• Altair Announces Fourth Quarter 2020 Financial Results

    ソース: Nasdaq GlobeNewswire / 25 2 2021 15:05:02   America/Chicago

    Record Fourth Quarter and Full Year 2020 Software Product and Total Revenue, Exceeding Expectations

    TROY, Mich., Feb. 25, 2021 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global technology company providing software and cloud solutions in the areas of simulation, high-performance computing, data analytics and artificial intelligence today released its financial results for the fourth quarter and full year ended December 31, 2020.

    “Altair had an excellent fourth quarter and full year 2020,” said James Scapa, Founder, Chairman and Chief Executive Officer of Altair. “In a year of business disruptions and personal challenges, Altair brought to market broad and deep additions and enhancements to our product portfolio while delivering solid financial performance. I am proud of our global team, and excited about 2021 as we will continue delivering industry-leading technology and expertise aligned with our vision for the convergence of simulation, high-performance computing, and artificial intelligence.”

    “Software product revenue increased over 12% from the fourth quarter of 2019 to 85% of total revenue, which drove year over year improvement in gross margin of over 500 basis points for the quarter, while our recurring software license rate rose to 92% for the year,” said Howard Morof, Chief Financial Officer of Altair. “The top line performance coupled with continued discipline managing operating expenses had a very positive impact on our profitability in the quarter.” 

    Fourth Quarter 2020 Financial Highlights

    • Software product revenue was $113.6 million compared to $101.2 million for the fourth quarter of 2019.
    • Total revenue was $133.4 million compared to $123.9 million for the fourth quarter of 2019.
    • Net income was $2.2 million compared to net loss of $(1.5) million for the fourth quarter of 2019. Diluted net income per share was $0.03 based on 78.5 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.02) for the fourth quarter of 2019, based on 72.2 million diluted weighted average common shares outstanding.
    • Adjusted EBITDA was $21.7 million, compared to $12.7 million for the fourth quarter of 2019.
    • Non-GAAP net income was $14.1 million, compared to Non-GAAP net income of $5.3 million for the fourth quarter of 2019. Non-GAAP diluted net income per share was $0.17 based on 83.0 million non-GAAP diluted common shares outstanding, compared to Non-GAAP diluted net income per share of $0.07 for the fourth quarter of 2019, based on 78.0 million non-GAAP diluted common shares outstanding.
    • Free cash flow was $3.4 million, compared to $(0.2) million for the fourth quarter of 2019.

    Full Year 2020 Financial Highlights

    • Software product revenue was $391.7 million compared to $366.7 million for the full year of 2019.
    • Total revenue was $469.9 million compared to $458.9 million for the full year of 2019.
    • Net loss was $(10.5) million compared to net loss of $(7.5) million for the full year of 2019. Diluted net loss per share was $(0.14) based on 73.2 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.11) for the full year of 2019, based on 71.5 million diluted weighted average common shares outstanding.
    • Adjusted EBITDA was $57.3 million, compared to $39.5 million for the full year of 2019.
    • Non-GAAP net income was $25.5 million, compared to Non-GAAP net income of $16.4 million for the full year of 2019. Non-GAAP diluted net income per share was $0.31 based on 83.0 million non-GAAP diluted common shares outstanding, compared to Non-GAAP diluted net income per share of $0.21 for the full year of 2019, based on 78.0 million non-GAAP diluted common shares outstanding.
    • Free cash flow was $26.8 million, compared to $21.7 million for the full year of 2019.

    Business Outlook

    Based on information available as of today, Altair is issuing guidance for the first quarter and full year 2021.

