Altair Announces Second Quarter 2021 Financial Results

Rhea-AI Summary

Altair (Nasdaq: ALTR) reported strong financial results for Q2 2021, achieving a 21.7% increase in total revenue, totaling $119.9 million, compared to $98.6 million in Q2 2020. Software product revenue also rose to $99.6 million from $81.8 million, reflecting a similar growth rate. However, the net loss widened to $13.6 million from $10.2 million year-over-year. Adjusted EBITDA increased significantly by 65.2% to $9.5 million, while non-GAAP net income surged 86.8% to $5.6 million. Altair has raised its full-year guidance amid strong customer demand.

Positive

• Total revenue rose 21.7% to $119.9 million.
• Software product revenue increased 21.7% to $99.6 million.
• Adjusted EBITDA grew 65.2% to $9.5 million, indicating strong profit expansion.
• Non-GAAP net income surged 86.8% to $5.6 million.

Negative

• Net loss widened to $13.6 million from $10.2 million year-over-year.
• Diluted net loss per share increased to $0.18 from $0.14.

Exceeds Expectations for Second Quarter 2021, Raises Outlook for the Year

TROY, Mich., Aug. 05, 2021 (GLOBE NEWSWIRE) --  Altair (Nasdaq: ALTR), a global technology company providing software and cloud solutions in the areas of simulation, high-performance computing, data analytics and artificial intelligence today released its financial results for the second quarter ended June 30, 2021.

“Altair had a strong second quarter 2021, with across-the-board success in multiple verticals, regions, and products, reflecting year on year software product revenue growth of 22%,” said James Scapa, Founder, Chairman and Chief Executive Officer of Altair. “Customers are investing to grow their businesses as we emerge from the pandemic, and Altair’s products, services, and business models are clearly resonating, gaining market awareness, and increasing market share.”

“Once again we saw customer demand exceed expectations in the second quarter 2021, which enabled us to achieve results above the high end of our guidance range for the third consecutive quarter,” said Matt Brown, Chief Financial Officer of Altair. “The second quarter 2021 reflects solid execution on our strategy of driving strong organic topline revenue growth and profit expansion.”

Second Quarter 2021 Financial Highlights

• Software product revenue was $99.6 million compared to $81.8 million for the second quarter of 2020, an increase of 21.7%
• Total revenue was $119.9 million compared to $98.6 million for the second quarter of 2020, an increase of 21.7%
• Net loss was $13.6 million compared to a net loss of $10.2 million for the second quarter of 2020, an increase of 33.5%. Diluted net loss per share was $0.18 based on 75.3 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $0.14 for the second quarter of 2020, based on 73.0 million diluted weighted average common shares outstanding
• Adjusted EBITDA was $9.5 million compared to $5.7 million for the second quarter of 2020, an increase of 65.2%. Adjusted EBITDA margin was 7.9% compared to 5.8% for the second quarter of 2020
• Non-GAAP net income was $5.6 million, compared to Non-GAAP net income of $3.0 million for the second quarter of 2020, an increase of 86.8%. Non-GAAP diluted net income per share was $0.07 based on 83.4 million non-GAAP diluted common shares outstanding, compared to Non-GAAP diluted net income per share of $0.04 for the second quarter of 2020, based on 80.7 million non-GAAP diluted common shares outstanding
• Free cash flow was $15.8 million, compared to $4.5 million for the second quarter of 2020, an increase of 252.7%

Business Outlook

Based on information available as of today, Altair is issuing the following guidance for the third quarter and full year 2021:  

(in millions)	Third Quarter 2021								Full Year 2021
Software Product Revenue		$	94.0		to	$	97.0			$	434.0		to	$	440.0
Total Revenue		$	112.0			$	115.0			$	512.0			$	518.0
Net Loss		$	(22.8	)		$	(20.9	)		$	(31.6	)		$	(26.8	)
Non-GAAP Net Income		$	0.1			$	1.6			$	40.9			$	44.6
Adjusted EBITDA		$	2.0			$	4.0			$	63.0			$	68.0
Net Cash Provided by Operating Activities										$	43.0			$	48.0
Free Cash Flow										$	34.0			$	39.0

