Altair (Nasdaq: ALTR), a global leader in computational science and
artificial intelligence, today released its financial results for
the second quarter and six months ended June 30, 2023.
“Altair had a solid second quarter of 2023, with software
product revenue and total revenue above the high end of guidance,”
said James Scapa, founder, chairman and chief executive officer of
Altair. “Our Q2 performance aligns well with our guidance for the
full year and demonstrates our continued success and strength.”
“We’re pleased with the outperformance we’ve seen in the first
half of the year,” said Matt Brown, chief financial officer of
Altair. “Our strong first half has been fueled by growth across a
number of verticals and particularly in aerospace, defense,
technology, and automotive, where demand for our products is
robust.”
Second Quarter 2023 Financial Highlights
- Software product revenue was $125.3 million compared to $116.9
million for the second quarter of 2022, an increase of 7.2% in
reported currency and 9.4% in constant currency
- Total revenue was $141.2 million compared to $132.7 million for
the second quarter of 2022, an increase of 6.4% in reported
currency and 8.4% in constant currency
- Net loss was $(22.3) million compared to net loss of $(33.8)
million for the second quarter of 2022. Net loss per share, diluted
was $(0.28) based on 80.0 million diluted weighted average common
shares outstanding, compared to net loss per share, diluted of
$(0.43) for the second quarter of 2022, based on 78.9 million
diluted weighted average common shares outstanding. Net loss margin
was -15.8% compared to net loss margin of -25.5% for the
second quarter of 2022
- Non-GAAP net income was $13.2 million, compared to non-GAAP net
income of $10.9 million for the second quarter of 2022, an increase
of 21.6%. Non-GAAP net income per share, diluted was $0.15 based on
88.4 million non-GAAP diluted common shares outstanding, compared
to non-GAAP net income per share, diluted of $0.13 for the second
quarter of 2022, based on 86.3 million non-GAAP diluted common
shares outstanding
- Adjusted EBITDA was $17.1 million compared to $16.4 million for
the second quarter of 2022, an increase of 3.7%. Adjusted EBITDA
margin was 12.1% compared to 12.4% for the second quarter of
2022
- Cash provided by operating activities was $30.0 million,
compared to $12.3 million for the second quarter of 2022
- Free cash flow was $25.6 million, compared to $11.0 million for
the second quarter of 2022.
Business Outlook
Based on information available as of today, Altair is issuing
the following guidance for the third quarter and full year
2023:
(in millions, except %) |
|
Third Quarter 2023 |
|
|
Full Year 2023 |
|
Software Product Revenue |
|
$ |
111 |
|
to |
$ |
113 |
|
|
$ |
548 |
|
to |
$ |
558 |
|
Growth Rate |
|
|
7.0 |
% |
|
|
8.9 |
% |
|
|
8.2 |
% |
|
|
10.2 |
% |
Growth Rate - Constant Currency |
|
|
5.8 |
% |
|
|
7.7 |
% |
|
|
9.1 |
% |
|
|
11.0 |
% |
Total Revenue |
|
$ |
126 |
|
|
$ |
128 |
|
|
$ |
611 |
|
|
$ |
621 |
|
Growth Rate |
|
|
5.6 |
% |
|
|
7.2 |
% |
|
|
6.8 |
% |
|
|
8.5 |
% |
Growth Rate - Constant Currency |