       
    (in millions) First Quarter 2021  Full Year 2021 
    Software Product Revenue $118.0 to$120.0  $423.0 to$431.0 
    Total Revenue $138.0  $140.0  $502.0  $510.0 
    Net Loss $(5.4) $(4.5) $(44.0) $(38.3)
    Non-GAAP Net Income $16.3  $17.8  $36.9  $42.8 
    Adjusted EBITDA $24.0  $26.0  $58.0  $66.0 

    Conference Call Information

    What:Altair’s Fourth Quarter and Full Year 2020 Financial Results Conference Call
    When:Friday, February 26, 2021
    Time:8:30 a.m. ET
    Live Call:(866) 754-5204, Domestic
    (636) 812-6621, International
    Replay:(855) 859-2056, Conference ID 3056322, Domestic
    (404) 537-3406, Conference ID 3056322, International
    Webcast:http://investor.altair.com (live & replay)

    Non-GAAP Financial Measures

    This press release contains the following non-GAAP financial measures: Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Net Income Per Share and Free Cash Flow.

    Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

    Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

    Non-GAAP net income – as defined through 2020 results excludes stock-based compensation, amortization of intangible assets related to acquisitions, and special items as identified by management and described elsewhere in this press release.

    Non-GAAP net income – as defined starting with 2021 guidance and going forward excludes stock-based compensation, amortization of intangible assets related to acquisitions, non-cash interest expense, impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate form period to period, and special items as identified by management and described elsewhere in this press release.

    Non-GAAP diluted common shares includes total outstanding shares plus outstanding equity awards under the Company’s equity award plans.

    Free cash flow consists of cash flow from operations less capital expenditures.

    Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

    Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

    About Altair

    Altair is a global technology company that provides software and cloud solutions in the areas of simulation, high-performance computing, data analytics and artificial intelligence. Altair enables organizations across broad industry segments to compete more effectively in a connected world while creating a more sustainable future. To learn more, please visit www.altair.com.

    Cautionary Language Concerning Forward-Looking Statements

    This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the first quarter and full year 2021, our statements regarding our expectation for 2021, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in our forward-looking statements due to a number of factors, including but not limited to, the risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.

    Media Relations
    Altair
    Dave Simon
    248-614-2400 ext. 332
    ir@altair.com

    Investor Relations
    The Blueshirt Group
    Monica Gould
    212-871-3927
    ir@altair.com

    Lindsay Savarese
    212-331-8417
    ir@altair.com

    ALTAIR ENGINERING INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    (Unaudited)

     December 31, 
    (in thousands)2020  2019 
    ASSETS       
    CURRENT ASSETS       
    Cash and cash equivalents$241,221  $223,117 
    Accounts receivable, net 117,878   104,984 
    Income tax receivable 6,736   7,264 
    Prepaid expenses and other current assets 21,100   17,092 
    Total current assets 386,935   352,457 
    Property and equipment, net 36,332   36,297 
    Operating lease right of use assets 33,526   28,134 
    Goodwill 264,481   233,683 
    Other intangible assets, net 76,114   67,075 
    Deferred tax assets 7,125   5,791 
    Other long-term assets 25,389   19,708 
    TOTAL ASSETS$829,902  $743,145 
    LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY       
    CURRENT LIABILITIES       
    Current portion of long-term debt$30,384  $430 
    Accounts payable 8,594   8,585 
    Accrued compensation and benefits 34,772   30,676 
    Current portion of operating lease liabilities 10,331   9,141 
    Other accrued expenses and current liabilities 30,982   28,603 
    Deferred revenue 85,691   75,431 
    Total current liabilities 200,754   152,866 
    Long-term debt, net of current portion 188,653   178,238 
    Operating lease liabilities, net of current portion 24,323   20,174 
    Deferred revenue, non-current 9,388   8,136 
    Other long-term liabilities 27,414   26,672 
    TOTAL LIABILITIES 450,532   386,086 
    Commitments and contingencies       
    MEZZANINE EQUITY 784   2,352 
    STOCKHOLDERS’ EQUITY       
    Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued or outstanding —   — 
    Common stock ($0.0001 par value)       
    Class A common stock, authorized 513,797 shares, issued and outstanding 44,216 and 41,271 shares as of December 31, 2020 and 2019, respectively 4   4 
    Class B common stock, authorized 41,203 shares, issued and outstanding 30,111 and 31,131 shares as of December 31, 2020 and 2019, respectively 3   3 
    Additional paid-in capital 474,669   446,633 
    Accumulated deficit (93,293)  (82,405)
    Accumulated other comprehensive loss (2,797)  (9,528)
    TOTAL STOCKHOLDERS’ EQUITY 378,586   354,707 
    TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY$829,902  $743,145 
            
