Altair(US:ALTR)2024-02-23 03:37Financial Data and Key Metrics Changes - Altair reported record high total quarterly revenue of $171.5 million for Q4 2023, and full-year revenue of $612.7 million, representing a year-over-year increase of 6.9% and 7.1% respectively in reported currency [7][22] - Adjusted EBITDA for Q4 2023 increased by 38.3% year-over-year to $53.6 million, or 31.2% of total revenue, while full-year adjusted EBITDA grew 19% to $129.1 million, or 21.1% of total revenue [7][22] - Non-GAAP gross margin for Q4 was 84.3%, up from 80.2% in the prior year, driven by the exit from a lower margin hardware business [19][20] Business Line Data and Key Metrics Changes - Software product revenue for the full year 2023 grew by 8.6% compared to 2022, with software revenue accounting for 90% of total revenue [8][22] - The recurring software license rate for 2023 was 93%, an increase from 92% in 2022 [8] - Total billings for Q4 were $196.1 million, a year-over-year increase of 4.4% in reported currency [18] Market Data and Key Metrics Changes - Growth was broad-based across geographies and verticals, with notable strength in automotive, aerospace, and technology sectors [18][19] - A leading manufacturer of Electric Vehicles in APAC made an eight-figure commitment to Altair's simulation and data analytics software [10] - The aerospace market remained strong, benefiting from a renewed focus on defense and vertical organization [66] Company Strategy and Development Direction - Altair is focusing on engineering AI and digital twin technologies, which are gaining traction and expected to drive future growth [9][35] - The company plans to hold an Investor Day on March 20, 2024, to discuss its vision and future plans [16] - Altair is investing in product development and sales capacity to capitalize on market opportunities [56] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a strong pipeline and increased investment in product differentiation [63] - The company is taking a prudent approach to guidance for 2024, reflecting a balanced revenue expectation throughout the year [39] - Management noted that the macroeconomic environment remains challenging but sees opportunities for growth in various sectors [37][63] Other Important Information - Altair's cash and cash equivalents at year-end 2023 were $467.5 million, with free cash flow of $117.1 million for the year [23][26] - The company welcomed three new channel partners in Q4, enhancing its indirect sales strategy [13] Q&A Session Summary Question: Impact of Synopsys-ANSYS merger on Altair's strategy - Management believes the merger presents opportunities due to uncertainty in the market, which could benefit Altair [28] Question: Revenue cadence and seasonality - Management noted a shift in revenue seasonality, with Q1 expected to be less dominant as the customer base broadens [30] Question: Importance of recent strategic initiatives - Management emphasized that changes made in 2023, including product releases and sales force alignment, are setting the stage for sustained momentum [32] Question: Level of conservatism in guidance - Management took a pragmatic approach to guidance, expecting a pickup in revenue in the latter half of 2024 [38] Question: Growth rates in data analytics vs. core simulation - Management indicated that growth in simulation led the way in 2023, with a convergence of data analytics and simulation technologies expected to drive future growth [42] Question: Changes in demand environment - Management reported increased strength in the pipeline over the last 90 days, particularly in Europe and the aerospace sector [62][66]