Altair (Nasdaq:ALTR), a global technology company providing
solutions in product development, high-performance computing and
data intelligence, today released its financial results for the
third quarter ended September 30, 2019.
“Software product revenue grew over 21% from a year
ago, as we continued to execute on our vision to provide truly
differentiated simulation, data analytics and high-performance
cloud computing solutions that enable our customers to compete more
effectively in a connected world,” said James Scapa, Founder,
Chairman and Chief Executive Officer of Altair. “Our core
simulation and optimization technologies performed well during the
quarter and we are highly encouraged by strong demand for our
SimSolid product, which has had one of the fastest new product
ramps in our history. We are also pleased to see continued strong
recurring software subscription revenues. While we are seeing
some macro headwinds in our automotive market and continue to be
impacted by foreign exchange challenges, our diversification across
multiple verticals and products provides us with optimism that our
momentum will continue into 2020 and beyond.”
Third Quarter 2019 Financial
Highlights
- Software product revenue was $77.8 million, an increase of 21%
from $64.2 million for the third quarter of 2018 highlighted
by 29% growth in the Americas region.
- Non-GAAP software product revenue was $80.1 million, an
increase of 25% from $64.2 million for the third quarter of
2018.
- Total revenue was $100.4 million, an increase of 16% from $86.8
million for the third quarter of 2018.
- Non-GAAP total revenue was $102.7 million, an increase of 18%
from $86.8 million for the third quarter of 2018.
- Net loss was $(15.9) million, compared to net income of $0.9
million for the third quarter of 2018. Diluted net loss per share
was $(0.22) based on 71.8 million diluted weighted average common
shares outstanding, compared to diluted net income per share of
$0.01 for the third quarter of 2018, based on 76.7 million diluted
weighted average common shares outstanding.
- Adjusted EBITDA was $(2.3) million, compared to $2.4 million
for the third quarter of 2018.
- Modified Adjusted EBITDA was $(0.1) million, compared to $2.4
million for the third quarter of 2018.
- Non-GAAP net loss was $(7.2) million, compared to $(1.4)
million for the third quarter of 2018. Non-GAAP diluted net loss
per share was $(0.09) based on 77.8 million non-GAAP diluted common
shares outstanding, compared to non-GAAP diluted net loss per share
of $(0.02) for the third quarter of 2018, based on 77.0 million
non-GAAP diluted common shares outstanding.
- Free cash flow, which consists of cash flow from operations
less capital expenditures, was $(3.3) million, compared to $0.9
million for the third quarter of 2018.
Business Outlook Based on
information available as of today, Altair is issuing revised and
reduced guidance for the fourth quarter and full year
2019.
|
|
(Unaudited) |
|
(in millions) |
|
Fourth Quarter 2019 |
Full Year 2019 |
|
Software Product Revenue |
|
$ |
83.5 |
|
to |
$ |
87.5 |
|
$ |
349.0 |
|
to |
$ |
353.0 |
|
Non-GAAP Software Product Revenue |
|
$ |
85.8 |
|
|
$ |
89.8 |
|
$ |
358.0 |
|
|
$ |
362.0 |
|
Total Revenue |
|
$ |
105.0 |
|
|
$ |
109.0 |
|
$ |
440.0 |
|
|
$ |
444.0 |
|
Non-GAAP Total Revenue |
|
$ |
107.3 |
|
|
$ |
111.3 |
|
$ |
449.0 |
|
|
$ |
453.0 |
|
Net (Loss) |
|
$ |
(5.4) |
|
$ |
(3.4) |
$ |
(11.4) |
|
$ |
(9.4) |
Non-GAAP Net Income |
|
$ |
2.2 |
|
|
$ |
4.2 |
|
$ |
20.1 |
|
|
$ |
22.1 |
|
Adjusted EBITDA |
|
$ |
7.3 |
|
|
$ |
9.3 |
|
$ |
34.0 |
|
|
$ |
36.0 |
|
Modified Adjusted EBITDA |
|
$ |
9.5 |
|
|
$ |
11.5 |
|
$ |
43.0 |
|
|
$ |
45.0 |
|
(All figures in millions)
Conference Call Information
What: |
Altair’s Third Quarter 2019 Financial Results Conference
Call |
When: |
Thursday, November 7, 2019 |
Time: |
5:00 p.m. ET |
Live Call: |
(866) 754-5204, Domestic(636) 812-6621, International |
Replay: |
(855) 859-2056, Conference ID 8382596, Domestic(404) 537-3406,
Conference ID 8382596, International |
Webcast: |
http://investor.altair.com (live & replay) |
Non-GAAP Financial Measures This
press release contains the following non-GAAP financial measures:
Non-GAAP Software Product Revenue, Non-GAAP Total Revenue, Adjusted
EBITDA, Modified Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Net
Income Per Share and Free Cash Flow.
