Altair(US:ALTR)2022-11-05 23:32Financial Data and Key Metrics Changes - Total revenue for the first 9 months of 2022 grew by 10.4% year-over-year on a constant currency basis [7] - Adjusted EBITDA for the first 9 months of 2022 was $69.9 million, representing 17% of revenue, compared to $61.3 million or 15.7% in the same period of 2021, reflecting a growth of 14% [9] - Calculated total billings for Q3 2022 were $122.9 million, a year-over-year increase of 4.9% in reported currency and 13.3% in constant currency [23] - Non-GAAP gross margin was 78.6% in Q3 2022, up from 75.2% in the prior year, an increase of 340 basis points [24] - Free cash flow for the first 9 months of 2022 was $85.7 million, an increase of more than 75% year-over-year [26] Business Line Data and Key Metrics Changes - Software product revenue as a percentage of total revenue for the first 9 months of 2022 was 87.8%, up from 84.7% in the same period in 2021 [8] - Software product billings in Q3 grew by more than 21% year-over-year on a constant currency basis [8] - Client engineering services have trended down significantly, but the trend is expected to stabilize entering Q4 [9] Market Data and Key Metrics Changes - Software product revenue was $103.8 million in Q3 2022, an increase of 1.4% compared to Q3 2021 in reported currencies [23] - Total revenue, including services and other revenue, was $119.4 million in Q3 2022, a decrease of 1.6% compared to Q3 2021 in reported currency [23] - The Americas, EMEA, and APAC regions all showed impressive growth rates in software product billings, approximately 22% year-over-year [8] Company Strategy and Development Direction - The acquisition of RapidMiner enhances Altair's data analytics portfolio and positions the company as a leader in supporting data science and analytics requirements across various market verticals [10][11] - The company is focusing on organic innovation while integrating acquired technologies to strengthen its product offerings [12] - Altair aims to increase the percentage of sales from indirect sales channels and has announced new partnerships to support this strategy [20] Management's Comments on Operating Environment and Future Outlook - Management remains positive about the remainder of 2022 despite global uncertainty and foreign currency exchange rate headwinds [21] - The pipeline remains strong, with no signs of deals being delayed, as customers continue to prioritize competitive product development [35] - The company expects software product revenue for Q4 2022 to be in the range of $126 million to $131 million, reflecting a year-over-year increase of 3.0% to 7.1% [27] Other Important Information - The company is raising guidance for full year 2022 total revenue to a range of $555 million to $560 million, representing year-over-year growth of 4.3% to 5.2% [29] - Adjusted EBITDA guidance for Q4 2022 is expected to be in the range of $22 million to $25 million, or 15.4% to 16.9% of total revenue [30] Q&A Session Summary Question: How is the demand environment perceived by core customers? - Management noted that the pipeline remains strong, with no signs of deals being delayed, as customers feel pressure to continue competitive product development [35] Question: What is the value proposition of the RapidMiner acquisition? - The acquisition enhances Altair's technology offerings and provides a strong platform for data analytics, particularly in the manufacturing sector [37] Question: Are there differences among customer verticals regarding the macro environment? - Management indicated that the demand appears solid across all verticals, including automotive and aerospace [41] Question: Is RapidMiner adding any revenue this year? - RapidMiner is expected to contribute a couple of million in Q4, but had minimal impact in Q3 [43] Question: What is the go-to-market plan for RapidMiner? - RapidMiner will quickly move into the units model, with a focus on transitioning existing customers to this model [48] Question: How does the company view M&A opportunities in the current macro environment? - Management sees potential for more M&A opportunities as time goes on, but plans to focus on digesting recent acquisitions [56] Question: What is the impact of U.S. export control rules on business? - While there is some impact, management believes business from China will continue to grow despite restrictions [68]