|
|
4.4 |
% |
|
|
6.1 |
% |
|
|
7.5 |
% |
|
|
9.3 |
% |
Net Loss |
|
$ |
(22.8 |
) |
|
$ |
(20.9 |
) |
|
$ |
(15.3 |
) |
|
$ |
(5.6 |
) |
Non-GAAP Net
Income |
|
$ |
2.9 |
|
|
$ |
4.4 |
|
|
$ |
89.9 |
|
|
$ |
97.3 |
|
Adjusted EBITDA |
|
$ |
3 |
|
|
$ |
5 |
|
|
$ |
119 |
|
|
$ |
129 |
|
Net Cash Provided by
Operating Activities |
|
|
|
|
|
|
|
$ |
120 |
|
|
$ |
128 |
|
Free Cash Flow |
|
|
|
|
|
|
|
$ |
108 |
|
|
$ |
116 |
|
The following table provides a reconciliation of Full Year 2023
guidance to the last guidance provided in May:
|
(Unaudited) |
|
Full Year 2023 |
(in
millions) |
Midpoint ofGuidance inMay |
|
|
Increase/(Decrease) |
|
|
CurrencyFluctuationsfrom PriorGuidance |
|
|
Midpoint ofGuidance inAugust |
Software Product Revenue |
$ |
556.0 |
|
|
$ |
— |
|
|
$ |
(3.0 |
) |
|
$ |
553.0 |
Total Revenue |
$ |
619.0 |
|
|
$ |
— |
|
|
$ |
(3.0 |
) |
|
$ |
616.0 |
Adjusted EBITDA |
$ |
125.0 |
|
|
$ |
— |
|
|
$ |
(1.0 |
) |
|
$ |
124.0 |
Conference Call Information |
|
|
What: |
Altair’s Second Quarter 2023 Financial Results Conference
Call |
When: |
Thursday, August 3, 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 third 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 RelationsAltairDave Simon248-614-2400
ext. 332dls@altair.com
Investor RelationsThe Blueshirt GroupMonica
Gould212-871-3927ir@altair.com
ALTAIR ENGINEERING INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
|
June 30, 2023 |
|
|
December 31, 2022 |
|
(In
thousands) |
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
Cash and cash equivalents |
$ |
418,338 |
|
|
$ |
316,146 |
|
Accounts receivable, net |
|
124,260 |
|
|
|
170,279 |
|
Income tax receivable |
|
14,505 |
|
|
|
11,259 |
|
Prepaid expenses and other current assets |
|
29,678 |
|
|
|
29,142 |
|
Total current assets |
|
586,781 |
|
|
|
526,826 |
|
Property and equipment, net |
|
39,107 |
|
|
|
37,517 |
|
Operating lease right of use
assets |
|
30,284 |
|
|
|
33,601 |
|
Goodwill |
|
453,093 |
|
|
|
449,048 |
|
Other intangible assets, net |
|
94,642 |
|
|
|
107,609 |
|
Deferred tax assets |
|
8,183 |
|
|
|
9,727 |
|
Other long-term assets |
|
43,717 |
|
|
|
40,410 |
|
TOTAL ASSETS |
$ |
1,255,807 |
|
|
$ |
1,204,738 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
CURRENT LIABILITIES: |
|
|
|
|
|
Accounts payable |
$ |
4,682 |
|
|
$ |
10,434 |
|
Accrued compensation and benefits |
|
35,951 |
|
|
|
42,456 |
|
Current portion of operating lease liabilities |
|
9,557 |
|
|
|
10,396 |
|
Other accrued expenses and current liabilities |
|
66,044 |
|
|
|
56,371 |
|
Deferred revenue |
|
121,853 |
|
|
|
113,081 |
|
Current portion of convertible senior notes, net |
|
81,161 |
|
|
|
— |
|
Total current liabilities |
|
319,248 |
|
|
|
232,738 |
|
Convertible senior notes,
net |
|
225,320 |
|
|
|
305,604 |
|
Operating lease liabilities, net
of current portion |
|
21,337 |
|
|
|
24,065 |
|
Deferred revenue,
non-current |
|
26,694 |
|
|
|
31,379 |
|
Other long-term liabilities |
|
42,993 |
|
|
|
41,216 |
|
TOTAL LIABILITIES |
|
635,592 |
|
|
|
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 53,951 and 52,277 shares as of June 30, 2023, and
