofit organization founded in 2005, focusing on enhancing the aerospace industry's competitiveness in the region [3] - The Cluster includes various innovative aerospace companies and emphasizes the importance of simulation, data analytics, and AI in the industry [3]

Company Performance - Altair Engineering reported quarterly earnings of $0.52 per share, missing the Zacks Consensus Estimate of $0.53 per share, but showing an increase from $0.46 per share a year ago, resulting in an earnings surprise of -1.89% [1] - The company posted revenues of $192.63 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 8.42%, compared to year-ago revenues of $171.5 million [2] - Over the last four quarters, Altair Engineering has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Outlook - Altair Engineering shares have added about 2% since the beginning of the year, underperforming the S&P 500's gain of 4.5% [3] - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), indicating expected performance in line with the market in the near future [6] - The current consensus EPS estimate for the coming quarter is $0.48 on revenues of $188.13 million, and $1.55 on revenues of $704.85 million for the current fiscal year [7] Industry Context - The Internet - Software industry, to which Altair Engineering belongs, is currently in the top 34% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Another company in the same industry, EverCommerce, is expected to report a quarterly loss of $0.02 per share, reflecting a year-over-year change of +83.3%, with revenues projected at $169.96 million, up 0.3% from the previous year [9]

[Part I](index=6&type=section&id=Part%20I) [Business Overview](index=6&type=section&id=Item%201.%20Business) Altair is a global leader in computational intelligence, providing software and cloud solutions in simulation, high-performance computing (HPC), data analytics, and AI - Altair is a global leader in computational intelligence, offering software and cloud solutions in simulation, HPC, data analytics, and AI[18](index=18&type=chunk) - On October 30, 2024, Altair entered into a merger agreement with Siemens Industry, anticipated to close in the first half of 2025, with stockholders receiving **$113.00 per share in cash**[22](index=22&type=chunk)[23](index=23&type=chunk) - As of December 31, 2024, the company had over **13,000 customers worldwide**, with automotive and aerospace being the largest industries[84](index=84&type=chunk)[85](index=85&type=chunk) - The company operates through two reportable segments: Software and Client Engineering Services (CES)[117](index=117&type=chunk) [Products and Services](index=7&type=section&id=Products%20and%20Services) Altair offers a comprehensive suite of software and services across physics simulation, high-performance computing, and data analytics/AI/IoT - Product categories include Physics Simulation and Concept Design; High Performance and Cloud Computing; and Data Analytics, AI, IoT, and Smart Product Development[34](index=34&type=chunk) - The Altair Partner Alliance (APA) extends offerings by providing customers access to over **150 complementary third-party software products** using existing Altair Units[52](index=52&type=chunk)[81](index=81&type=chunk) - The company provides Client Engineering Services (CES), placing engineering, IT, and data science talent at customer sites for specific assignments[59](index=59&type=chunk)[60](index=60&type=chunk) - Altair One serves as a cloud innovation gateway for customers to access, download, and run Altair and partner applications[30](index=30&type=chunk) [Sales, Licensing, and Customers](index=15&type=section&id=Sales%2C%20Licensing%2C%20and%20Customers) Altair primarily uses a direct sales force and a unique units-based subscription model, achieving high recurring software license rates - Approximately **87% of 2024 software revenue** was generated through the direct sales force, with the remaining **13% from indirect channels**[75](index=75&type=chunk)[77](index=77&type=chunk) - The company's unique "Altair Units" subscription model provides flexible access to its software portfolio and partner products, driving a recurring software license rate of approximately **92% over the last five years**[81](index=81&type=chunk) - In 2024, software billings were geographically distributed with **32% in the Americas**, **31% in EMEA**, and **37% in APAC**[85](index=85&type=chunk) - No single customer accounted for more than **2% of 2024 software billings**[85](index=85&type=chunk) [Competition and Intellectual