Altair Announces Fourth Quarter and Full Year 2023 Financial Results
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Insights
The announcement of record-high revenue and profit by Altair for both the fourth quarter and full year is a significant indicator of the company's financial health and operational efficiency. This performance may suggest that Altair has effectively capitalized on the growing demand for computational intelligence solutions across various industries. The strong financial results could lead to a positive investor sentiment, potentially influencing the company's stock price in the short term. In the long term, sustained growth in revenue and profit margins could result in increased market share and investment in research and development, further solidifying Altair's competitive position.
It is also worth noting that such financial outcomes may reflect well on the company's management and strategic direction, especially considering the complexity of the computational intelligence market. The company's ability to achieve record figures in this context could imply a robust business model and an agile response to market demands.
The emphasis on strong momentum across multiple verticals suggests that Altair's offerings are well-received in diverse markets, which is crucial for risk mitigation. Diversification across verticals can protect a company from downturns in any single industry. For stakeholders, this diversification is a reassuring sign of stability. However, it would be beneficial to analyze which specific verticals are driving the growth and if this aligns with broader market trends. If Altair is ahead of the curve in sectors like healthcare, automotive, or aerospace, which are rapidly adopting computational intelligence, this could indicate potential for continued upward trajectory.
Additionally, the rise in computational intelligence's importance could hint at a larger industry trend. Companies that are early adopters or innovators in this space may enjoy a first-mover advantage, potentially leading to higher barriers to entry for competitors and greater market control. Stakeholders should monitor how Altair plans to leverage its current success to maintain its leadership position.
Altair's performance is particularly noteworthy in the context of the computational intelligence sector, which is characterized by rapid innovation and intense competition. The record-high figures could be indicative of successful product launches, customer retention and market expansion strategies. It would be pertinent to delve into the company's product mix and identify which offerings are the primary contributors to the financial success. Are these products aligned with emerging technological trends such as artificial intelligence, machine learning and big data analytics?
Understanding Altair's technological edge and how it translates to commercial success is critical. If Altair's products are considered best-in-class or if they possess unique features that are difficult to replicate, this could provide a sustainable competitive advantage. Stakeholders should consider the company's investment in innovation and its intellectual property portfolio, as these will be crucial in maintaining its market position against competitors.
Record-High Revenue and Profit for the Fourth Quarter and Full Year
TROY, Mich., Feb. 22, 2024 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational intelligence, today released its financial results for the fourth quarter and full year ended December 31, 2023.
"Altair finished 2023 with a strong fourth quarter, notching record-high revenue and profit for the quarter and full-year," said James R. Scapa, founder, chairman and chief executive officer of Altair. "We are seeing strong momentum across a number of verticals, where computational intelligence is becoming increasingly important. We are excited about our recent and upcoming product releases and believe that our investments in engineering AI are positioning us as a leader in this important and growing domain.”
"Our global team worked hard to achieve outstanding results for 2023, and we finished the year exceeding our profitability goals. We are thrilled to have surpassed the
Fourth Quarter 2023 Financial Highlights
- Software product revenue was
$155.9 million compared to$145.0 million for the fourth quarter of 2022, an increase of7.6% in reported currency and6.7% in constant currency - Total revenue was
$171.5 million compared to$160.4 million for the fourth quarter of 2022, an increase of6.9% in reported currency and6.0% in constant currency - Net income was
$19.7 million compared to$12.1 million for the fourth quarter of 2022. Net income per share, diluted was$0.22 b ased on 89.0 million diluted weighted average common shares outstanding, compared to net income per share, diluted of$0.14 for the fourth quarter of 2022, based on 87.5 million diluted weighted average common shares outstanding. Net income margin was11.5% compared to net income margin of7.5% for the fourth quarter of 2022 - Non-GAAP net income was
$41.1 million , compared to non-GAAP net income of$27.5 million for the fourth quarter of 2022, an increase of49.2% . Non-GAAP net income per share, diluted was$0.46 b ased on 89.0 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of$0.31 for the fourth quarter of 2022, based on 87.5 million non-GAAP diluted common shares outstanding - Adjusted EBITDA was
$53.6 million compared to$38.7 million for the fourth quarter of 2022, an increase of38.3% . Adjusted EBITDA margin was31.2% compared to24.1% for the fourth quarter of 2022 - Cash provided by operating activities was
$21.7 million , compared to$13.0 million for the fourth quarter of 2022 - Free cash flow was
$19.3 million , compared to$10.1 million for the fourth quarter of 2022.
