Daily Tech News, Interviews, Reviews and Updates

Altair Announces Third Quarter 2023 Financial Results

Quarterly Software Product Revenue Increased more than 14% Year-Over-Year

TROY, Mich., Nov. 02, 2023 (GLOBE NEWSWIRE) — Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the third quarter and nine months ended September 30, 2023.

“The third quarter of 2023 was excellent for Altair, with software product revenue and total revenue again above the high end of guidance,” said James Scapa, founder, chairman and chief executive officer of Altair. “Our Q3 performance demonstrates the power and veracity of our vision for the convergence of computational science and AI across industries and verticals including engineering, scientific discovery, and business.”

“Fiscal 2023 continues to progress in a positive way,” said Matt Brown, chief financial officer of Altair. “Our performance through the first nine months of 2023 gives us confidence we’re on track to meet our financial goals for the year.”

Third Quarter 2023 Financial Highlights

  • Software product revenue was $119.1 million compared to $103.8 million for the third quarter of 2022, an increase of 14.8% in reported currency and 14.5% in constant currency
  • Total revenue was $134.0 million compared to $119.4 million for the third quarter of 2022, an increase of 12.3% in reported currency and 11.9% in constant currency
  • Net loss was $(4.4) million compared to net loss of $(33.2) million for the third quarter of 2022. Net loss per share, diluted was $(0.05) based on 80.4 million diluted weighted average common shares outstanding, compared to net loss per share, diluted of $(0.42) for the third quarter of 2022, based on 79.2 million diluted weighted average common shares outstanding. Net loss margin was -3.3% compared to net loss margin of -27.9% for the third quarter of 2022
  • Non-GAAP net income was $12.7 million, compared to non-GAAP net income of $4.3 million for the third quarter of 2022, an increase of 197.0%. Non-GAAP net income per share, diluted was $0.14 based on 88.6 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of $0.05 for the third quarter of 2022, based on 88.1 million non-GAAP diluted common shares outstanding
  • Adjusted EBITDA was $15.5 million compared to $6.8 million for the third quarter of 2022, an increase of 126.3%. Adjusted EBITDA margin was 11.5% compared to 5.7% for the third quarter of 2022
  • Cash provided by operating activities was $16.4 million, compared to $8.5 million for the third quarter of 2022
  • Free cash flow was $14.7 million, compared to $5.2 million for the third quarter of 2022.

Business Outlook

Based on information available as of today, Altair is issuing the following guidance for the fourth quarter and full year 2023:

(in millions, except %)   Fourth Quarter 2023     Full Year 2023  
Software Product Revenue   $ 153   to $ 159     $ 547   to $ 553  
Growth Rate     5.6 %     9.7 %     8.0 %     9.2 %
Growth Rate – Constant Currency     5.1 %     9.3 %     9.4 %     10.6 %
Total Revenue   $ 169     $ 175     $ 610     $ 616  
Growth Rate     5.3 %     9.1 %     6.6 %     7.7 %
Growth Rate – Constant Currency     4.9 %     8.6 %     7.9 %     9.0 %
Net Income (Loss)   $ 15.5     $ 21.3     $ (12.6 )   $ (6.8 )
Non-GAAP Net Income   $ 33.6     $ 38.0     $ 91.6     $ 96.1  
Adjusted EBITDA   $ 44     $ 50     $ 120     $ 126  
Net Cash Provided by Operating Activities               $ 118     $ 126  
Free Cash Flow               $ 108     $ 116  

The following table provides a reconciliation of Full Year 2023 guidance to the last guidance provided in August:

  (Unaudited)  
  Full Year 2023  
(in millions) Midpoint of Guidance in August     Increase/
(Decrease)
    Currency Fluctuations from Prior Guidance     Midpoint of Guidance in November  
Software Product Revenue $ 553.0     $     $ (3.0 )   $ 550.0  
Total Revenue $ 616.0     $     $ (3.0 )   $ 613.0  
Adjusted EBITDA $ 124.0     $     $ (1.0 )   $ 123.0  


Conference Call Information
   
What: Altair’s Third Quarter 2023 Financial Results Conference Call
When: Thursday, November 2, 2023
Time: 5 p.m. ET
 Webcast: http://investor.altair.com (live & replay)


Non-GAAP Financial Measures

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

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.

Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, restructuring charges, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the 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 from period to period.

Non-GAAP diluted common shares includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position.

Billings consists of total revenue plus the change in deferred revenue, excluding deferred revenue from acquisitions.

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.

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

Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense, restructuring expense and other special items as identified by management and described elsewhere in this press release.

Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

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 leader in computational science and artificial intelligence (AI) that provides software and cloud solutions in simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, 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 fourth quarter and full year 2023, our statements regarding our expectations for 2023, 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
[email protected]

Investor Relations
The Blueshirt Group
Monica Gould
212-871-3927
[email protected]

ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
  September 30, 2023     December 31, 2022  
(In thousands) (Unaudited)        
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents $ 431,188     $ 316,146  
Accounts receivable, net   121,855       170,279  
Income tax receivable   12,402       11,259  
Prepaid expenses and other current assets   26,561       29,142  
Total current assets   592,006       526,826  
Property and equipment, net   38,167       37,517  
Operating lease right of use assets   32,132       33,601  
Goodwill   452,822       449,048  
Other intangible assets, net   86,491       107,609  
Deferred tax assets   8,046       9,727  
Other long-term assets   42,327       40,410  
TOTAL ASSETS $ 1,251,991     $ 1,204,738  
LIABILITIES AND STOCKHOLDERS’ EQUITY  
CURRENT LIABILITIES:          
Accounts payable $ 5,159     $ 10,434  
Accrued compensation and benefits   39,468       42,456  
Current portion of operating lease liabilities   9,209       10,396  
Other accrued expenses and current liabilities   50,917       56,371  
Deferred revenue   110,843       113,081  
Current portion of convertible senior notes, net   81,319        
Total current liabilities   296,915       232,738  
Convertible senior notes, net   225,635       305,604  
Operating lease liabilities, net of current portion   23,373       24,065  
Deferred revenue, non-current   28,090       31,379  
Other long-term liabilities   43,860       41,216  
TOTAL LIABILITIES   617,873       635,002  
Commitments and contingencies          
STOCKHOLDERS’ EQUITY:          
Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding          
Common stock ($0.0001 par value)          
Class A common stock, authorized 513,797 shares, issued and outstanding 54,351
and 52,277 shares as of September 30, 2023, and December 31, 2022, respectively
  5       5  
Class B common stock, authorized 41,203 shares, issued and outstanding 27,045
and 27,745 shares as of September 30, 2023, and December 31, 2022, respectively
  3       3  
Additional paid-in capital   816,551       721,307  
Accumulated deficit   (150,178 )     (121,577 )
Accumulated other comprehensive loss   (32,263 )     (30,002 )
TOTAL STOCKHOLDERS’ EQUITY   634,118       569,736  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,251,991     $ 1,204,738  

ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
  Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(in thousands, except per share data) 2023     2022     2023     2022  
Revenue                      
License $ 79,825     $ 67,245     $ 279,972     $ 256,102  
Maintenance and other services   39,252       36,520       114,069       105,453  
Total software   119,077       103,765       394,041       361,555  
Software related services   6,517       6,706       20,281       23,143  
Total software and related services   125,594       110,471       414,322       384,698  
Client engineering services   7,126       7,355       22,936       22,414  
Other   1,283       1,525       3,940       4,676  
Total revenue   134,003       119,351       441,198       411,788  
Cost of revenue                      
License   3,083       2,579       11,888       11,386  
Maintenance and other services   13,689       13,025       41,754       38,628  
Total software *   16,772       15,604       53,642       50,014  
Software related services   5,251       5,240       16,175       16,739  
Total software and related services   22,023       20,844       69,817       66,753  
Client engineering services   5,930       5,835       19,321       18,390  
Other   1,133       1,230       3,480       3,892  
Total cost of revenue   29,086       27,909       92,618       89,035  
Gross profit   104,917       91,442       348,580       322,753  
Operating expenses:                      
Research and development *   51,598       53,092       160,126       150,608  
Sales and marketing *   44,069       41,352       132,543       120,345  
General and administrative *   17,218       18,258       53,791       54,054  
Amortization of intangible assets   7,704       6,571       23,143       18,682  
Other operating (income) expense, net   (4,408 )     (2,835 )     1,324       (9,383 )
Total operating expenses   116,181       116,438       370,927       334,306  
Operating loss   (11,264 )     (24,996 )     (22,347 )     (11,553 )
Interest expense   1,529       1,566       4,583       2,851  
Other (income) expense, net   (1,890 )     2,107       (9,698 )     26,082  
Loss before income taxes   (10,903 )     (28,669 )     (17,232 )     (40,486 )
Income tax (benefit) expense   (6,541 )     4,579       11,369       15,008  
Net loss $ (4,362 )   $ (33,248 )   $ (28,601 )   $ (55,494 )
Loss per share:                      
Net loss per share attributable to common
stockholders, basic and diluted
$ (0.05 )   $ (0.42 )   $ (0.36 )   $ (0.70 )
Weighted average shares outstanding:                      
Weighted average number of shares used in computing
net loss per share, basic and diluted
  80,431       79,207       80,204       79,205  

