ANSYS, Inc. (NASDAQ: ANSS), today reported second quarter 2021 GAAP
and non-GAAP revenue growth of 16% in reported currency, or 13% and
14% in constant currency, respectively, when compared to the second
quarter of 2020. For the second quarter of 2021, the Company
reported diluted earnings per share of $1.06 and $1.85 on a GAAP
and non-GAAP basis, respectively, compared to $1.11 and $1.55 on a
GAAP and non-GAAP basis, respectively, for the second quarter of
2020.
"Ansys delivered exceptionally strong results
for the second quarter and significantly beat our financial
guidance across our key metrics. Our broad-based growth validates
our strategy of Pervasive Simulation, and our product leadership
and ongoing go-to-market momentum gives us increased confidence in
our business and ability to execute against our goals. In July, we
extended our technology leadership with Ansys 2021 R2, which
introduced breakthrough technologies and innovative capabilities
across our product portfolio. These enhancements are bolstering the
value of Ansys simulation for our customers by providing them
greater engineering insight with enhanced speed and scalability,”
said Ajei Gopal, Ansys president and CEO.
Nicole Anasenes, Ansys CFO, stated, “Our
outstanding performance was highlighted by 25% ACV growth in the
second quarter, driving our first half 2021 ACV growth to 16%.
Given the strength and momentum in our core business year-to-date,
coupled with our sales pipeline, I am confident in our ability to
achieve our increased full-year 2021 guidance.”
/ Financial
Results
Ansys' second quarter and year-to-date (YTD)
2021 and 2020 financial results are presented below. The 2021 and
2020 non-GAAP results exclude the income statement effects of the
acquisition accounting adjustments to deferred revenue, stock-based
compensation, amortization of acquired intangible assets, and
transaction expenses related to business combinations.
GAAP and non-GAAP results are as follows:
|
GAAP |
|
Non-GAAP |
(in millions, except percentages and per share
data) |
Q2 QTD 2021 |
|
Q2 QTD 2020 |
|
% Change |
|
Q2 QTD 2021 |
|
Q2 QTD 2020 |
|
% Change |
Revenue |
$ |
446.7 |
|
|
$ |
385.7 |
|
|
16 |
|
% |
|
$ |
452.6 |
|
|
$ |
389.7 |
|
|
16 |
% |
Net
income |
$ |
93.7 |
|
|
$ |
96.6 |
|
|
(3 |
) |
% |
|
$ |
162.6 |
|
|
$ |
134.3 |
|
|
21 |
% |
Diluted
earnings per share |
$ |
1.06 |
|
|
$ |
1.11 |
|
|
(5 |
) |
% |
|
$ |
1.85 |
|
|
$ |
1.55 |
|
|
19 |
% |
Operating profit margin |
26.1 |
% |
|
29.3 |
% |
|
|
|
41.7 |
% |
|
42.9 |
% |
|
|
|
GAAP |
|
Non-GAAP |
(in millions, except percentages and per share
data) |
Q2 YTD 2021 |
|
Q2 YTD 2020 |
|
% Change |
|
Q2 YTD 2021 |
|
Q2 YTD 2020 |
|
% Change |
Revenue |
$ |
809.9 |
|
|
$ |
690.6 |
|
|
17 |
% |
|
$ |
824.7 |
|
|
$ |
698.6 |
|
|
18 |
% |
Net
income |
$ |
166.1 |
|
|
$ |
142.6 |
|
|
16 |
% |
|
$ |
261.5 |
|
|
$ |
206.6 |
|
|
27 |
% |
Diluted
earnings per share |
$ |
1.89 |
|
|
$ |
1.64 |
|
|
15 |
% |
|
$ |
2.97 |
|
|
$ |
2.37 |
|
|
25 |
% |
Operating profit margin |
20.6 |
% |
|
21.3 |
% |
|
|
|
38.0 |
% |
|
36.9 |
% |
|
|
The non-GAAP financial results highlighted
above, and the non-GAAP financial outlook for 2021 discussed below,
represent non-GAAP financial measures. Reconciliations of these
measures to the appropriate GAAP measures, for the three and six
months ended June 30, 2021 and 2020, and for the 2021
financial outlook, can be found in the condensed financial
information included in this release.