Full Year 2023 Financial Highlights
- Software product revenue was
$550.0 million compared to$506.5 million for the full year of 2022, an increase of8.6% in reported currency and9.8% in constant currency - Total revenue was
$612.7 million compared to$572.2 million for the full year of 2022, an increase of7.1% in reported currency and8.2% in constant currency - Net loss was
$(8.9) million compared to net loss of$(43.4) million for the full year of 2022. Net loss per share, diluted was$(0.11) b ased on 80.6 million diluted weighted average common shares outstanding, compared to net loss per share, diluted of$(0.55) for the full year of 2022, based on 79.5 million diluted weighted average common shares outstanding. Net loss margin was -1.5% compared to net loss margin of -7.6% for the full year of 2022 - Non-GAAP net income was
$98.8 million , compared to non-GAAP net income of$75.6 million for the full year of 2022, an increase of30.6% . Non-GAAP net income per share, diluted was$1.13 b ased on 87.6 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of$0.89 for the full year of 2022, based on 85.4 million non-GAAP diluted common shares outstanding - Adjusted EBITDA was
$129.1 million compared to$108.6 million for the full year of 2022, an increase of18.9% . Adjusted EBITDA margin was21.1% compared to19.0% for the full year of 2022 - Cash provided by operating activities was
$127.3 million , compared to$39.6 million for the full year of 2022 - Free cash flow was
$117.1 million , compared to$29.9 million for the full year of 2022.
Business Outlook
Based on information available as of today, Altair is issuing the following guidance for the first quarter and full year 2024:
| (in millions, except %) | First Quarter 2024 | Full Year 2024 | ||||||||||||||
| Software Product Revenue | $ | 152 | to | $ | 155 | $ | 600 | to | $ | 610 | ||||||
| Growth Rate | 1.6 | % | 3.6 | % | 9.1 | % | 10.9 | % | ||||||||
| Growth Rate - Constant Currency | 0.8 | % | 2.8 | % | 8.3 | % | 10.1 | % | ||||||||
| Total Revenue | $ | 167 | $ | 170 | $ | 663 | $ | 673 | ||||||||
| Growth Rate | 0.6 | % | 2.4 | % | 8.2 | % | 9.8 | % | ||||||||
| Growth Rate - Constant Currency | -0.1 | % | 1.7 | % | 7.5 | % | 9.1 | % | ||||||||
| Net Income | $ | 8.0 | $ | 11.0 | $ | 30.0 | $ | 37.7 | ||||||||
| Non-GAAP Net Income | $ | 29.5 | $ | 31.7 | $ | 114.4 | $ | 120.4 | ||||||||
| Adjusted EBITDA | $ | 37 | $ | 40 | $ | 143 | $ | 151 | ||||||||
| Net Cash Provided by Operating Activities | $ | 140 | $ | 148 | ||||||||||||
| Free Cash Flow | $ | 129 | $ | 137 | ||||||||||||
| Conference Call Information | |
| What: | Altair’s Fourth Quarter and Full Year 2023 Financial Results Conference Call |
| When: | Thursday, February 22, 2024 |
| Time: | 5 p.m. ET |
| Webcast: | http://investor.altair.com (live & replay) |
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: Non-GAAP Net Income, Non-GAAP Net Income Per Share, Billings, Adjusted EBITDA, Free Cash Flow, Non-GAAP Gross Profit and Non-GAAP Operating Expense.
Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.
Non-GAAP 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 the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position.
Billings consists of total revenue plus the change in deferred revenue, excluding deferred revenue from acquisitions.
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.
Free cash flow consists of cash flow from operations less capital expenditures.
Non-GAAP gross profit represents gross profit adjusted for stock-based compensation expense, restructuring expense and other special items as identified by management and described elsewhere in this press release.
Non-GAAP operating expense represents operating expense excluding stock-based compensation expense, amortization, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.