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

  (Unaudited)  
  Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(in thousands) 2023     2022     2023     2022  
Cost of revenue – software $ 2,468     $ 2,332     $ 7,792     $ 6,265  
Research and development   7,824       10,243       26,510       26,580  
Sales and marketing   6,933       7,806       22,105       22,505  
General and administrative   3,301       2,329       10,016       7,174  
Total stock-based compensation expense $ 20,526     $ 22,710     $ 66,423     $ 62,524  

  (Unaudited)  
  Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(in thousands) 2023     2022     2023     2022  
Employee stock-based compensation plans $ 19,187     $ 15,490     $ 56,860     $ 43,622  
Post combination expense in connection with acquisitions   1,339       7,220       9,563       18,902  
Total stock-based compensation expense $ 20,526     $ 22,710     $ 66,423     $ 62,524  


ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
 
  Nine Months Ended September 30,  
(In thousands) 2023     2022  
OPERATING ACTIVITIES:          
Net loss $ (28,601 )   $ (55,494 )
Adjustments to reconcile net loss to net cash provided by operating activities:          
Depreciation and amortization   29,271       24,092  
Stock-based compensation expense   66,423       62,524  
Amortization of debt issuance costs   1,399       1,330  
Deferred income taxes   2,178       4  
Loss (gain) on mark-to-market adjustment of contingent consideration   4,494       (7,482 )
Expense on repurchase of convertible senior notes         16,621  
Other, net   (14 )     336  
Changes in assets and liabilities:          
Accounts receivable, net   47,226       13,859  
Prepaid expenses and other current assets   959       1,906  
Other long-term assets   (1,491 )     3,134  
Accounts payable   (5,494 )     (270 )
Accrued compensation and benefits   (2,726 )     (3,639 )
Other accrued expenses and current liabilities   (4,526 )     (48,698 )
Deferred revenue   (3,442 )     18,311  
Net cash provided by operating activities   105,656       26,534  
INVESTING ACTIVITIES:          
Capital expenditures   (7,882 )     (6,721 )
Payments for acquisition of businesses, net of cash acquired   (3,235 )     (134,130 )
Other investing activities, net   (2,452 )     (10,322 )
Net cash used in investing activities   (13,569 )     (151,173 )
FINANCING ACTIVITIES:          
Proceeds from the exercise of common stock options   25,526       2,840  
Payments for repurchase and retirement of common stock   (6,255 )     (4,387 )
Proceeds from employee stock purchase plan contributions   5,772       6,549  
Proceeds from issuance of convertible senior notes, net of discounts and commissions         224,265  
Repurchase of convertible senior notes         (192,422 )
Payments of debt issuance costs         (1,523 )
Other financing activities   (73 )     (170 )
Net cash provided by financing activities   24,970       35,152  
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (2,599 )     (12,142 )
Net increase (decrease) in cash, cash equivalents and restricted cash   114,458       (101,629 )
Cash, cash equivalents and restricted cash at beginning of year   316,958       414,012  
Cash, cash equivalents and restricted cash at end of period $ 431,416     $ 312,383  