            

    ALTAIR ENGINEERING INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (Unaudited)

     For the Three Months Ended December 31,  For the Year Ended December 31, 
    (in thousands, except per share data)2020  2019  2020  2019 
    Revenue               
    License$76,381  $64,194  $259,965  $244,321 
    Maintenance and other services 37,244   36,993   131,746   122,381 
    Total software 113,625   101,187   391,711   366,702 
    Software related services 7,906   8,941   26,454   34,576 
    Total software and related services 121,531   110,128   418,165   401,278 
    Client engineering services 9,934   11,722   44,320   48,987 
    Other 1,976   2,027   7,436   8,650 
    Total revenue 133,441   123,877   469,921   458,915 
    Cost of revenue               
    License 6,786   8,139   19,637   21,285 
    Maintenance and other services 10,105   10,892   38,688   38,401 
    Total software * 16,891   19,031   58,325   59,686 
    Software related services 6,102   6,497   21,243   25,640 
    Total software and related services 22,993   25,528   79,568   85,326 
    Client engineering services 8,067   9,882   35,684   39,875 
    Other 1,631   1,540   6,053   7,398 
    Total cost of revenue 32,691   36,950   121,305   132,599 
    Gross profit 100,750   86,927   348,616   326,316 
    Operating expenses:               
    Research and development * 34,966   30,498   126,081   117,510 
    Sales and marketing * 30,537   27,589   111,440   106,051 
    General and administrative * 22,933   21,292   86,432   82,178 
    Amortization of intangible assets 4,986   3,769   16,376   14,442 
    Other operating loss (income), net 5   (370)  (3,426)  (2,072)
    Total operating expenses 93,427   82,778   336,903   318,109 
    Operating income 7,323   4,149   11,713   8,207 
    Interest expense 3,008   2,785   11,598   6,371 
    Other income, net (65)  (849)  (1,917)  (1,552)
    Income before income taxes 4,380   2,213   2,032   3,388 
    Income tax expense 2,182   3,715   12,532   10,930 
    Net income (loss)$2,198  $(1,502) $(10,500) $(7,542)
    Income per share:               
    Net income (loss) per share attributable to common stockholders, basic$0.03  $(0.02) $(0.14) $(0.11)
    Net income (loss) per share attributable to common stockholders, diluted$0.03  $(0.02) $(0.14) $(0.11)
    Weighted average shares outstanding:               
    Weighted average number of shares used in computing net income (loss) per share, basic 74,020   72,227   73,241   71,544 
    Weighted average number of shares used in computing net income (loss) per share, diluted 78,484   72,227   73,241   71,544 


    *   Amounts include stock-based compensation expense as follows (in thousands):

       
     (Unaudited) 
     Three Months Ended
    December 31,    		  Twelve Months Ended
    December 31,    		 
     2020  2019  2020  2019 
    Cost of revenue-software$871  $342  $2,473  $1,069 
    Research and development 2,686   1,306   8,372   2,917 
    Sales and marketing 2,474   688   6,423   2,250 
    General and administrative 1,385   608   4,087   2,292 
    Total stock-based compensation expense$7,416  $2,944  $21,355  $8,528 

    ALTAIR ENGINEERING INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOW
    (Unaudited)