Altair believes that these non-GAAP measures of
financial results provide useful information to management and
investors regarding certain financial and business trends relating
to its financial condition and results of operations. The Company’s
management uses these non-GAAP measures to compare the Company’s
performance to that of prior periods for trend analysis, for
purposes of determining executive and senior management incentive
compensation and for budgeting and planning purposes. The Company
also believes that the use of these non-GAAP financial measures
provides an additional tool for investors to use in evaluating
ongoing operating results and trends and in comparing the Company’s
financial measures with other software companies, many of which
present similar non-GAAP financial measures to investors.
Non-GAAP software product revenue and Non-GAAP
total revenue include revenue not recognized under GAAP due to
acquisition accounting adjustments associated with the accounting
for deferred revenue in significant business combinations.
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.
Modified Adjusted EBITDA represents Adjusted EBITDA
adjusted for revenue not recognized under GAAP due to acquisition
accounting adjustments associated with the accounting for deferred
revenue in significant business combinations.
Non-GAAP net income excludes stock-based
compensation, amortization of intangible assets related to
acquisitions, revenue not recognized under GAAP due to acquisition
accounting and special items as identified by management and
described elsewhere in this press release.
Non-GAAP diluted common shares includes total
outstanding shares plus outstanding equity awards under the Altair
equity award plans.
Company management does not consider these non-GAAP
measures in isolation or as an alternative to financial measures
determined in accordance with GAAP. The principal limitation of
these non-GAAP financial measures is that they exclude significant
expenses and income that are required by GAAP to be recorded in the
Company’s financial statements. In addition, they are subject to
inherent limitations as they reflect the exercise of judgment by
management about which expenses and income are excluded or included
in determining these non-GAAP financial measures. Altair urges
investors to review the reconciliation of its non-GAAP financial
measures to the comparable GAAP financial measures, which it
includes in press releases announcing quarterly financial results,
including this press release, and not to rely on any single
financial measure to evaluate the Company’s business.
Reconciliation tables of the most comparable GAAP
financial measures to the non-GAAP financial measures used in this
press release are included with the financial tables at the end of
this release.
About Altair Altair is a global
technology company that provides software and cloud solutions in
the areas of product design and development, high-performance
computing (HPC) and data intelligence. Altair enables organizations
across broad industry segments to compete more effectively in a
connected world while creating a more sustainable future. To learn
more, please visit www.altair.com.
Cautionary Language Concerning
Forward-Looking Statements
This press release contains “forward-looking
statements” within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995, including but
not limited to, our guidance for the fourth quarter and full year
2019, statements regarding other future periods 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
forward-looking statements due to a number of factors, including
but not limited to, 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.