Property](index=16&type=section&id=Competition%20and%20Intellectual%20Property) Altair competes in a fragmented market, leveraging its broad software offering, integrated optimization, and unique licensing model, protected by a substantial patent portfolio - Primary competitors include Dassault Systèmes, Siemens AG, Ansys, MSC Software (a Hexagon company), SAS Institute, and Alteryx[87](index=87&type=chunk) - Competitive advantages are cited as the breadth and depth of its software, integrated optimization technology, and the patented units-based subscription model[88](index=88&type=chunk)[92](index=92&type=chunk) - As of December 31, 2024, Altair holds **303 issued patents worldwide** and has eight published patent applications[94](index=94&type=chunk) [Acquisitions](index=21&type=section&id=Acquisitions) Altair strategically acquires companies to enhance its technology portfolio, strengthening capabilities in data analytics, electronic design, and simulation - Acquired KSK Analytics, a Japanese AI and data analytics consulting and training firm[112](index=112&type=chunk) - Acquired Metrics Design Automation Inc., a Canadian company specializing in semiconductor electronic functional simulation and design verification[112](index=112&type=chunk) - Acquired Research in Flight, maker of FlightStream CFD software, strengthening its presence in the aerospace and defense sector[112](index=112&type=chunk) - Acquired the assets of Cambridge Semantics, a data fabric provider, to be integrated into the Altair RapidMiner platform[112](index=112&type=chunk) [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks, including those related to the pending Siemens merger, business operations, intellectual property, and financial obligations - Significant risks are associated with the pending merger with Siemens, including potential failure to complete the transaction, business disruptions, and restrictions on business activities[124](index=124&type=chunk)[134](index=134&type=chunk)[137](index=137&type=chunk) - Business and industry risks include failure to sustain revenue growth, intense competition, reduced customer spending on R&D, and dependence on the cyclical automotive industry[125](index=125&type=chunk)[143](index=143&type=chunk)[160](index=160&type=chunk) - Intellectual property and technology risks include potential defects in complex software, failure to protect proprietary technology, and vulnerability to cybersecurity incidents like hacking and malware[126](index=126&type=chunk)[195](index=195&type=chunk)[204](index=204&type=chunk) - The company is subject to risks from its substantial debt, including the effective subordination of its Convertible Notes and limitations on its ability to pay cash upon conversion[131](index=131&type=chunk)[262](index=262&type=chunk) [Cybersecurity](index=67&type=section&id=Item%201C.%20Cybersecurity) Altair's cybersecurity program, overseen by the Board and managed by the CISO, focuses on prevention, resilience, and continuous monitoring, while acknowledging complex threat environments - Cybersecurity oversight is provided by the Board of Directors, with day-to-day management led by the CISO, who has over **35 years of IT experience**[288](index=288&type=chunk)[289](index=289&type=chunk) - The company has a formal governance structure to assess, identify, and manage cybersecurity risks, including threat intelligence and insider threat programs[290](index=290&type=chunk)[293](index=293&type=chunk) - Altair engages third-party services for penetration testing and utilizes a SOC-as-a-Service provider for continuous monitoring and rapid threat response[292](index=292&type=chunk) - The company acknowledges that despite its efforts, it may not be successful in preventing a material cybersecurity incident and that its insurance may not fully cover all related costs[295](index=295&type=chunk) [Legal Proceedings](index=70&type=section&id=Item%203.%20Legal%20Proceedings) Three lawsuits were filed against Altair and its directors in connection with the pending Siemens merger, with one already dismissed, while other ordinary course legal matters persist - Three lawsuits were filed by stockholders in January 2025 in connection with the pending merger, alleging the Proxy Statement was materially incomplete; one lawsuit has since been dismissed[299](index=299&type=chunk) - The company acknowledges that it may be subject to other legal proceedings and intellectual property infringement claims in the ordinary course of business[300](index=300&type=chunk) [Part II](index=71&type=section&id=Part%20II) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=73&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For fiscal year 2024, Altair reported total revenue of **$665.8 million** and net income of **$14.2 million**, driven by software growth and improved profitability, with strong liquidity [Results of Operations (2024 vs. 2023)](index=80&type=section&id=Results%20of%20Operations%20%282024%20vs.