/ Other Performance
Metrics
(in millions, except percentages) |
Q2 QTD 2021 |
|
Q2 QTD 2020 |
|
% Change |
|
% Change in Constant Currency |
ACV |
$ |
430.5 |
|
|
$ |
344.4 |
|
|
25 |
|
% |
|
23 |
% |
Operating cash flows |
$ |
118.9 |
|
|
$ |
131.6 |
|
|
(10 |
) |
% |
|
|
(in millions, except percentages) |
Q2 YTD 2021 |
|
Q2 YTD 2020 |
|
% Change |
|
% Change in Constant Currency |
ACV |
$ |
749.9 |
|
|
$ |
645.5 |
|
|
16 |
% |
|
14 |
% |
Operating cash flows |
$ |
290.0 |
|
|
$ |
279.0 |
|
|
4 |
% |
|
|
ACV is a metric the Company uses to better understand the
business. 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 2021
Financial Outlook
The Company's third quarter and fiscal year 2021
revenue and diluted earnings per share guidance is provided below.
The Company is also providing its fiscal year 2021 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 expenses.
The financial guidance below reflects the
Company's current estimates of the impacts of the global pandemic
and trade restrictions. This guidance is based on the Company's
evaluation of factual information it has determined to be relevant
and the application of certain assumptions made by the Company.
Please refer to the Company's prepared remarks document for
essential additional information regarding the Company's financial
guidance, including its assumptions regarding overall business
dynamics and the economic impacts of COVID-19 and trade
restrictions.
/ Third Quarter 2021
Guidance
The Company currently expects the following for the quarter
ending September 30, 2021:
(in millions, except percentages and per share
data) |
GAAP |
|
Non-GAAP |
Revenue |
|
$395.8 |
|
- |
|
$420.8 |
|
|
|
$400.0 |
|
- |
|
$425.0 |
|
Revenue Growth Rate |
|
7.9% |
|
- |
|
14.7% |
|
|
|
8.4% |
|
- |
|
15.1% |
|
Revenue Growth Rate — Constant Currency |
|
7.0% |
|
- |
|
13.8% |
|
|
|
7.5% |
|
- |
|
14.2% |
|
Diluted earnings per share |
|
$0.58 |
|
- |
|
$0.80 |
|
|
|
$1.22 |
|
- |
|
$1.39 |
|
/ Fiscal Year 2021
Guidance
The Company currently expects the following for the fiscal year
ending December 31, 2021:
(in millions, except percentages and per share
data) |
GAAP |
|
Non-GAAP |
Revenue |
|
$1,818.9 |
|
- |
|
$1,868.9 |
|
|
|
$1,840.0 |
|
- |
|
$1,890.0 |
|
Revenue Growth Rate |
|
8.2% |
|
- |
|
11.2% |
|
|
|
8.5% |
|
- |
|
11.5% |
|
Revenue Growth Rate — Constant Currency |
|
6.9% |
|
- |
|
9.9% |
|
|
|
7.3% |
|
- |
|
10.2% |
|
Diluted earnings per share |
|
$4.51 |
|
- |
|
$4.91 |
|
|
|
$6.85 |
|
- |
|
$7.15 |
|
The difference between the GAAP and non-GAAP
revenue guidance presented above is a result of the expected impact
of the application of the fair value provisions applicable to the
accounting for business combinations in the amount of $4.2 million
for the third quarter and $21.1 million for FY 2021.
(in millions, except percentages) |
Other Financial Metrics |
ACV |
|
$1,800.0 |
- |
$1,845.0 |
|
ACV Growth Rate |
|
11.4% |
- |
14.1% |
|
ACV Growth Rate — Constant Currency |
|
10.8% |
- |
13.5% |
|
Operating cash flows |
|
$495.0 |
- |
$535.0 |
|
/ Conference Call
Information
Ansys will hold a conference call at
8:30 a.m. Eastern Time on August 5, 2021 to
discuss second 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
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.