Financial Results

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

  (Unaudited)  
  Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(in thousands, except per share amounts) 2023     2022     2023     2022  
Net loss $ (4,362 )   $ (33,248 )   $ (28,601 )   $ (55,494 )
Stock-based compensation expense   20,526       22,710       66,423       62,524  
Amortization of intangible assets   7,704       6,571       23,143       18,682  
Non-cash interest expense   469       501       1,399       1,339  
Impact of non-GAAP tax rate(1)   (10,997 )     3,079       (8,897 )     (1,878 )
Special adjustments and other(2)   (658 )     4,657       4,212       22,886  
Non-GAAP net income $ 12,682     $ 4,270     $ 57,679     $ 48,059  
                       
Net loss per share, diluted $ (0.05 )   $ (0.42 )   $ (0.36 )   $ (0.70 )
Non-GAAP net income per share, diluted $ 0.14     $ 0.05     $ 0.65     $ 0.55  
                       
GAAP diluted shares outstanding   80,431       79,207       80,204       79,205  
Non-GAAP diluted shares outstanding   88,556       88,100       88,066       86,708  

(1) The Company uses a non-GAAP effective tax rate of 26%.
(2) The three months ended September 30, 2023, includes a $3.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $2.8 million of currency losses on acquisition-related intercompany loans. The three months ended September 30, 2022, includes $6.8 million of currency losses on acquisition-related intercompany loans, and a $2.2 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2023, includes a $4.5 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $0.3 million of currency gains on acquisition-related intercompany loans. The nine months ended September 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and a $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition.

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

  (Unaudited)  
  Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(in thousands) 2023     2022     2023     2022  
Net loss $ (4,362 )   $ (33,248 )   $ (28,601 )   $ (55,494 )
Income tax (benefit) expense   (6,541 )     4,579       11,369       15,008  
Stock-based compensation expense   20,526       22,710       66,423       62,524  
Interest expense   1,529       1,566       4,583       2,851  
Depreciation and amortization   9,783       8,273       29,271       24,092  
Special adjustments, interest income and other(1)   (5,481 )     2,949       (7,480 )     20,878  
Adjusted EBITDA $ 15,454     $ 6,829     $ 75,565     $ 69,859  

(1) The three months ended September 30, 2023, includes $4.8 million of interest income, a $3.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $2.8 million currency losses on acquisition-related intercompany loans. The three months ended September 30, 2022, includes $6.8 million currency losses on acquisition-related intercompany loans, a $2.2 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $1.7 million of interest income. The nine months ended September 30, 2023, includes $11.7 million of interest income, a $4.5 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $0.3 million currency gains on acquisition-related intercompany loans. The nine months ended September 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans, a $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $2.0 million of interest income.

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
September 30,
    Nine Months Ended
September 30,
 
(in thousands) 2023     2022     2023     2022  
Net cash provided by operating activities(1) $ 16,427     $ 8,493     $ 105,656     $ 26,534  
Capital expenditures   (1,698 )     (3,264 )     (7,882 )     (6,721 )
Free cash flow(1) $ 14,729     $ 5,229     $ 97,774     $ 19,813  

(1) The nine months ended September 30, 2022, includes a $65.9 million payment in January 2022 for a damages judgement assumed as part of an acquisition in December 2021.

The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure:

  (Unaudited)  
  Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(in thousands) 2023     2022     2023     2022  
Gross profit $ 104,917     $ 91,442     $ 348,580     $ 322,753  
Stock-based compensation expense   2,468       2,332       7,792       6,265  
Non-GAAP gross profit $ 107,385     $ 93,774     $ 356,372     $ 329,018  
                       
Gross profit margin   78.3 %     76.6 %     79.0 %     78.4 %
Non-GAAP gross margin   80.1 %     78.6 %     80.8 %     79.9 %

The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure:

  (Unaudited)  
  Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(in thousands) 2023     2022     2023     2022  
Total operating expense $ 116,181     $ 116,438     $ 370,927     $ 334,306  
Stock-based compensation expense   (18,058 )     (20,378 )     (58,631 )     (56,259 )
Amortization   (7,704 )     (6,571 )     (23,143 )     (18,682 )
Gain (loss) on mark-to-market adjustment of contingent consideration   3,493       2,178       (4,494 )     7,482  
Non-GAAP operating expense $ 93,912     $ 91,667     $ 284,659     $ 266,847  