     Year Ended December 31,
    (in thousands)2020  2019 
    OPERATING ACTIVITIES:       
    Net loss$(10,500) $(7,542)
    Adjustments to reconcile net loss to net cash provided by operating activities:       
    Depreciation and amortization 23,806   21,522 
    Provision for credit loss 1,259   671 
    Amortization of debt discount and issuance costs 10,829   5,663 
    Stock-based compensation expense 21,355   8,528 
    Deferred income taxes (10,350)  (950)
    Other, net 118   6 
    Changes in assets and liabilities:       
    Accounts receivable (11,032)  (7,901)
    Prepaid expenses and other current assets (2,131)  (2,396)
    Other long-term assets (4,527)  (2,591)
    Accounts payable (1,839)  (426)
    Accrued compensation and benefits 1,985   (1,232)
    Other accrued expenses and current liabilities 5,771   513 
    Operating lease right of use assets and liabilities, net (142)  102 
    Deferred revenue 8,280   17,426 
    Net cash provided by operating activities 32,882   31,393 
    INVESTING ACTIVITIES:       
    Payments for acquisition of businesses, net of cash acquired (41,028)  (25,720)
    Capital expenditures (6,093)  (9,660)
    Payments for acquisition of developed technology (2,133)  (473)
    Other investing activities, net 162   14 
    Net cash used in investing activities (49,092)  (35,839)
    FINANCING ACTIVITIES:       
    Borrowings under revolving commitment 30,000   96,992 
    Proceeds from the exercise of stock options 1,710   1,510 
    Proceeds from issuance of convertible senior notes, net of underwriters' discounts and commissions —   223,101 
    Payments on revolving commitment —   (127,941)
    Payments for issuance costs of convertible senior notes —   (1,233)
    Other financing activities (460)  (513)
    Net cash provided by financing activities 31,250   191,916 
    Effect of exchange rate changes on cash, cash equivalents and restricted cash 3,010   342 
    Net increase in cash, cash equivalents and restricted cash 18,050   187,812 
    Cash, cash equivalents and restricted cash at beginning of year 223,497   35,685 
    Cash, cash equivalents and restricted cash at end of period$241,547  $223,497 
    Supplemental disclosures of cash flow:       
    Interest paid$731  $664 
    Income taxes paid$12,666  $7,686 
    Supplemental disclosure of non-cash investing and financing activities:       
    Issuance of common stock in connection with acquisitions$3,504  $7,637 
    Promissory notes issued and deferred payment obligations for acquisitions$1,266  $497 
    Finance leases$118  $632 
    Property and equipment in accounts payable and other current liabilities$1,671  $259 
            

    Financial Results

    The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net income (loss) and net income (loss) per share – diluted, the most comparable GAAP financial measures:

     (Unaudited) 
     Three Months Ended
    December 31,    		  Twelve Months Ended
    December 31,    		 
    (in thousands, except per share amounts)2020  2019  2020  2019 
    Net income (loss)$2,198  $(1,502) $(10,500) $(7,542)
    Stock-based compensation expense 7,416   2,944   21,355   8,528 
    Amortization of intangible assets 4,986   3,769   16,376   14,442 
    Special adjustments (1) —   7   (372)  2,038 
    Income tax effect of non-GAAP adjustments (451)  34   (1,380)  (1,069)
    Non-GAAP net income$14,149  $5,252  $25,479  $16,397 
                    
    Net income (loss) per share - diluted$0.03  $(0.02) $(0.14) $(0.11)
    Non-GAAP net income per share - diluted$0.17  $0.07  $0.31  $0.21 
                    
    GAAP diluted shares outstanding: 78,484   72,227   73,241   71,544 
    Non-GAAP diluted shares outstanding: 83,000   78,000   83,000   78,000 


    (1)The twelve months ended December 31, 2020, includes $1.0 million of proceeds from settlements related to a historical acquisition and $0.6 million of severance expense. The twelve months ended December 31, 2019, includes $1.0 million of impairment charges for royalty contracts, $0.6 million of acquisition related costs and $0.4 million of severance expense.