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 10156465. The archived webcast can be
accessed, along with other financial information, on Ansys' website
at
https://investors.ansys.com/events-and-presentations/events-calendar.
/ GAAP Financial
Statements
ANSYS, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance
Sheets |
(Unaudited) |
(in thousands) |
June 30, 2021 |
|
December 31, 2020 |
ASSETS: |
|
|
|
Cash & short-term investments |
$ |
958,208 |
|
|
$ |
913,151 |
|
Accounts receivable, net |
449,664 |
|
|
537,564 |
|
Goodwill |
3,110,736 |
|
|
3,038,306 |
|
Other intangibles, net |
689,398 |
|
|
694,865 |
|
Other assets |
682,766 |
|
|
756,704 |
|
Total assets |
$ |
5,890,772 |
|
|
$ |
5,940,590 |
|
LIABILITIES & STOCKHOLDERS' EQUITY: |
|
|
|
Current deferred revenue |
$ |
338,396 |
|
|
$ |
372,061 |
|
Long-term debt |
753,327 |
|
|
798,118 |
|
Other liabilities |
548,831 |
|
|
672,539 |
|
Stockholders' equity |
4,250,218 |
|
|
4,097,872 |
|
Total liabilities & stockholders' equity |
$ |
5,890,772 |
|
|
$ |
5,940,590 |
|
ANSYS, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of Income |
(Unaudited) |
|
Three Months Ended |
|
Six Months Ended |
(in thousands, except per share data) |
June 30, 2021 |
|
June 30, 2020 |
|
June 30, 2021 |
|
June 30, 2020 |
Revenue: |
|
|
|
|
|
|
|
Software licenses |
$ |
214,822 |
|
|
|
$ |
169,341 |
|
|
|
$ |
347,426 |
|
|
|
$ |
257,171 |
|
|
Maintenance and service |
231,832 |
|
|
|
216,320 |
|
|
|
462,454 |
|
|
|
433,475 |
|
|
Total revenue |
446,654 |
|
|
|
385,661 |
|
|
|
809,880 |
|
|
|
690,646 |
|
|
Cost of sales: |
|
|
|
|
|
|
|
Software licenses |
8,065 |
|
|
|
8,511 |
|
|
|
15,671 |
|
|
|
13,437 |
|
|
Amortization |
15,025 |
|
|
|
9,764 |
|
|
|
29,974 |
|
|
|
19,316 |
|
|
Maintenance and service |
41,068 |
|
|
|
35,585 |
|
|
|
80,616 |
|
|
|
71,223 |
|
|
Total cost of sales |
64,158 |
|
|
|
53,860 |
|
|
|
126,261 |
|
|
|
103,976 |
|
|
Gross profit |
382,496 |
|
|
|
331,801 |
|
|
|
683,619 |
|
|
|
586,670 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
160,410 |
|
|
|
128,698 |
|
|
|
306,625 |
|
|
|
259,220 |
|
|
Research and development |
100,879 |
|
|
|
86,133 |
|
|
|
201,358 |
|
|
|
172,245 |
|
|
Amortization |
4,434 |
|
|
|
4,163 |
|
|
|
8,841 |
|
|
|
8,325 |
|
|
Total operating expenses |
265,723 |
|
|
|
218,994 |
|
|
|
516,824 |
|
|
|
439,790 |
|
|
Operating income |
116,773 |
|
|
|
112,807 |
|
|
|
166,795 |
|
|
|
146,880 |
|
|
Interest income |
486 |
|
|
|
934 |
|
|
|
1,003 |
|
|
|
3,709 |
|
|
Interest expense |
(3,336 |
) |
|
|
(3,040 |
) |
|
|
(6,651 |
) |
|
|
(6,691 |
) |
|
Other income, net |
14,937 |
|
|
|
1,884 |
|
|
|
15,336 |
|
|
|
2,011 |
|
|
Income before income tax provision |
128,860 |
|
|
|
112,585 |
|
|
|
176,483 |
|
|
|
145,909 |
|
|
Income tax provision |
35,144 |
|
|
|
16,021 |
|
|
|
10,369 |
|
|
|
3,281 |
|
|
Net income |
$ |
93,716 |
|
|
|
$ |
96,564 |
|
|
|
$ |
166,114 |
|
|
|
$ |
142,628 |
|
|
Earnings per share – basic: |
|
|
|
|
|
|
|
Earnings per share |
$ |
1.08 |
|
|
|
$ |
1.13 |
|
|
|
$ |
1.91 |
|
|
|
$ |
1.66 |
|
|
Weighted average shares |
87,168 |
|
|
|
85,651 |
|
|
|
86,988 |
|
|
|
85,724 |
|
|
Earnings per share – diluted: |
|
|
|
|
|
|
|
Earnings per share |
$ |
1.06 |
|
|
|
$ |
1.11 |
|
|
|
$ |
1.89 |
|
|
|
$ |
1.64 |
|
|
Weighted average shares |
88,053 |
|
|
|
86,934 |
|
|
|
88,019 |
|
|
|
87,152 |
|
|
/ Reconciliations of
GAAP to Non-GAAP Measures (Unaudited)