The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:

  (Unaudited)  
  Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
(in thousands) 2023     2022     2023     2022  
Revenue $ 134,003     $ 119,351     $ 441,198     $ 411,788  
Ending deferred revenue   138,933       116,540       138,933       116,540  
Beginning deferred revenue   (148,547 )     (112,926 )     (144,460 )     (106,032 )
Deferred revenue acquired         (26 )           (2,598 )
Billings $ 124,389     $ 122,939     $ 435,671     $ 419,698  

The following table provides revenue, Billings and Adjusted EBITDA on a constant currency basis:

  (Unaudited)  
  Three Months Ended
September 30, 2023
    Three Months Ended September 30, 2022     Increase/
(Decrease) %
 
(in thousands) As reported     Currency changes     As adjusted for constant currency     As reported     As reported     As adjusted for constant currency  
Software revenue $ 119.1     $ (0.3 )   $ 118.8     $ 103.8       14.8 %     14.5 %
Total revenue $ 134.0     $ (0.4 )   $ 133.6     $ 119.4       12.3 %     11.9 %
Billings $ 124.4     $ (1.3 )   $ 123.1     $ 122.9       1.2 %     0.1 %
Adjusted EBITDA $ 15.5     $ 1.0     $ 16.5     $ 6.8       126.3 %     142.1 %
                                   
                                   
  (Unaudited)  
  Nine Months Ended
September 30, 2023
    Nine Months Ended September 30, 2022     Increase/
(Decrease) %
 
(in thousands) As reported     Currency changes     As adjusted for constant currency     As reported     As reported     As adjusted for constant currency  
Software revenue $ 394.0     $ 7.7     $ 401.7     $ 361.6       9.0 %     11.1 %
Total revenue $ 441.2     $ 8.0     $ 449.2     $ 411.8       7.1 %     9.1 %
Billings $ 435.7     $ 6.5     $ 442.2     $ 419.7       3.8 %     5.4 %
Adjusted EBITDA $ 75.6     $ 4.9     $ 80.5     $ 69.9       8.2 %     15.2 %


Change in Classification of Indirect Costs

Beginning in the first quarter of 2023, the Company refined its classification of certain indirect costs to reflect the way management is now reviewing the information in decision making and to improve comparability with peers. These indirect costs include certain IT, facilities, and depreciation expenses that were previously reported primarily in General and administrative expense. These indirect costs have now been reclassified to Research and development, Sales and marketing, and General and administrative expenses based on global headcount. Management believes this refined methodology better reflects the nature of the costs and financial performance of the Company.

As a result, the Company’s consolidated statements of operations have been recast for prior periods presented to reflect the effects of the changes to Research and development, Sales and marketing, and General and administrative expense. There was no net impact to total operating expenses, income from operations, net income or net income per share for any periods presented. The consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in stockholders’ equity, and the consolidated statements of cash flows were not affected by changes in the presentation of these costs.

Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to current period presentation. The following tables provide the relevant financial results as previously reported, as recast for the current period and forthcoming filings, and the associated impacts of the changes. Within these tables, the references to periods such as “FY 2021” and “Q1 2022” refer to the corresponding periods as reported in the applicable Form 10-K, Form 10-Q, or Form 8-K filings.

The following table summarizes the changes made to the consolidated statements of operations (in thousands):

  Previously Reported  
  FY 2021     Q1 2022     Q2 2022     Q3 2022     Q4 2022     FY 2022  
Operating expenses:                                  
Research and development $ 151,049     $ 43,094     $ 46,477     $ 48,781     $ 47,511     $ 185,863  
Sales and marketing   132,750       35,682       39,116       39,244       41,203       155,245  
General and administrative   91,500       23,569       24,367       24,677       24,993       97,606  
Amortization of intangible assets   18,357       5,903       6,208       6,571       8,828       27,510  
Other operating income, net   (3,482 )     (781 )     (5,767 )     (2,835 )     (572 )     (9,955 )
Total operating expenses $ 390,174     $ 107,467     $ 110,401     $ 116,438     $ 121,963     $ 456,269  
                                   