Investor and Media RelationsDave
SimonAltair248-614-2400 ext. 332ir@altair.com
ALTAIR ENGINERING INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
|
September 30, 2019 |
|
|
December 31, 2018 |
|
(In thousands) |
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
246,937 |
|
|
$ |
35,345 |
|
Accounts receivable, net |
|
|
84,062 |
|
|
|
96,803 |
|
Income tax receivable |
|
|
11,551 |
|
|
|
4,431 |
|
Prepaid expenses and other current assets |
|
|
18,398 |
|
|
|
17,455 |
|
Total current assets |
|
|
360,948 |
|
|
|
154,034 |
|
Property and equipment, net |
|
|
33,720 |
|
|
|
30,153 |
|
Operating lease right of use assets |
|
|
26,507 |
|
|
|
— |
|
Goodwill |
|
|
210,500 |
|
|
|
210,532 |
|
Other intangible assets, net |
|
|
60,956 |
|
|
|
69,836 |
|
Deferred tax assets |
|
|
5,870 |
|
|
|
5,354 |
|
Other long-term assets |
|
|
18,199 |
|
|
|
17,288 |
|
TOTAL ASSETS |
|
$ |
716,700 |
|
|
$ |
487,197 |
|
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’
EQUITY |
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
437 |
|
|
$ |
331 |
|
Accounts payable |
|
|
8,286 |
|
|
|
8,357 |
|
Accrued compensation and benefits |
|
|
28,839 |
|
|
|
31,740 |
|
Current portion of operating lease liabilities |
|
|
8,891 |
|
|
|
— |
|
Other accrued expenses and current liabilities |
|
|
27,426 |
|
|
|
27,039 |
|
Deferred revenue |
|
|
69,377 |
|
|
|
59,765 |
|
Total current liabilities |
|
|
143,256 |
|
|
|
127,232 |
|
Long-term debt, net of current portion |
|
|
175,624 |
|
|
|
31,417 |
|
Operating lease liabilities, net of current portion |
|
|
18,831 |
|
|
|
— |
|
Deferred revenue, non-current |
|
|
7,666 |
|
|
|
6,754 |
|
Other long-term liabilities |
|
|
25,630 |
|
|
|
25,756 |
|
TOTAL LIABILITIES |
|
|
371,007 |
|
|
|
191,159 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
MEZZANINE EQUITY |
|
|
2,352 |
|
|
|
2,352 |
|
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 40,354 and 38,349 shares as of September 30, 2019
and December 31, 2018, respectively |
|
|
4 |
|
|
|
4 |
|
Class B common stock, authorized 41,203 shares, issued and
outstanding 31,391 and 32,171 shares as of September 30, 2019
and December 31, 2018, respectively |
|
|
3 |
|
|
|
3 |
|
Additional paid-in capital |
|
|
436,197 |
|
|
|
379,832 |
|
Accumulated deficit |
|
|
(80,903 |
) |
|
|
(74,863 |
) |
Accumulated other comprehensive loss |
|
|
(11,960 |
) |
|
|
(11,290 |
) |
TOTAL STOCKHOLDERS’ EQUITY |
|
|
343,341 |
|
|
|
293,686 |
|
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY |
|
$ |
716,700 |
|
|
$ |
487,197 |
|
ALTAIR ENGINEERING INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
(in thousands, except per share data) |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License |
|
$ |
46,853 |
|
|
$ |
40,880 |
|
|
$ |
180,127 |
|
|
$ |
154,515 |
|
Maintenance and other services |
|
|
30,963 |
|
|
|
23,302 |
|
|
|
85,388 |
|
|
|
69,943 |
|
Total software |
|
|
77,816 |
|
|
|
64,182 |
|
|
|
265,515 |
|
|
|
224,458 |
|
Software related services |
|
|
7,956 |
|
|
|
8,692 |
|
|
|
25,635 |
|
|
|
26,872 |
|
Total software and related services |
|
|
85,772 |
|
|
|
72,874 |
|
|
|
291,150 |
|
|
|
251,330 |
|
Client engineering services |
|
|
12,803 |
|
|
|
12,155 |
|
|
|
37,265 |
|
|
|
36,652 |
|
Other |
|
|
1,831 |
|
|
|
1,722 |
|
|
|
6,623 |
|
|
|
5,386 |
|
Total revenue |
|
|
100,406 |
|
|
|
86,751 |
|
|
|
335,038 |
|
|
|
293,368 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License |
|
|
4,371 |
|
|
|
2,736 |
|
|
|
13,146 |
|
|
|
10,534 |
|
Maintenance and other services |
|
|
9,548 |
|
|
