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Altair Announces Third Quarter 2023 Financial Results

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Altair, a global leader in computational science and AI, reported strong financial results for Q3 2023. Software product revenue increased by 14.8% to $119.1 million compared to Q3 2022. Total revenue reached $134.0 million, a 12.3% increase. Net loss improved to $(4.4) million from $(33.2) million in Q3 2022. Non-GAAP net income rose by 197.0% to $12.7 million. Adjusted EBITDA increased by 126.3% to $15.5 million. Altair provided positive guidance for Q4 2023 and expects software product revenue of $153-159 million and total revenue of $169 million.
Positive
  • Altair's software product revenue increased by 14.8% to $119.1 million in Q3 2023 compared to the same period last year.
  • Net loss improved to $(4.4) million in Q3 2023 from $(33.2) million in Q3 2022.
  • Non-GAAP net income rose by 197.0% to $12.7 million in Q3 2023 compared to Q3 2022.
  • Adjusted EBITDA increased by 126.3% to $15.5 million in Q3 2023 compared to the same period last year.
Negative
  • None.

Quarterly Software Product Revenue Increased more than 14% Year-Over-Year

TROY, Mich., Nov. 02, 2023 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence, today released its financial results for the third quarter and nine months ended September 30, 2023.

"The third quarter of 2023 was excellent for Altair, with software product revenue and total revenue again above the high end of guidance," said James Scapa, founder, chairman and chief executive officer of Altair. "Our Q3 performance demonstrates the power and veracity of our vision for the convergence of computational science and AI across industries and verticals including engineering, scientific discovery, and business."

"Fiscal 2023 continues to progress in a positive way," said Matt Brown, chief financial officer of Altair. "Our performance through the first nine months of 2023 gives us confidence we're on track to meet our financial goals for the year."

Third Quarter 2023 Financial Highlights

  • Software product revenue was $119.1 million compared to $103.8 million for the third quarter of 2022, an increase of 14.8% in reported currency and 14.5% in constant currency
  • Total revenue was $134.0 million compared to $119.4 million for the third quarter of 2022, an increase of 12.3% in reported currency and 11.9% in constant currency
  • Net loss was $(4.4) million compared to net loss of $(33.2) million for the third quarter of 2022. Net loss per share, diluted was $(0.05) based on 80.4 million diluted weighted average common shares outstanding, compared to net loss per share, diluted of $(0.42) for the third quarter of 2022, based on 79.2 million diluted weighted average common shares outstanding. Net loss margin was -3.3% compared to net loss margin of -27.9% for the third quarter of 2022
  • Non-GAAP net income was $12.7 million, compared to non-GAAP net income of $4.3 million for the third quarter of 2022, an increase of 197.0%. Non-GAAP net income per share, diluted was $0.14 based on 88.6 million non-GAAP diluted common shares outstanding, compared to non-GAAP net income per share, diluted of $0.05 for the third quarter of 2022, based on 88.1 million non-GAAP diluted common shares outstanding
  • Adjusted EBITDA was $15.5 million compared to $6.8 million for the third quarter of 2022, an increase of 126.3%. Adjusted EBITDA margin was 11.5% compared to 5.7% for the third quarter of 2022
  • Cash provided by operating activities was $16.4 million, compared to $8.5 million for the third quarter of 2022
  • Free cash flow was $14.7 million, compared to $5.2 million for the third quarter of 2022.

Business Outlook

Based on information available as of today, Altair is issuing the following guidance for the fourth quarter and full year 2023:

(in millions, except %) Fourth Quarter 2023  Full Year 2023 
Software Product Revenue $153 to$159  $547 to$553 
Growth Rate  5.6%  9.7%  8.0%  9.2%
Growth Rate - Constant Currency  5.1%  9.3%  9.4%  10.6%
Total Revenue $169  $175  $610  $616 
Growth Rate  5.3%  9.1%  6.6%  7.7%
Growth Rate - Constant Currency  4.9%  8.6%  7.9%  9.0%
Net Income (Loss) $15.5  $21.3  $(12.6) $(6.8)
Non-GAAP Net Income $33.6  $38.0  $91.6  $96.1 
Adjusted EBITDA $44  $50  $120  $126 
Net Cash Provided by Operating Activities       $118  $126 
Free Cash Flow       $108  $116 

The following table provides a reconciliation of Full Year 2023 guidance to the last guidance provided in August:

 (Unaudited) 
 Full Year 2023 
(in millions)Midpoint of Guidance in August  Increase/
(Decrease)
  Currency Fluctuations from Prior Guidance  Midpoint of Guidance in November 
Software Product Revenue$553.0  $  $(3.0) $550.0 
Total Revenue$616.0  $  $(3.0) $613.0 
Adjusted EBITDA$124.0  $  $(1.0) $123.0 


