ANSYS, Inc. (NASDAQ: ANSS), today reported fourth quarter 2019 GAAP
and non-GAAP revenue growth of 17% and 18%, respectively, or 18%
for each in constant currency. For FY 2019, GAAP and non-GAAP
revenue growth was 17%, or 19% in constant currency. For the fourth
quarter, the Company reported growth in diluted earnings per share
of 7% and 5% on a GAAP and non-GAAP basis, respectively. For FY
2019, the Company reported growth in diluted earnings per share of
8% and 10% on a GAAP and non-GAAP basis, respectively.
Ajei Gopal, Ansys President & CEO, stated,
“Q4 was an outstanding quarter concluding a stellar 2019. We grew
double digits across revenue and ACV for the quarter and the year,
and I am confident we are tracking towards our 2022 objective of $2
billion in ACV. Our strong execution is a solid testament to the
underlying momentum in our business and I am proud of the numerous
milestones we accomplished in 2019. We extended our market and
technology leadership and differentiated our multiphysics product
portfolio both organically, as well as through strategic
acquisitions, and expanded our partner ecosystem. Our vision of
making simulation pervasive across the product lifecycle is
resonating with customers and partners and we believe we are in the
early innings of transformative growth and driving long-term value
creation in 2020 and beyond.”
Maria Shields, Ansys CFO, stated, “Q4 capped a
very strong year and demonstrated the strength of our business
model. We set new company records across key financial metrics
including our Q4 and full year 2019 revenue, ACV, earnings and
operating cash flows. We also grew our deferred revenue and
backlog, setting a new year-end record at $871 million, an increase
of 32% over 2018. To deliver on both our near-term and longer-term
growth objectives, we continue to invest in our core products,
high-growth adjacent markets and digital transformation initiatives
to scale our business. Our leadership in the simulation market
continues to strengthen, giving us increasing confidence in our
ability to achieve our 2022 long-term targets. In December
2019, we were added to the prestigious NASDAQ-100 Index, marking
another important milestone for Ansys as we look ahead into 2020
and celebrate our fifty-year heritage of technology innovation and
product excellence.”
Financial Results
Ansys' fourth quarter and FY 2019 and 2018
financial results are presented below. The 2019 and 2018 non-GAAP
results exclude the income statement effects of the acquisition
accounting adjustments to deferred revenue, stock-based
compensation, amortization of acquired intangible assets,
transaction costs related to business combinations, and adjustments
related to the transition tax associated with the Tax Cuts and Jobs
Act.
GAAP and non-GAAP results are as follows:
|
GAAP |
|
Non-GAAP |
(in millions, except
percentages and per share data) |
Q4 QTD2019 |
|
Q4 QTD2018 |
|
% Change |
|
Q4 QTD2019 |
|
Q4 QTD2018 |
|
% Change |
Revenue |
$ |
486.2 |
|
|
$ |
415.4 |
|
|
17 |
% |
|
$ |
492.5 |
|
|
$ |
418.0 |
|
|
18 |
% |
Net income |
$ |
165.9 |
|
|
$ |
153.2 |
|
|
8 |
% |
|
$ |
194.7 |
|
|
$ |
182.1 |
|
|
7 |
% |
Diluted earnings per
share |
$ |
1.91 |
|
|
$ |
1.79 |
|
|
7 |
% |
|
$ |
2.24 |
|
|
$ |
2.13 |
|
|
5 |
% |
Operating profit margin |
38.2 |
% |
|
43.3 |
% |
|
|
|
48.0 |
% |
|
51.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
Non-GAAP |
(in millions, except
percentages and per share data) |
FY 2019 |
|
FY 2018 |
|
% Change |
|
FY 2019 |
|
FY 2018 |
|
% Change |
Revenue |
$ |
1,515.9 |
|
|
$ |
1,293.6 |
|
|
17 |
% |
|
$ |
1,528.4 |
|
|
$ |
1,303.1 |
|
|
17 |
% |
Net income |
$ |
451.3 |
|
|
$ |
419.4 |
|
|
8 |
% |
|
$ |
565.0 |
|
|
$ |
513.9 |
|
|
10 |
% |
Diluted earnings per
share |
$ |
5.25 |
|
|
$ |
4.88 |
|
|
8 |
% |
|
$ |
6.58 |
|
|
$ |
5.98 |
|
|
10 |
% |
Operating profit margin |
34.0 |
% |
|
36.8 |
% |
|
|
|
45.3 |
% |
|
47.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The non-GAAP financial results highlighted
above, and the non-GAAP financial outlook for 2020 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, 2019 and 2018, and for the 2020
financial outlook, can be found in the condensed financial
information included in this release.