December 31, 2022, respectively |
|
5 |
|
|
|
5 |
|
Class B common stock, authorized 41,203 shares, issued and
outstanding 27,175 and 27,745 shares as of June 30, 2023, and
December 31, 2022 |
|
3 |
|
|
|
3 |
|
Additional paid-in capital |
|
790,184 |
|
|
|
721,307 |
|
Accumulated deficit |
|
(145,816 |
) |
|
|
(121,577 |
) |
Accumulated other comprehensive
loss |
|
(24,161 |
) |
|
|
(30,002 |
) |
TOTAL STOCKHOLDERS’ EQUITY |
|
620,215 |
|
|
|
569,736 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
1,255,807 |
|
|
$ |
1,204,738 |
|
ALTAIR ENGINEERING INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
|
|
|
|
|
|
|
Three Months EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
(in thousands, except
per share data) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
License |
$ |
87,738 |
|
|
$ |
82,688 |
|
|
$ |
200,147 |
|
|
$ |
188,857 |
|
Maintenance and other services |
|
37,583 |
|
|
|
34,205 |
|
|
|
74,817 |
|
|
|
68,933 |
|
Total software |
|
125,321 |
|
|
|
116,893 |
|
|
|
274,964 |
|
|
|
257,790 |
|
Software related services |
|
6,664 |
|
|
|
7,376 |
|
|
|
13,764 |
|
|
|
16,437 |
|
Total software and related services |
|
131,985 |
|
|
|
124,269 |
|
|
|
288,728 |
|
|
|
274,227 |
|
Client engineering services |
|
8,034 |
|
|
|
7,047 |
|
|
|
15,810 |
|
|
|
15,059 |
|
Other |
|
1,142 |
|
|
|
1,340 |
|
|
|
2,657 |
|
|
|
3,151 |
|
Total revenue |
|
141,161 |
|
|
|
132,656 |
|
|
|
307,195 |
|
|
|
292,437 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
License |
|
3,981 |
|
|
|
4,120 |
|
|
|
8,805 |
|
|
|
8,807 |
|
Maintenance and other services |
|
13,639 |
|
|
|
12,884 |
|
|
|
28,065 |
|
|
|
25,603 |
|
Total software * |
|
17,620 |
|
|
|
17,004 |
|
|
|
36,870 |
|
|
|
34,410 |
|
Software related services |
|
5,308 |
|
|
|
5,464 |
|
|
|
10,924 |
|
|
|
11,499 |
|
Total software and related services |
|
22,928 |
|
|
|
22,468 |
|
|
|
47,794 |
|
|
|
45,909 |
|
Client engineering services |
|
6,767 |
|
|
|
5,914 |
|
|
|
13,391 |
|
|
|
12,555 |
|
Other |
|
1,102 |
|
|
|
1,141 |
|
|
|
2,347 |
|
|
|
2,662 |
|
Total cost of revenue |
|
30,797 |
|
|
|
29,523 |
|
|
|
63,532 |
|
|
|
61,126 |
|
Gross profit |
|
110,364 |
|
|
|
103,133 |
|
|
|
243,663 |
|
|
|
231,311 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research and development * |
|
55,277 |
|
|
|
50,437 |
|
|
|
108,528 |
|
|
|
97,516 |
|
Sales and marketing * |
|
44,982 |
|
|
|
41,153 |
|
|
|
88,474 |
|
|
|
78,993 |
|
General and administrative * |
|
18,622 |
|
|
|
18,370 |
|
|
|
36,573 |
|
|
|
35,796 |
|
Amortization of intangible assets |
|
7,625 |
|
|
|
6,208 |
|
|
|
15,439 |
|
|
|
12,111 |
|
Other operating expense (income), net |
|
127 |
|
|
|
(5,767 |
) |
|
|
5,732 |
|
|
|
(6,548 |
) |
Total operating expenses |
|
126,633 |
|
|
|
110,401 |
|
|
|
254,746 |
|
|
|
217,868 |
|
Operating (loss) income |
|
(16,269 |
) |
|
|
(7,268 |
) |
|
|
(11,083 |
) |
|
|
13,443 |
|
Interest expense |
|
1,528 |
|
|
|
700 |
|
|
|
3,054 |
|
|
|
1,285 |
|
Other (income) expense, net |
|
(4,195 |
) |
|
|
21,907 |
|
|
|
(7,808 |
) |
|
|
23,975 |
|
Loss before income taxes |
|
(13,602 |
) |
|
|