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 intelligence that provides software and cloud solutions in 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. For more information, visit https://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 first quarter and full year 2024, our statements regarding our expectations for 2024, 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
Altair
Dave Simon
248-614-2400 ext. 332
dls@altair.com
Investor Relations
The Blueshirt Group
Monica Gould
212-871-3927
ir@altair.com
| ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||
| December 31, | |||||||
| (in thousands) | 2023 | 2022 | |||||
| ASSETS | |||||||
| CURRENT ASSETS | |||||||
| Cash and cash equivalents | $ | 467,459 | $ | 316,146 | |||
| Accounts receivable, net | 190,461 | 170,279 | |||||
| Income tax receivable | 16,650 | 11,259 | |||||
| Prepaid expenses and other current assets | 26,053 | 29,142 | |||||
| Total current assets | 700,623 | 526,826 | |||||
| Property and equipment, net | 39,803 | 37,517 | |||||
| Operating lease right of use assets | 30,759 | 33,601 | |||||
| Goodwill | 458,125 | 449,048 | |||||
| Other intangible assets, net | 83,550 | 107,609 | |||||
| Deferred tax assets | 9,955 | 9,727 | |||||
| Other long-term assets | 40,678 | 40,410 | |||||
| TOTAL ASSETS | $ | 1,363,493 | $ | 1,204,738 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| CURRENT LIABILITIES | |||||||
| Accounts payable | $ | 8,995 | $ | 10,434 | |||
| Accrued compensation and benefits | 45,081 | 42,456 | |||||
| Current portion of operating lease liabilities | 8,825 | 10,396 | |||||
| Other accrued expenses and current liabilities | 48,398 | 56,371 | |||||
| Deferred revenue | 131,356 | 113,081 | |||||
| Current portion of convertible senior notes, net | 81,455 | — | |||||
| Total current liabilities | 324,110 | 232,738 | |||||
| Convertible senior notes, net | 225,929 | 305,604 | |||||
| Operating lease liabilities, net of current portion | 22,625 | 24,065 | |||||
| Deferred revenue, non-current | 32,347 | 31,379 | |||||
| Other long-term liabilities | 47,151 | 41,216 | |||||
| TOTAL LIABILITIES | 652,162 | 635,002 | |||||
| Commitments and contingencies | |||||||
| STOCKHOLDERS’ EQUITY | |||||||
| Preferred stock ( | — | — | |||||
| Common stock ( | |||||||
| Class A common stock, authorized 513,797 shares, issued and outstanding 55,240 and 52,277 shares as of December 31, 2023 and 2022, respectively | 5 | 5 | |||||
| Class B common stock, authorized 41,203 shares, issued and outstanding 26,814 and 27,745 shares as of December 31, 2023 and 2022, respectively | 3 | 3 | |||||
| Additional paid-in capital | 864,135 | 721,307 | |||||
| Accumulated deficit | (130,503 | ) | (121,577 | ) | |||
| Accumulated other comprehensive loss | (22,309 | ) | (30,002 | ) | |||
| TOTAL STOCKHOLDERS’ EQUITY | 711,331 | 569,736 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,363,493 | $ | 1,204,738 | |||
| ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||
| Three Months Ended December 31, 2023 | Year Ended December 31, 2023 | ||||||||||||||
| (in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Revenue | |||||||||||||||
| License | $ | 113,172 | $ | 107,418 | $ | 393,144 | $ | 363,520 | |||||||
| Maintenance and other services | 42,761 | 37,535 | 156,830 | 142,988 | |||||||||||
| Total software | 155,933 | 144,953 | 549,974 | 506,508 | |||||||||||
| Software related services | 7,751 | 7,518 | 28,032 | 30,661 | |||||||||||
| Total software and related services | 163,684 | 152,471 | 578,006 | 537,169 | |||||||||||
| Client engineering services | 6,561 | 6,469 | 29,497 | 28,883 | |||||||||||
| Other | 1,258 | 1,493 | 5,198 | 6,169 | |||||||||||
