Fourth Quarter 2017
ANSYS, Inc. (NASDAQ:ANSS), today reported fourth quarter 2017 GAAP
and non-GAAP revenue growth of 9% in constant currency. For FY
2017, GAAP and non-GAAP revenue growth was 10% and 11%,
respectively, in constant currency. Recurring revenue, which
comprises lease license and annual maintenance revenue, totaled 70%
and 71% of revenue for the fourth quarter on a GAAP and non-GAAP
basis, respectively. For FY 2017, recurring revenue totaled 75% of
revenue. For the fourth quarter, the Company reported decreased
diluted earnings per share of 24% on a GAAP basis and 9% growth in
diluted earnings per share on a non-GAAP basis. For FY 2017, the
Company reported a decrease of less than 1% and an increase of 10%
in diluted earnings per share on a GAAP and non-GAAP basis,
respectively. The GAAP diluted earnings per share amounts were
significantly impacted by the Tax Cuts and Jobs Act.
Ajei Gopal, ANSYS President and CEO, commented,
“Our performance in 2017 significantly exceeded my expectations
coming into the year. We broke through the $1 billion revenue
barrier, we grew our annual revenue by double-digits for the first
time in five years, and we were added to the S&P 500 Index. We
have made continued progress with our go-to-market initiatives, as
illustrated by the 21% annual growth in our deferred revenue and
backlog, ending the year at a record $770 million. We did all of
this while maintaining industry-leading margins, delivering
higher-than-expected EPS and extending our technology lead against
the competition."
In addition, Gopal stated, "In January 2018, we
released ANSYS® 19, the most feature-rich release in our nearly
50-year history of innovation. We are excited about the pipeline of
opportunities that lie ahead for 2018 and beyond. Customer feedback
has been outstanding, and product downloads have been strong. Our
flagship products are the heart of our success, and we'll continue
to support the core use cases for these solutions and expand them
to support emerging customer initiatives like autonomous vehicles
and smart connected products. We are also reaching new audiences
with solutions like Discovery LiveTM, which is available for trial
and sale through a new e-commerce portal that premiered this
month.”
Maria Shields, ANSYS CFO, stated, “The strength
of our core business and our dedication to execution is reflected
in our strong financial performance for both the quarter and the
year. Our Q4 and fiscal year 2017 revenues and earnings represented
new company records. We also ended the year with record operating
cash flows and deferred revenue and backlog, demonstrating progress
toward our stated long-term goal of sustained, double-digit revenue
growth. To achieve our growth objectives, we will continue to
move forward with investments in our core products, high-growth
adjacent markets and our business infrastructure.”
On December 22, 2017, the U.S. government enacted comprehensive
tax legislation commonly referred to as the Tax Cuts and Jobs Act
(Tax Reform). Tax Reform makes broad and complex changes to the
U.S. tax code. The new law adversely impacted our GAAP income tax
provision for Q4 2017. In connection with our initial analysis of
the impact of Tax Reform, a discrete net tax expense of $17.9
million was recorded in the period ending December 31, 2017,
primarily consisting of $1.9 million for the revaluation of net
deferred tax assets related to the corporate rate reduction and
$16.0 million for the transition tax. In addition to the $17.9
million charge, we would have recognized a $4.8 million benefit in
the fourth quarter related to foreign earnings repatriation, but
this benefit was eliminated due to Tax Reform. These items were
excluded for non-GAAP purposes as discussed in the Non-GAAP
Measures section below.
Financial Results
ANSYS' fourth quarter and fiscal year 2017 and
2016 financial results are presented below. The 2017 and 2016
non-GAAP results exclude the income statement effects of
acquisition adjustments to deferred revenue, stock-based
compensation, amortization of acquired intangible assets,
acquisition-related transaction costs, restructuring charges and
the impact of the Tax Cuts and Jobs Act.