|
Three Months Ended |
|
June 30, 2021 |
(in thousands, except percentages and per share
data) |
Revenue |
|
Gross Profit |
|
% |
|
Operating Income |
|
% |
|
Net Income |
|
EPS - Diluted1 |
Total GAAP |
$ |
446,654 |
|
|
$ |
382,496 |
|
|
85.6 |
% |
|
$ |
116,773 |
|
|
26.1 |
% |
|
$ |
93,716 |
|
|
|
$ |
1.06 |
|
|
Acquisition accounting for deferred revenue |
5,896 |
|
|
5,896 |
|
|
0.2 |
% |
|
5,896 |
|
|
0.9 |
% |
|
5,896 |
|
|
|
0.07 |
|
|
Stock-based compensation expense |
— |
|
|
3,519 |
|
|
0.8 |
% |
|
42,885 |
|
|
9.5 |
% |
|
42,885 |
|
|
|
0.48 |
|
|
Excess payroll taxes related to stock-based awards |
— |
|
|
182 |
|
|
0.1 |
% |
|
2,319 |
|
|
0.6 |
% |
|
2,319 |
|
|
|
0.03 |
|
|
Amortization of intangible assets from acquisitions |
— |
|
|
15,025 |
|
|
3.3 |
% |
|
19,459 |
|
|
4.3 |
% |
|
19,459 |
|
|
|
0.22 |
|
|
Transaction expenses related to business combinations |
— |
|
|
— |
|
|
— |
% |
|
1,321 |
|
|
0.3 |
% |
|
1,321 |
|
|
|
0.02 |
|
|
Adjustment for income tax effect |
— |
|
|
— |
|
|
— |
% |
|
— |
|
|
— |
% |
|
(2,997 |
) |
|
|
(0.03 |
) |
|
Total non-GAAP |
$ |
452,550 |
|
|
$ |
407,118 |
|
|
90.0 |
% |
|
$ |
188,653 |
|
|
41.7 |
% |
|
$ |
162,599 |
|
|
|
$ |
1.85 |
|
|
1 Diluted weighted average shares were 88,053.
|
Three Months Ended |
|
June 30, 2020 |
(in thousands, except percentages and per share
data) |
Revenue |
|
Gross Profit |
|
% |
|
Operating Income |
|
% |
|
Net Income |
|
EPS - Diluted1 |
Total GAAP |
$ |
385,661 |
|
|
$ |
331,801 |
|
|
86.0 |
% |
|
$ |
112,807 |
|
|
29.3 |
% |
|
$ |
96,564 |
|
|
|
$ |
1.11 |
|
|
Acquisition accounting for deferred revenue |
4,040 |
|
|
4,040 |
|
|
0.2 |
% |
|
4,040 |
|
|
0.7 |
% |
|
4,040 |
|
|
|
0.05 |
|
|
Stock-based compensation expense |
— |
|
|
3,464 |
|
|
0.8 |
% |
|
34,130 |
|
|
8.9 |
% |
|
34,130 |
|
|
|
0.40 |
|
|
Excess payroll taxes related to stock-based awards |
— |
|
|
166 |
|
|
0.1 |
% |
|
1,876 |
|
|
0.4 |
% |
|
1,876 |
|
|
|
0.02 |
|
|
Amortization of intangible assets from acquisitions |
— |
|
|
9,764 |
|
|
2.5 |
% |
|
13,927 |
|
|
3.6 |
% |
|
13,927 |
|
|
|
0.16 |
|
|
Transaction expenses related to business combinations |
— |
|
|
— |
|
|
— |
% |
|
309 |
|
|
— |
% |
|
309 |
|
|
|
— |
|
|
Rabbi trust (income) / expense |
— |
|
|
— |
|
|
— |
% |
|
— |
|
|
— |
% |
|
(1 |
) |
|
|
— |
|
|
Adjustment for income tax effect |
— |
|
|
— |
|
|
— |
% |
|
— |
|
|
— |
% |
|
(16,518 |
) |
|
|