Conference Call Information
  
What:Altair’s Third Quarter 2023 Financial Results Conference Call
When:Thursday, November 2, 2023
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 science and artificial intelligence (AI) 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. 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 2023, our statements regarding our expectations for 2023, 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
 
 September 30, 2023  December 31, 2022 
(In thousands)(Unaudited)    
ASSETS     
CURRENT ASSETS:     
Cash and cash equivalents$431,188  $316,146 
Accounts receivable, net 121,855   170,279 
Income tax receivable 12,402   11,259 
Prepaid expenses and other current assets 26,561   29,142 
Total current assets 592,006   526,826 
Property and equipment, net 38,167   37,517 
Operating lease right of use assets 32,132   33,601 
Goodwill 452,822   449,048 
Other intangible assets, net 86,491   107,609 
Deferred tax assets 8,046   9,727 
Other long-term assets 42,327   40,410 
TOTAL ASSETS$1,251,991  $1,204,738 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
CURRENT LIABILITIES:     
Accounts payable$5,159  $10,434 
Accrued compensation and benefits 39,468   42,456 
Current portion of operating lease liabilities 9,209   10,396 
Other accrued expenses and current liabilities 50,917   56,371 
Deferred revenue 110,843   113,081 
Current portion of convertible senior notes, net 81,319    
Total current liabilities 296,915   232,738 
Convertible senior notes, net 225,635   305,604 
Operating lease liabilities, net of current portion 23,373   24,065 
Deferred revenue, non-current 28,090   31,379 
Other long-term liabilities 43,860   41,216 
TOTAL LIABILITIES 617,873   635,002 
Commitments and contingencies     
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 54,351
and 52,277 shares as of September 30, 2023, and December 31, 2022, respectively
 5   5 
Class B common stock, authorized 41,203 shares, issued and outstanding 27,045
and 27,745 shares as of September 30, 2023, and December 31, 2022, respectively
 3   3 
Additional paid-in capital 816,551   721,307 
Accumulated deficit (150,178)  (121,577)
Accumulated other comprehensive loss (32,263)  (30,002)
TOTAL STOCKHOLDERS’ EQUITY 634,118   569,736 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$1,251,991  $1,204,738 


ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands, except per share data)2023  2022  2023  2022 
Revenue           
License$79,825  $67,245  $279,972  $256,102 
Maintenance and other services 39,252   36,520   114,069   105,453 
Total software 119,077   103,765   394,041   361,555 
Software related services 6,517   6,706   20,281   23,143 
Total software and related services 125,594   110,471   414,322   384,698 
Client engineering services 7,126   7,355   22,936   22,414 
Other 1,283   1,525   3,940   4,676 
Total revenue 134,003   119,351   441,198   411,788 
Cost of revenue           
License 3,083   2,579   11,888   11,386 
Maintenance and other services 13,689   13,025   41,754   38,628 
Total software * 16,772   15,604   53,642   50,014 
Software related services 5,251   5,240   16,175   16,739 
Total software and related services 22,023   20,844   69,817   66,753 
Client engineering services 5,930   5,835   19,321   18,390 
Other 1,133   1,230   3,480   3,892 
Total cost of revenue 29,086   27,909   92,618   89,035 
Gross profit 104,917   91,442   348,580   322,753 
Operating expenses:           
Research and development * 51,598   53,092   160,126   150,608 
Sales and marketing * 44,069   41,352   132,543   120,345 
General and administrative * 17,218   18,258   53,791   54,054 
Amortization of intangible assets 7,704   6,571   23,143   18,682 
Other operating (income) expense, net (4,408)  (2,835)  1,324   (9,383)
Total operating expenses 116,181   116,438   370,927   334,306 
Operating loss (11,264)  (24,996)  (22,347)  (11,553)
Interest expense 1,529   1,566   4,583   2,851 
Other (income) expense, net (1,890)  2,107   (9,698)  26,082 
Loss before income taxes (10,903)  (28,669)  (17,232)  (40,486)
Income tax (benefit) expense (6,541)  4,579   11,369   15,008 
Net loss$(4,362) $(33,248) $(28,601) $(55,494)
Loss per share:           
Net loss per share attributable to common
stockholders, basic and diluted
$(0.05) $(0.42) $(0.36) $(0.70)
Weighted average shares outstanding:           
Weighted average number of shares used in computing
net loss per share, basic and diluted
 80,431   79,207   80,204   79,205 


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

 (Unaudited) 
 Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands)2023  2022  2023  2022 
Cost of revenue – software$2,468  $2,332  $7,792  $6,265 
Research and development 7,824   10,243   26,510   26,580 
Sales and marketing 6,933   7,806   22,105   22,505 
General and administrative 3,301   2,329   10,016   7,174 
Total stock-based compensation expense$20,526  $22,710  $66,423  $62,524 