(29,875 |
) |
|
|
(6,329 |
) |
|
|
(11,817 |
) |
Income tax expense |
|
8,678 |
|
|
|
3,899 |
|
|
|
17,910 |
|
|
|
10,429 |
|
Net loss |
$ |
(22,280 |
) |
|
$ |
(33,774 |
) |
|
$ |
(24,239 |
) |
|
$ |
(22,246 |
) |
Loss per share: |
|
|
|
|
|
|
|
|
|
|
|
Net loss per share attributable to common stockholders, basic and
diluted |
$ |
(0.28 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.28 |
) |
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net loss per
share, basic and diluted |
|
79,986 |
|
|
|
78,948 |
|
|
|
80,088 |
|
|
|
79,204 |
|
* Amounts include stock-based compensation expense as
follows (in thousands):
|
(Unaudited) |
|
|
Three Months EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
(in
thousands) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Cost of revenue – software |
$ |
2,572 |
|
|
$ |
2,030 |
|
|
$ |
5,324 |
|
|
$ |
3,933 |
|
Research and development |
|
9,943 |
|
|
|
8,979 |
|
|
|
18,686 |
|
|
|
16,337 |
|
Sales and marketing |
|
7,581 |
|
|
|
7,664 |
|
|
|
15,172 |
|
|
|
14,699 |
|
General and
administrative |
|
3,640 |
|
|
|
2,527 |
|
|
|
6,715 |
|
|
|
4,845 |
|
Total stock-based compensation expense |
$ |
23,736 |
|
|
$ |
21,200 |
|
|
$ |
45,897 |
|
|
$ |
39,814 |
|
|
(Unaudited) |
|
|
Three Months EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
(in
thousands) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Employee stock-based compensation plans |
$ |
19,189 |
|
|
$ |
14,873 |
|
|
$ |
37,673 |
|
|
$ |
28,132 |
|
Post combination expense in
connection with acquisitions |
|
4,547 |
|
|
|
6,327 |
|
|
|
8,224 |
|
|
|
11,682 |
|
Total stock-based compensation expense |
$ |
23,736 |
|
|
$ |
21,200 |
|
|
$ |
45,897 |
|
|
$ |
39,814 |
|
ALTAIR ENGINEERING INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOW |
(Unaudited) |
|
|
Six Months Ended June 30, |
|
(In
thousands) |
2023 |
|
|
2022 |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
Net loss |
$ |
(24,239 |
) |
|
$ |
(22,246 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
|
Depreciation and amortization |
|
19,488 |
|
|
|
15,819 |
|
Stock-based compensation expense |
|
45,897 |
|
|
|
39,814 |
|
Amortization of debt issuance costs |
|
930 |
|
|
|
829 |
|
Deferred income taxes |
|
2,015 |
|
|
|
(64 |
) |
Loss (gain) on mark-to-market adjustment of contingent
consideration |
|
7,987 |
|
|
|
(5,304 |
) |
Expense on repurchase of convertible senior notes |
|
— |
|
|
|
16,621 |
|
Other, net |
|
405 |
|
|
|
229 |
|
Changes in assets and liabilities: |
|
|
|
|
|
Accounts receivable, net |
|
45,077 |
|
|
|
29,270 |
|
Prepaid expenses and other current assets |
|
(3,166 |
) |
|
|
2,056 |
|
Other long-term assets |
|
(2,516 |
) |
|
|
4,397 |
|
Accounts payable |
|
(5,529 |
) |
|
|
(2,070 |
) |
Accrued compensation and benefits |
|
(6,591 |
) |
|
|
(9,742 |
) |
Other accrued expenses and current liabilities |
|
4,857 |
|
|
|
(61,648 |
) |
Deferred revenue |
|
4,614 |
|
|
|
10,080 |
|
Net cash provided by operating activities |
|
89,229 |
|
|
|
18,041 |
|
INVESTING ACTIVITIES: |
|
|
|
|
|
Capital expenditures |
|
(6,184 |
) |
|
|
(3,457 |
) |