|
7,095 |
|
|
|
27,509 |
|
|
|
22,202 |
|
Total software * |
|
|
13,919 |
|
|
|
9,831 |
|
|
|
40,655 |
|
|
|
32,736 |
|
Software related services |
|
|
6,013 |
|
|
|
6,352 |
|
|
|
19,143 |
|
|
|
19,573 |
|
Total software and related services |
|
|
19,932 |
|
|
|
16,183 |
|
|
|
59,798 |
|
|
|
52,309 |
|
Client engineering services |
|
|
10,160 |
|
|
|
9,817 |
|
|
|
29,993 |
|
|
|
29,977 |
|
Other |
|
|
1,649 |
|
|
|
1,204 |
|
|
|
5,858 |
|
|
|
3,416 |
|
Total cost of revenue |
|
|
31,741 |
|
|
|
27,204 |
|
|
|
95,649 |
|
|
|
85,702 |
|
Gross profit |
|
|
68,665 |
|
|
|
59,547 |
|
|
|
239,389 |
|
|
|
207,666 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development * |
|
|
29,667 |
|
|
|
24,301 |
|
|
|
87,012 |
|
|
|
71,748 |
|
Sales and marketing * |
|
|
25,790 |
|
|
|
19,243 |
|
|
|
78,462 |
|
|
|
57,849 |
|
General and administrative * |
|
|
20,706 |
|
|
|
17,234 |
|
|
|
60,886 |
|
|
|
51,636 |
|
Amortization of intangible assets |
|
|
3,545 |
|
|
|
1,739 |
|
|
|
10,673 |
|
|
|
5,665 |
|
Other operating income |
|
|
(536 |
) |
|
|
(4,850 |
) |
|
|
(1,702 |
) |
|
|
(7,433 |
) |
Total operating expenses |
|
|
79,172 |
|
|
|
57,667 |
|
|
|
235,331 |
|
|
|
179,465 |
|
Operating (loss) income |
|
|
(10,507 |
) |
|
|
1,880 |
|
|
|
4,058 |
|
|
|
28,201 |
|
Interest expense |
|
|
2,726 |
|
|
|
31 |
|
|
|
3,586 |
|
|
|
92 |
|
Other income, net |
|
|
(588 |
) |
|
|
(970 |
) |
|
|
(703 |
) |
|
|
(2,046 |
) |
(Loss) income before income taxes |
|
|
(12,645 |
) |
|
|
2,819 |
|
|
|
1,175 |
|
|
|
30,155 |
|
Income tax expense |
|
|
3,294 |
|
|
|
1,885 |
|
|
|
7,215 |
|
|
|
5,617 |
|
Net (loss) income |
|
$ |
(15,939 |
) |
|
$ |
934 |
|
|
$ |
(6,040 |
) |
|
$ |
24,538 |
|
Income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share attributable to common
stockholders, basic |
|
$ |
(0.22 |
) |
|
$ |
0.01 |
|
|
$ |
(0.08 |
) |
|
$ |
0.37 |
|
Net (loss) income per share attributable to common
stockholders, diluted |
|
$ |
(0.22 |
) |
|
$ |
0.01 |
|
|
$ |
(0.08 |
) |
|
$ |
0.33 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net
(loss) income per share, basic |
|
|
71,770 |
|
|
|
70,001 |
|
|
|
71,313 |
|
|
|
66,429 |
|
Weighted average number of shares used in computing net
(loss) income per share, diluted |
|
|
71,770 |
|
|
|
76,709 |
|
|
|
71,313 |
|
|
|
74,182 |
|
_________________*
Amounts include stock-based compensation expense as follows (in
thousands) (unaudited):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Cost of revenue – software |
|
$ |
384 |
|
|
$ |
8 |
|
|
$ |
727 |
|
|
$ |
24 |
|
Research and development |
|
|
674 |
|
|
|
175 |
|
|
|
1,611 |
|
|
|
330 |
|
Sales and marketing |
|
|
625 |
|
|
|
140 |
|
|
|
1,562 |
|
|
|
315 |
|
General and administrative |
|
|
609 |
|
|
|
240 |
|
|
|
1,684 |
|
|
|
544 |
|
Total stock-based compensation expense |
|
$ |
2,292 |
|
|
$ |
563 |
|
|
$ |
5,584 |
|
|
$ |
1,213 |
|
ALTAIR ENGINEERING INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOW(Unaudited)
|
|
Nine Months Ended September 30, |
|
(In thousands) |
|
2019 |
|
|
2018 |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(6,040 |
) |
|
$ |
24,538 |
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
15,836 |
|
|
|
10,895 |
|
Provision for bad debt |
|
|
472 |
|
|
|
455 |
|
Amortization of debt discount and issuance costs |
|
|
3,044 |
|
|
|
18 |
|
Stock-based compensation expense |
|
|
5,584 |
|
|
|
1,213 |
|
Gain on sale of assets held for sale and other |
|
|
— |
|
|
|
(4,544 |
) |
Impairment of intangibles |
|
|
— |
|
|
|
608 |
|
Deferred income taxes |
|
|
(741 |