GAAP and non-GAAP results:
|
|
|
|
|
GAAP |
|
Non-GAAP |
(in millions,
except percentages and per share data) |
Q4 2017 |
|
Q4 2016 |
|
% Change |
|
Q4 2017 |
|
Q4 2016 |
|
% Change |
Revenue |
$ |
302.3 |
|
|
$ |
270.6 |
|
|
12 |
% |
|
$ |
303.4 |
|
|
$ |
270.6 |
|
|
12 |
% |
Net income |
$ |
52.6 |
|
|
$ |
70.0 |
|
|
(25 |
)% |
|
$ |
92.8 |
|
|
$ |
86.1 |
|
|
8 |
% |
Earnings per share |
$ |
0.61 |
|
|
$ |
0.80 |
|
|
(24 |
)% |
|
$ |
1.07 |
|
|
$ |
0.98 |
|
|
9 |
% |
Operating profit
margin |
33.3 |
% |
|
35.8 |
% |
|
|
|
42.6 |
% |
|
45.1 |
% |
|
|
Operating cash
flow |
$ |
103.5 |
|
|
$ |
99.2 |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
Non-GAAP |
(in millions,
except percentages and per share data) |
FY 2017 |
|
FY 2016 |
|
% Change |
|
FY 2017 |
|
FY 2016 |
|
% Change |
Revenue |
$ |
1,095.3 |
|
|
$ |
988.5 |
|
|
11 |
% |
|
$ |
1,098.1 |
|
|
$ |
988.6 |
|
|
11 |
% |
Net income |
$ |
259.3 |
|
|
$ |
265.6 |
|
|
(2 |
)% |
|
$ |
347.9 |
|
|
$ |
322.9 |
|
|
8 |
% |
Earnings per share |
$ |
2.98 |
|
|
$ |
2.99 |
|
|
— |
% |
|
$ |
4.01 |
|
|
$ |
3.63 |
|
|
10 |
% |
Operating profit
margin |
35.7 |
% |
|
38.1 |
% |
|
|
|
46.4 |
% |
|
47.0 |
% |
|
|
Operating cash
flow |
$ |
430.4 |
|
|
$ |
366.0 |
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The non-GAAP financial results highlighted
above, and the non-GAAP financial outlook for 2018 discussed below,
represent non-GAAP financial measures. Reconciliations of these
measures to the appropriate GAAP measures, for the three and twelve
months ended December 31, 2017 and 2016, and for the 2018
financial outlook, are included in the condensed financial
information included in this release.
Management's 2018 Financial Outlook
The Company's first quarter and fiscal year 2018
revenue and earnings per share guidance is provided below. The
revenue and earnings per share guidance is provided on both a GAAP
and a non-GAAP basis, and in accordance with both ASC 605 and ASC
606. Non-GAAP financial measures exclude the income statement
effects of acquisition adjustments to deferred revenue, stock-based
compensation, amortization of acquired intangible assets and
acquisition-related transaction costs.
First Quarter 2018 Guidance
The Company currently expects the following for the quarter
ending March 31, 2018:
|
|
|
|
(in millions,
except per share data) |
GAAP |
|
non-GAAP |
Revenue under ASC
606 |
$261.0 - $281.0 |
|
$261.0 - $281.0 |
Diluted earnings per
share under ASC 606 |
$0.70 - $0.88 |
|
$0.90 - $1.05 |
Revenue under ASC
605 |
$274.6 - $284.6 |
|
$275.0 - $285.0 |
Diluted earnings per
share under ASC 605 |
$0.82 - $0.92 |
|
$1.02 - $1.09 |
|
|
|
|
Fiscal Year 2018 Guidance
The Company currently expects the following for the fiscal year
ending December 31, 2018:
|
|
|
|
(in millions,
except per share data) |
GAAP |
|
non-GAAP |
Revenue under ASC
606 |
$1,152.0 -
$1,232.0 |
|
$1,152.0 -
$1,232.0 |
Diluted earnings per
share under ASC 606 |
$3.38 - $4.11 |
|
$4.41 - $5.04 |
Revenue under ASC
605 |
$1,191.3 -
$1,226.3 |
|
$1,192.0 -
$1,227.0 |
Diluted earnings per
share under ASC 605 |
$3.72 - $4.06 |
|
$4.76 - $5.00 |
|
|
|
|
|
|
(in
millions) |
Other Financial Metrics |
Annual Contract Value
(ACV) |
$1,230.0 -
$1,275.0 |
Operating cash
flows* |
$430.0 - $470.0 |
|
|
*The Company's operating cash flow guidance reflects an adverse
impact of approximately $20.0 million related to the acceleration
of income tax payments associated with deferred revenue and backlog
credited to retained earnings and never recognized as revenue in
the financial statements.
ACV is comprised of the following:
- the annualized value of maintenance and lease contracts with
start dates or anniversary dates during the period, plus
- the value of perpetual license contracts with start dates
during the period, plus
- the value of services contracts completed during the period and
expected to be fulfilled over the next 12 months.
