Altair(US:ALTR)2024-10-31 18:37Acquisitions - In April 2024, the company acquired Cambridge Semantics, integrating its technologies into the Altair RapidMiner platform[97]. - The company also acquired Research in Flight in April 2024, enhancing its Altair HyperWorks design and simulation platform with CFD software[98]. - In July 2024, Metrics Design Automation Inc. was acquired, introducing a SaaS model for semiconductor simulation available through Altair One[99]. - The company aims to integrate recent acquisitions to expand its software portfolio and better serve customer demands[104]. - Amortization of intangible assets increased by $1.5 million for the three months ended September 30, 2024, primarily due to recent acquisitions[124]. - Amortization of intangible assets rose by $1.2 million, or 5%, for the nine months ended September 30, 2024, primarily due to recent acquisitions[141]. Financial Performance - Software revenue for the three months ended September 30, 2024, was $138,672,000, representing a 16% increase from $119,077,000 in the same period of 2023[111]. - Total revenue for the nine months ended September 30, 2024, was $473,157,000, a 7% increase compared to $441,198,000 for the same period in 2023[109]. - Gross profit for the three months ended September 30, 2024, was $121,435,000, reflecting a 16% increase from $104,917,000 in the prior year[116]. - Net income for the three months ended September 30, 2024, was $1,779,000, a significant improvement from a net loss of $4,362,000 in the same period of 2023[109]. - Adjusted EBITDA for the three months ended September 30, 2024, was $25,705,000, a 66% increase from $15,454,000 in the prior year[109]. - Total operating expenses for the three months ended September 30, 2024, were $125,747,000, an 8% increase from $116,181,000 in 2023[109]. - Free cash flow for the nine months ended September 30, 2024, was $106,815,000, a 9% increase compared to $97,774,000 in the previous year[109]. - Revenue for the three months ended September 30, 2024, was $9,246 million, a 20% increase from $7,704 million in the same period of 2023[122]. - Net income for the three months ended September 30, 2024, was $1,779 million, compared to a net loss of $4,362 million for the same period in 2023, representing a period-to-period change of $6,141 million[130]. - Software revenue increased by 10% for the nine months ended September 30, 2024, driven by growth in software license revenue and strong retention within existing accounts[131]. - Gross profit for the nine months ended September 30, 2024, was $381,733 million, a 10% increase from $348,580 million in the same period of 2023[135]. - Net income was $13.2 million for the nine months ended September 30, 2024, a significant improvement from a net loss of $28.6 million in the same period of 2023[150]. - Adjusted EBITDA for the nine months ended September 30, 2024, was $88.9 million, up from $75.6 million in the same period of 2023[152]. Expenses - Research and development expenses increased by $4,513,000, or 9%, for the three months ended September 30, 2024, totaling $56,111,000 compared to $51,598,000 in 2023[118]. - Sales and marketing expenses rose by $1,490,000, or 3%, for the three months ended September 30, 2024, amounting to $45,559,000 compared to $44,069,000 in the previous year[119]. - Research and development expenses increased by $3.9 million, or 2%, for the nine months ended September 30, 2024, totaling $164,014 million[138]. - Sales and marketing expenses increased by $3.9 million, or 3%, for the nine months ended September 30, 2024, totaling $136,468 million[139]. - Other operating income was $4.3 million for the nine months ended September 30, 2024, compared to an expense of $1.3 million for the same period in 2023, reflecting a change of $5.6 million[144]. Cash Flow and Debt - Net cash provided by operating activities for the nine months ended September 30, 2024, was $116.6 million, an increase of $10.9 million compared to $105.7 million for the same period in 2023[173]. - Free cash flow for the nine months ended September 30, 2024, was $106.8 million, compared to $97.8 million for the same period in 2023[152]. - Net cash used in investing activities for the nine months ended September 30, 2024, was $40.4 million, an increase of $26.8 million compared to $13.6 million in 2023[174]. - The company paid $30.6 million related to business acquisitions and investments during the nine months ended September 30, 2024[174]. - The 2027 convertible notes have a principal amount of $230.0 million and were classified as long-term debt as of September 30, 2024[164]. - As of September 30, 2024, the company had $513.4 million in cash and cash equivalents, with $200.0 million available on its credit facility[163]. Tax and Other Income - The effective tax rate was 65% for the three months ended September 30, 2024, compared to 60% for the same period in 2023[129]. - Income tax expense decreased by $1.9 million, or 16%, for the nine months ended September 30, 2024, totaling $9.5 million[148]. - The effective tax rate was 42% for the nine months ended September 30, 2024, compared to -66% for the same period in 2023[149]. - Other income, net for the three months ended September 30, 2024, increased by $8.9 million to $(10,758) million, primarily due to $5.9 million of interest income and $4.9 million in net foreign currency gains[127]. - Other income, net increased by $10.8 million for the nine months ended September 30, 2024, driven by $17.5 million of interest income[147]. Market and Operational Insights - The company reported that its billings are historically highest in the first and fourth quarters, which may lead to significant fluctuations in quarterly results[103]. - The company identified two reportable segments: Software and Client Engineering Services, focusing on software products and client engineering support[106]. - Foreign currency fluctuations are a risk due to substantial international operations, impacting revenues and profits[105]. - The company emphasizes the importance of successfully renewing software licenses and retaining key executives for future performance[86]. - The company anticipates that demand for its software will grow beyond simulation engineering specialists into additional industry verticals[86]. - The recurring software license rate was 92% for the nine months ended September 30, 2024, compared to 94% for the same period in 2023[162].