| Total revenue | 171,503 | 160,433 | 612,701 | 572,221 | |||||||||||
| Cost of revenue | |||||||||||||||
| License | 3,200 | 9,111 | 15,088 | 20,497 | |||||||||||
| Maintenance and other services | 14,340 | 13,318 | 56,094 | 51,946 | |||||||||||
| Total software * | 17,540 | 22,429 | 71,182 | 72,443 | |||||||||||
| Software related services | 5,655 | 5,119 | 21,830 | 21,858 | |||||||||||
| Total software and related services | 23,195 | 27,548 | 93,012 | 94,301 | |||||||||||
| Client engineering services | 5,129 | 5,187 | 24,450 | 23,577 | |||||||||||
| Other | 849 | 1,119 | 4,329 | 5,011 | |||||||||||
| Total cost of revenue | 29,173 | 33,854 | 121,791 | 122,889 | |||||||||||
| Gross profit | 142,330 | 126,579 | 490,910 | 449,332 | |||||||||||
| Operating expenses: | |||||||||||||||
| Research and development * | 52,519 | 51,934 | 212,645 | 202,542 | |||||||||||
| Sales and marketing * | 43,595 | 43,539 | 176,138 | 163,884 | |||||||||||
| General and administrative * | 17,096 | 18,234 | 70,887 | 72,288 | |||||||||||
| Amortization of intangible assets | 7,708 | 8,828 | 30,851 | 27,510 | |||||||||||
| Other operating (income) expense, net | (1,178 | ) | (572 | ) | 146 | (9,955 | ) | ||||||||
| Total operating expenses | 119,740 | 121,963 | 490,667 | 456,269 | |||||||||||
| Operating income (loss) | 22,590 | 4,616 | 243 | (6,937 | ) | ||||||||||
| Interest expense | 1,533 | 1,526 | 6,116 | 4,377 | |||||||||||
| Other (income) loss, net | (8,794 | ) | (9,183 | ) | (18,492 | ) | 16,899 | ||||||||
| Income (loss) before income taxes | 29,851 | 12,273 | 12,619 | (28,213 | ) | ||||||||||
| Income tax expense | 10,176 | 208 | 21,545 | 15,216 | |||||||||||
| Net income (loss) | $ | 19,675 | $ | 12,065 | $ | (8,926 | ) | $ | (43,429 | ) | |||||
| Income (loss) per share: | |||||||||||||||
| Net income (loss) per share attributable to common stockholders, basic | $ | 0.24 | $ | 0.15 | $ | (0.11 | ) | $ | (0.55 | ) | |||||
| Net income (loss) per share attributable to common stockholders, diluted | $ | 0.22 | $ | 0.14 | $ | (0.11 | ) | $ | (0.55 | ) | |||||
| Weighted average shares outstanding: | |||||||||||||||
| Weighted average number of shares used in computing net income (loss) per share, basic | 81,760 | 80,266 | 80,596 | 79,472 | |||||||||||
| Weighted average number of shares used in computing net income (loss) per share, diluted | 88,977 | 87,498 | 80,596 | 79,472 | |||||||||||
* Amounts include stock-based compensation expense as follows (in thousands):
| (Unaudited) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| (in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Cost of revenue – software | $ | 2,303 | $ | 2,086 | $ | 10,095 | $ | 8,351 | |||||||
| Research and development | 7,332 | 9,670 | 33,842 | 36,250 | |||||||||||
| Sales and marketing | 6,271 | 7,865 | 28,376 | 30,370 | |||||||||||
| General and administrative | 3,252 | 2,642 | 13,268 | 9,816 | |||||||||||
| Total stock-based compensation expense | $ | 19,158 | $ | 22,263 | $ | 85,581 | $ | 84,787 | |||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| (in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Employee stock-based compensation plans | $ | 16,688 | $ | 15,933 | $ | 73,548 | $ | 59,555 | |||||||
| Post combination expense in connection with acquisitions | 2,470 | 6,330 | 12,033 | 25,232 | |||||||||||
| Total stock-based compensation expense | $ | 19,158 | $ | 22,263 | $ | 85,581 | $ | 84,787 | |||||||
| ALTAIR ENGINEERING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) | |||||||||||
| Year Ended December 31, | |||||||||||
| (in thousands) | 2023 | 2022 | 2021 | ||||||||
| OPERATING ACTIVITIES: | |||||||||||
| Net loss | $ | (8,926 | ) | $ | (43,429 | ) | $ | (8,794 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 39,124 | 35,504 | 25,644 | ||||||||