(0.19 |
) |
|
Total non-GAAP |
$ |
389,701 |
|
|
$ |
349,235 |
|
|
89.6 |
% |
|
$ |
167,089 |
|
|
42.9 |
% |
|
$ |
134,327 |
|
|
|
$ |
1.55 |
|
|
1 Diluted weighted average shares were 86,934.
|
Six Months Ended |
|
June 30, 2021 |
(in thousands, except percentages and per share
data) |
Revenue |
|
Gross Profit |
|
% |
|
Operating Income |
|
% |
|
Net Income |
|
EPS - Diluted1 |
Total GAAP |
$ |
809,880 |
|
|
$ |
683,619 |
|
|
84.4 |
% |
|
$ |
166,795 |
|
|
20.6 |
% |
|
$ |
166,114 |
|
|
|
$ |
1.89 |
|
|
Acquisition accounting for deferred revenue |
14,819 |
|
|
14,819 |
|
|
0.3 |
% |
|
14,819 |
|
|
1.4 |
% |
|
14,819 |
|
|
|
0.17 |
|
|
Stock-based compensation expense |
— |
|
|
7,081 |
|
|
0.9 |
% |
|
78,004 |
|
|
9.5 |
% |
|
78,004 |
|
|
|
0.88 |
|
|
Excess payroll taxes related to stock-based awards |
— |
|
|
1,047 |
|
|
0.1 |
% |
|
11,454 |
|
|
1.4 |
% |
|
11,454 |
|
|
|
0.13 |
|
|
Amortization of intangible assets from acquisitions |
— |
|
|
29,974 |
|
|
3.6 |
% |
|
38,815 |
|
|
4.7 |
% |
|
38,815 |
|
|
|
0.44 |
|
|
Transaction expenses related to business combinations |
— |
|
|
— |
|
|
— |
% |
|
3,291 |
|
|
0.4 |
% |
|
3,291 |
|
|
|
0.04 |
|
|
Adjustment for income tax effect |
— |
|
|
— |
|
|
— |
% |
|
— |
|
|
— |
% |
|
(50,976 |
) |
|
|
(0.58 |
) |
|
Total non-GAAP |
$ |
824,699 |
|
|
$ |
736,540 |
|
|
89.3 |
% |
|
$ |
313,178 |
|
|
38.0 |
% |
|
$ |
261,521 |
|
|
|
$ |
2.97 |
|
|
1 Diluted weighted average shares were 88,019.
|
Six Months Ended |
|
June 30, 2020 |
(in thousands, except percentages and per share
data) |
Revenue |
|
Gross Profit |
|
% |
|
Operating Income |
|
% |
|
Net Income |
|
EPS - Diluted1 |
Total GAAP |
$ |
690,646 |
|
|
$ |
586,670 |
|
|
84.9 |
% |
|
$ |
146,880 |
|
|
21.3 |
% |
|
$ |
142,628 |
|
|
|
$ |
1.64 |
|
|
Acquisition accounting for deferred revenue |
7,952 |
|
|
7,952 |
|
|
0.2 |
% |
|
7,952 |
|
|
0.9 |
% |
|
7,952 |
|
|
|
0.09 |
|
|
Stock-based compensation expense |
— |
|
|
6,330 |
|
|
1.0 |
% |
|
65,071 |
|
|
9.4 |
% |
|
65,071 |
|
|
|
0.75 |
|
|
Excess payroll taxes related to stock-based awards |
— |
|
|
689 |
|
|
0.1 |
% |
|
8,859 |
|
|
1.2 |
% |
|
8,859 |
|
|
|
0.10 |
|
|
Amortization of intangible assets from acquisitions |
— |
|
|
19,316 |
|
|
2.7 |
% |
|
27,641 |
|
|
4.0 |
% |
|
27,641 |
|
|
|
0.32 |
|
|
Transaction expenses related to business combinations |
— |
|
|
— |
|
|
— |
% |
|
1,259 |
|
|
0.1 |
% |
|
1,259 |
|