Conference Call Information
ANSYS will hold a conference call at
8:30 a.m. Eastern Time on February 22, 2018
to discuss fourth quarter results. The Company will provide its
prepared remarks on the Company’s investor relations homepage and
as an exhibit in its Form 8-K in advance of the call to provide
shareholders and analysts with additional time and detail for
analyzing its results in preparation for the conference call. The
prepared remarks will not be read on the call and only brief
remarks will be made prior to the Q&A session.
To participate in the live conference call, dial
855-239-2942 (US) or 412-542-4124 (Canada & Int’l). The call
will be recorded and a replay will be available within two hours
after the call. The replay will be available by dialing (877)
344-7529 (US), (855) 669-9658 (Canada) or (412) 317-0088 (Int’l)
and entering the passcode 10116584. The archived webcast can be
accessed, along with other financial information, on ANSYS' website
at
http://investors.ansys.com/events-and-presentations/events.aspx.
|
ANSYS, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets |
(Unaudited) |
(in
thousands) |
December 31, 2017 |
|
December 31, 2016 |
ASSETS: |
|
|
|
Cash
& short-term investments |
$ |
881,787 |
|
|
$ |
822,860 |
|
Accounts
receivable, net |
124,659 |
|
|
107,192 |
|
Goodwill |
1,378,553 |
|
|
1,337,215 |
|
Other
intangibles, net |
157,625 |
|
|
172,619 |
|
Other
assets |
398,999 |
|
|
360,640 |
|
Total
assets |
$ |
2,941,623 |
|
|
$ |
2,800,526 |
|
LIABILITIES
& STOCKHOLDERS' EQUITY: |
|
|
|
Deferred
revenue |
$ |
440,491 |
|
|
$ |
403,279 |
|
Other
liabilities |
255,301 |
|
|
188,842 |
|
Stockholders' equity |
2,245,831 |
|
|
2,208,405 |
|
Total
liabilities & stockholders' equity |
$ |
2,941,623 |
|
|
$ |
2,800,526 |
|
|
|
|
|
|
|
|
|
|
ANSYS, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of
Income |
(Unaudited) |
|
Three Months Ended |
|
Twelve Months Ended |
(in thousands,
except per share data) |
December 31, 2017 |
|
December 31, 2016 |
|
December 31, 2017 |
|
December 31, 2016 |
Revenue: |
|
|
|
|
|
|
|
Software
licenses |
$ |
176,596 |
|
|
$ |
161,506 |
|
|
$ |
624,964 |
|
|
$ |
568,174 |
|
Maintenance and service |
125,740 |
|
|
109,122 |
|
|
470,286 |
|
|
420,291 |
|
Total
revenue |
302,336 |
|
|
270,628 |
|
|
1,095,250 |
|
|
988,465 |
|
Cost of sales: |
|
|
|
|
|
|
|
Software
licenses |
10,224 |
|
|
9,155 |
|
|
34,421 |
|
|
28,860 |
|
Amortization |
9,902 |
|
|
9,548 |
|
|
36,794 |
|
|
38,092 |
|
Maintenance and service |
20,686 |
|
|
20,275 |
|
|
78,949 |
|
|
79,908 |
|
Total
cost of sales |
40,812 |
|
|
38,978 |
|
|
150,164 |
|
|
146,860 |
|
Gross profit |
261,524 |
|
|
231,650 |
|
|
945,086 |
|
|
841,605 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling,
general and administrative |
108,157 |
|
|
85,950 |
|
|
338,640 |
|
|
269,515 |
|
Research
and development |
49,222 |
|
|
45,560 |
|
|
202,746 |
|
|
183,093 |
|
Amortization |
3,466 |
|
|
3,174 |
|
|
12,972 |
|
|
12,755 |
|
Total
operating expenses |
160,845 |
|
|
134,684 |
|
|
554,358 |
|
|
465,363 |
|
Operating income |
100,679 |
|
|
96,966 |
|
|
390,728 |
|
|
376,242 |
|
Interest income |
2,135 |
|
|
1,099 |
|
|
6,962 |
|
|
4,209 |
|
Other (expense) income,
net |
(484 |
) |
|
1 |
|
|
(1,996 |
) |
|
(136 |
) |
Income before income
tax provision |
102,330 |
|
|
98,066 |
|
|
395,694 |
|
|
380,315 |
|
Income tax
provision |
49,745 |
|
|
28,083 |
|
|
136,443 |
|
|
114,679 |
|
Net income |
$ |
52,585 |
|
|
$ |
69,983 |
|
|
$ |
259,251 |
|
|
$ |
265,636 |
|
Earnings per share –
basic: |
|
|
|
|
|
|
|
Earnings
per share |
$ |
0.62 |
|
|
$ |
0.81 |
|
|
$ |
3.05 |
|
|
$ |
3.05 |
|
Weighted
average shares |
84,557 |
|
|
86,198 |
|
|
84,988 |
|
|
87,227 |
|
Earnings per share –
diluted: |
|
|