| Amortization of debt discount and issuance costs | 1,869 | 1,792 | 11,428 | ||||||||
| Stock-based compensation expense | 85,581 | 84,787 | 44,549 | ||||||||
| Deferred income taxes | (2,319 | ) | (4,164 | ) | (1,502 | ) | |||||
| Loss (gain) on mark-to-market adjustment of contingent consideration | 5,706 | (7,153 | ) | — | |||||||
| Expense on repurchase of convertible senior notes | — | 16,621 | — | ||||||||
| Other, net | 74 | 387 | 1,271 | ||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | (19,141 | ) | (34,175 | ) | (15,645 | ) | |||||
| Prepaid expenses and other current assets | (1,915 | ) | 1,014 | (9,026 | ) | ||||||
| Other long-term assets | (52 | ) | 2,852 | (6,682 | ) | ||||||
| Accounts payable | (1,878 | ) | 3,771 | (3,857 | ) | ||||||
| Accrued compensation and benefits | 1,783 | 280 | 7,761 | ||||||||
| Other accrued expenses and current liabilities | 9,068 | (59,463 | ) | 6,365 | |||||||
| Deferred revenue | 18,333 | 40,946 | 10,111 | ||||||||
| Net cash provided by operating activities | 127,307 | 39,570 | 61,623 | ||||||||
| INVESTING ACTIVITIES: | |||||||||||
| Capital expenditures | (10,193 | ) | (9,648 | ) | (7,849 | ) | |||||
| Payments for acquisition of businesses, net of cash acquired | (3,236 | ) | (134,541 | ) | (53,983 | ) | |||||
| Other investing activities, net | (2,423 | ) | (10,322 | ) | (650 | ) | |||||
| Net cash used in investing activities | (15,852 | ) | (154,511 | ) | (62,482 | ) | |||||
| FINANCING ACTIVITIES: | |||||||||||
| Proceeds from the exercise of common stock options | 36,140 | 3,577 | 2,262 | ||||||||
| Proceeds from employee stock purchase plan contributions | 7,978 | 8,976 | 4,222 | ||||||||
| Payments for repurchase and retirement of common stock | (6,255 | ) | (19,659 | ) | — | ||||||
| Proceeds from issuance of convertible senior notes, net of underwriters' discounts and commissions | — | 224,265 | — | ||||||||
| Repurchase of convertible senior notes | — | (192,422 | ) | — | |||||||
| Payments for issuance costs of convertible senior notes | — | (1,523 | ) | — | |||||||
| Proceeds from private placement of common stock | — | — | 200,000 | ||||||||
| Payments on revolving commitment | — | — | (30,000 | ) | |||||||
| Other financing activities | (97 | ) | (233 | ) | (537 | ) | |||||
| Net cash provided by financing activities | 37,766 | 22,981 | 175,947 | ||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1,397 | (5,094 | ) | (2,623 | ) | ||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 150,618 | (97,054 | ) | 172,465 | |||||||
| Cash, cash equivalents and restricted cash at beginning of year | 316,958 | 414,012 | 241,547 | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 467,576 | $ | 316,958 | $ | 414,012 | |||||
Financial Results
The following table provides a reconciliation of Non-GAAP net income and Non-GAAP net income per share – diluted, to net income (loss) and net income (loss) per share – diluted, the most comparable GAAP financial measures:
| (Unaudited) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| (in thousands, except per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Net income (loss) | $ | 19,675 | $ | 12,065 | $ | (8,926 | ) | $ | (43,429 | ) | |||||
| Stock-based compensation expense | 19,158 | 22,263 | 85,581 | 84,787 | |||||||||||
| Amortization of intangible assets | 7,708 | 8,828 | 30,851 | 27,510 | |||||||||||
| Non-cash interest expense | 470 | 467 | 1,869 | 1,806 | |||||||||||
| Impact of non-GAAP tax rate(1) | (4,261 | ) | (9,468 | ) | (13,158 | ) | (11,346 | ) | |||||||
| Special adjustments and other(2) | (1,659 | ) | (6,614 | ) | 2,553 | 16,272 | |||||||||