Other Financial Metrics
(in millions, except
percentages) |
Q4 QTD2019 |
|
Q4 QTD2018 |
|
% Change |
|
% Changein ConstantCurrency |
ACV |
$ |
541.3 |
|
|
$ |
480.5 |
|
|
13 |
% |
|
13 |
% |
Operating cash flows |
$ |
139.5 |
|
|
$ |
131.5 |
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except
percentages) |
FY 2019 |
|
FY 2018 |
|
% Change |
|
% Changein ConstantCurrency |
ACV |
$ |
1,461.8 |
|
|
$ |
1,325.2 |
|
|
10 |
% |
|
12 |
% |
Operating cash flows |
$ |
499.9 |
|
|
$ |
485.0 |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACV is a financial performance metric that Ansys introduced in
2018. The Company believes this measure is an improved metric as
compared to the historically provided bookings metric because it
adjusts the sales bookings metric to reflect only the annual value
of a contract and also adjusts to reflect the sales booking at the
date of the contract inception or renewal. There is no GAAP measure
comparable to ACV. ACV is composed 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 annualized value of fixed-term services contracts with
start dates or anniversary dates during the period, plus
- the value of work performed during the period on
fixed-deliverable services contracts.
Management's 2020 Financial Outlook
The Company's first quarter and fiscal year 2020
revenue and diluted earnings per share guidance is provided below.
The Company is also providing its fiscal year 2020 guidance for ACV
and operating cash flows. The revenue and diluted earnings per
share guidance is provided on both a GAAP and non-GAAP basis.
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 2020 Guidance
The Company currently expects the following for the quarter
ending March 31, 2020:
(in millions, except per share data) |
GAAP |
|
Non-GAAP |
Revenue |
$296.1 - $316.1 |
|
$300.0 - $320.0 |
Diluted earnings per
share |
$0.43 - $0.59 |
|
$0.75 - $0.88 |
|
|
|
|
Fiscal Year 2020 Guidance
The Company currently expects the following for the fiscal year
ending December 31, 2020:
(in millions, except per share data) |
GAAP |
|
Non-GAAP |
Revenue |
$1,632.0 - $1,692.0 |
|
$1,640.0 - $1,700.0 |
Diluted earnings per
share |
$4.36 - $5.02 |
|
$6.19 - $6.71 |
|
|
|
|
In the first quarter and fiscal year 2020 guidance reflected
above, the expected impacts of non-GAAP adjustments associated with
the acquisition accounting for deferred revenue are $3.9 million
and $8.0 million, respectively.
(in millions) |
Other FinancialMetrics |
ACV |
$1,605.0 - $1,650.0 |
Operating cash flows |
$500.0 - $530.0 |
|
|
Conference Call Information
Ansys will hold a conference call at
8:30 a.m. Eastern Time on February 27, 2020
to discuss fourth quarter and fiscal year 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 stockholders 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. The
Company will also post a complementary investor presentation titled
"4Q 2019 Investor Presentation" that can be accessed by clicking
Events & Presentations, then Presentations at
https://investors.ansys.com.
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 10138950. The archived webcast can be
accessed, along with other financial information, on Ansys' website
at
https://investors.ansys.com/events-and-presentations/events-calendar.
|
ANSYS, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets |
(Unaudited) |
(in
thousands) |
December 31, 2019 |
|
December 31, 2018 |
ASSETS: |
|
|
|
Cash & short-term investments |
$ |
872,382 |
|
|
$ |
777,364 |
|
Accounts receivable, net |
433,479 |
|
|
317,700 |
|
Goodwill |
2,413,280 |
|
|
1,572,455 |
|
Other intangibles, net |
476,711 |
|
|
211,272 |
|
Other assets(1) |
643,035 |
|
|
387,173 |
|
Total assets |
$ |
4,838,887 |
|
|
$ |
3,265,964 |
|
LIABILITIES &
STOCKHOLDERS' EQUITY: |
|
|
|
Current deferred revenue |
$ |
351,353 |
|
|
$ |
328,584 |
|
Long-term debt |
423,531 |
|
|
— |
|
Other liabilities(1) |
610,624 |
|
|
287,833 |
|
Stockholders' equity |
3,453,379 |
|
|
2,649,547 |
|
Total liabilities & stockholders' equity |
$ |
4,838,887 |
|
|
$ |
3,265,964 |
|
|
|
|
|
|
|
|
|
(1)Effective January 1, 2019, the Company adopted the new
leasing standard, which requires virtually all leases to be
recorded on the balance sheet. Results for reporting periods
beginning after January 1, 2019 are presented under the new
guidance, while prior period amounts are not adjusted and continue
to be reported in accordance with previous guidance. The adoption
of the new standard resulted in the recognition of approximately
$90 million of lease assets, and corresponding lease liabilities,
on the Company's condensed consolidated balance sheet as of January
1, 2019.