|
|
|
|
|
Earnings
per share |
$ |
0.61 |
|
|
$ |
0.80 |
|
|
$ |
2.98 |
|
|
$ |
2.99 |
|
Weighted
average shares |
86,709 |
|
|
87,811 |
|
|
86,854 |
|
|
88,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Non-GAAP Measures |
(Unaudited) |
|
Three Months Ended |
|
December 31, 2017 |
|
December 31, 2016 |
(in thousands,
except percentages and per share data) |
As Reported |
|
Adjustments |
|
Non-GAAP Results |
|
As Reported |
|
Adjustments |
|
Non-GAAP Results |
Total revenue |
$ |
302,336 |
|
|
$ |
1,108 |
|
(1 |
) |
$ |
303,444 |
|
|
$ |
270,628 |
|
|
$ |
— |
|
|
$ |
270,628 |
|
Operating income |
100,679 |
|
|
28,582 |
|
(2 |
) |
129,261 |
|
|
96,966 |
|
|
25,124 |
|
(4 |
) |
122,090 |
|
Operating profit
margin |
33.3 |
% |
|
|
|
42.6 |
% |
|
35.8 |
% |
|
|
|
45.1 |
% |
Net income |
$ |
52,585 |
|
|
$ |
40,183 |
|
(3 |
) |
$ |
92,768 |
|
|
$ |
69,983 |
|
|
$ |
16,141 |
|
(5 |
) |
$ |
86,124 |
|
Earnings per share –
diluted: |
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share |
$ |
0.61 |
|
|
|
|
$ |
1.07 |
|
|
$ |
0.80 |
|
|
|
|
$ |
0.98 |
|
Weighted
average shares |
86,709 |
|
|
|
|
86,709 |
|
|
87,811 |
|
|
|
|
87,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amount represents the revenue not reported during the period
as a result of the acquisition accounting adjustment associated
with the accounting for deferred revenue in business
combinations.
(2) Amount represents $13.7 million of stock-based compensation
expense, $13.4 million of amortization expense associated with
intangible assets acquired in business combinations, $0.4 million
of transaction expenses related to business combinations and the
$1.1 million adjustment to revenue as reflected in (1) above.
(3) Amount represents the impact of the adjustments to operating
income referred to in (2) above, decreased for the related
income tax impact of $11.0 million, excluding the impact of the Tax
Cuts and Jobs Act, and rabbi trust income of $0.1 million, and
increased for total net impacts of the Tax Cuts and Jobs Act of
$22.7 million.
(4) Amount represents $12.7 million of amortization expense
associated with intangible assets acquired in business
combinations, $8.8 million of stock-based compensation expense,
$3.4 million of restructuring charges and $0.2 million of
transaction expenses related to business combinations.
(5) Amount represents the impact of the adjustments to operating
income referred to in (4) above, adjusted for the related
income tax impact of $9.0 million.
|
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Non-GAAP Measures |
(Unaudited) |
|
Twelve Months Ended |
|
December 31, 2017 |
|
December 31, 2016 |
(in thousands,
except percentages and per share data) |
As Reported |
|
Adjustments |
|
Non-GAAP Results |
|
As Reported |
|
Adjustments |
|
Non-GAAP Results |
Total revenue |
$ |
1,095,250 |
|
|
$ |
2,856 |
|
(1 |
) |
$ |
1,098,106 |
|
|
$ |
988,465 |
|
|
$ |
103 |
|
(4 |
) |
$ |
988,568 |
|
Operating income |
390,728 |
|
|
118,567 |
|
(2 |
) |
509,295 |
|
|
376,242 |
|
|
88,114 |
|
(5 |
) |
464,356 |
|
Operating profit
margin |
35.7 |
% |
|
|
|
46.4 |
% |
|
38.1 |
% |
|
|
|
47.0 |
% |
Net income |
$ |
259,251 |
|
|
$ |
88,663 |
|
(3 |
) |
$ |
347,914 |
|
|
$ |
265,636 |
|
|
$ |
57,286 |
|
(6 |
) |
$ |
322,922 |
|
Earnings per share –
diluted: |
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share |
$ |
2.98 |
|
|
|
|
$ |
4.01 |
|
|
$ |
2.99 |
|
|
|
|
$ |
3.63 |
|
Weighted
average shares |
86,854 |
|
|
|
|
86,854 |
|
|
88,969 |
|
|
|
|
88,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amount represents the revenue not reported during the period
as a result of the acquisition accounting adjustment associated
with the accounting for deferred revenue in business
combinations.
