Altair(ALTR) - 2024 Q4 - Annual Results

Financial Performance Overview Q4 2024 Financial Highlights 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 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 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] - The transaction is anticipated to close in the first half of 2025, subject to customary closing conditions[5] - In light of the pending transaction, Altair has suspended its quarterly financial results conference calls and its financial guidance[5] Consolidated Financial Statements Consolidated Balance Sheets 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 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] Consolidated Statements of Cash Flow 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 Explanation of Non-GAAP Measures 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] - Key non-GAAP measures include Non-GAAP Net Income, Adjusted EBITDA, Free Cash Flow, and Billings[7] - Adjustments to derive non-GAAP measures typically exclude stock-based compensation, amortization of intangible assets, asset impairment charges, and other special items[9][11][12] Reconciliation of GAAP to Non-GAAP Net Income 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] Reconciliation of GAAP to Adjusted EBITDA 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 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] | 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% |