|
ANSYS, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of Income |
(Unaudited) |
|
Three Months Ended |
|
Twelve Months Ended |
(in thousands, except
per share data) |
December 31, 2019 |
|
December 31, 2018 |
|
December 31, 2019 |
|
December 31, 2018 |
Revenue: |
|
|
|
|
|
|
|
Software licenses |
$ |
268,943 |
|
|
$ |
226,421 |
|
|
$ |
699,630 |
|
|
$ |
576,717 |
|
Maintenance and service |
217,285 |
|
|
189,011 |
|
|
816,262 |
|
|
716,919 |
|
Total revenue |
486,228 |
|
|
415,432 |
|
|
1,515,892 |
|
|
1,293,636 |
|
Cost of sales: |
|
|
|
|
|
|
|
Software licenses |
7,324 |
|
|
6,318 |
|
|
23,944 |
|
|
18,619 |
|
Amortization |
7,646 |
|
|
3,631 |
|
|
21,710 |
|
|
27,034 |
|
Maintenance and service |
34,626 |
|
|
30,140 |
|
|
120,619 |
|
|
110,232 |
|
Total cost of sales |
49,596 |
|
|
40,089 |
|
|
166,273 |
|
|
155,885 |
|
Gross profit |
436,632 |
|
|
375,343 |
|
|
1,349,619 |
|
|
1,137,751 |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
167,937 |
|
|
133,137 |
|
|
521,200 |
|
|
413,580 |
|
Research and development |
79,152 |
|
|
58,896 |
|
|
298,210 |
|
|
233,802 |
|
Amortization |
3,827 |
|
|
3,374 |
|
|
15,169 |
|
|
13,795 |
|
Total operating expenses |
250,916 |
|
|
195,407 |
|
|
834,579 |
|
|
661,177 |
|
Operating income |
185,716 |
|
|
179,936 |
|
|
515,040 |
|
|
476,574 |
|
Interest income |
3,186 |
|
|
3,745 |
|
|
12,796 |
|
|
11,419 |
|
Interest expense |
(2,900 |
) |
|
(12 |
) |
|
(3,461 |
) |
|
(59 |
) |
Other (expense) income, net |
(855 |
) |
|
1,393 |
|
|
(1,792 |
) |
|
(849 |
) |
Income before income tax
provision |
185,147 |
|
|
185,062 |
|
|
522,583 |
|
|
487,085 |
|
Income tax provision |
19,295 |
|
|
31,899 |
|
|
71,288 |
|
|
67,710 |
|
Net income |
$ |
165,852 |
|
|
$ |
153,163 |
|
|
$ |
451,295 |
|
|
$ |
419,375 |
|
Earnings per share – basic: |
|
|
|
|
|
|
|
Earnings per share |
$ |
1.95 |
|
|
$ |
1.83 |
|
|
$ |
5.36 |
|
|
$ |
4.99 |
|
Weighted average shares |
85,183 |
|
|
83,699 |
|
|
84,259 |
|
|
83,973 |
|
Earnings per share –
diluted: |
|
|
|
|
|
|
|
Earnings per share |
$ |
1.91 |
|
|
$ |
1.79 |
|
|
$ |
5.25 |
|
|
$ |
4.88 |
|
Weighted average shares |
86,992 |
|
|
85,472 |
|
|
85,925 |
|
|
85,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Non-GAAP Measures |
(Unaudited) |
|
Three Months Ended |
|
December 31, 2019 |
|
December 31, 2018 |
(in thousands, except
percentages and per share data) |
GAAPResults |
|
Adjustments |
|
Non-GAAPResults |
|
GAAPResults |
|
Adjustments |
|
Non-GAAPResults |
Total revenue |
$ |
486,228 |
|
|
$ |
6,265 |
|
(1) |
|
$ |
492,493 |
|
|
$ |
415,432 |
|
|
$ |
2,545 |
|
(4) |
|
$ |
417,977 |
|
Operating income |
185,716 |
|
|
50,496 |
|
(2) |
|
236,212 |
|
|
179,936 |
|
|
35,646 |
|
(5) |
|
215,582 |
|
Operating profit margin |
38.2 |
% |
|
|
|
48.0 |
% |
|
43.3 |
% |
|
|
|
51.6 |
% |
Net income |
$ |
165,852 |
|
|
$ |
28,861 |
|
(3) |
|
$ |
194,713 |
|
|
$ |
153,163 |
|
|
$ |
28,919 |
|
(6) |
|
$ |
182,082 |
|
Earnings per share –
diluted: |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
$ |
1.91 |
|
|
|
|
$ |
2.24 |
|
|
$ |
1.79 |
|
|
|
|
$ |
2.13 |
|
Weighted average shares |
86,992 |
|
|
|
|
86,992 |
|
|
85,472 |
|
|
|
|
85,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $31.4 million of stock-based compensation
expense, $0.4 million of excess payroll taxes related to
stock-based awards, $11.5 million of amortization expense
associated with intangible assets acquired in business
combinations, $0.9 million of transaction expenses related to
business combinations and the $6.3 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 $21.5 million and rabbi trust income of $0.1
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 $24.5 million of stock-based compensation