Conference Call Information

What:	Altair’s Second Quarter 2021 Financial Results Conference Call
When:	Thursday, August 5, 2021
Time:	5:00 p.m. ET
Live Call:	(866) 754-5204, Domestic
	(636) 812-6621, International
Replay:	(855) 859-2056, Conference ID 4173813, Domestic
	(404) 537-3406, Conference ID 4173813, 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 technology company that provides software and cloud solutions in the areas of simulation, high-performance computing, and artificial intelligence. Altair enables organizations across broad industry segments to compete more effectively in a connected world while creating a more sustainable future. To learn more, please visit www.altair.com.

Cautionary Language Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the third quarter and full year 2021, our statements regarding our expectation for 2021, 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
ir@altair.com

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

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

ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

		June 30, 2021				December 31, 2020
(In thousands)		(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	260,098			$	241,221
Accounts receivable, net			91,570				117,878
Income tax receivable			7,949				6,736
Prepaid expenses and other current assets			23,030				21,100
Total current assets			382,647				386,935
Property and equipment, net			39,610				36,332
Operating lease right of use assets			33,395				33,526
Goodwill			262,963				264,481
Other intangible assets, net			66,637				76,114
Deferred tax assets			8,265				7,125
Other long-term assets			26,699				25,389
TOTAL ASSETS		$	820,216			$	829,902
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt		$	—			$	29,962
Accounts payable			6,515				8,594
Accrued compensation and benefits			35,846				34,772
Current portion of operating lease liabilities			10,770				10,331
Other accrued expenses and current liabilities			27,810				31,404
Deferred revenue			81,343				85,691
Convertible senior notes, net			193,926				—
Total current liabilities			356,210				200,754
Convertible senior notes, net			—				188,300
Operating lease liabilities, net of current portion			23,785				24,323
Deferred revenue, non-current			7,236				9,388
Other long-term liabilities			32,856				27,767
TOTAL LIABILITIES			420,087				450,532
Commitments and contingencies
MEZZANINE EQUITY			784				784
STOCKHOLDERS’ EQUITY:
Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding			—				—
Common stock ($0.0001 par value)
Class A common stock, authorized 513,797 shares, issued and outstanding 46,392 and 44,216 shares as of June 30, 2021, and December 31, 2020, respectively			4				4
Class B common stock, authorized 41,203 shares, issued and outstanding 29,091 and 30,111 shares as of June 30, 2021, and December 31, 2020, respectively			3				3
Additional paid-in capital			495,824				474,669
Accumulated deficit			(92,581	)			(93,293	)
Accumulated other comprehensive loss			(3,905	)			(2,797	)
TOTAL STOCKHOLDERS’ EQUITY			399,345				378,586
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY		$	820,216			$	829,902