) |
|
|
706 |
|
Other, net |
|
|
(16 |
) |
|
|
(134 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
10,185 |
|
|
|
15,674 |
|
Prepaid expenses and other current assets |
|
|
(8,718 |
) |
|
|
(6,821 |
) |
Other long-term assets |
|
|
(1,443 |
) |
|
|
44 |
|
Accounts payable |
|
|
(420 |
) |
|
|
796 |
|
Accrued compensation and benefits |
|
|
(2,111 |
) |
|
|
2,650 |
|
Other accrued expenses and current liabilities |
|
|
2,110 |
|
|
|
(4,781 |
) |
Operating lease right-of-use assets and liabilities, net |
|
|
188 |
|
|
|
— |
|
Deferred revenue |
|
|
12,075 |
|
|
|
(895 |
) |
Net cash provided by operating activities |
|
|
30,005 |
|
|
|
40,422 |
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(8,120 |
) |
|
|
(5,333 |
) |
Payments for acquisition of developed technology |
|
|
(473 |
) |
|
|
(2,738 |
) |
Payments for acquisition of businesses, net of cash acquired |
|
|
(709 |
) |
|
|
(15,950 |
) |
Proceeds from the sale of assets held for sale and other |
|
|
— |
|
|
|
6,613 |
|
Other investing activities, net |
|
|
16 |
|
|
|
— |
|
Net cash used in investing activities |
|
|
(9,286 |
) |
|
|
(17,408 |
) |
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from issuance of convertible senior notes, net of
underwriters' discount and commissions |
|
|
223,101 |
|
|
|
— |
|
Payments on revolving commitment |
|
|
(127,941 |
) |
|
|
— |
|
Borrowings under revolving commitment |
|
|
96,991 |
|
|
|
— |
|
Proceeds from the exercise of stock options |
|
|
1,441 |
|
|
|
1,929 |
|
Payments for issuance costs of convertible senior notes |
|
|
(1,233 |
) |
|
|
— |
|
Payments for follow-on public offering and initial public offering
costs |
|
|
— |
|
|
|
(541 |
) |
Proceeds from issuance of Class A common stock in follow-on public
offering, net of underwriters' discounts and commissions |
|
|
— |
|
|
|
135,572 |
|
Other financing activities |
|
|
(399 |
) |
|
|
(446 |
) |
Net cash provided by financing activities |
|
|
191,960 |
|
|
|
136,514 |
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
|
|
(1,065 |
) |
|
|
(1,354 |
) |
Net increase in cash, cash equivalents and restricted cash |
|
|
211,614 |
|
|
|
158,174 |
|
Cash, cash equivalents and restricted cash at beginning of
year |
|
|
35,685 |
|
|
|
39,578 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
247,299 |
|
|
$ |
197,752 |
|
Supplemental disclosure of cash flow: |
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
385 |
|
|
$ |
70 |
|
Income taxes paid |
|
$ |
7,163 |
|
|
$ |
5,900 |
|
Supplemental disclosure of non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
Finance leases |
|
$ |
588 |
|
|
$ |
995 |
|
Property and equipment in accounts payable, other current
liabilities and other liabilities |
|
$ |
1,827 |
|
|
$ |
228 |
|
Follow-on public offering costs in accounts payable |
|
$ |
— |
|
|
$ |
15 |
|
Promissory notes issued and deferred payment obligations for
acquisitions |
|
$ |
— |
|
|
$ |
278 |
|
Financial Results
The following table provides a reconciliation of
Non-GAAP net (loss) income and Non-GAAP net (loss) income per share
- diluted to net (loss) income and net (loss) income 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) |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net (loss) income |
|
$ |
(15,939 |
) |
|
$ |
934 |
|
|
$ |
(6,040 |
) |
|
$ |
24,538 |
|
Stock-based compensation expense |
|
|
2,292 |
|
|
|
563 |
|
|
|
5,584 |
|
|
|
1,213 |
|
Amortization of intangible assets |
|
|
3,545 |
|
|
|
1,739 |
|
|
|
10,673 |
|
|
|
5,665 |
|
Acquisition related deferred revenue (1) |
|
|