    The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure:

     (Unaudited) 
     Three Months Ended
    December 31,    		  Twelve Months Ended
    December 31,    		 
    (in thousands)2020  2019  2020  2019 
    Net income (loss)$2,198  $(1,502) $(10,500) $(7,542)
    Income tax expense 2,182   3,715   12,532   10,930 
    Stock-based compensation expense 7,416   2,944   21,355   8,528 
    Interest expense 3,008   2,785   11,598   6,371 
    Depreciation and amortization 6,890   5,686   23,806   21,522 
    Special adjustments, interest income and other (1) (2)  (893)  (1,503)  (260)
    Adjusted EBITDA$21,692  $12,735  $57,288  $39,549 


    (1)The twelve months ended December 31, 2020, includes $1.0 million of proceeds from settlements related to a historical acquisition and $0.6 million of severance expense. The twelve months ended December 31, 2019, includes $1.0 million of impairment charges for royalty contracts, $0.6 million of acquisition related costs and $0.4 million of severance expense.

    The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure:

     (Unaudited) 
     Three Months Ended
    December 31,    		  Twelve Months Ended
    December 31,    		 
    (in thousands)2020  2019  2020  2019 
    Net cash provided by operating activities 5,503   1,388   32,882   31,393 
    Capital expenditures (2,087)  (1,540)  (6,093)  (9,660)
    Free Cash Flow$3,416  $(152) $26,789  $21,733 
                    

    Business Outlook

    Starting with the 2021 guidance presented in this press release (including the reconciliations provided below) and going forward, our definition of Non-GAAP net income now excludes non-cash interest expense and assumes a non-GAAP income tax rate, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period. There are no other changes from our prior definition. We’ve made these changes to reflect how management reviews results of the business and to be more consistent with our peers.

    The following table provides a reconciliation of projected Non-GAAP net income to projected net loss, the most comparable GAAP financial measure:

     (Unaudited) 
     Three Months Ending
    March 31, 2021    		  Year Ending
    December 31, 2021    		 
    (in thousands)Low  High  Low  High 
    Net loss$(5,400) $(4,500) $(44,000) $(38,300)
    Stock-based compensation expense 11,900   11,900   44,500   44,500 
    Amortization of intangible assets 4,400   4,400   17,800   17,800 
    Non-cash interest expense 2,800   2,800   11,400   11,400 
    Special adjustments and other 4,000   5,000   5,000   7,000 
    Impact of non-GAAP tax rate (1,400)  (1,800)  2,200   400 
    Non-GAAP net income$16,300  $17,800  $36,900  $42,800 
                    

    For comparability purposes, the following table provides a reconciliation of the Quarterly Non-GAAP net income results for 2020 to GAAP net income (loss) for 2020, reflecting the 2021 definition:

     (Unaudited) 
     Three Months Ended 
    (in thousands)March 31,
    2020    		  June 30,
    2020    		  Sept 30,
    2020    		  December 31,
    2020    		 
    Net income (loss)$6,030  $(10,223) $(8,505) $2,198 
    Stock-based compensation expense 3,171   4,534   6,234   7,416 
    Amortization of intangible assets 3,840   3,692   3,858   4,986 
    Non-cash interest expense 2,648   2,689   2,725   2,762 
    Special adjustments and other —   578   (950)  — 
    Impact of non-GAAP tax rate (637)  1,718   1,294   (2,900)
    Non-GAAP net income$15,052  $2,988  $4,656  $14,462 
                    

    The following table provides a reconciliation of projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure:

     (Unaudited) 
     Three Months Ending
    March 31, 2021    		  Year Ending
    December 31, 2021    		 
    (in thousands)Low  High  Low  High 
    Net loss$(5,400) $(4,500) $(44,000) $(38,300)
    Income tax expense 4,300   4,400   15,200   15,500 
    Stock-based compensation expense 11,900   11,900   44,500   44,500 
    Interest expense 2,900   2,900   12,000   12,000 
    Depreciation and amortization 6,300   6,300   25,400   25,400 
    Special adjustments, interest income and other 4,000   5,000   4,900   6,900 
    Adjusted EBITDA$24,000  $26,000  $58,000  $66,000 


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