| Non-GAAP net income | $ | 41,091 | $ | 27,541 | $ | 98,770 | $ | 75,600 | |||||||
| Net income (loss) per share, diluted | $ | 0.22 | $ | 0.14 | $ | (0.11 | ) | $ | (0.55 | ) | |||||
| Non-GAAP net income per share, diluted | $ | 0.46 | $ | 0.31 | $ | 1.13 | $ | 0.89 | |||||||
| GAAP diluted shares outstanding: | 88,977 | 87,498 | 80,596 | 79,472 | |||||||||||
| Non-GAAP diluted shares outstanding: | 88,977 | 87,498 | 87,642 | 85,392 | |||||||||||
(1) The Company uses a non-GAAP effective tax rate of
(2) The three months ended December 31, 2023, includes a
The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure:
| (Unaudited) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| (in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Net income (loss) | $ | 19,675 | $ | 12,065 | $ | (8,926 | ) | $ | (43,429 | ) | |||||
| Income tax expense | 10,176 | 208 | 21,545 | 15,216 | |||||||||||
| Stock-based compensation expense | 19,158 | 22,263 | 85,581 | 84,787 | |||||||||||
| Interest expense | 1,533 | 1,526 | 6,116 | 4,377 | |||||||||||
| Depreciation and amortization | 9,853 | 11,412 | 39,124 | 35,504 | |||||||||||
| Special adjustments, interest income and other(1) | (6,822 | ) | (8,733 | ) | (14,302 | ) | 12,145 | ||||||||
| Adjusted EBITDA | $ | 53,573 | $ | 38,741 | $ | 129,138 | $ | 108,600 | |||||||
(1) The three months ended December 31, 2023, includes a
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, | Year Ended December 31, | ||||||||||||||
| (in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Net cash provided by operating activities(1) | $ | 21,651 | $ | 13,036 | $ | 127,307 | $ | 39,570 | |||||||
| Capital expenditures | (2,311 | ) | (2,927 | ) | (10,193 | ) | (9,648 | ) | |||||||
| Free Cash Flow(1) | $ | 19,340 | $ | 10,109 | $ | 117,114 | $ | 29,922 | |||||||
(1) The twelve months ended December 31, 2022, includes a
The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure, and a comparison of Non-GAAP gross margin (Non-GAAP gross profit as a percentage of total revenue) to gross margin (gross profit as a percentage of total revenue), the most comparable GAAP financial measure:
| (Unaudited) | |||||||||||||||
| Three Months Ended December 31, 2023 | Year Ended December 31, | ||||||||||||||
| (in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Gross profit | $ | 142,330 | $ | 126,579 | $ | 490,910 | $ | 449,332 | |||||||
| Stock-based compensation expense | 2,303 | 2,086 | 10,095 | 8,351 | |||||||||||
| Non-GAAP gross profit | $ | 144,633 | $ | 128,665 | $ | 501,005 | $ | 457,683 | |||||||
| Gross profit margin | 83.0 | % | 78.9 | % | 80.1 | % | 78.5 | % | |||||||
| Non-GAAP gross margin | 84.3 | % | 80.2 | % | 81.8 | % | 80.0 | % | |||||||
The following table provides a reconciliation of Non-GAAP operating expense to Total operating expense, the most comparable GAAP financial measure:
| (Unaudited) | |||||||||||||||
| Three Months Ended December 31, 2023 | Year Ended December 31, | ||||||||||||||
| (in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Total operating expense | $ | 119,740 | $ | 121,963 | $ | 490,667 | $ | 456,269 | |||||||
| Stock-based compensation expense | (16,855 | ) | (20,177 | ) | (75,486 | ) | (76,436 | ) | |||||||
| Amortization | (7,708 | ) | (8,828 | ) | (30,851 | ) | (27,510 | ) | |||||||
| (Gain) loss on mark-to-market adjustment of contingent consideration | (1,212 | ) | (329 | ) | (5,706 | ) | 7,153 | ||||||||
| Non-GAAP operating expense | $ | 93,965 | $ | 92,629 | $ | 378,624 | $ | 359,476 | |||||||
The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:
| (Unaudited) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| (in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Revenue | $ | 171,503 | $ | 160,433 | $ | 612,701 | $ | 572,221 | |||||||
