Altair(US:ALTR)2023-08-04 21:12Financial Data and Key Metrics Changes - Altair reported a solid second quarter of 2023 with adjusted EBITDA growing year-over-year to $17.1 million [7] - Total billings for Q2 2023 reached $147.8 million, a year-over-year increase of 17.8% in reported currency and 19.6% in constant currency [8][25] - Software product revenue for Q2 2023 was $125.3 million, a year-over-year increase of 7.2% in reported currency and 9.4% in constant currency [25][26] - Total revenue in Q2 2023 was $141.2 million, a year-over-year increase of 6.4% in reported currency and 8.4% in constant currency [26] - Non-GAAP gross margin increased to 80.0% in Q2 2023 from 79.3% in the prior year [27] - Free cash flow through the first half of 2023 was $83.0 million [28] Business Line Data and Key Metrics Changes - Software product revenue as a percentage of total revenue for Q2 2023 was 88.8%, up from 88.1% in Q2 2022 [7] - The recurring software license rate for the first half of 2023 was 94%, an increase from 93% in the first half of 2022 [7] Market Data and Key Metrics Changes - Strength was observed in the aerospace, defense, technology, and automotive verticals, with notable customer renewals and expansions [8][12] - A significant aerospace customer increased its software licensing commitment by over 50%, resulting in a seven-figure annual licensing agreement [12] - A major aircraft component supplier committed to a 44% increase in a multi-year software licensing deal [13] Company Strategy and Development Direction - The company is focusing on enterprise selling and engaging at higher levels with key customers to build long-term relationships [12] - Altair plans to release new significant products in Q4 2023, integrating AI within simulation products [9] - The acquisition of OmniV aims to enhance Altair's digital twin solutions and requirements management capabilities [10][11][76] Management's Comments on Operating Environment and Future Outlook - Management described the current macroeconomic environment as "lackluster," with expectations for stronger demand in 2024 and 2025 [21][38] - The company anticipates continued growth in adjusted EBITDA and aims for a 20% adjusted EBITDA margin this year [21][22] - Management expressed confidence in the pipeline and positioning for future growth despite current economic challenges [39][44] Other Important Information - Altair was named to Newsweek's Most Loved Workplaces list for the third consecutive year, reflecting employee satisfaction [18] - The company was recognized as the overall leader in the manufacturing data analytics sector by ABI Research [19][20] Q&A Session Summary Question: How resilient are R&D budgets in the current macro environment? - Management noted that while budgets are being watched closely, there is potential for significant customer interest and engagement [36][38] Question: What is the outlook for Q3 and Q4 revenue dynamics? - Management explained that Q3 is historically the smallest quarter due to summer holidays, but the overall pipeline for the second half looks strong [46][47] Question: What are the core drivers behind the momentum in renewals and expansions? - Management highlighted strong activity in aerospace and defense, with customers seeking more efficient and effective solutions [50][53] Question: How is the SimSolid Cloud performing in the market? - Management indicated that it is early days for SimSolid Cloud, but initial evaluations are positive, particularly for small to medium accounts [72][74] Question: What is the rationale behind the acquisition of OmniV? - The acquisition fills a gap in requirements management solutions and is expected to enhance Altair's offerings in digital twin technology [76][77]