Payments for acquisition of businesses, net of cash acquired |
|
(721 |
) |
|
|
(37,660 |
) |
Other investing activities, net |
|
(1,452 |
) |
|
|
(322 |
) |
Net cash used in investing activities |
|
(8,357 |
) |
|
|
(41,439 |
) |
FINANCING ACTIVITIES: |
|
|
|
|
|
Proceeds from the exercise of common stock options |
|
23,507 |
|
|
|
1,689 |
|
Payments for repurchase and retirement of common stock |
|
(6,255 |
) |
|
|
(4,387 |
) |
Proceeds from employee stock purchase plan contributions |
|
3,797 |
|
|
|
4,431 |
|
Proceeds from issuance of convertible senior notes, net of
discounts and commissions |
|
— |
|
|
|
224,265 |
|
Repurchase of convertible senior notes |
|
— |
|
|
|
(192,792 |
) |
Payments of debt issuance costs |
|
— |
|
|
|
(1,157 |
) |
Other financing activities |
|
(48 |
) |
|
|
(131 |
) |
Net cash provided by financing activities |
|
21,001 |
|
|
|
31,918 |
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
|
(44 |
) |
|
|
(6,226 |
) |
Net increase in cash, cash
equivalents and restricted cash |
|
101,829 |
|
|
|
2,294 |
|
Cash, cash equivalents and
restricted cash at beginning of year |
|
316,958 |
|
|
|
414,012 |
|
Cash, cash equivalents and
restricted cash at end of period |
$ |
418,787 |
|
|
$ |
416,306 |
|
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 EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
(in thousands, except
per share amounts) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net loss |
$ |
(22,280 |
) |
|
$ |
(33,774 |
) |
|
$ |
(24,239 |
) |
|
$ |
(22,246 |
) |
Stock-based compensation
expense |
|
23,736 |
|
|
|
21,200 |
|
|
|
45,897 |
|
|
|
39,814 |
|
Amortization of intangible
assets |
|
7,625 |
|
|
|
6,208 |
|
|
|
15,439 |
|
|
|
12,111 |
|
Non-cash interest expense |
|
465 |
|
|
|
422 |
|
|
|
930 |
|
|
|
839 |
|
Impact of non-GAAP tax
rate(1) |
|
4,033 |
|
|
|
79 |
|
|
|
2,100 |
|
|
|
(4,957 |
) |
Special adjustments and
other(2) |
|
(361 |
) |
|
|
16,737 |
|
|
|
4,870 |
|
|
|
18,229 |
|
Non-GAAP net income |
$ |
13,218 |
|
|
$ |
10,872 |
|
|
$ |
44,997 |
|
|
$ |
43,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share,
diluted |
$ |
(0.28 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.28 |
) |
Non-GAAP net income per share,
diluted |
$ |
0.15 |
|
|
$ |
0.13 |
|
|
$ |
0.51 |
|
|
$ |
0.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted shares
outstanding |
|
79,986 |
|
|
|
78,948 |
|
|
|
80,088 |
|
|
|
79,204 |
|
Non-GAAP diluted shares
outstanding |
|
88,383 |
|
|
|
86,281 |
|
|
|
88,735 |
|
|
|
86,516 |
|
(1) |
The Company
uses a non-GAAP effective tax rate of 26%. |
(2) |
The three months ended June 30, 2023, includes $1.0 million
loss from a mark-to-market adjustment of contingent consideration
associated with the World Programming acquisition and $1.3 million
currency gains on acquisition-related intercompany loans. The three
months ended June 30, 2022, includes $16.6 million expense on
repurchase of convertible senior notes, $5.4 million currency
losses on acquisition-related intercompany loans, and a $5.3
million gain from the mark-to-market adjustment of contingent
consideration associated with the World Programming acquisition.
