Altair(ALTR)2023-05-03 16:00Financial Performance - Total revenue for the three months ended March 31, 2023, was $166,034 thousand, representing a 4% increase compared to $159,781 thousand for the same period in 2022[110]. - Adjusted EBITDA for the three months ended March 31, 2023, was $43,055 thousand, down 8% from $46,590 thousand in the same period of 2022[111]. - Net loss for the three months ended March 31, 2023, was $(1,959) thousand, compared to a net income of $11,528 thousand for the same period in 2022[111]. - Billings for the three months ended March 31, 2023, were $163,517 thousand, a decrease of 5% from $171,337 thousand in the same period of 2022[111]. - Gross profit increased by $5,121,000, or 4%, to $133,299,000 for the three months ended March 31, 2023, compared to $128,178,000 for the same period in 2022[126]. - Free cash flow for the three months ended March 31, 2023, was $57.5 million, a significant increase from $3.6 million in the same period of 2022[152]. - For the three months ended March 31, 2023, the company reported a net loss of $2.0 million, a significant decrease from a net income of $11.5 million in the same period of 2022, representing a change of NM[140][142]. Revenue Breakdown - Software revenue increased by 6% to $149,643 thousand, driven by growth in software license revenue, particularly in the automotive and aerospace sectors[111]. - Software related services revenue decreased by 22% to $7,100,000 for the three months ended March 31, 2023, compared to $9,061,000 for the same period in 2022[116]. - Client engineering services revenue decreased by 3% to $7,776,000 for the three months ended March 31, 2023, compared to $8,012,000 for the same period in 2022[117]. - Other revenue decreased by 16% to $1,515,000 for the three months ended March 31, 2023, compared to $1,811,000 for the same period in 2022[120]. Expenses and Costs - Research and development expenses increased by 13% to $53,251 thousand, compared to $47,079 thousand in the same period of 2022[111]. - Sales and marketing expenses increased by $5,652,000, or 15%, to $43,492,000 for the three months ended March 31, 2023, compared to $37,840,000 for the same period in 2022[129]. - Interest expense increased by $941,000, or 161%, to $1,526,000 for the three months ended March 31, 2023, compared to $585,000 for the same period in 2022[135]. - Other operating expense increased by $6,386,000 for the three months ended March 31, 2023, primarily due to a $7,000,000 loss on the mark-to-market adjustment of contingent consideration[133]. - Amortization of intangible assets increased by $1,911,000, or 32%, to $7,814,000 for the three months ended March 31, 2023, compared to $5,903,000 for the same period in 2022[131]. - Cost of software related services revenue decreased by $419,000, or 7%, to $5,616,000 for the three months ended March 31, 2023, compared to $6,035,000 for the same period in 2022[122]. Cash and Financing - The company had cash and cash equivalents of $378.4 million as of March 31, 2023, with an additional $200.0 million available under its credit facility[155][159]. - Net cash provided by operating activities for Q1 2023 was $59.2 million, an increase of $53.4 million compared to Q1 2022[163]. - Net cash used in investing activities for Q1 2023 was $3.1 million, a decrease of $12.4 million compared to Q1 2022[164]. - Net cash provided by financing activities for Q1 2023 was $5.5 million, an increase of $2.9 million compared to Q1 2022[165]. - The company had no outstanding borrowings under its 2019 Amended Credit Agreement as of March 31, 2023[172]. - The company issued $230.0 million of 1.750% convertible senior notes due in 2027 and $230.0 million of 0.250% convertible senior notes due 2024, with $81.8 million remaining outstanding as of March 31, 2023[171]. Strategic Outlook - The integration of recent acquisitions is expected to expand the portfolio of software and products, enhancing customer service capabilities[104]. - The company continues to evaluate potential acquisitions and strategic transactions to expand its business, which may impact its cash position and debt obligations[157]. - The company anticipates that revenues and profits may be impacted by changes in foreign currency rates due to substantial international operations[105]. - The effective tax rate increased to 127% for the three months ended March 31, 2023, compared to 36% in the same period of 2022, primarily due to changes in tax regulations affecting R&D expense capitalization[139]. Market and Risk Factors - The recurring software license rate improved to 95% for the three months ended March 31, 2023, up from 93% in the same period of 2022, indicating stronger customer retention[154]. - Interest rate risk is present due to potential fluctuations in interest income on invested cash balances[172]. - The company does not have any foreign currency hedging contracts as of March 31, 2023[169]. - The company does not plan on engaging in hedging activities in the near future based on current international operations[169]. - There was a favorable effect of exchange rate changes on cash of $0.4 million for Q1 2023, compared to an adverse effect of $1.0 million in Q1 2022[165].