(2) Amount represents $53.2 million of stock-based compensation
expense, $49.8 million of amortization expense associated with
intangible assets acquired in business combinations, $11.7 million
of restructuring charges, $1.1 million of transaction expenses
related to business combinations and the $2.9 million adjustment to
revenue as reflected in (1) above.
(3) Amount represents the impact of the adjustments to operating
income referred to in (2) above, decreased for the related
income tax impact of $52.5 million, excluding the impact of the Tax
Cuts and Jobs Act, and rabbi trust income of $0.1 million, and
increased for total net impacts of the Tax Cuts and Jobs Act of
$22.7 million.
(4) Amount represents the revenue not reported during the period
as a result of the acquisition accounting adjustment associated
with the accounting for deferred revenue in business
combinations.
(5) Amount represents $50.8 million of amortization expense
associated with intangible assets acquired in business
combinations, $33.3 million of stock-based compensation expense,
$3.4 million of restructuring charges, $0.4 million of transaction
expenses related to business combinations and the $0.1 million
adjustment to revenue as reflected in (4) above.
(6) Amount represents the impact of the adjustments to operating
income referred to in (5) above, adjusted for the related
income tax impact of $30.8 million.
|
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Forward-Looking
Guidance |
Quarter Ending March 31, 2018 |
|
ASC
605 |
|
ASC
606 |
|
Earnings Per
Share Range - Diluted |
|
Earnings Per
Share Range - Diluted |
U.S. GAAP
expectation |
$0.82
- $0.92 |
|
$0.70
- $0.88 |
Adjustment to exclude
acquisition-related amortization |
$0.10
- $0.11 |
|
$0.10
- $0.11 |
Adjustment to exclude
stock-based compensation |
$0.07
- $0.09 |
|
$0.07
- $0.09 |
Non-GAAP
expectation |
$1.02 - $1.09 |
|
$0.90 - $1.05 |
|
|
|
|
|
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Forward-Looking
Guidance |
Year Ending December 31, 2018 |
|
ASC
605 |
|
ASC
606 |
|
Earnings Per Share Range - Diluted |
|
Earnings Per
Share Range - Diluted |
U.S. GAAP
expectation |
$3.72 - $4.06 |
|
$3.38
- $4.11 |
Adjustment to exclude
acquisition adjustments to deferred revenue |
$0.01 |
|
- |
Adjustment to exclude
acquisition-related amortization |
$0.34 - $0.36 |
|
$0.34
- $0.36 |
Adjustment to exclude
stock-based compensation |
$0.59 - $0.67 |
|
$0.59
- $0.67 |
Non-GAAP
expectation |
$4.76 - $5.00 |
|
$4.41 - $5.04 |
|
|
|
|
Use of Non-GAAP Measures
The Company provides non-GAAP revenue, non-GAAP
operating income, non-GAAP operating profit margin, non-GAAP net
income and non-GAAP diluted earnings per share as supplemental
measures to GAAP regarding the Company's operational performance.
These financial measures exclude the impact of certain items and,
therefore, have not been calculated in accordance with GAAP. A
detailed explanation of each of the adjustments to such financial
measures is described below. This press release also contains a
reconciliation of each of these non-GAAP financial measures to its
most comparable GAAP financial measure.
Management uses non-GAAP financial measures (a) to evaluate
the Company's historical and prospective financial performance as
well as its performance relative to its competitors, (b) to
set internal sales targets and spending budgets, (c) to
allocate resources, (d) to measure operational profitability
and the accuracy of forecasting, (e) to assess financial
discipline over operational expenditures and (f) as an
important factor in determining variable compensation for
management and its employees. In addition, many financial analysts
that follow the Company focus on and publish both historical
results and future projections based on non-GAAP financial
measures. The Company believes that it is in the best interest of
its investors to provide this information to analysts so that they
accurately report the non-GAAP financial information. Moreover,
investors have historically requested and the Company has
historically reported these non-GAAP financial measures as a means
of providing consistent and comparable information with past
reports of financial results.