| Ending deferred revenue | 163,703 | 144,460 | 163,703 | 144,460 | |||||||||||
| Beginning deferred revenue | (138,933 | ) | (116,540 | ) | (144,460 | ) | (106,032 | ) | |||||||
| Deferred revenue acquired | (149 | ) | (449 | ) | (149 | ) | (3,047 | ) | |||||||
| Billings | $ | 196,124 | $ | 187,904 | $ | 631,795 | $ | 607,602 | |||||||
The following table provides revenue, Billings and Adjusted EBITDA on a constant currency basis:
| (Unaudited) | |||||||||||||||||||||||
| Three Months Ended December 31, 2023 | Three Months Ended December 31, 2022 | Increase/ (Decrease) % | |||||||||||||||||||||
| (in thousands) | As reported | Currency changes | As adjusted for constant currency | As reported | As reported | As adjusted for constant currency | |||||||||||||||||
| Software revenue | $ | 155.9 | $ | (1.3 | ) | $ | 154.6 | $ | 145.0 | 7.6 | % | 6.7 | % | ||||||||||
| Total revenue | $ | 171.5 | $ | (1.5 | ) | $ | 170.0 | $ | 160.4 | 6.9 | % | 6.0 | % | ||||||||||
| Billings | $ | 196.1 | $ | (1.4 | ) | $ | 194.7 | $ | 187.9 | 4.4 | % | 3.6 | % | ||||||||||
| Adjusted EBITDA | $ | 53.6 | $ | 0.3 | $ | 53.9 | $ | 38.7 | 38.3 | % | 39.1 | % | |||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Year Ended December 31, 2023 | Year Ended December 31, 2022 | Increase/ (Decrease) % | |||||||||||||||||||||
| (in thousands) | As reported | Currency changes | As adjusted for constant currency | As reported | As reported | As adjusted for constant currency | |||||||||||||||||
| Software revenue | $ | 550.0 | $ | 6.4 | $ | 556.4 | $ | 506.5 | 8.6 | % | 9.8 | % | |||||||||||
| Total revenue | $ | 612.7 | $ | 6.6 | $ | 619.3 | $ | 572.2 | 7.1 | % | 8.2 | % | |||||||||||
| Billings | $ | 631.8 | $ | 5.1 | $ | 636.9 | $ | 607.6 | 4.0 | % | 4.8 | % | |||||||||||
| Adjusted EBITDA | $ | 129.1 | $ | 5.2 | $ | 134.3 | $ | 108.6 | 18.9 | % | 23.7 | % | |||||||||||
Change in Classification of Indirect Costs
Beginning in the first quarter of 2023, the Company refined its classification of certain indirect costs to reflect the way management is now reviewing the information in decision making and to improve comparability with peers. These indirect costs include certain IT, facilities, and depreciation expenses that were previously reported primarily in General and administrative expense. These indirect costs have now been reclassified to Research and development, Sales and marketing, and General and administrative expenses based on global headcount. Management believes this refined methodology better reflects the nature of the costs and financial performance of the Company.
As a result, the Company’s consolidated statements of operations have been recast for prior periods presented to reflect the effects of the changes to Research and development, Sales and marketing, and General and administrative expense. There was no net impact to total operating expenses, income from operations, net income or net income per share for any periods presented. The consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in stockholders’ equity, and the consolidated statements of cash flows were not affected by changes in the presentation of these costs.
Each prior period that will be presented in the forthcoming Form 10-Q and Form 10-K filings will be recast to conform to current period presentation. The following tables provide the relevant financial results as previously reported, as recast for the current period and forthcoming filings, and the associated impacts of the changes. Within these tables, the references to periods such as “FY 2021” and “Q1 2022” refer to the corresponding periods as reported in the applicable Form 10-K, Form 10-Q, or Form 8-K filings.