The six months ended June 30, 2023, includes $8.0 million loss from
a mark-to-market adjustment of contingent consideration associated
with the World Programming acquisition and $3.1 million currency
gains on acquisition-related intercompany loans. The six months
ended June 30, 2022, includes $16.6 million expense on repurchase
of convertible senior notes, $6.9 million currency losses on
acquisition-related intercompany loans and a $5.3 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 June 30, |
|
|
Six Months Ended June 30, |
|
(in
thousands) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net loss |
$ |
(22,280 |
) |
|
$ |
(33,774 |
) |
|
$ |
(24,239 |
) |
|
$ |
(22,246 |
) |
Income tax expense |
|
8,678 |
|
|
|
3,899 |
|
|
|
17,910 |
|
|
|
10,429 |
|
Stock-based compensation
expense |
|
23,736 |
|
|
|
21,200 |
|
|
|
45,897 |
|
|
|
39,814 |
|
Interest expense |
|
1,528 |
|
|
|
700 |
|
|
|
3,054 |
|
|
|
1,285 |
|
Depreciation and
amortization |
|
9,738 |
|
|
|
8,133 |
|
|
|
19,488 |
|
|
|
15,819 |
|
Special adjustments, interest
income and other(1) |
|
(4,344 |
) |
|
|
16,282 |
|
|
|
(1,999 |
) |
|
|
17,929 |
|
Adjusted EBITDA |
$ |
17,056 |
|
|
$ |
16,440 |
|
|
$ |
60,111 |
|
|
$ |
63,030 |
|
(1) |
The three
months ended June 30, 2023, includes $1.0 million loss from a
mark-to-market adjustment of contingent consideration associated
with the World Programming acquisition, $4.0 million of interest
income, and $1.3 million currency gains on acquisition-related
intercompany loans. The three months ended June 30, 2022, includes
$16.6 million expense on repurchase of convertible senior notes,
$5.4 million currency losses on acquisition-related intercompany
loans, and a $5.3 million gain from the mark-to-market adjustment
of contingent consideration associated with the World Programming
acquisition. The six months ended June 30, 2023, includes $8.0
million loss from a mark-to-market adjustment of contingent
consideration associated with the World Programming acquisition,
$6.9 million of interest income, and $3.1 million currency gains on
acquisition-related intercompany loans. The six months ended June
30, 2022, includes $16.6 million expense on repurchase of
convertible senior notes, $6.9 million currency losses on
acquisition-related intercompany loans and a $5.3 million gain from
the mark-to-market adjustment of contingent consideration
associated with the World Programming acquisition. |
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 EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
(in
thousands) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net cash provided by operating activities(1) |
$ |
30,030 |
|
|
$ |
12,255 |
|
|
$ |
89,229 |
|
|
$ |
18,041 |
|
Capital expenditures |
|
(4,457 |
) |
|
|
(1,267 |
) |
|
|
(6,184 |
) |
|
|
(3,457 |
) |
Free cash flow(1) |
$ |
25,573 |
|
|
$ |
10,988 |
|
|
$ |
83,045 |
|
|
$ |
14,584 |
|
(1) |
The six months
ended June 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 EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