2,250 |
|
|
|
— |
|
|
|
6,750 |
|
|
|
— |
|
Special adjustments (2) |
|
|
1,027 |
|
|
|
(4,177 |
) |
|
|
2,031 |
|
|
|
(4,400 |
) |
Income tax effect of non-GAAP adjustments |
|
|
(368 |
) |
|
|
(459 |
) |
|
|
(1,103 |
) |
|
|
(658 |
) |
Non-GAAP net (loss) income |
|
$ |
(7,193 |
) |
|
$ |
(1,400 |
) |
|
$ |
17,895 |
|
|
$ |
26,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share - diluted |
|
$ |
(0.22 |
) |
|
$ |
0.01 |
|
|
$ |
(0.08 |
) |
|
$ |
0.33 |
|
Non-GAAP net (loss) income per share - diluted |
|
$ |
(0.09 |
) |
|
$ |
(0.02 |
) |
|
$ |
0.23 |
|
|
$ |
0.34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted shares outstanding: |
|
|
71,770 |
|
|
|
76,709 |
|
|
|
71,313 |
|
|
|
74,182 |
|
Non-GAAP diluted shares outstanding: |
|
|
77,800 |
|
|
|
77,000 |
|
|
|
77,800 |
|
|
|
77,000 |
|
(1) |
Represents revenue not recognized under GAAP due to acquisition
accounting adjustments associated with the accounting for deferred
revenue in significant business combinations. |
(2) |
Includes a) nonrecurring severance expenses of $0.4 million and
nonrecurring acquisition related costs of $0.6 million, for both
the three and nine months ended September 30, 2019, and b) an
impairment charge for royalty contracts resulting in $1.0 million
of expenses for the nine months ended September 30, 2019. |
|
Includes a) a gain on the sale of a building of $4.4 million for
the three and nine months ended September 30, 2018, b) an
impairment charge for royalty contracts resulting in $0.2 million
and $2.0 million for the three and nine months ended September 30,
2018, respectively and c) a non-recurring adjustment for a change
in estimated legal expenses resulting in $2.0 million of income for
the nine months ended September 30, 2018. |
The following table provides a reconciliation of
Adjusted EBITDA and Modified Adjusted EBITDA to net (loss) income,
the most comparable GAAP financial measure:
|
|
(Unaudited) |
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
(in thousands) |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net (loss) income |
|
$ |
(15,939 |
) |
|
$ |
934 |
|
|
$ |
(6,040 |
) |
|
$ |
24,538 |
|
Income tax expense |
|
|
3,294 |
|
|
|
1,885 |
|
|
|
7,215 |
|
|
|
5,617 |
|
Stock-based compensation expense |
|
|
2,292 |
|
|
|
563 |
|
|
|
5,584 |
|
|
|
1,213 |
|
Interest expense |
|
|
2,726 |
|
|
|
31 |
|
|
|
3,586 |
|
|
|
92 |
|
Interest income and other (1) |
|
|
(76 |
) |
|
|
(4,384 |
) |
|
|
633 |
|
|
|
(5,103 |
) |
Depreciation and amortization |
|
|
5,368 |
|
|
|
3,370 |
|
|
|
15,836 |
|
|
|
10,895 |
|
Adjusted EBITDA |
|
|
(2,335 |
) |
|
|
2,399 |
|
|
|
26,814 |
|
|
|
37,252 |
|
Acquisition related deferred revenue (2) |
|
|
2,250 |
|
|
|
— |
|
|
|
6,750 |
|
|
|
— |
|
Modified Adjusted EBITDA |
|
$ |
(85 |
) |
|
$ |
2,399 |
|
|
$ |
33,564 |
|
|
$ |
37,252 |
|
(1) |
Includes a) nonrecurring severance expenses of $0.4 million and
nonrecurring acquisition related costs of $0.6 million, for both
the three and nine months ended September 30, 2019, and b)
impairment charges for royalty contracts resulting in $1.0 million
of expense for the nine months ended September 30, 2019. |
|
Includes a) a gain on the sale of a building of $4.4 million for
the three and nine months ended September 30, 2018, b) impairment
charges for royalty contracts and trade names resulting in $0.8
million and $2.6 million of expense for the three and nine months
ended September 30, 2018, respectively, and c) a non-recurring
adjustment for a change in estimated legal expenses resulting in
