ANSYS(ANSS) - 2024 Q1 - Quarterly Report

Financial Performance - Total revenue for Q1 2024 was $466.6 million, a decrease of 8.4$509.4 million in Q1 2023[20] - Net income for Q1 2024 was $34.8 million, a decline of 65.5$100.6 million in Q1 2023[20] - Operating income fell to $43.3 million, down 66.0$127.7 million year-over-year[20] - Earnings per share (EPS) for Q1 2024 was $0.40, compared to$1.16 in Q1 2023, reflecting a decrease of 65.5%[20] - Comprehensive income for Q1 2024 was $12.8 million, significantly lower than$113.9 million in Q1 2023, primarily due to foreign currency translation adjustments[23] - GAAP operating income decreased by 66.1%, while non-GAAP operating income fell by 26.0% for the same period[108] - GAAP diluted earnings per share dropped by 65.2%, and non-GAAP diluted earnings per share decreased by 24.9% year-over-year[108] Revenue Breakdown - Software licenses revenue decreased to $160.3 million, down 26.8$219.2 million in the same period last year[20] - Subscription lease licenses revenue decreased to $94.8 million from$147.9 million, while perpetual licenses revenue decreased to $65.5 million from$71.2 million[42] - Maintenance revenue increased to $289.3 million from$268.6 million, and service revenue decreased to $16.9 million from$21.7 million[42] - The Americas region experienced a revenue decline of 18.8%, while Asia-Pacific saw a growth of 6.0% in the same period[122] - International revenue accounted for 57.1% of total revenue in Q1 2024, up from 51.6% in Q1 2023[138] Cash Flow and Investments - Cash and cash equivalents at the end of Q1 2024 increased to $1.05 billion, up from$507.7 million at the end of Q1 2023[26] - The company reported a net cash provided by operating activities of $282.8 million, an increase from$260.8 million in the prior year[26] - Cash, cash equivalents, and short-term investments increased by $210.2 million (24.4$860.4 million on December 31, 2023, to $1,070.6 million on March 31, 2024[167] - Net cash used in investing activities decreased by$94.0 million (73.2%) from $(128.4) million for the three months ended March 31, 2023, to$(34.4) million for the same period in 2024[172] - Net cash used in financing activities decreased by $186.2 million (77.3$(240.8) million for the three months ended March 31, 2023, to $(54.6) million for the same period in 2024[173] Expenses - Research and development expenses increased to$128.8 million, up from $120.3 million in Q1 2023, indicating a focus on innovation[20] - Selling, general and administrative expenses rose to$219.6 million, representing 47.1% of revenue, compared to 37.0% in Q1 2023[146] - Increased operating expenses in Q1 2024 were primarily due to higher personnel and acquisition costs related to the Merger Agreement with Synopsys[106] Debt and Financing - The carrying value of the term loan as of March 31, 2024, was $754.0 million, with no principal payments due in the next twelve months[175] - The weighted average interest rate for the three months ended March 31, 2024, was 6.32$755.0 million as of March 31, 2024[186] Strategic Developments - Ansys entered into a merger agreement with Synopsys, expected to close in the first half of 2025, pending regulatory approvals[34] - A strategic equity investment agreement was entered into on December 5, 2023, with a purchase price of $300 million expected to close in 2024[47] - The company’s strategy focuses on expanding the use of simulation across product lifecycles and increasing accessibility to a broader user base[98] Market Conditions - Future performance may be impacted by macroeconomic conditions, including inflation and geopolitical factors, which could affect business operations and strategic transactions[126] - The engineering simulation software market is experiencing growth driven by trends such as electrification, autonomy, and sustainability[100] Tax and Legal Matters - The effective tax rate for the three months ended March 31, 2024, was 15.1$7.2 million related to pending service tax audits in India, although a reserve has not been recorded as the charges are not deemed probable[94] - The company is subject to various legal proceedings, but the resolution of these matters is not expected to have a material adverse effect on its financial position[193] Workforce - The company employed 6,200 people as of March 31, 2024, maintaining the same workforce level as of December 31, 2023[97]