Altair(ALTR)2023-05-07 11:42Financial Data and Key Metrics Changes - Altair reported a strong start to 2023 with software product revenue, total revenue, and adjusted EBITDA exceeding guidance, marking an all-time high for both software product revenue and total revenue [6][21] - Adjusted EBITDA for Q1 2023 was $43.1 million, representing 25.9% of total revenue, compared to $46.6 million or 29.2% in Q1 2022 [27] - Total billings for the quarter were $163.5 million, a year-over-year decrease of 4.6% in reported currency and 0.9% in constant currency [22] - Software product revenue in Q1 2023 was $149.6 million, a year-over-year increase of 6.2% in reported currency and 10.0% in constant currency [23] - Total revenue in Q1 2023 was $166.0 million, a year-over-year increase of 3.9% in reported currency and 7.5% in constant currency [24] Business Line Data and Key Metrics Changes - Software product revenue as a percentage of total revenue for Q1 2023 was 90.1%, up from 88.2% in Q1 2022 [6][25] - The recurring software license rate was 95% for the quarter, compared to 93% in Q1 2022 [6] - The company experienced strong renewals and expansion in the automotive and aerospace verticals, contributing to software product revenue growth [23] Market Data and Key Metrics Changes - The automotive sector remains a significant market for Altair, with high demand for new cars despite a decline in revenue contribution as a percentage of total business [54] - The banking and financial services sector is showing positive dynamics, with the company converting accounts to its units model and receiving strong interest in its offerings [40] Company Strategy and Development Direction - Altair is focused on expanding its data analytics offerings and integrating them with simulation tools to enhance customer engagement and drive growth [62] - The company is investing in marketing and indirect channels to promote new products like SimSolid Cloud, targeting smaller and mid-market customers [60] - Altair aims to maintain a strong balance sheet and is well-positioned to withstand market uncertainties, with a cash balance of $378.4 million [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's performance against a backdrop of global uncertainty, highlighting strong customer demand and successful product integrations [19] - The company anticipates continued growth in software product revenue, maintaining guidance for Q2 and full year 2023 [29][30] Other Important Information - Altair's acquisition of World Programming was affirmed by the U.S. Court of Appeals, allowing the company to leverage open-source technologies [12] - The company is investing in cutting-edge technologies, including quantum computing and high-performance computing, to stay ahead of industry trends [19] Q&A Session Summary Question: Insights on Q2 guidance and sequential performance - Management indicated that the Q2 guidance reflects historical seasonal patterns, with Q1 and Q4 typically being stronger quarters [34] Question: Performance of RapidMiner post-acquisition - Management expressed confidence in the RapidMiner acquisition, noting increased customer interest and sales force confidence [37] Question: Demand dynamics outside manufacturing - Management reported positive engagement in the banking and financial services sector, despite challenges in the broader market [40] Question: Confidence in SimSolid technology - Management highlighted the unique capabilities of SimSolid, emphasizing its ease of use and rapid results for complex assemblies [42] Question: Long-term strategy for targeting less technical users - Management acknowledged the opportunity in mid and small market customers, focusing on democratizing simulation technology [50] Question: Outlook on the automotive end market - Management noted that while automotive revenue is declining as a percentage of total business, demand for new cars remains strong [54]