(in
thousands) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Gross profit |
$ |
110,364 |
|
|
$ |
103,133 |
|
|
$ |
243,663 |
|
|
$ |
231,311 |
|
Stock-based compensation
expense |
|
2,572 |
|
|
|
2,030 |
|
|
|
5,324 |
|
|
|
3,933 |
|
Non-GAAP gross profit |
$ |
112,936 |
|
|
$ |
105,163 |
|
|
$ |
248,987 |
|
|
$ |
235,244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit margin |
|
78.2 |
% |
|
|
77.7 |
% |
|
|
79.3 |
% |
|
|
79.1 |
% |
Non-GAAP gross margin |
|
80.0 |
% |
|
|
79.3 |
% |
|
|
81.1 |
% |
|
|
80.4 |
% |
The following table provides a reconciliation of Non-GAAP
operating expense to Total operating expense, the most comparable
GAAP financial measure:
|
(Unaudited) |
|
|
Three Months EndedJune 30, |
|
|
Six Months EndedJune 30, |
|
(in
thousands) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Total operating expense |
$ |
126,633 |
|
|
$ |
110,401 |
|
|
$ |
254,746 |
|
|
$ |
217,868 |
|
Stock-based compensation
expense |
|
(21,164 |
) |
|
|
(19,170 |
) |
|
|
(40,573 |
) |
|
|
(35,881 |
) |
Amortization |
|
(7,625 |
) |
|
|
(6,208 |
) |
|
|
(15,439 |
) |
|
|
(12,111 |
) |
(Loss) gain on mark-to-market
adjustment of contingent consideration |
|
(981 |
) |
|
|
5,304 |
|
|
|
(7,987 |
) |
|
|
5,304 |
|
Non-GAAP operating expense |
$ |
96,863 |
|
|
$ |
90,327 |
|
|
$ |
190,747 |
|
|
$ |
175,180 |
|
The following table provides a reconciliation of Billings to
revenue, the most comparable GAAP financial measure:
|
(Unaudited) |
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(in
thousands) |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenue |
$ |
141,161 |
|
|
$ |
132,656 |
|
|
$ |
307,195 |
|
|
$ |
292,437 |
|
Ending deferred revenue |
|
148,547 |
|
|
|
112,926 |
|
|
|
148,547 |
|
|
|
112,926 |
|
Beginning deferred revenue |
|
(141,943 |
) |
|
|
(118,403 |
) |
|
|
(144,460 |
) |
|
|
(106,032 |
) |
Deferred revenue acquired |
|
— |
|
|
|
(1,756 |
) |
|
|
— |
|
|
|
(2,572 |
) |
Billings |
$ |
147,765 |
|
|
$ |
125,423 |
|
|
$ |
311,282 |
|
|
$ |
296,759 |
|
The following table provides revenue, Billings and Adjusted
EBITDA on a constant currency basis:
|
(Unaudited) |
|
|
Three Months EndedJune 30, 2023 |
|
|
Three MonthsEnded June 30,2022 |
|
|
Increase/(Decrease) % |
|
(in
thousands) |
As reported |
|
|
Currencychanges |
|
|
As adjusted forconstant currency |
|
|
As reported |
|
|
As reported |
|
|
As adjusted forconstantcurrency |
|
Software revenue |
$ |
125.3 |
|
|
$ |
2.6 |
|
|
$ |
127.9 |
|
|
$ |
116.9 |
|
|
|
7.2 |
% |
|
|
9.4 |
% |
Total revenue |
$ |
141.2 |
|
|
$ |
2.7 |
|
|
$ |
143.9 |
|
|
$ |
132.7 |
|
|
|
6.4 |
% |
|
|
8.4 |
% |
Billings |
$ |
147.8 |
|
|
$ |
2.3 |
|
|
$ |
150.1 |
|
|
$ |
125.4 |
|
|
|
17.8 |
% |
|
|
19.6 |
% |
Adjusted EBITDA |
$ |
17.1 |
|
|
$ |
1.4 |
|
|
$ |
18.5 |
|
|
$ |
16.4 |
|
|
|
3.7 |
% |
|
|
12.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
Six Months EndedJune 30, 2023 |
|
|
Six Months Ended June 30, 2022 |
|
|
Increase/(Decrease) % |
|
(in
thousands) |
As reported |
|
|
Currencychanges |
|
|