%202023%29) In fiscal year 2024, total revenue grew to **$665.8 million**, driven by an **11% increase in Software revenue**, leading to a net income of **$14.2 million** from a prior-year loss Consolidated Results of Operations (2024 vs. 2023) (in thousands) | Financial Metric | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$665,788** | **$612,701** | **8.7%** | | Software Revenue | $611,900 | $549,974 | 11.3% | | Engineering services and other | $53,888 | $62,727 | (14.1%) | | **Gross Profit** | **$540,985** | **$490,910** | **10.2%** | | **Total Operating Expenses** | **$523,300** | **$490,667** | **6.6%** | | Research and development | $221,161 | $212,645 | 4.0% | | Sales and marketing | $184,280 | $176,138 | 4.6% | | General and administrative | $90,150 | $70,887 | 27.2% | | **Operating Income** | **$17,685** | **$243** | **NM** | | **Net Income (Loss)** | **$14,175** | **$(8,926)** | **NM** | - Software revenue increased by **11%** (**13% in constant currency**), driven by strong retention and expansion within existing accounts, particularly in aerospace & defense[363](index=363&type=chunk) - General and administrative expenses increased by **27%**, primarily due to a **$16.4 million** rise in professional fees related to the pending merger with Siemens Industry[371](index=371&type=chunk) [Non-GAAP Financial Measures](index=84&type=section&id=Non-GAAP%20Financial%20Measures) Altair's non-GAAP metrics for 2024 show positive trends, with Billings increasing to **$667.9 million**, Adjusted EBITDA growing to **$149.9 million**, and Free Cash Flow rising to **$140.0 million** Non-GAAP Financial Measures (2022-2024) (in thousands) | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Billings | $667,876 | $631,795 | $607,602 | | Adjusted EBITDA | $149,912 | $129,138 | $108,600 | | Free Cash Flow | $139,998 | $117,114 | $29,922 | - Free Cash Flow for 2024 was adversely impacted by approximately **$13.2 million** of expenses paid related to the pending Merger with Siemens Industry[390](index=390&type=chunk) - The recurring software license rate was **93%** for the year ended December 31, 2024, consistent with **93% in 2023** and up from **92% in 2022**[392](index=392&type=chunk) [Liquidity and Capital Resources](index=86&type=section&id=Liquidity%20and%20Capital%20Resources) Altair maintains strong liquidity with **$561.9 million** in cash and equivalents and an undrawn **$200.0 million** revolving credit facility, supported by increased operating cash flow - As of December 31, 2024, cash and cash equivalents were **$561.9 million**, up from **$467.5 million** at year-end 2023[393](index=393&type=chunk)[400](index=400&type=chunk) - The company has **$230.0 million** in convertible notes due 2027 and access to a **$200.0 million** revolving credit facility, which was undrawn as of year-end 2024[393](index=393&type=chunk)[398](index=398&type=chunk) Summary of Cash Flows (in thousands) | | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $154,084 | $127,307 | | Net cash used in investing activities | $(46,130) | $(15,852) | | Net cash (used in) provided by financing activities | $(7,035) | $37,766 | [Critical Accounting Estimates](index=88&type=section&id=Critical%20Accounting%20Estimates) Altair's critical accounting estimates involve significant judgment in revenue recognition, business acquisitions, and income taxes, particularly regarding deferred tax assets - Revenue recognition requires significant judgment in determining the standalone selling price (SSP) for distinct performance obligations, typically based on historical observable prices or an adjusted market assessment approach[416](index=416&type=chunk)[421](index=421&type=chunk)[542](index=542&type=chunk) - Accounting for acquisitions involves complex estimates for the fair value of identifiable assets and liabilities, with goodwill tested for impairment annually in the fourth quarter[423](index=423&type=chunk)[424](index=424&type=chunk)[526](index=526&type=chunk) - Income tax accounting requires assessing the need for a valuation allowance against deferred tax assets; due to a lack of sustainable earnings