|
|
0.01 |
|
|
Rabbi trust (income) / expense |
— |
|
|
— |
|
|
— |
% |
|
— |
|
|
— |
% |
|
(5 |
) |
|
|
— |
|
|
Adjustment for income tax effect |
— |
|
|
— |
|
|
— |
% |
|
— |
|
|
— |
% |
|
(46,773 |
) |
|
|
(0.54 |
) |
|
Total non-GAAP |
$ |
698,598 |
|
|
$ |
620,957 |
|
|
88.9 |
% |
|
$ |
257,662 |
|
|
36.9 |
% |
|
$ |
206,632 |
|
|
|
$ |
2.37 |
|
|
1 Diluted weighted average shares were 87,152.
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Forward-Looking Guidance |
Quarter Ending September 30, 2021 |
|
Earnings Per Share - Diluted |
U.S. GAAP
expectation |
$0.58 |
|
- |
|
$0.80 |
|
Exclusions before tax: |
|
|
|
|
Acquisition adjustments to deferred revenue |
$0.05 |
|
Acquisition-related amortization |
$0.21 |
|
Stock-based compensation and related excess payroll tax |
$0.48 |
|
- |
|
$0.55 |
|
Adjustment for income tax effect |
|
($0.15) |
|
- |
|
($0.17) |
|
Non-GAAP expectation |
$1.22 |
|
- |
|
$1.39 |
|
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Forward-Looking Guidance |
Year Ending December 31, 2021 |
|
Earnings Per Share - Diluted |
U.S. GAAP
expectation |
$4.51 |
|
- |
|
$4.91 |
|
Exclusions before tax: |
|
|
|
|
Acquisition adjustments to deferred revenue |
$0.24 |
|
Acquisition-related amortization |
$0.84 |
|
- |
|
$0.87 |
|
Stock-based compensation and related excess payroll tax |
$1.97 |
|
- |
|
$2.08 |
|
Transaction expenses related to business combinations |
$0.04 |
|
Adjustment for income tax effect |
|
($0.85) |
|
- |
|
($0.89) |
|
Non-GAAP expectation |
$6.85 |
|
- |
|
$7.15 |
|
/ Use of Non-GAAP
Measures
We provide non-GAAP revenue, non-GAAP gross
profit, non-GAAP gross profit margin, 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. 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 lease licenses and
software maintenance contracts are renewed in future periods.
Amortization of intangible assets from
acquisitions. 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 for the purpose of calculating non-GAAP gross profit,
non-GAAP gross profit margin, 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. We incur expense related to stock-based
compensation included in our GAAP presentation of 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
gross profit, non-GAAP gross profit margin, 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.
Transaction expenses 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.