$2.0 million of income for the nine months ended September 30,
2018. |
(2) |
Represents revenue not recognized under GAAP due to acquisition
accounting adjustments associated with the accounting for deferred
revenue in significant business combinations. |
The following table provides a reconciliation of
Non-GAAP total revenue to total revenue, the most comparable GAAP
financial measure:
|
|
(Unaudited) |
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
(in thousands) |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Total revenue |
|
$ |
100,406 |
|
|
$ |
86,751 |
|
|
$ |
335,038 |
|
|
$ |
293,368 |
|
Acquisition related deferred revenue (1) |
|
|
2,250 |
|
|
|
— |
|
|
|
6,750 |
|
|
|
— |
|
Non-GAAP total revenue |
|
$ |
102,656 |
|
|
$ |
86,751 |
|
|
$ |
341,788 |
|
|
$ |
293,368 |
|
(1) |
Adjustment for revenue not recognized under GAAP due to acquisition
accounting adjustments associated with the accounting for deferred
revenue in significant business combinations. |
The following table provides a reconciliation of
Non-GAAP total software product revenue to total software product
revenue, the most comparable GAAP financial measure:
|
|
(Unaudited) |
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
(in thousands) |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Total software product revenue |
|
$ |
77,816 |
|
|
$ |
64,182 |
|
|
$ |
265,515 |
|
|
$ |
224,458 |
|
Acquisition related deferred revenue(1) |
|
|
2,250 |
|
|
|
— |
|
|
|
6,750 |
|
|
|
— |
|
Non-GAAP total software product revenue |
|
$ |
80,066 |
|
|
$ |
64,182 |
|
|
$ |
272,265 |
|
|
$ |
224,458 |
|
(1) |
Adjustment for revenue not recognized under GAAP due to acquisition
accounting adjustments associated with the accounting for deferred
revenue in significant business combinations. |
The following table provides a recompilation 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) |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net cash (used in) provided by operating activities |
|
$ |
(1,863 |
) |
|
$ |
3,109 |
|
|
$ |
30,005 |
|
|
$ |
40,422 |
|
Capital expenditures |
|
|
(1,453 |
) |
|
|
(2,203 |
) |
|
|
(8,120 |
) |
|
|
(5,333 |
) |
Free cash flow |
|
$ |
(3,316 |
) |
|
$ |
906 |
|
|
$ |
21,885 |
|
|
$ |
35,089 |
|
Effective January 1, 2018, we adopted Accounting
Standards Update No. 2014-09, Revenue from Contracts with Customers
(ASC 606). The following table sets forth selected quarterly
information under ASC 606 for 2018:
|
|
(Unaudited) |
|
|
|
Three months ended |
|
|
|
ASC 606 |
|
(in thousands) |
|
March 31,2018 |
|
|
June 30,2018 |
|
|
September 30,2018 |
|
|
December 31,2018 |
|
Software product revenue |
|
$ |
89,670 |
|
|
$ |
70,606 |
|
|
$ |
64,182 |
|
|
$ |
79,903 |
|
Total revenue |
|
|
113,257 |
|
|
|
93,360 |
|
|
|
86,751 |
|
|
|
103,011 |
|
Net income (loss) |
|
|
24,684 |
|
|
|
(1,080 |
) |
|
|
934 |
|
|
|
(9,003 |
) |
Adjusted EBITDA |
|
|
29,550 |
|
|
|
5,303 |
|
|
|
2,399 |
|
|
|
12,928 |
|
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 endingDecember 31,
2019 |
|
|
Year EndingDecember 31, 2019 |
|
(in thousands) |
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
Net loss |
|
$ |
(5,350 |
) |
|
$ |
(3,350 |
) |
|
$ |
(11,400 |
) |
|
$ |
(9,400 |
) |
Stock-based compensation expense |
|
|
2,100 |
|
|
|
2,100 |
|
|
|
7,700 |
|
|
|
7,700 |
|
Amortization of intangible assets |
|
|
3,600 |
|
|
|
3,600 |
|
|
|
14,300 |
|
|
|
14,300 |
|
Acquisition related deferred revenue (1) |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
9,000 |
|
|
|
9,000 |
|
Non-recurring adjustments |