in the U.S., the company maintains a valuation allowance against substantially all of its net deferred tax assets in the United States[425](index=425&type=chunk)[627](index=627&type=chunk) [Financial Statements and Supplementary Data](index=93&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Altair's audited consolidated financial statements for the three years ended December 31, 2024, including an unqualified auditor's opinion and detailed notes - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2024[462](index=462&type=chunk)[473](index=473&type=chunk) - The auditor identified Software Revenue Recognition as a Critical Audit Matter, citing the complexity and judgment involved in estimating the standalone selling prices for performance obligations in software contracts[466](index=466&type=chunk)[467](index=467&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$1,445,647** | **$1,363,493** | | Cash and cash equivalents | $561,898 | $467,459 | | Goodwill | $462,459 | $458,125 | | **Total Liabilities** | **$588,458** | **$652,162** | | **Total Stockholders' Equity** | **$857,189** | **$711,331** | Consolidated Statement of Operations Highlights (in thousands) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | **Total Revenue** | **$665,788** | **$612,701** | | **Gross Profit** | **$540,985** | **$490,910** | | **Operating Income (Loss)** | **$17,685** | **$243** | | **Net Income (Loss)** | **$14,175** | **$(8,926)** | [Part III](index=96&type=section&id=Part%20III) [Directors, Executive Officers, Compensation, and Governance](index=96&type=section&id=Items%2010-14) Information for Items 10-14, covering directors, executive officers, compensation, security ownership, related transactions, and accountant fees, is incorporated by reference from the forthcoming 2025 Proxy Statement - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and principal accountant fees and services is incorporated by reference from the forthcoming 2025 Proxy Statement[449](index=449&type=chunk)[450](index=450&type=chunk)[451](index=451&type=chunk)[452](index=452&type=chunk)[453](index=453&type=chunk)

[Financial Performance Overview](index=1&type=section&id=Altair%20Announces%20Fourth%20Quarter%20and%20Full%20Year%202024%20Financial%20Results) [Q4 2024 Financial Highlights](index=1&type=section&id=Fourth%20Quarter%202024%20Financial%20Highlights) In Q4 2024, Altair reported total revenue of $192.6 million, a 12.3% increase year-over-year, driven by a 15.0% growth in software revenue. However, GAAP net income significantly decreased to $1.0 million from $19.7 million in Q4 2023. In contrast, Non-GAAP net income rose to $47.4 million, and Adjusted EBITDA increased by 13.9% to $61.0 million | Financial Metric | Q4 2024 | Q4 2023 | Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$192.6M** | **$171.5M** | **+12.3%** | | Software Revenue | $179.4M | $155.9M | +15.0% | | **Net Income (GAAP)** | **$1.0M** | **$19.7M** | **-94.9%** | | Net Income per Share (GAAP, diluted) | $0.01 | $0.22 | -95.5% | | **Non-GAAP Net Income** | **$47.4M** | **$41.1M** | **+15.3%** | | Non-GAAP Net Income per Share (diluted) | $0.52 | $0.47 | +10.6% | | **Adjusted EBITDA** | **$61.0M** | **$53.6M** | **+13.9%** | | Adjusted EBITDA Margin | 31.7% | 31.2% | +0.5 p.p. | | Free Cash Flow | $33.2M | $19.3M | +72.0% | [Full Year 2024 Financial Highlights](index=1&type=section&id=Full%20Year%202024%20Financial%20Highlights) For the full year 2024, Altair achieved total revenue of $665.8 million, an 8.7% increase from 2023. The company returned to profitability with a GAAP net income of $14.2 million, a significant turnaround from a net loss of $8.9 million in the previous year. Non-GAAP net income and Adjusted EBITDA also saw strong growth of 21.1% and 16.1% respectively, with free cash flow increasing to $140.0 million | Financial Metric | Full Year 2024 | Full Year 2023 | Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$665.8M** | **$612.7M** | **+8.7%** | | Software Revenue | $611.9M | $550.0M | +11.3% | | **Net Income (Loss) (GAAP)** | **$14.2M** | **($8.9M)** | **N/A (Turned to profit)** | | Net Income (Loss) per Share (GAAP, diluted) | $0.16 | ($0.11) | N/A (Turned to profit) | | **Non-GAAP Net Income** | **$119.6M** | **$98.8M** | **+21.1%** | | Non-GAAP Net Income per Share (diluted) | $1.35 | $1.17 | +15.4% | | **Adjusted EBITDA** | **$149.9M** | **$129.1M** | **+16.1%** | | Adjusted EBITDA Margin | 22.5% | 21.1% | +1.4 p.p. | | Free Cash Flow | $140.0M | $117.1M | +19.6% | [Pending Transaction with