Altair Announces Fourth Quarter and Full Year 2021 Financial Results

Rhea-AI Summary

Altair (Nasdaq: ALTR) reported a strong financial performance for 2021, with software product revenue growth of 15.8%, reaching $453.7 million. Total revenue for the year was $532.2 million, up from $469.9 million in 2020. Despite a net loss of $(8.8) million, adjusted EBITDA improved to $85.3 million. In Q4 2021, software product revenue increased to $122.4 million, while total revenue grew to $140.8 million. The company projects Q1 2022 software product revenue between $134.0 million and $137.0 million.

Positive

• Software product revenue increased 15.8% year-over-year.
• Adjusted EBITDA rose to $85.3 million for the full year.
• Non-GAAP net income was $57.6 million, an increase from $37.2 million in 2020.
• Free cash flow improved to $53.8 million compared to $26.8 million in 2020.

Negative

• Net loss of $(8.8) million for the full year, though improved from $(10.5) million in 2020.
• Diluted net loss per share was $(0.12), compared to $(0.14) in 2020.

Full Year 2021 Software Product Revenue Grew 15.8%, Exceeding Expectations

TROY, Mich., Feb. 24, 2022 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence today released its financial results for the fourth quarter and full year ended December 31, 2021.

“Altair had an excellent fourth quarter and full year 2021, highlighted by year-on-year software product revenue growth of 15.8%,” said James Scapa, Founder, Chairman and Chief Executive Officer of Altair. “Our vision for driving smarter decisions with computational science and artificial intelligence is resonating with customers, our products continue to gain market share, and we are expanding our footprint across all verticals.”

“Our fourth quarter 2021 financial performance was a fantastic end to an impressive year, with revenue and profit exceeding expectations and carrying momentum into 2022,” said Matt Brown, Chief Financial Officer of Altair. “We achieved software revenue growth in the mid-teens in 2021, while significantly improving our profitability, putting us well on track for our medium and long-term goals.”

Fourth Quarter 2021 Financial Highlights

• Software product revenue was $122.4 million compared to $113.6 million for the fourth quarter of 2020.
• Total revenue was $140.8 million compared to $133.4 million for the fourth quarter of 2020.
• Net loss was $(1.4) million compared to net income of $2.2 million for the fourth quarter of 2020. Diluted net loss per share was $(0.02) based on 79.0 million diluted weighted average common shares outstanding, compared to diluted net income per share of $0.03 for the fourth quarter of 2020, based on 78.5 million diluted weighted average common shares outstanding.
• Adjusted EBITDA was $24.0 million, compared to $21.7 million for the fourth quarter of 2020.
• Non-GAAP net income was $16.4 million, compared to non-GAAP net income of $14.5 million for the fourth quarter of 2020. Non-GAAP diluted net income per share was $0.19 based on 87.3 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.17 for the fourth quarter of 2020, based on 83.0 million non-GAAP diluted common shares outstanding.
• Free cash flow was $5.0 million, compared to $3.4 million for the fourth quarter of 2020.

Full Year 2021 Financial Highlights

• Software product revenue was $453.7 million compared to $391.7 million for the full year of 2020.
• Total revenue was $532.2 million compared to $469.9 million for the full year of 2020.
• Net loss was $(8.8) million compared to net loss of $(10.5) million for the full year of 2020. Diluted net loss per share was $(0.12) based on 76.2 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.14) for the full year of 2020, based on 73.2 million diluted weighted average common shares outstanding.
• Adjusted EBITDA was $85.3 million, compared to $57.3 million for the full year of 2020.
• Non-GAAP net income was $57.6 million, compared to non-GAAP net income of $37.2 million for the full year of 2020. Non-GAAP diluted net income per share was $0.66 based on 87.3 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.45 for the full year of 2020, based on 83.0 million non-GAAP diluted common shares outstanding.
• Free cash flow was $53.8 million, compared to $26.8 million for the full year of 2020.

Business Outlook

Based on information available as of today, Altair is issuing guidance for the first quarter and full year 2022.

(in millions)		First Quarter 2022								Full Year 2022
Software Product Revenue		$	134.0		to	$	137.0			$	496.0		to	$	508.0
Total Revenue		$	152.0			$	155.0			$	568.0			$	582.0
Net Income (Loss)		$	5.6			$	7.5			$	(23.1	)		$	(13.4	)
Non-GAAP Net Income		$	25.2			$	26.6			$	65.3			$	72.7
Adjusted EBITDA		$	36.0			$	38.0			$	96.0			$	106.0
Net Cash Provided by Operating Activities										$	12.2			$	19.2
Free Cash Flow (1)										$	5.0			$	12.0

(1)   Includes $65.9 million payment in January 2022 for legal judgement acquired in December 2021.