As adjusted forconstant currency |
|
|
As reported |
|
|
As reported |
|
|
As adjusted forconstantcurrency |
|
Software revenue |
$ |
275.0 |
|
|
$ |
7.9 |
|
|
$ |
282.9 |
|
|
$ |
257.8 |
|
|
|
6.7 |
% |
|
|
9.7 |
% |
Total revenue |
$ |
307.2 |
|
|
$ |
8.5 |
|
|
$ |
315.7 |
|
|
$ |
292.4 |
|
|
|
5.0 |
% |
|
|
7.9 |
% |
Billings |
$ |
311.3 |
|
|
$ |
8.6 |
|
|
$ |
319.9 |
|
|
$ |
296.8 |
|
|
|
4.9 |
% |
|
|
7.8 |
% |
Adjusted EBITDA |
$ |
60.1 |
|
|
$ |
3.8 |
|
|
$ |
63.9 |
|
|
$ |
63.0 |
|
|
|
-4.6 |
% |
|
|
1.5 |
% |
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 loss, the most comparable GAAP
financial measure:
|
(Unaudited) |
|
|
Three Months Ending September 30, 2023 |
|
|
Year Ending December 31, 2023 |
|
(in
thousands) |
Low |
|
|
High |
|
|
Low |
|
|
High |
|
Net loss |
$ |
(22,800 |
) |
|
$ |
(20,900 |
) |
|
$ |
(15,300 |
) |
|
$ |
(5,600 |
) |
Stock-based compensation
expense |
|
18,200 |
|
|
|
18,200 |
|
|
|
82,200 |
|
|
|
82,200 |
|
Amortization of intangible
assets |
|
7,600 |
|
|
|
7,600 |
|
|
|
30,400 |
|
|
|
30,400 |
|
Non-cash interest expense |
|
500 |
|
|
|
500 |
|
|
|
1,800 |
|
|
|
1,800 |
|
Impact of non-GAAP tax
rate(1) |
|
(600 |
) |
|
|
(1,000 |
) |
|
|
(14,100 |
) |
|
|
(16,400 |
) |
Special adjustments and
other(2) |
|
— |
|
|
|
— |
|
|
|
4,900 |
|
|
|
4,900 |
|
Non-GAAP net income |
$ |
2,900 |
|
|
$ |
4,400 |
|
|
$ |
89,900 |
|
|
$ |
97,300 |
|
(1) |
The Company
uses a non-GAAP effective tax rate of 26%. |
(2) |
The year ending December 31, 2023, includes $8.0 million loss
from a mark-to-market adjustment of contingent consideration
associated with the World Programming acquisition and $3.1 million
currency gains on acquisition-related intercompany loans. |
The following table provides a reconciliation of projected
Adjusted EBITDA to projected net loss, the most comparable GAAP
financial measure:
|
(Unaudited) |
|
|
Three Months EndingSeptember 30, 2023 |
|
|
Year EndingDecember 31, 2023 |
|
(in
thousands) |
Low |
|
|
High |
|
|
Low |
|
|
High |
|
Net loss |
$ |
(22,800 |
) |
|
$ |
(20,900 |
) |
|
$ |
(15,300 |
) |
|
$ |
(5,600 |
) |
Income tax expense |
|
400 |
|
|
|
500 |
|
|
|
17,500 |
|
|
|
17,800 |
|
Stock-based compensation
expense |
|
18,200 |
|
|
|
18,200 |
|
|
|
82,200 |
|
|
|
82,200 |
|
Interest (income) expense |
|
(2,500 |
) |
|
|
(2,500 |
) |
|
|
(9,000 |
) |
|
|
(9,000 |
) |
Depreciation and
amortization |
|
9,700 |
|
|
|
9,700 |
|
|
|
38,700 |
|
|
|
38,700 |
|
Special adjustments and
other(1) |
|
— |
|
|
|
— |
|
|
|
4,900 |
|
|
|
4,900 |
|
Adjusted EBITDA |
$ |
3,000 |
|
|
$ |
5,000 |
|
|
$ |
119,000 |
|
|
$ |
129,000 |
|
(1) |
The year
ending December 31, 2023, includes $8.0 million loss from a
mark-to-market adjustment of contingent consideration associated
with the World Programming acquisition and $3.1 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 |
$ |
120,200 |
|
|
$ |
128,200 |
|
Capital expenditures |
|
(12,200 |
) |
|
|
(12,200 |
) |
Free cash flow |
$ |
108,000 |
|
|
$ |
116,000 |
|
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