ANSYS(ANSS) - 2025 Q1 - Quarterly Report

Financial Performance - Revenue for the three months ended March 31, 2025, increased by 8.2% compared to the same period in 2024[89] - GAAP operating income for the same period rose by 35.9%, while non-GAAP operating income increased by 12.5%[89] - GAAP diluted earnings per share grew by 47.5%, and non-GAAP diluted earnings per share increased by 18.0%[89] - Total revenue for the three months ended March 31, 2025, was $504.9 million[107] - Net income for the three months ended March 31, 2025, was $51,865 thousand, resulting in diluted earnings per share of $0.59, compared to $34,778 thousand and $0.40 in the same period of 2024, marking an increase of 49.1% in net income[123] - Non-GAAP net income for the three months ended March 31, 2025, was $144,149 thousand, with a diluted earnings per share of $1.64, compared to $121,996 thousand and $1.39 in the same period of 2024[126] Revenue Breakdown - Maintenance revenue grew by 12.1%, or 13.9% in constant currency, driven by a $35.1 million increase, primarily from existing customers[107] - Service revenue increased by 21.2%, or 22.5% in constant currency, mainly due to increased consulting work in the EMEA region[107] - Subscription lease license revenue rose by 2.2%, or 4.0% in constant currency, with the increase largely attributed to sales to existing customers[107] - Perpetual license revenue decreased by 3.8%, or 2.9% in constant currency, due to a 13.8% drop in deal volume[107] Cash Flow and Investments - Cash, cash equivalents, and short-term investments increased by $331,042 thousand, or 22.1%, from $1,497,517 thousand on December 31, 2024, to $1,828,559 thousand on March 31, 2025[135] - Net cash provided by operating activities rose by $116,118 thousand, or 41.1%, from $282,817 thousand for the three months ended March 31, 2024, to $398,935 thousand for the same period in 2025[138] - Net cash used in investing activities decreased by $3,749 thousand, or 10.9%, from $(34,436) thousand in Q1 2024 to $(30,687) thousand in Q1 2025[139] - Net cash used in financing activities decreased by $13,406 thousand, or 24.5%, from $(68,049) thousand in Q1 2024 to $(54,643) thousand in Q1 2025[140] Operating Expenses - Total operating expenses were $373,429 thousand, which is 74.0% of revenue, an increase of $18,830 thousand or 5.3% from the previous year[116] - Research and development expenses increased to $137,292 thousand, representing 27.2% of revenue, an increase of $8,481 thousand or 6.6% compared to the prior year[116] - The company experienced a net increase in maintenance and service costs of $3,631 thousand, primarily due to increased salaries and stock-based compensation[115] Market Trends and Strategic Initiatives - The engineering simulation software market is experiencing strong growth driven by the need for rapid, quality innovation and increased product complexity[77] - Key industry trends include electrification, autonomy, connectivity, and the industrial internet of things (IIoT)[78] - Investments in AI capabilities across the simulation portfolio are enhancing customer experience and accelerating simulation processes[76] - The company continues to focus on sales improvement activities, including hiring and customer engagement initiatives[100] Currency Impact - The company reported a total adverse impact from currency fluctuations on revenue of $7,679 thousand for the three months ended March 31, 2025[152] - The U.S. Dollar was 3.5% stronger against foreign currencies on average for the three months ended March 31, 2025, compared to the same period in 2024[151] - A hypothetical 10% strengthening in the U.S. Dollar would have decreased revenue by $22.2 million and operating income by $5.7 million for the three months ended March 31, 2025[153] Debt and Interest Rates - The carrying value of the term loan as of March 31, 2025, was $754,300 thousand, with no principal payments due in the next twelve months[142] - The interest rate under the 2022 Credit Agreement was 5.25% as of March 31, 2025, following an amendment for a Sustainability Rate Adjustment[143] - Outstanding term loan borrowings amounted to $755.0 million as of March 31, 2025, with interest rates based on Term SOFR or base rate plus applicable margin[155] - A hypothetical increase of 100 basis points in interest rates would increase interest expense and decrease cash flows by $7.7 million over the next twelve months[157]