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

		Three Months Ended June 30,								Six Months Ended June 30,
(in thousands, except per share data)		2021				2020				2021				2020
Revenue
License		$	66,632			$	51,018			$	163,027			$	128,561
Maintenance and other services			32,926				30,815				66,072				61,715
Total software			99,558				81,833				229,099				190,276
Software related services			7,481				5,444				15,579				12,378
Total software and related services			107,039				87,277				244,678				202,654
Client engineering services			10,268				9,640				20,945				23,518
Other			2,605				1,644				4,452				3,852
Total revenue			119,912				98,561				270,075				230,024
Cost of revenue
License			3,617				2,851				9,012				8,374
Maintenance and other services			12,043				8,502				23,598				18,957
Total software *			15,660				11,353				32,610				27,331
Software related services			5,731				4,656				11,853				10,145
Total software and related services			21,391				16,009				44,463				37,476
Client engineering services			8,293				7,789				17,181				19,107
Other			2,262				1,283				3,724				2,995
Total cost of revenue			31,946				25,081				65,368				59,578
Gross profit			87,966				73,480				204,707				170,446
Operating expenses:
Research and development *			38,757				28,970				77,033				60,437
Sales and marketing *			31,909				25,806				63,979				53,905
General and administrative *			21,861				20,248				45,787				42,594
Amortization of intangible assets			4,615				3,692				9,492				7,532
Other operating income, net			(585	)			(944	)			(1,202	)			(1,835	)
Total operating expenses			96,557				77,772				195,089				162,633
Operating (loss) income			(8,591	)			(4,292	)			9,618				7,813
Interest expense			2,988				2,843				5,961				5,656
Other expense (income), net			708				320				1,543				(1,070	)
(Loss) income before income taxes			(12,287	)			(7,455	)			2,114				3,227
Income tax expense			1,361				2,768				1,402				7,420
Net (loss) income		$	(13,648	)		$	(10,223	)		$	712			$	(4,193	)
(Loss) income per share:
Net (loss) income per share attributable to common stockholders, basic		$	(0.18	)		$	(0.14	)		$	0.01			$	(0.06	)
Net (loss) income per share attributable to common stockholders, diluted		$	(0.18	)		$	(0.14	)		$	0.01			$	(0.06	)
Weighted average shares outstanding:
Weighted average number of shares used in computing net (loss) income per share, basic			75,263				72,999				74,959				72,811
Weighted average number of shares used in computing net (loss) income per share, diluted			75,263				72,999				79,851				72,811

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

		(Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Cost of revenue – software		$	1,222			$	552			$	2,380			$	918
Research and development			4,143				1,830				7,329				3,258
Sales and marketing			3,659				1,273				7,127				2,000
General and administrative			1,624				879				3,460				1,529
Total stock-based compensation expense		$	10,648			$	4,534			$	20,296			$	7,705

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

		Six Months Ended June 30,
(In thousands)		2021				2020
OPERATING ACTIVITIES:
Net income (loss)		$	712			$	(4,193	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			13,180				11,293
Provision for credit loss			205				589
Amortization of debt discount and issuance costs			5,631				5,342
Stock-based compensation expense			20,296				7,705
Deferred income taxes			(1	)			(5,961	)
Other, net			34				3
Changes in assets and liabilities:
Accounts receivable			24,852				23,264
Prepaid expenses and other current assets			(3,367	)			1,817
Other long-term assets			(5,067	)			(960	)
Accounts payable			(967	)			(3,841	)
Accrued compensation and benefits			1,548				497
Other accrued expenses and current liabilities			2,999				161
Deferred revenue			(5,333	)			(2,315	)
Net cash provided by operating activities			54,722				33,401
INVESTING ACTIVITIES:
Capital expenditures			(5,391	)			(2,530	)
Payments for acquisition of developed technology			(344	)			(433	)
Payments for acquisition of businesses, net of cash acquired			—				(2,270	)
Other investing activities, net			(45	)			142
Net cash used in investing activities			(5,780	)			(5,091	)
FINANCING ACTIVITIES:
Payments on revolving commitment			(30,000	)			—
Proceeds from the exercise of stock options			885				477
Other financing activities			(206	)			(210	)
Net cash (used in) provided by financing activities			(29,321	)			267
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(847	)			(1,148	)
Net increase in cash, cash equivalents and restricted cash			18,774				27,429
Cash, cash equivalents and restricted cash at beginning of year			241,547				223,497
Cash, cash equivalents and restricted cash at end of period		$	260,321			$	250,926
Supplemental disclosure of cash flow:
Interest paid		$	339			$	306
Income taxes paid		$	3,744			$	9,491
Supplemental disclosure of non-cash investing and financing activities:
Finance leases		$	—			$	100
Property and equipment in accounts payable, other current liabilities and other liabilities		$	631			$	343