Siemens](index=1&type=section&id=Pending%20Transaction%20with%20Siemens%20and%20Conference%20Call%20Information) Altair's stockholders have approved the acquisition by Siemens Industry Software Inc., with the transaction now expected to close in the first half of 2025. Due to the pending merger, Altair has suspended its quarterly financial results conference calls and is no longer providing quarterly or annual guidance - Stockholders approved the merger agreement for Siemens to acquire Altair[5](index=5&type=chunk) - The transaction is anticipated to close in the first half of 2025, subject to customary closing conditions[5](index=5&type=chunk) - In light of the pending transaction, Altair has suspended its quarterly financial results conference calls and its financial guidance[5](index=5&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=ALTAIR%20ENGINEERING%20INC.%20AND%20SUBSIDIARIES%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of December 31, 2024, Altair's total assets increased to $1.45 billion from $1.36 billion a year prior, primarily due to a $94.4 million increase in cash and cash equivalents. Total liabilities decreased from $652.2 million to $588.5 million, largely reflecting the reclassification and settlement of convertible senior notes. Consequently, total stockholders' equity grew significantly to $857.2 million from $711.3 million | Balance Sheet Item (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | **$784,978** | **$700,623** | | Cash and cash equivalents | $561,898 | $467,459 | | **Total Assets** | **$1,445,647** | **$1,363,493** | | **Total Current Liabilities** | **$487,769** | **$324,110** | | **Total Liabilities** | **$588,458** | **$652,162** | | **Total Stockholders' Equity** | **$857,189** | **$711,331** | [Consolidated Statements of Operations](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the year ended December 31, 2024, total revenue grew 8.7% to $665.8 million, driven by a strong 11.3% increase in software revenue. Gross profit rose to $541.0 million. The company achieved a net income of $14.2 million, a substantial improvement from the $8.9 million net loss in 2023, despite a rise in operating expenses, which included higher R&D and G&A costs | Income Statement Item (in thousands) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$665,788** | **$612,701** | **+8.7%** | | Total Software Revenue | $611,900 | $549,974 | +11.3% | | **Gross Profit** | **$540,985** | **$490,910** | **+10.2%** | | **Total Operating Expenses** | **$523,300** | **$490,667** | **+6.6%** | | Operating Income | $17,685 | $243 | +7177.8% | | **Net Income (Loss)** | **$14,175** | **($8,926)** | **N/A** | | Diluted Earnings (Loss) Per Share | $0.16 | ($0.11) | N/A | - Total stock-based compensation expense decreased to **$67.7 million** in 2024 from **$85.6 million** in 2023[21](index=21&type=chunk) [Consolidated Statements of Cash Flow](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOW) For the full year 2024, Altair generated $154.1 million in net cash from operating activities, an increase from $127.3 million in 2023. Net cash used in investing activities was $46.1 million, primarily for business acquisitions. Financing activities resulted in a net cash use of $7.0 million. Overall, the company's cash and cash equivalents increased by $94.5 million during the year | Cash Flow Item (in thousands) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$154,084** | **$127,307** | | Net cash used in investing activities | ($46,130) | ($15,852) | | Net cash (used in) provided by financing activities | ($7,035) | $37,766 | | **Net increase in cash, cash equivalents** | **$94,466** | **$150,618** | | Cash, cash equivalents at end of period | $562,042 | $467,576 | [Non-GAAP Financial Measures and Reconciliations](index=2&type=section&id=Non-GAAP%20Financial%20Measures) [Explanation of Non-GAAP Measures](index=2&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Altair utilizes several non-GAAP financial measures, including Non-GAAP Net Income, Adjusted EBITDA, Free Cash Flow, and Billings, to supplement its GAAP results. Management believes these metrics offer valuable insights into the company's operational performance and business trends by excluding certain non-cash or non-recurring items like stock-based compensation, amortization of intangibles, and acquisition-related expenses - The company uses non-GAAP measures for trend analysis, determining executive compensation, and budgeting[8](index=8&type=chunk) - Key non-GAAP measures include **Non-GAAP Net Income**, **Adjusted EBITDA**, **Free