Conference Call Information

What:	Altair’s Fourth Quarter and Full Year 2021 Financial Results Conference Call
When:	Thursday, February 24, 2022
Time:	5 p.m. ET
Live Call:	(866) 754-5204, Domestic
	(636) 812-6621, International
Replay:	(855) 859-2056, Conference ID 8892192, Domestic (404) 537-3406, Conference ID 8892192, International
Webcast:	http://investor.altair.com  (live & replay)

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: 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.

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.

Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, restructuring charges, asset impairment charges, non-cash interest expense, other special items as identified by management and described elsewhere in this press release, and the impact of non-GAAP tax rate to income tax expense, which approximates our tax rate excluding discrete items and other specific events that can fluctuate from period to period.

Non-GAAP diluted common shares includes total outstanding shares plus outstanding equity awards under the Company’s equity award plans.

Free cash flow consists of cash flow from operations less capital expenditures.

Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

About Altair

Altair is a global leader in computational science and artificial intelligence (AI) that provides software and cloud solutions in the areas of simulation, high-performance computing (HPC), data analytics and AI. Altair enables organizations across all industries to compete more effectively and drive smarter decisions in an increasingly connected world – all while creating a greener, more sustainable future. To learn more, please visit www.altair.com.

Cautionary Language Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the fourth quarter and full year 2021, our statements regarding our expectation for 2022, and our reconciliations of projected non-GAAP financial measures.  These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in our forward-looking statements due to a number of factors, including but not limited to, the risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.

Media Relations
Dave Simon
Altair
248-614-2400 ext. 332
dls@altair.com

Investor Relations
The Blueshirt Group
Monica Gould
212-871-3927
ir@altair.com

Lindsay Savarese
212-331-8417
ir@altair.com

ALTAIR ENGINERING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

		December 31,
(in thousands)		2021				2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	413,743			$	241,221
Accounts receivable, net			137,561				117,878
Income tax receivable			9,388				6,736
Prepaid expenses and other current assets			27,529				21,100
Total current assets			588,221				386,935
Property and equipment, net			40,478				36,332
Operating lease right of use assets			28,494				33,526
Goodwill			370,178				264,481
Other intangible assets, net			99,057				76,114
Deferred tax assets			8,495				7,125
Other long-term assets			28,352				25,389
TOTAL ASSETS		$	1,163,275			$	829,902
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current portion of long-term debt		$	—			$	29,962
Accounts payable			6,647				8,594
Accrued compensation and benefits			42,307				34,772
Current portion of operating lease liabilities			9,933				10,331
Other accrued expenses and current liabilities			122,226				31,404
Deferred revenue			93,160				85,691
Convertible senior notes, net			199,705				—
Total current liabilities			473,978				200,754
Convertible senior notes, net			—				188,300
Operating lease liabilities, net of current portion			19,550				24,323
Deferred revenue, non-current			12,872				9,388
Other long-term liabilities			42,894				27,767
TOTAL LIABILITIES			549,294				450,532
Commitments and contingencies
MEZZANINE EQUITY			784				784
STOCKHOLDERS’ EQUITY
Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued or outstanding			—				—
Common stock ($0.0001 par value)
Class A common stock, authorized 513,797 shares, issued and outstanding 51,524 and 44,216 shares as of December 31, 2021 and 2020, respectively			5				4
Class B common stock, authorized 41,203 shares, issued and outstanding 27,745 and 30,111 shares as of December 31, 2021 and 2020, respectively			3				3
Additional paid-in capital			724,226				474,669
Accumulated deficit			(102,087	)			(93,293	)
Accumulated other comprehensive loss			(8,950	)			(2,797	)
TOTAL STOCKHOLDERS’ EQUITY			613,197				378,586
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY		$	1,163,275			$	829,902

ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

		For the Three Months Ended December 31,								For the Year Ended December 31,
(in thousands, except per share data)		2021				2020				2021				2020
Revenue
License		$	94,178			$	76,381			$	324,808			$	259,965
Maintenance and other services			28,180				37,244				128,938				131,746
Total software			122,358				113,625				453,746				391,711
Software related services			8,594				7,906				31,823				26,454
Total software and related services			130,952				121,531				485,569				418,165
Client engineering services			8,277				9,934				39,282				44,320
Other			1,568				1,976				7,328				7,436
Total revenue			140,797				133,441				532,179				469,921
Cost of revenue
License			6,223				6,786				19,929				19,637
Maintenance and other services			12,494				10,105				47,862				38,688
Total software *			18,717				16,891				67,791				58,325
Software related services			5,645				6,102				23,205				21,243
Total software and related services			24,362				22,993				90,996				79,568
Client engineering services			6,547				8,067				31,710				35,684
Other			1,888				1,631				6,960				6,053
Total cost of revenue			32,797				32,691				129,666				121,305
Gross profit			108,000				100,750				402,513				348,616
Operating expenses:
Research and development *			38,177				34,966				151,049				126,081
Sales and marketing *			38,182				30,537				132,750				111,440
General and administrative *			23,517				22,933				91,500				86,432
Amortization of intangible assets			4,433				4,986				18,357				16,376
Other operating (income) loss, net			(956	)			5				(3,482	)			(3,426	)
Total operating expenses			103,353				93,427				390,174				336,903
Operating income			4,647				7,323				12,339				11,713
Interest expense			3,067				3,008				12,065				11,598
Other (income) loss, net			(1,105	)			(65	)			562				(1,917	)
Income (loss) before income taxes			2,685				4,380				(288	)			2,032
Income tax expense			4,082				2,182				8,506				12,532
Net (loss) income		$	(1,397	)		$	2,198			$	(8,794	)		$	(10,500	)
(Loss) income per share:
Net (loss) income per share attributable to common stockholders, basic		$	(0.02	)		$	0.03			$	(0.12	)		$	(0.14	)
Net (loss) income per share attributable to common stockholders, diluted		$	(0.02	)		$	0.03			$	(0.12	)		$	(0.14	)
Weighted average shares outstanding:
Weighted average number of shares used in computing net (loss) income per share, basic			79,008				74,020				76,179				73,241
Weighted average number of shares used in computing net (loss) income per share, diluted			79,008				78,484				76,179				73,241

*        Amounts include stock-based compensation expense as follows (in thousands):

		(Unaudited)
		Three Months Ended December 31,								Twelve Months Ended December 31,
		2021				2020				2021				2020
Cost of revenue-software		$	1,828			$	871			$	5,619			$	2,473
Research and development			5,338				2,686				16,561				8,372
Sales and marketing			4,244				2,474				15,044				6,423
General and administrative			1,910				1,385				7,325				4,087
Total stock-based compensation expense		$	13,320			$	7,416			$	44,549			$	21,355

ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)

		Year Ended December 31,
(in thousands)		2021				2020
OPERATING ACTIVITIES:
Net loss		$	(8,794	)		$	(10,500	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			25,644				23,806
Provision for credit loss			514				1,259
Amortization of debt discount and issuance costs			11,428				10,829
Stock-based compensation expense			44,549				21,355
Deferred income taxes			(1,502	)			(10,350	)
Other, net			757				118
Changes in assets and liabilities:
Accounts receivable			(15,645	)			(11,032	)
Prepaid expenses and other current assets			(9,026	)			(2,131	)
Other long-term assets			(6,682	)			(4,527	)
Accounts payable			(3,857	)			(1,839	)
Accrued compensation and benefits			7,761				1,985
Other accrued expenses and current liabilities			6,365				5,629
Deferred revenue			10,111				8,280
Net cash provided by operating activities			61,623				32,882
INVESTING ACTIVITIES:
Payments for acquisition of businesses, net of cash acquired			(53,983	)			(41,028	)
Capital expenditures			(7,849	)			(6,093	)
Payments for acquisition of developed technology			(344	)			(2,133	)
Other investing activities, net			(306	)			162
Net cash used in investing activities			(62,482	)			(49,092	)
FINANCING ACTIVITIES:
Proceeds from private placement of common stock			200,000				—
Payments on revolving commitment			(30,000	)			—
Proceeds from employee stock purchase plan contributions			4,222				—
Proceeds from the exercise of common stock options			2,262				1,710
Borrowings under revolving commitment			—				30,000
Other financing activities			(537	)			(460	)
Net cash provided by financing activities			175,947				31,250
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(2,623	)			3,010
Net increase in cash, cash equivalents and restricted cash			172,465				18,050
Cash, cash equivalents and restricted cash at beginning of year			241,547				223,497
Cash, cash equivalents and restricted cash at end of period		$	414,012			$	241,547
Supplemental disclosures of cash flow:
Interest paid		$	633			$	731
Income taxes paid		$	9,168			$	12,666
Supplemental disclosure of non-cash investing and financing activities:
Issuance of common stock in connection with acquisitions		$	3,690			$	3,504
Promissory notes issued and deferred payment obligations for acquisitions		$	86,936			$	1,266
Finance leases		$	9			$	118
Property and equipment in accounts payable and other current liabilities		$	1,056			$	1,671