Financial Results

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

		(Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
(in thousands, except per share amounts)		2021				2020				2021				2020
Net (loss) income		$	(13,648	)		$	(10,223	)		$	712			$	(4,193	)
Stock-based compensation expense			10,648				4,534				20,296				7,705
Amortization of intangible assets			4,615				3,692				9,492				7,532
Non-cash interest expense			2,837				2,689				5,637				5,337
Restructuring expense			1,732				—				5,078				—
Special adjustments and other			—				578				—				578
Impact of non-GAAP tax rate			(601	)			1,718				(9,678	)			1,081
Non-GAAP net income		$	5,583			$	2,988			$	31,537			$	18,040
Net (loss) income per share - diluted		$	(0.18	)		$	(0.14	)		$	0.01			$	(0.06	)
Non-GAAP net income per share - diluted		$	0.07			$	0.04			$	0.38			$	0.22
GAAP diluted shares outstanding:			75,263				72,999				79,851				72,811
Non-GAAP diluted shares outstanding:			83,400				80,700				83,400				80,700

The following table provides a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP financial measure:

		(Unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)		2021				2020				2021				2020
Net (loss) income		$	(13,648	)		$	(10,223	)		$	712			$	(4,193	)
Income tax expense			1,361				2,768				1,402				7,420
Stock-based compensation expense			10,648				4,534				20,296				7,705
Interest expense			2,988				2,843				5,961				5,656
Depreciation and amortization			6,494				5,633				13,180				11,293
Restructuring expense			1,732				—				5,078				—
Special adjustments, interest income and other			(79	)			194				(173	)			(460	)
Adjusted EBITDA		$	9,496			$	5,749			$	46,456			$	27,421

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 June 30,								Six Months Ended June 30,
(in thousands)		2021				2020				2021				2020
Net cash provided by operating activities		$	18,151			$	5,365			$	54,722			$	33,401
Capital expenditures			(2,352	)			(886	)			(5,391	)			(2,530	)
Free cash flow		$	15,799			$	4,479			$	49,331			$	30,871

Business Outlook

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

		(Unaudited)
		Three Months Ending September 30, 2021								Year Ending December 31, 2021
(in thousands)		Low				High				Low				High
Net loss		$	(22,800	)		$	(20,900	)		$	(31,600	)		$	(26,800	)
Stock-based compensation expense			11,700				11,700				43,700				43,700
Amortization of intangible assets			4,500				4,500				17,600				17,600
Non-cash interest expense			2,900				2,900				11,400				11,400
Restructuring expense			500				500				5,600				5,600
Impact of non-GAAP tax rate			3,300				2,900				(5,800	)			(6,900	)
Non-GAAP net income		$	100			$	1,600			$	40,900			$	44,600

The following table provides a reconciliation of projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure:

		(Unaudited)
		Three Months Ending September 30, 2021								Year Ending December 31, 2021
(in thousands)		Low				High				Low				High
Net loss		$	(22,800	)		$	(20,900	)		$	(31,600	)		$	(26,800	)
Income tax expense			3,300				3,400				8,600				8,800
Stock-based compensation expense			11,700				11,700				43,700				43,700
Interest expense			3,000				3,000				12,000				12,000
Depreciation and amortization			6,400				6,400				25,000				25,000
Restructuring expense			500				500				5,600				5,600
Special adjustments, interest income and other			(100	)			(100	)			(300	)			(300	)
Adjusted EBITDA		$	2,000			$	4,000			$	63,000			$	68,000

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, 2021
(in thousands)						Low				High
Net cash provided by operating activities						$	43,000			$	48,000
Capital expenditures							(9,000	)			(9,000	)
Free cash flow						$	34,000			$	39,000

FAQ

What were Altair's earnings results for Q2 2021?

Altair reported a total revenue of $119.9 million for Q2 2021, a 21.7% increase from $98.6 million in Q2 2020.

What is Altair's financial outlook for the remainder of 2021?

Altair raised its guidance for full-year 2021, expecting total revenue between $512.0 million and $518.0 million.

What was Altair's adjusted EBITDA for Q2 2021?

Altair's adjusted EBITDA for Q2 2021 was $9.5 million, a 65.2% increase compared to $5.7 million in Q2 2020.

What was the net loss reported by Altair for Q2 2021?

Altair reported a net loss of $13.6 million for Q2 2021, compared to a net loss of $10.2 million in Q2 2020.