expense, $0.5 million of excess payroll taxes related to
stock-based awards, $7.0 million of amortization expense associated
with intangible assets acquired in business combinations, $1.2
million of transaction expenses related to business combinations
and the $2.5 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, decreased for the related
income tax impact of $6.9 million and increased for rabbi trust
expense of $0.2 million.
|
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Non-GAAP Measures |
(Unaudited) |
|
Twelve Months Ended |
|
December 31,
2019 |
|
December 31,
2018 |
(in thousands, except
percentages and per share data) |
GAAPResults |
|
Adjustments |
|
|
Non-GAAPResults |
|
GAAPResults |
|
Adjustments |
|
|
Non-GAAPResults |
Total revenue |
$ |
1,515,892 |
|
|
$ |
12,514 |
|
(1) |
|
$ |
1,528,406 |
|
|
$ |
1,293,636 |
|
|
$ |
9,442 |
|
(4) |
|
$ |
1,303,078 |
|
Operating income |
515,040 |
|
|
177,093 |
|
(2) |
|
692,133 |
|
|
476,574 |
|
|
141,442 |
|
(5) |
|
618,016 |
|
Operating profit margin |
34.0 |
% |
|
|
|
|
45.3 |
% |
|
36.8 |
% |
|
|
|
|
47.4 |
% |
Net income |
$ |
451,295 |
|
|
$ |
113,702 |
|
(3) |
|
$ |
564,997 |
|
|
$ |
419,375 |
|
|
$ |
94,510 |
|
(6) |
|
$ |
513,885 |
|
Earnings per share –
diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
$ |
5.25 |
|
|
|
|
|
$ |
6.58 |
|
|
$ |
4.88 |
|
|
|
|
|
$ |
5.98 |
|
Weighted average shares |
85,925 |
|
|
|
|
|
85,925 |
|
|
85,913 |
|
|
|
|
|
85,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $116.2 million of stock-based compensation
expense, $4.9 million of excess payroll taxes related to
stock-based awards, $36.9 million of amortization expense
associated with intangible assets acquired in business
combinations, $6.6 million of transaction expenses related to
business combinations and the $12.5 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 $61.2 million, adjustments related to the
transition tax associated with the Tax Cuts and Jobs Act of $1.8
million, and rabbi trust income of $0.4 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 $83.3 million of stock-based compensation
expense, $4.3 million of excess payroll taxes related to
stock-based awards, $40.8 million of amortization expense
associated with intangible assets acquired in business
combinations, $3.5 million of transaction expenses related to
business combinations and the $9.4 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, decreased for the related
income tax impact of $47.9 million and increased for a
measurement-period adjustment related to the Tax Cuts and Jobs Act
of $0.9 million and rabbi trust expense of $0.1 million.
|
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Forward-Looking Guidance |
Quarter Ending March 31, 2020 |
|
Earnings Per Share -Diluted |
U.S. GAAP
expectation |
$0.43 - $0.59 |
Adjustment to
exclude acquisition adjustments to deferred revenue |
$0.03 |
Adjustment to
exclude acquisition-related amortization |
$0.12 - $0.13 |
Adjustment to
exclude stock-based compensation |
$0.14 - $0.16 |
Non-GAAP
expectation |
$0.75 - $0.88 |
|
|
|
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Forward-Looking Guidance |
Year Ending December 31, 2020 |
|
Earnings Per Share -Diluted |
U.S. GAAP
expectation |
$4.36 - $5.02 |
Adjustment to
exclude acquisition adjustments to deferred revenue |
$0.07 |
Adjustment to
exclude acquisition-related amortization |
$0.48 - $0.51 |
Adjustment to
exclude stock-based compensation |
$1.14 - $1.25 |
Non-GAAP
expectation |
$6.19 - $6.71 |
|
|
Use of Non-GAAP Measures
We provide 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 our 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.