Cash Flow**, and **Billings**[7](index=7&type=chunk) - Adjustments to derive non-GAAP measures typically exclude **stock-based compensation**, **amortization of intangible assets**, **asset impairment charges**, and other special items[9](index=9&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) [Reconciliation of GAAP to Non-GAAP Net Income](index=7&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Net%20Income) For the full year 2024, Altair's GAAP net income of $14.2 million was reconciled to a Non-GAAP net income of $119.6 million. The primary adjustments were the add-back of stock-based compensation ($67.7 million), amortization of intangible assets ($33.0 million), and special adjustments ($24.6 million), which notably included $22.3 million in expenses related to the pending Siemens merger | Reconciliation to Non-GAAP Net Income (in thousands) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | **Net income (loss) (GAAP)** | **$14,175** | **($8,926)** | | Stock-based compensation expense | $67,680 | $85,581 | | Amortization of intangible assets | $33,022 | $30,851 | | Non-cash interest expense | $1,514 | $1,869 | | Impact of non-GAAP tax rate | ($21,406) | ($13,158) | | Special adjustments and other | $24,597 | $2,553 | | **Non-GAAP net income** | **$119,582** | **$98,770** | - Special adjustments for the year ended Dec 31, 2024, include **$22.3 million** of expenses related to the pending merger transaction[26](index=26&type=chunk) [Reconciliation of GAAP to Adjusted EBITDA](index=7&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA) Adjusted EBITDA for the full year 2024 was $149.9 million, up 16.1% from $129.1 million in 2023. This was reconciled from a GAAP net income of $14.2 million by adding back items such as income tax expense ($18.5 million), stock-based compensation ($67.7 million), interest expense ($5.8 million), and depreciation & amortization ($42.2 million) | Reconciliation to Adjusted EBITDA (in thousands) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | **Net income (loss) (GAAP)** | **$14,175** | **($8,926)** | | Income tax expense | $18,455 | $21,545 | | Stock-based compensation expense | $67,680 | $85,581 | | Interest expense | $5,836 | $6,116 | | Depreciation and amortization | $42,164 | $39,124 | | Special adjustments, interest income and other | $1,602 | ($14,302) | | **Adjusted EBITDA** | **$149,912** | **$129,138** | [Other Reconciliations and Constant Currency](index=8&type=section&id=Other%20Reconciliations) The company reported Free Cash Flow of $140.0 million for FY 2024, which was adversely impacted by $13.2 million in payments for the pending merger. Billings for the year grew to $667.9 million. On a constant currency basis, FY 2024 total revenue growth was 9.8% (vs. 8.7% reported) and Adjusted EBITDA growth was 19.7% (vs. 16.1% reported), indicating a negative impact from currency fluctuations | Free Cash Flow (in thousands) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $154,084 | $127,307 | | Capital expenditures | ($14,086) | ($10,193) | | **Free Cash Flow** | **$139,998** | **$117,114** | - Free Cash Flow for FY 2024 was negatively impacted by approximately **$13.2 million** in expenses paid related to the pending merger transaction[28](index=28&type=chunk) | Constant Currency Growth (FY 2024 vs FY 2023) | As Reported | Constant Currency | | :--- | :--- | :--- | | Software Revenue Growth | 11.3% | 12.5% | | Total Revenue Growth | 8.7% | 9.8% | | Billings Growth | 5.7% | 7.0% | | Adjusted EBITDA Growth | 16.1% | 19.7% |

Core Insights - Altair, a leader in computational intelligence, reported its financial results for Q4 and the full year of 2024, showing significant revenue growth but a decline in net income for the fourth quarter [1][4]. Financial Highlights Fourth Quarter 2024 Financial Highlights - Software revenue reached $179.4 million, up 15.0% from $155.9 million in Q4 2023, with a 16.5% increase in constant currency [6]. - Total revenue was $192.6 million, a 12.3% increase from $171.5 million in Q4 2023, with a 13.8% rise in constant currency [6]. - Net income fell to $1.0 million from $19.7 million in Q4 2023, resulting in a net income margin of 0.5% compared to 11.5% in the previous year [6]. - Non-GAAP net income increased to $47.4 million from $41.1 million in Q4 2023, with non-GAAP net income per share rising to $0.52 from $0.47 [6]. - Adjusted EBITDA was $61.0 million, up 13.9% from $53.6 million in Q4 2023, with an adjusted EBITDA margin of 31.7% [6]. Full Year 2024 Financial Highlights - Software revenue