The following table summarizes the changes made to the consolidated statements of operations (in thousands):
| Previously Reported | |||||||||||||||||||||||
| FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | $ | 151,049 | $ | 43,094 | $ | 46,477 | $ | 48,781 | $ | 47,511 | $ | 185,863 | |||||||||||
| Sales and marketing | 132,750 | 35,682 | 39,116 | 39,244 | 41,203 | 155,245 | |||||||||||||||||
| General and administrative | 91,500 | 23,569 | 24,367 | 24,677 | 24,993 | 97,606 | |||||||||||||||||
| Amortization of intangible assets | 18,357 | 5,903 | 6,208 | 6,571 | 8,828 | 27,510 | |||||||||||||||||
| Other operating income, net | (3,482 | ) | (781 | ) | (5,767 | ) | (2,835 | ) | (572 | ) | (9,955 | ) | |||||||||||
| Total operating expenses | $ | 390,174 | $ | 107,467 | $ | 110,401 | $ | 116,438 | $ | 121,963 | $ | 456,269 | |||||||||||
| Recast | |||||||||||||||||||||||
| FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | $ | 167,341 | $ | 47,079 | $ | 50,437 | $ | 53,092 | $ | 51,934 | $ | 202,542 | |||||||||||
| Sales and marketing | 141,484 | 37,840 | 41,153 | 41,352 | 43,539 | 163,884 | |||||||||||||||||
| General and administrative | 66,474 | 17,426 | 18,370 | 18,258 | 18,234 | 72,288 | |||||||||||||||||
| Amortization of intangible assets | 18,357 | 5,903 | 6,208 | 6,571 | 8,828 | 27,510 | |||||||||||||||||
| Other operating income, net | (3,482 | ) | (781 | ) | (5,767 | ) | (2,835 | ) | (572 | ) | (9,955 | ) | |||||||||||
| Total operating expenses | $ | 390,174 | $ | 107,467 | $ | 110,401 | $ | 116,438 | $ | 121,963 | $ | 456,269 | |||||||||||
| Change | |||||||||||||||||||||||
| FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | $ | 16,292 | $ | 3,985 | $ | 3,960 | $ | 4,311 | $ | 4,423 | $ | 16,679 | |||||||||||
| Sales and marketing | 8,734 | 2,158 | 2,037 | 2,108 | 2,336 | 8,639 | |||||||||||||||||
| General and administrative | (25,026 | ) | (6,143 | ) | (5,997 | ) | (6,419 | ) | (6,759 | ) | (25,318 | ) | |||||||||||
| Amortization of intangible assets | — | — | — | — | — | — | |||||||||||||||||
| Other operating income, net | — | — | — | — | — | — | |||||||||||||||||
| Total operating expenses | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Business Outlook
The following table provides a reconciliation of projected Non-GAAP net income to projected net income, the most comparable GAAP financial measure:
| (Unaudited) | |||||||||||||||
| Three Months Ending March 31, 2024 | Year Ending December 31, 2024 | ||||||||||||||
| (in thousands) | Low | High | Low | High | |||||||||||
| Net income | $ | 8,000 | $ | 11,000 | $ | 30,000 | $ | 37,700 | |||||||
| Stock-based compensation expense | 18,900 | 18,900 | 74,500 | 74,500 | |||||||||||
| Amortization of intangible assets | 7,400 | 7,400 | 28,800 | 28,800 | |||||||||||
| Non-cash interest expense | 500 | 500 | 1,500 | 1,500 | |||||||||||
| Impact of non-GAAP tax rate(1) | (5,300 | ) | (6,100 | ) | (20,400 | ) | (22,100 | ) | |||||||
| Non-GAAP net income | $ | 29,500 | $ | 31,700 | $ | 114,400 | $ | 120,400 | |||||||
(1) The Company uses a non-GAAP effective tax rate of
The following table provides a reconciliation of projected Adjusted EBITDA to projected net income, the most comparable GAAP financial measure:
| (Unaudited) | |||||||||||||||
| Three Months Ending March 31, 2024 | Year Ending December 31, 2024 | ||||||||||||||
| (in thousands) | Low | High | Low | High | |||||||||||
| Net income | $ | 8,000 | $ | 11,000 | $ | 30,000 | $ | 37,700 | |||||||
| Income tax expense | 4,500 | 4,500 | 17,700 | 18,000 | |||||||||||
| Stock-based compensation expense | 18,900 | 18,900 | 74,500 | 74,500 | |||||||||||
| Interest (income) expense, net | (3,900 | ) | (3,900 | ) | (16,600 | ) | (16,600 | ) | |||||||
| Depreciation and amortization | 9,500 | 9,500 | 37,400 | 37,400 | |||||||||||
| Adjusted EBITDA | $ | 37,000 | $ | 40,000 | $ | 143,000 | $ | 151,000 | |||||||
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, 2024 | |||||||
| (in thousands) | Low | High | |||||
| Net cash provided by operating activities | $ | 140,000 | $ | 148,000 | |||
| Capital expenditures | (11,000 | ) | (11,000 | ) | |||
| Free cash flow | $ | 129,000 | $ | 137,000 | |||
FAQ
What were Altair's financial results for the fourth quarter and full year ended December 31, 2023?
Who is the founder and CEO of Altair?
What was highlighted as a key driver of Altair's strong performance in various verticals?