While management believes that these non-GAAP financial measures
provide useful supplemental information to investors, there are
limitations associated with the use of these non-GAAP financial
measures. These non-GAAP financial measures are not prepared in
accordance with GAAP, are not reported by all of the Company's
competitors and may not be directly comparable to similarly titled
measures of the Company's competitors due to potential differences
in the exact method of calculation. The Company compensates for
these limitations by using these non-GAAP financial measures as
supplements to GAAP financial measures and by reviewing the
reconciliations of the non-GAAP financial measures to their most
comparable GAAP financial measures.
The adjustments to these non-GAAP financial measures, and the
basis for such adjustments, are outlined below:
Acquisition accounting for deferred revenue and its
related tax impact. Historically, the Company has
consummated acquisitions in order to support its strategic and
other business objectives. In accordance with the fair value
provisions applicable to the accounting for business combinations,
acquired deferred revenue is often recorded on the opening balance
sheet at an amount that is lower than the historical carrying
value. Although this acquisition accounting requirement has no
impact on the Company's business or cash flow, it adversely impacts
the Company's reported GAAP revenue in the reporting periods
following an acquisition. In order to provide investors with
financial information that facilitates comparison of both
historical and future results, the Company provides non-GAAP
financial measures which exclude the impact of the acquisition
accounting adjustment. The Company believes that this non-GAAP
financial adjustment is useful to investors because it allows
investors to (a) evaluate the effectiveness of the methodology
and information used by management in its financial and operational
decision-making, and (b) compare past and future reports of
financial results of the Company as the revenue reduction related
to acquired deferred revenue will not recur when related annual
lease licenses and software maintenance contracts are renewed in
future periods.
Amortization of intangible assets from acquisitions and
its related tax impact. The Company incurs
amortization of intangible assets, included in its GAAP
presentation of amortization expense, related to various
acquisitions it has made. Management excludes these expenses and
their related tax impact for the purpose of calculating non-GAAP
operating income, non-GAAP operating profit margin, non-GAAP net
income and non-GAAP diluted earnings per share when it evaluates
the continuing operational performance of the Company because these
costs are fixed at the time of an acquisition, are then amortized
over a period of several years after the acquisition and generally
cannot be changed or influenced by management after the
acquisition. Accordingly, management does not consider these
expenses for purposes of evaluating the performance of the Company
during the applicable time period after the acquisition, and it
excludes such expenses when making decisions to allocate resources.
The Company believes that these non-GAAP financial measures are
useful to investors because they allow investors to
(a) evaluate the effectiveness of the methodology and
information used by management in its financial and operational
decision-making, and (b) compare past reports of financial
results of the Company as the Company has historically reported
these non-GAAP financial measures.
Stock-based compensation expense and its related tax
impact. The Company incurs expense related to
stock-based compensation included in its GAAP presentation of cost
of software licenses; cost of maintenance and service; research and
development expense; and selling, general and administrative
expense. Stock-based compensation expense (benefit) incurred in
connection with the Company's deferred compensation plan held in a
rabbi trust includes an offsetting benefit (charge) recorded in
other income (expense). Although stock-based compensation is an
expense of the Company and viewed as a form of compensation,
management excludes these expenses for the purpose of calculating
non-GAAP operating income, non-GAAP operating profit margin,
non-GAAP net income and non-GAAP diluted earnings per share when it
evaluates the continuing operational performance of the Company.
Management similarly excludes income (expense) related to assets
held in a rabbi trust in connection with the Company's deferred
compensation plan. Specifically, the Company excludes stock-based
compensation and income related to assets held in the deferred
compensation plan rabbi trust during its annual budgeting process
and its quarterly and annual assessments of the Company's and
management's performance. The annual budgeting process is the
primary mechanism whereby the Company allocates resources to
various initiatives and operational requirements. Additionally, the
annual review by the board of directors during which it compares
the Company's historical business model and profitability to the
planned business model and profitability for the forthcoming year
excludes the impact of stock-based compensation. In evaluating the
performance of senior management and department managers, charges
related to stock-based compensation are excluded from expenditure
and profitability results. In fact, the Company records stock-based
compensation expense into a stand-alone cost center for which no
single operational manager is responsible or accountable. In this
way, management is able to review, on a period-to-period basis,
each manager's performance and assess financial discipline over
operational expenditures without the effect of stock-based
compensation. The Company believes that these non-GAAP financial
measures are useful to investors because they allow investors to
(a) evaluate the Company's operating results and the
effectiveness of the methodology used by management to review the
Company's operating results, and (b) review historical
comparability in the Company's financial reporting as well as
comparability with competitors' operating results.