Financial Results

The following table provides a reconciliation Adjusted EBITDA, Non-GAAP net income and Non-GAAP net income per share – diluted, to net loss and net loss per share – diluted, the most comparable GAAP financial measures:

		(Unaudited)
		Three Months Ended December 31,								Twelve Months Ended December 31,
(in thousands, except per share amounts)		2021				2020				2021				2020
Net (loss) income		$	(1,397	)		$	2,198			$	(8,794	)		$	(10,500	)
Stock-based compensation expense			13,320				7,416				44,549				21,355
Amortization of intangible assets			4,433				4,986				18,357				16,376
Non-cash interest expense			2,915				2,762				11,428				10,824
Restructuring expense			99				—				5,053				—
Impact of non-GAAP tax rate			(1,696	)			(2,900	)			(11,740	)			(525	)
Special adjustments and other (1)			(1,229	)			—				(1,229	)			(372	)
Non-GAAP net income			16,445				14,462				57,624				37,158
Depreciation expense			1,856				1,904				7,287				7,430
Cash interest (income) expense			(114	)			244				96				(357	)
Income tax expense, net of non-GAAP impact			5,778				5,082				20,246				13,057
Adjusted EBITDA		$	23,965			$	21,692			$	85,253			$	57,288
Net (loss) income per share, diluted		$	(0.02	)		$	0.03			$	(0.12	)		$	(0.14	)
Non-GAAP net income per share, diluted		$	0.19			$	0.17			$	0.66			$	0.45
GAAP diluted shares outstanding:			79,008				78,484				76,179				73,241
Non-GAAP diluted shares outstanding:			87,300				83,000				87,300				83,000

(1)   The three and twelve months ended December 31, 2021, includes $1.2 million currency gains on acquisition-related intercompany loans. The twelve months ended December 31, 2020, includes $1.0 million of proceeds from settlements related to a historical acquisition and $0.6 million of severance expense.

The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure:

		(Unaudited)
		Three Months Ended December 31,								Twelve Months Ended December 31,
(in thousands)		2021				2020				2021				2020
Net cash provided by operating activities		$	6,029			$	5,503			$	61,623			$	32,882
Capital expenditures			(1,038	)			(2,087	)			(7,849	)			(6,093	)
Free Cash Flow		$	4,991			$	3,416			$	53,774			$	26,789

Business Outlook

The following table provides a reconciliation of projected Adjusted EBITDA and projected Non-GAAP net income to projected net income (loss), the most comparable GAAP financial measure:

		(Unaudited)
		Three Months Ending March 31, 2022								Year Ending December 31, 2022
(in thousands)		Low				High				Low				High
Net income (loss)		$	5,600			$	7,500			$	(23,100	)		$	(13,400	)
Stock-based compensation expense			18,000				18,000				71,600				71,600
Amortization of intangible assets			5,900				5,900				23,000				23,000
Non-cash interest expense			300				300				1,300				1,300
Impact of non-GAAP tax rate			(4,600	)			(5,100	)			(7,500	)			(9,800	)
Non-GAAP net income			25,200				26,600				65,300				72,700
Depreciation expense			1,900				1,900				7,400				7,400
Cash interest expense, net			100				100				300				300
Income tax expense, net of non-GAAP impact			8,800				9,400				23,000				25,600
Adjusted EBITDA		$	36,000			$	38,000			$	96,000			$	106,000

The following table provides a reconciliation of projected Free Cash Flow to projected net cash provided by operating activities, the most comparable GAAP financial measure:

						(Unaudited)
						Year Ending December 31, 2022
(in thousands)						Low				High
Net cash provided by operating activities (1)						$	12,200			$	19,200
Capital expenditures							(7,200	)			(7,200	)
Free Cash Flow (1)						$	5,000			$	12,000

(1)   Includes $65.9 million payment in January 2022 for legal judgement acquired in December 2021.

FAQ

What were Altair's Q4 2021 software product revenue figures?

Altair reported Q4 2021 software product revenue of $122.4 million, compared to $113.6 million in Q4 2020.

What is Altair's total revenue for the full year 2021?

Altair's total revenue for the full year 2021 was $532.2 million, up from $469.9 million in 2020.

What guidance did Altair provide for Q1 2022?

Altair projects Q1 2022 software product revenue between $134.0 million and $137.0 million.

How much was Altair's non-GAAP net income for the full year 2021?

Altair's non-GAAP net income for the full year 2021 was $57.6 million, compared to $37.2 million in 2020.

What was Altair's adjusted EBITDA for Q4 2021?

Altair achieved adjusted EBITDA of $24.0 million in Q4 2021, up from $21.7 million in Q4 2020.