We use non-GAAP financial measures (a) to
evaluate our historical and prospective financial performance as
well as our performance relative to our 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 employees. In addition, many financial analysts that
follow us focus on and publish both historical results and future
projections based on non-GAAP financial measures. We believe that
it is in the best interest of our investors to provide this
information to analysts so that they accurately report the non-GAAP
financial information. Moreover, investors have historically
requested, and we have historically reported, these non-GAAP
financial measures as a means of providing consistent and
comparable information with past reports of financial results.
While we believe 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 our
competitors and may not be directly comparable to similarly titled
measures of our competitors due to potential differences in the
exact method of calculation. We compensate 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, we
have consummated acquisitions in order to support our 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 our business or cash flow, it adversely impacts our
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, we provide non-GAAP financial measures which
exclude the impact of the acquisition accounting adjustment. We
believe 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 us in our
financial and operational decision-making, and (b) compare our
past and future reports of financial results 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. We incur
amortization of intangible assets, included in our GAAP
presentation of amortization expense, related to various
acquisitions we have made. We exclude 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 we evaluate our
continuing operational performance 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 us after the acquisition. Accordingly, we do not
consider these expenses for purposes of evaluating our performance
during the applicable time period after the acquisition, and we
exclude such expenses when making decisions to allocate resources.
We believe 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 us in our
financial and operational decision-making, and (b) compare our
past reports of financial results as we have historically reported
these non-GAAP financial measures.
Stock-based compensation expense and its
related tax impact. We incur expense related to
stock-based compensation included in our GAAP presentation of cost
of software licenses; cost of maintenance and service; research and
development expense; and selling, general and administrative
expense. This non-GAAP adjustment also includes excess payroll tax
expense related to stock-based compensation. Stock-based
compensation expense (benefit) incurred in connection with our
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 and viewed as a
form of compensation, we exclude 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 we evaluate our continuing operational performance. We
similarly exclude income (expense) related to assets held in a
rabbi trust in connection with our deferred compensation plan.
Specifically, we exclude stock-based compensation and income
(expense) related to assets held in the deferred compensation plan
rabbi trust during our annual budgeting process and our quarterly
and annual assessments of our performance. The annual budgeting
process is the primary mechanism whereby we allocate resources to
various initiatives and operational requirements. Additionally, the
annual review by our board of directors during which it compares
our 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 our senior management and department managers,
charges related to stock-based compensation are excluded from
expenditure and profitability results. In fact, we record
stock-based compensation expense into a stand-alone cost center for
which no single operational manager is responsible or accountable.
In this way, we can 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. We believe that these non-GAAP financial measures are
useful to investors because they allow investors to
(a) evaluate our operating results and the effectiveness of
the methodology used by us to review our operating results, and
(b) review historical comparability in our financial reporting
as well as comparability with competitors' operating results.
Restructuring charges and the related
tax impact. We occasionally incur expenses for
restructuring our workforce included in our GAAP presentation of
cost of software licenses; cost of maintenance and service;
research and development expense; and selling, general and
administrative expense. We exclude 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 we evaluate our continuing operational performance, as we
generally do not incur these expenses as a part of our operations.
We believe that these non-GAAP financial measures are useful to
investors because they allow investors to (a) evaluate our
operating results and the effectiveness of the methodology used by
us to review our operating results, and (b) review historical
comparability in our financial reporting as well as comparability
with competitors' operating results.
Transaction costs related to business
combinations. We incur expenses for professional
services rendered in connection with business combinations, which
are included in our GAAP presentation of selling, general and
administrative expense. These expenses are generally not
tax-deductible. We exclude these acquisition-related transaction
expenses, derived from announced 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 we evaluate our continuing operational performance, as we
generally would not have otherwise incurred these expenses in the
periods presented as a part of our operations. We believe that
these non-GAAP financial measures are useful to investors because
they allow investors to (a) evaluate our operating results and
the effectiveness of the methodology used by us to review our
operating results, and (b) review historical comparability in
our financial reporting as well as comparability with competitors'
operating results.