Restructuring charges and the related tax
impact. The Company occasionally incurs expenses for
restructuring its workforce included in its GAAP presentation of
cost of software licenses; cost of maintenance and service;
research and development expense; and selling, general and
administrative expense. Management excludes these expenses for the
purpose of calculating non-GAAP operating income, non-GAAP
operating profit margin, non-GAAP net income and non-GAAP diluted
earnings per share when it evaluates the continuing operational
performance of the Company, as it generally does not incur these
expenses as a part of its operations. The Company believes that
these non-GAAP financial measures are useful to investors because
they allow investors to (a) evaluate the Company's operating
results and the effectiveness of the methodology used by management
to review the Company's operating results, and (b) review
historical comparability in the Company's financial reporting as
well as comparability with competitors' operating
results.
Transaction costs related to business
combinations. The Company incurs expenses for
professional services rendered in connection with business
combinations, which are included in its GAAP presentation of
research and development expense and selling, general and
administrative expense. These expenses are generally not
tax-deductible. Management excludes these acquisition-related
transaction expenses, derived from closed acquisitions, for the
purpose of calculating non-GAAP operating income, non-GAAP
operating profit margin, non-GAAP net income and non-GAAP diluted
earnings per share when it evaluates the continuing operational
performance of the Company, as it generally would not have
otherwise incurred these expenses in the periods presented as a
part of its operations. The Company believes that these non-GAAP
financial measures are useful to investors because they allow
investors to (a) evaluate the Company's operating results and
the effectiveness of the methodology used by management to review
the Company's operating results, and (b) review historical
comparability in the Company's financial reporting as well as
comparability with competitors' operating results.
Tax Cuts and Jobs Act. The
Company recorded charges in its income tax provision related to the
enactment of the Tax Cuts and Jobs Act, including charges for the
transition tax related to unrepatriated cash and the impacts of the
tax rate change on net deferred tax assets. In addition, the
Company was not able to realize a tax benefit related to foreign
earnings repatriation due to the enactment of the Tax Cuts and Jobs
Act. Management excludes these charges and the unrealized benefit
for the purpose of calculating non-GAAP net income and non-GAAP
diluted earnings per share when it evaluates the continuing
operational performance of the Company, as (i) the charges are not
expected to recur as part of its normal operations and (ii) both
the charges and unrealized tax benefit resulted from the extremely
infrequent event of major U.S. tax reform, the last such reform
having occurred in 1986. The Company believes that these non-GAAP
financial measures are useful to investors because they allow
investors to (a) evaluate the Company's operating results and
the effectiveness of the methodology used by management to review
the Company's operating results, and (b) review historical
comparability in the Company's financial reporting.
Non-GAAP financial measures are not in accordance with, or an
alternative for, GAAP. The Company's non-GAAP financial measures
are not meant to be considered in isolation or as a substitute for
comparable GAAP financial measures, and should be read only in
conjunction with the Company's consolidated financial statements
prepared in accordance with GAAP.
The Company has provided a reconciliation of the non-GAAP
financial measures to the most directly comparable GAAP financial
measures as listed below:
GAAP Reporting
Measure |
Non-GAAP
Reporting Measure |
Revenue |
Non-GAAP Revenue |
Operating Income |
Non-GAAP Operating
Income |
Operating Profit
Margin |
Non-GAAP Operating
Profit Margin |
Net Income |
Non-GAAP Net
Income |
Diluted Earnings Per
Share |
Non-GAAP Diluted
Earnings Per Share |
About ANSYS, Inc.
If you’ve ever seen a rocket launch, flown on an airplane,
driven a car, used a computer, touched a mobile device, crossed a
bridge, or put on wearable technology, chances are you've used a
product where ANSYS software played a critical role in its
creation. ANSYS is the global leader in Pervasive Engineering
Simulation. We help the world's most innovative companies deliver
radically better products to their customers. By offering the best
and broadest portfolio of engineering simulation software, we help
them solve the most complex design challenges and create products
limited only by imagination. Founded in 1970, ANSYS employs
thousands of professionals, many of whom are expert M.S. and
Ph.D.-level engineers in finite element analysis, computational
fluid dynamics, electronics, semiconductors, embedded software and
design optimization. Headquartered south of Pittsburgh,
Pennsylvania, U.S.A., ANSYS has more than 75 strategic sales
locations throughout the world with a network of channel partners
in 40+ countries. Visit www.ansys.com for more information.