Non-GAAP tax provision. We
utilize a normalized non-GAAP annual effective tax rate (AETR) to
calculate non-GAAP measures. This methodology provides better
consistency across interim reporting periods by eliminating the
effects of non-recurring items and aligning the non-GAAP tax rate
with our expected geographic earnings mix. To project this rate, we
analyzed our historic and projected non-GAAP earnings mix by
geography along with other factors such as our current tax
structure, recurring tax credits and incentives, and expected tax
positions. On an annual basis we will re-evaluate this rate for
significant items that may materially affect our projections.
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 |
Gross Profit |
Non-GAAP Gross Profit |
Gross Profit Margin |
Non-GAAP Gross Profit
Margin |
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. 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 update
forward-looking statements, whether as a result of new information,
future events or otherwise.
The following risks, among others, could cause actual results to
differ materially from those described in any forward-looking
statements:
- current and future impacts of a natural disaster or
catastrophe, including the COVID-19 pandemic, on the global economy
and our business and condensed consolidated financial statements;
adverse changes in global economic and/or political conditions; and
political, economic, regulatory and public health and safety risks
and uncertainties in the countries and regions in which we
operate;
- declines in our customers’ businesses resulting in adverse
changes in procurement patterns; disruptions in accounts receivable
and cash flow due to customers’ liquidity challenges and commercial
deterioration; uncertainties regarding demand for our products and
services in the future and our customers’ acceptance of new
products; and delays or declines in anticipated sales due to
reduced or altered sales and marketing interactions with
customers;
- impacts from tariffs, trade sanctions, export license
requirements or other trade barriers; disruptions in the global
economy and financial markets that may limit or delay availability
of credit under existing or new credit facilities, or that may
limit our ability to obtain credit or financing on acceptable terms
or at all; and the effect of changes in currency exchange rates or
interest rates;
- our ability to protect our proprietary technology;
cybersecurity threats or other security breaches, including in
relation to an increased level of our activity that is occurring
from remote global off-site locations; and disclosure and misuse of
employee or customer data whether as a result of a cybersecurity
incident or otherwise;
- the quality of our products, including the strength of
features, functionality and integrated multi-physics capabilities;
our ability to develop and market new products to address the
industry’s rapidly changing technology; failures or errors in our
products and services; and increased pricing pressure as a result
of the competitive environment in which we operate;
- plans for future capital spending; the extent of corporate
benefits from such spending including with respect to customer
relationship management; and higher than anticipated costs for
research and development or slowdown in our research and
development activities;
- 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; and the impact indebtedness incurred in
connection with any acquisition could have on our operations;
- investments in global sales and marketing organizations and
global business infrastructure; and dependence on our channel
partners for the distribution of our products;
- our ability to recruit and retain key personnel including any
delays in recruitment caused by restrictions on travel and in
person interactions; and the absence of key personnel or teams due
to illness or recuperation;
- increased volatility in our revenue due to the timing, duration
and value of multi-year lease contracts; our reliance on high
renewal rates for annual lease and maintenance contracts; the
volatility of our stock price; the potential variations in our
sales forecasts compared to actual sales; and the uncertainty of
estimates associated with the acquisition accounting treatment of
deferred revenue;
- operational disruptions generally or specifically in connection
with transitions to and from remote work environments; and the
failure of our technological infrastructure or those of the service
providers upon whom we rely including for infrastructure and cloud
services;
- our and our channel partners’ ability to comply with laws and
regulations in relevant jurisdictions; the outcome of
contingencies, including legal proceedings, government or
regulatory investigations and service tax audit cases;
- uncertainty regarding income tax estimates in the jurisdictions
in which we operate; and the effect of changes in tax laws and
regulations in the jurisdictions in which we operate; and
- other risks and uncertainties described in our reports filed
from time to time with the Securities and Exchange Commission.
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: |
|
Kelsey DeBriyn |
|
|
724.820.3927 |
|
|
kelsey.debriyn@ansys.com |
Media: |
|
Mary Kate Joyce |
|
|
724.820.4368 |
|
|
marykate.joyce@ansys.com |
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