  Recast  
  FY 2021     Q1 2022     Q2 2022     Q3 2022     Q4 2022     FY 2022  
Operating expenses:                                  
Research and development $ 167,341     $ 47,079     $ 50,437     $ 53,092     $ 51,934     $ 202,542  
Sales and marketing   141,484       37,840       41,153       41,352       43,539       163,884  
General and administrative   66,474       17,426       18,370       18,258       18,234       72,288  
Amortization of intangible assets   18,357       5,903       6,208       6,571       8,828       27,510  
Other operating income, net   (3,482 )     (781 )     (5,767 )     (2,835 )     (572 )     (9,955 )
Total operating expenses $ 390,174     $ 107,467     $ 110,401     $ 116,438     $ 121,963     $ 456,269  
                                   
  Change  
  FY 2021     Q1 2022     Q2 2022     Q3 2022     Q4 2022     FY 2022  
Operating expenses:                                  
Research and development $ 16,292     $ 3,985     $ 3,960     $ 4,311     $ 4,423     $ 16,679  
Sales and marketing   8,734       2,158       2,037       2,108       2,336       8,639  
General and administrative   (25,026 )     (6,143 )     (5,997 )     (6,419 )     (6,759 )     (25,318 )
Amortization of intangible assets                                  
Other operating income, net                                  
Total operating expenses $     $     $     $     $     $  


Business Outlook

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

  (Unaudited)  
  Three Months Ending
December 31, 2023
    Year Ending
December 31, 2023
 
(in thousands) Low     High     Low     High  
Net income (loss) $ 15,500     $ 21,300     $ (12,600 )   $ (6,800 )
Stock-based compensation expense   17,100       17,100       83,500       83,500  
Amortization of intangible assets   7,400       7,400       30,500       30,500  
Non-cash interest expense   500       500       1,900       1,900  
Impact of non-GAAP tax rate(1)   (6,900 )     (8,300 )     (15,900 )     (17,200 )
Special adjustments and other(2)               4,200       4,200  
Non-GAAP net income $ 33,600     $ 38,000     $ 91,600     $ 96,100  

(1) The Company uses a non-GAAP effective tax rate of 26%.
(2) The year ending December 31, 2023, includes $4.5 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $0.3 million currency gains on acquisition-related intercompany loans.

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

  (Unaudited)  
  Three Months Ending
December 31, 2023
    Year Ending
December 31, 2023
 
(in thousands) Low     High     Low     High  
Net income (loss) $ 15,500     $ 21,300     $ (12,600 )   $ (6,800 )
Income tax expense   4,900       5,100       16,300       16,500  
Stock-based compensation expense   17,100       17,100       83,500       83,500  
Interest (income) expense   (3,000 )     (3,000 )     (10,100 )     (10,100 )
Depreciation and amortization   9,500       9,500       38,700       38,700  
Special adjustments and other(1)               4,200       4,200  
Adjusted EBITDA $ 44,000     $ 50,000     $ 120,000     $ 126,000  

(1) The year ending December 31, 2023, includes $4.5 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $0.3 million currency gains on acquisition-related intercompany loans.

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

  (Unaudited)  
  Year Ending
December 31, 2023
 
(in thousands) Low     High  
Net cash provided by operating activities $ 118,400     $ 126,400  
Capital expenditures   (10,400 )     (10,400 )
Free cash flow $ 108,000     $ 116,000  

Disclaimer: The above press release comes to you under an arrangement with GlobeNewswire. TheTechOutlook.com takes no editorial responsibility for the same.



Readers like you help support The Tech Outlook. When you make a purchase using links on our site, we may earn an affiliate commission. We cannot guarantee the Product information shown is 100% accurate and we advise you to check the product listing on the original manufacturer website. Thetechoutlook is not responsible for price changes carried out by retailers. The discounted price or deal mentioned in this item was available at the time of writing and may be subject to time restrictions and/or limited unit availability. Amazon and the Amazon logo are trademarks of Amazon.com, Inc. or its affiliates Read More
You might also like

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More