|
|
— |
|
|
|
— |
|
|
|
2,000 |
|
|
|
2,000 |
|
Income tax effect of non-GAAP adjustments |
|
|
(370 |
) |
|
|
(370 |
) |
|
|
(1,500 |
) |
|
|
(1,500 |
) |
Non-GAAP net income |
|
$ |
2,230 |
|
|
$ |
4,230 |
|
|
$ |
20,100 |
|
|
$ |
22,100 |
|
(1) |
Adjustment for revenue not recognized under GAAP due to acquisition
accounting adjustments associated with the accounting for deferred
revenue in significant business combinations. |
The following table provides a reconciliation of
projected Adjusted EBITDA and Modified Adjusted EBITDA to projected
net loss, the most comparable GAAP financial measure:
|
|
(Unaudited) |
|
|
|
Three Months endingDecember 31,
2019 |
|
|
Year EndingDecember 31, 2019 |
|
(in thousands) |
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
Net loss |
|
$ |
(5,350 |
) |
|
$ |
(3,350 |
) |
|
$ |
(11,400 |
) |
|
$ |
(9,400 |
) |
Income tax expense |
|
|
3,200 |
|
|
|
3,200 |
|
|
|
10,400 |
|
|
|
10,400 |
|
Stock-based compensation expense |
|
|
2,100 |
|
|
|
2,100 |
|
|
|
7,700 |
|
|
|
7,700 |
|
Interest expense |
|
|
2,800 |
|
|
|
2,800 |
|
|
|
6,300 |
|
|
|
6,300 |
|
Depreciation and amortization |
|
|
5,400 |
|
|
|
5,400 |
|
|
|
21,200 |
|
|
|
21,200 |
|
Interest income and other non-recurring adjustments |
|
|
(900 |
) |
|
|
(900 |
) |
|
|
(200 |
) |
|
|
(200 |
) |
Adjusted EBITDA |
|
|
7,250 |
|
|
|
9,250 |
|
|
|
34,000 |
|
|
|
36,000 |
|
Acquisition related deferred revenue (1) |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
9,000 |
|
|
|
9,000 |
|
Modified Adjusted EBITDA |
|
$ |
9,500 |
|
|
$ |
11,500 |
|
|
$ |
43,000 |
|
|
$ |
45,000 |
|
(1) |
Adjustment for revenue not recognized under GAAP due to acquisition
accounting adjustments associated with the accounting for deferred
revenue in significant business combinations. |
The following table provides a reconciliation of
projected Non-GAAP total revenue to projected total revenue, the
most comparable GAAP financial measure:
|
|
(Unaudited) |
|
|
|
Three Months endingDecember 31,
2019 |
|
|
Year EndingDecember 31, 2019 |
|
(in thousands) |
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
Total revenue |
|
$ |
105,000 |
|
|
$ |
109,000 |
|
|
$ |
440,000 |
|
|
$ |
444,000 |
|
Acquisition related deferred revenue (1) |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
9,000 |
|
|
|
9,000 |
|
Non-GAAP total revenue |
|
$ |
107,250 |
|
|
$ |
111,250 |
|
|
$ |
449,000 |
|
|
$ |
453,000 |
|
(1) |
Adjustment for revenue not recognized under GAAP due to acquisition
accounting adjustments associated with the accounting for deferred
revenue in significant business combinations. |
The following table provides a reconciliation of
projected Non-GAAP total software product revenue to projected
total software product revenue, the most comparable GAAP financial
measure:
|
|
(Unaudited) |
|
|
|
Three Months endingDecember 31,
2019 |
|
|
Year EndingDecember 31, 2019 |
|
(in thousands) |
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
Total software product revenue |
|
$ |
83,500 |
|
|
$ |
87,500 |
|
|
$ |
349,000 |
|
|
$ |
353,000 |
|
Acquisition related deferred revenue (1) |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
9,000 |
|
|
|
9,000 |
|
Non-GAAP total software product revenue |
|
$ |
85,750 |
|
|
$ |
89,750 |
|
|
$ |
358,000 |
|
|
$ |
362,000 |
|
(1) |
Adjustment for revenue not recognized under GAAP due to acquisition
accounting adjustments associated with the accounting for deferred
revenue in significant business combinations. |
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