Tax Cuts and Jobs Act. We
recorded impacts to our income tax provision related to the
enactment of the Tax Cuts and Jobs Act, specifically for the
transition tax related to unrepatriated cash and the impacts of the
tax rate change on net deferred tax assets. We exclude these
impacts for the purpose of calculating non-GAAP net income and
non-GAAP diluted earnings per share when we evaluate our continuing
operational performance, as (i) the charges are not expected to
recur as part of our normal operations and (ii) the charges
resulted from the extremely infrequent event of major U.S. tax
reform, the last such reform having occurred in 1986. We believe
that these non-GAAP financial measures are useful to investors
because they allow investors to (a) evaluate our operating
results and the effectiveness of the methodology used by us to
review our operating results, and (b) review historical
comparability in our financial reporting.
Non-GAAP financial measures are not in
accordance with, or an alternative for, GAAP. Our 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 our consolidated financial
statements prepared in accordance with GAAP.
We have 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
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 engineering
simulation. Through our strategy of 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 is
headquartered south of Pittsburgh, Pennsylvania, U.S.A. Visit
https://www.ansys.com for more information.
Forward-Looking Information
This document contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are statements that provide current
expectations or forecasts of future events based on certain
assumptions. Forward-looking statements are subject to risks,
uncertainties, and factors relating to our business which could
cause our actual results to differ materially from the expectations
expressed in or implied by such forward-looking statements.
Forward-looking statements use words such as “anticipate,”
“believe,” “could,” “estimate,” “expect,” “forecast,” “intend,”
“likely,” “may,” “outlook,” “plan,” “predict,” “project,” “should,”
“target,” or other words of similar meaning. Forward-looking
statements include those about market opportunity, including our
total addressable market. Risks, uncertainties, and factors that
could cause actual results to differ materially from those implied
by these forward-looking statements include: adverse changes in
global economic and/or political conditions; declines in our
customers’ businesses resulting in adverse changes in customer
procurement patterns; uncertainties regarding demand for our
products and services in the future and our customers’ acceptance
of new products; plans for future capital spending; investments in
complementary companies, products, services and technologies; our
ability to complete and successfully integrate our acquisitions and
realize the financial and business benefits of the transactions;
political, economic, and regulatory risks and uncertainties in the
countries and regions in which we operate; impacts from tariffs,
trade sanctions, export license requirements or other trade
barriers; the effect of changes in currency exchange rates and
changes in interest rates; potential variations in our sales
forecasts compared to actual sales; the volatility of our stock
price; failures or errors in our products and services; our
industry’s rapidly changing technology; the quality of our
products, including the strength of features, functionality and
integrated multi-physics capabilities; lease license volatility;
the investment of more resources in research and development than
anticipated; increased pricing pressure as a result of the
competitive environment in which we operate; our ability to recruit
and retain key personnel; our ability to protect our proprietary
technology; cybersecurity threats or other security breaches;
disclosure and misuse of employee or customer data whether as a
result of a cybersecurity incident or otherwise; implementation of
our new IT systems; investments in global sales and marketing
organizations and global business infrastructure; dependence on our
channel partners for the distribution of our products; increased
variability in our revenue due to the adoption of Accounting
Standards Codification 606; our reliance on high renewal rates for
annual lease and maintenance contracts; catastrophic events
including pandemics such as the coronavirus which may damage our
facilities or otherwise disrupt our business; operational
disruptions or the failure of our technological infrastructure;
periodic reorganization of our sales force; the repatriation of
previously taxed earnings in excess of working capital and capital
expenditure requirements; the outcome of contingencies, including
legal proceedings and government or regulatory investigations and
service tax audit cases; uncertainty regarding income tax estimates
in the jurisdictions in which we operate; the effect of changes in
tax laws and regulations in the jurisdictions in which we operate;
changes in accounting principles or standards; the uncertainty of
estimates relating to the impact on reported revenue related to the
acquisition accounting treatment of deferred revenue; and other
risks and uncertainties described in our reports filed from time to
time with the Securities and Exchange Commission. We caution
readers not to place undue reliance upon any such forward-looking
statements, which speak only as of the date they are made. We
undertake no obligation to publicly update forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
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 https://investors.ansys.com for more
information.
ANSS - F
Contact:
Investors:Annette Arribas,
IRC724.820.3700annette.arribas@ansys.com
Media:Amy Pietzak724.820.4367
amy.pietzak@ansys.com
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