Forward-Looking Information
Certain statements contained in this press
release regarding matters that are not historical facts, including,
but not limited to, statements regarding our projections for the
first quarter of 2018 and fiscal year 2018 (both GAAP and non-GAAP
to exclude acquisition accounting adjustments to deferred revenue,
acquisition-related amortization, stock-based compensation expense
and acquisition-related transaction costs with related tax
impacts); statements regarding management's use of non-GAAP
financial measures; statements regarding investing in the business;
statements regarding the strength of customer demand for our
products; statements regarding our pipeline of opportunities;
statements regarding ANSYS 19, its features and their respective
impact on our customers; statements related to our intent to move
forward with investments in our core products, high-growth adjacent
markets and our business infrastructure; and statements regarding
the Tax Cuts and Jobs Act are "forward-looking" statements (as
defined in the Private Securities Litigation Reform Act of 1995).
Because such statements are subject to risks and uncertainties,
actual results may differ materially from those expressed or
implied by such forward-looking statements. All forward-looking
statements in this press release are subject to risks and
uncertainties, including, but not limited to, the risk that adverse
conditions in the global and domestic markets will significantly
affect ANSYS’ customers’ ability to purchase products from the
Company at the same level as prior periods or to pay for the
Company’s products and services; the risk that declines in ANSYS’
customers’ business may lengthen customer sales cycles; the risk of
declines in the economy of one or more of ANSYS’ primary geographic
regions; the risk that ANSYS’ revenues and operating results will
be adversely affected by changes in currency exchange rates or
economic declines in any of the countries in which ANSYS conducts
transactions; the risk that the assumptions underlying ANSYS'
anticipated revenues and expenditures will change or prove
inaccurate; the risk that ANSYS has overestimated its ability to
maintain growth and profitability, and control costs; uncertainties
regarding the demand for ANSYS' products and services in future
periods; uncertainties regarding customer acceptance of new
products; the risk of ANSYS’ products' future compliance with
industry quality standards and its potential impact on the
Company’s financial results; the risk that the Company may need to
change its pricing models due to competition and its potential
impact on the Company’s financial results; the risk that ANSYS'
operating results will be adversely affected by possible delays in
developing, completing or shipping new or enhanced products; the
risk that enhancements to the Company's products or products
acquired in acquisitions may not produce anticipated sales; the
risk that the Company may not be able to recruit and retain key
executives and technical personnel; the risk that third parties may
misappropriate the Company’s proprietary technology or develop
similar technology independently; the risk of unauthorized access
to and distribution of the Company’s source code; the risk of the
Company’s implementation of its new IT systems; the risk of
difficulties in the relationship with ANSYS’ independent regional
channel partners; the risk of ANSYS’ reliance on perpetual licenses
and the result that any change in customer licensing behavior may
have on the Company’s financial results; the risk that ANSYS may
not achieve the anticipated benefits of its acquisitions or that
the integration of the acquired technologies or products with the
Company’s existing product lines may not be successful; the risk of
periodic reorganizations and changes within ANSYS’ sales
organization; the risk of industry consolidation and the impact it
may have on customer purchasing decisions; and other factors that
are detailed from time to time in reports filed by ANSYS, Inc. with
the Securities and Exchange Commission, including ANSYS, Inc.'s
2017 Annual Report on Form 10-K. We undertake no obligation to
publicly update or revise any forward-looking statements, whether
changes occur as a result of new information or future events,
after the date they were made.
ANSYS and any and all ANSYS, Inc. brand,
product, service and feature names, logos and slogans are
registered trademarks or trademarks of ANSYS, Inc. or its
subsidiaries in the United States or other countries. All
other brand, product, service and feature names or trademarks are
the property of their respective owners.
Visit www.ansys.com for more information. The
ANSYS IR App is now available for download
on iTunes and Google Play. ANSYS also has a strong
presence on the major social channels. To join the simulation
conversation, please visit www.ansys.com/Social@ANSYS.
Beginning end-of-day March 15, 2018, ANSYS will
observe a Quiet Period during which the business outlook as
provided in this press release and the most recent Annual Report on
Form 10-K and Quarterly Report on Form 10-Q no longer constitutes
the Company's current expectations. During the Quiet Period, the
business outlook in these documents should be considered
historical, speaking as of prior to the Quiet Period only and not
subject to any update by the Company. During the Quiet Period,
ANSYS' representatives will not comment on ANSYS' business outlook,
financial results or expectations. The Quiet Period will extend
until the day when ANSYS' first quarter 2018 earnings release is
published, which is currently scheduled for May 2, 2018.
Contact:Investors:
Annette N. Arribas
724.820.3700
annette.arribas@ansys.comMedia:
Amy Pietzak
724.820.4367
amy.pietzak@ansys.com
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