for the full year was $611.9 million, an 11.3% increase from $550.0 million in 2023, with a 12.5% rise in constant currency [6]. - Total revenue reached $665.8 million, up 8.7% from $612.7 million in 2023, with a 9.8% increase in constant currency [6]. - Net income improved to $14.2 million from a net loss of $(8.9) million in 2023, resulting in a net income margin of 2.1% [6]. - Non-GAAP net income for the year was $119.6 million, compared to $98.8 million in 2023, with non-GAAP net income per share increasing to $1.35 from $1.17 [6]. - Adjusted EBITDA for the full year was $149.9 million, a 16.1% increase from $129.1 million in 2023, with an adjusted EBITDA margin of 22.5% [6]. Pending Transaction - On January 22, 2025, Altair's stockholders approved a merger agreement with Siemens Industry Software Inc., with the transaction expected to close in the first half of 2025, pending customary closing conditions [4]. - Due to the pending merger, Altair is suspending its quarterly financial results conference calls and guidance [4]. Cash Flow and Operating Activities - Cash provided by operating activities was $154.1 million for the full year, compared to $127.3 million in 2023 [6]. - Free cash flow for the year was $140.0 million, up from $117.1 million in 2023 [6]. Balance Sheet - As of December 31, 2024, total assets were $1,445.6 million, compared to $1,363.5 million in 2023 [20][21]. - Total liabilities were $588.5 million, down from $652.2 million in 2023 [20][21]. - Stockholders' equity increased to $857.2 million from $711.3 million in 2023 [21]. Changes in Revenue Presentation - Effective Q1 2024, Altair changed the presentation of revenue and cost of revenue, combining certain line items into a single category labeled "Engineering services and other," which does not affect previously reported amounts [28].

Core Insights - Altair has launched Altair® HyperWorks® 2025, a design and simulation platform aimed at creating a zero-prototype world where designs are perfected virtually before physical production [1][2] - The platform integrates AI, high-performance computing, and multiphysics simulation to enhance product development and innovation [1][3] AI-Powered Engineering and Optimization - Altair's new transformer architectures improve physics prediction models, enabling accurate simulations with limited data [4] - Machine learning models reduce simulation times while enhancing reliability, and AI-enabled reduced order modeling allows for faster simulations of nonlinear systems [4] Cloud-Based and SaaS Solutions - The Altair® DSim™ SaaS solution offers semiconductor designers unlimited simulations on a pay-as-you-go basis, promoting scalability without upfront costs [5] - Altair One® cloud innovation gateway enhances collaboration by providing instant access to simulation applications and HPC resources [5] Automation and Customization - New automation features, including Python APIs, streamline repetitive tasks and data queries, while advanced batch execution reduces workflow complexity [6] - Customization options allow users to tailor simulations for specific applications, such as pharmaceuticals and agriculture [6] Digital Engineering: A Connected Ecosystem - Altair's approach connects data, teams, and processes across the product lifecycle, enhancing digital twin and digital thread technologies for seamless data flow [7] - Private material databases support sustainability goals by providing a single source for material decisions and CO₂ impact analysis tools [7] Solver Efficiency - The "One Model, One Solver" approach simplifies structural simulations, allowing smooth transitions between different analysis types [8] - AI-powered PhysicsAI™ models can replace traditional numerical solvers, accelerating simulations while maintaining accuracy [8] Multiphysics Simulation for Electronics - Recent updates improve the management of thermal, electromagnetic, and power interactions in electronics design, enhancing system performance predictions [10] CAE as a Design Tool - Altair® Inspire™ offers user-friendly computational physics for various analyses, while the CoPilot™ Beta AI assistant provides on-demand guidance [11] Advanced Material Simulation - Altair's material solutions enable organizations to source and simulate high-fidelity material data, optimizing designs and achieving sustainability goals [12] Particle Simulation - New physics models in particle simulation enhance workflows and enable realistic representations for applications in agriculture, batteries, and pharmaceuticals [13]