 (Unaudited) 
 Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands)2023  2022  2023  2022 
Employee stock-based compensation plans$19,187  $15,490  $56,860  $43,622 
Post combination expense in connection with acquisitions 1,339   7,220   9,563   18,902 
Total stock-based compensation expense$20,526  $22,710  $66,423  $62,524 



ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
 
 Nine Months Ended September 30, 
(In thousands)2023  2022 
OPERATING ACTIVITIES:     
Net loss$(28,601) $(55,494)
Adjustments to reconcile net loss to net cash provided by operating activities:     
Depreciation and amortization 29,271   24,092 
Stock-based compensation expense 66,423   62,524 
Amortization of debt issuance costs 1,399   1,330 
Deferred income taxes 2,178   4 
Loss (gain) on mark-to-market adjustment of contingent consideration 4,494   (7,482)
Expense on repurchase of convertible senior notes    16,621 
Other, net (14)  336 
Changes in assets and liabilities:     
Accounts receivable, net 47,226   13,859 
Prepaid expenses and other current assets 959   1,906 
Other long-term assets (1,491)  3,134 
Accounts payable (5,494)  (270)
Accrued compensation and benefits (2,726)  (3,639)
Other accrued expenses and current liabilities (4,526)  (48,698)
Deferred revenue (3,442)  18,311 
Net cash provided by operating activities 105,656   26,534 
INVESTING ACTIVITIES:     
Capital expenditures (7,882)  (6,721)
Payments for acquisition of businesses, net of cash acquired (3,235)  (134,130)
Other investing activities, net (2,452)  (10,322)
Net cash used in investing activities (13,569)  (151,173)
FINANCING ACTIVITIES:     
Proceeds from the exercise of common stock options 25,526   2,840 
Payments for repurchase and retirement of common stock (6,255)  (4,387)
Proceeds from employee stock purchase plan contributions 5,772   6,549 
Proceeds from issuance of convertible senior notes, net of discounts and commissions    224,265 
Repurchase of convertible senior notes    (192,422)
Payments of debt issuance costs    (1,523)
Other financing activities (73)  (170)
Net cash provided by financing activities 24,970   35,152 
Effect of exchange rate changes on cash, cash equivalents and restricted cash (2,599)  (12,142)
Net increase (decrease) in cash, cash equivalents and restricted cash 114,458   (101,629)
Cash, cash equivalents and restricted cash at beginning of year 316,958   414,012 
Cash, cash equivalents and restricted cash at end of period$431,416  $312,383 


Financial Results

The following table provides a reconciliation of 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
September 30,
  Nine Months Ended
September 30,
 
(in thousands, except per share amounts)2023  2022  2023  2022 
Net loss$(4,362) $(33,248) $(28,601) $(55,494)
Stock-based compensation expense 20,526   22,710   66,423   62,524 
Amortization of intangible assets 7,704   6,571   23,143   18,682 
Non-cash interest expense 469   501   1,399   1,339 
Impact of non-GAAP tax rate(1) (10,997)  3,079   (8,897)  (1,878)
Special adjustments and other(2) (658)  4,657   4,212   22,886 
Non-GAAP net income$12,682  $4,270  $57,679  $48,059 
            
Net loss per share, diluted$(0.05) $(0.42) $(0.36) $(0.70)
Non-GAAP net income per share, diluted$0.14  $0.05  $0.65  $0.55 
            
GAAP diluted shares outstanding 80,431   79,207   80,204   79,205 
Non-GAAP diluted shares outstanding 88,556   88,100   88,066   86,708 


(1)The Company uses a non-GAAP effective tax rate of 26%.
(2)The three months ended September 30, 2023, includes a $3.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $2.8 million of currency losses on acquisition-related intercompany loans. The three months ended September 30, 2022, includes $6.8 million of currency losses on acquisition-related intercompany loans, and a $2.2 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2023, includes a $4.5 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $0.3 million of currency gains on acquisition-related intercompany loans. The nine months ended September 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and a $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition.


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

 (Unaudited) 
 Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands)2023  2022  2023  2022 
Net loss$(4,362) $(33,248) $(28,601) $(55,494)
Income tax (benefit) expense (6,541)  4,579   11,369   15,008 
Stock-based compensation expense 20,526   22,710   66,423   62,524 
Interest expense 1,529   1,566   4,583   2,851 
Depreciation and amortization 9,783   8,273   29,271   24,092 
Special adjustments, interest income and other(1) (5,481)  2,949   (7,480)  20,878 
Adjusted EBITDA$15,454  $6,829  $75,565  $69,859 


(1)The three months ended September 30, 2023, includes $4.8 million of interest income, a $3.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $2.8 million currency losses on acquisition-related intercompany loans. The three months ended September 30, 2022, includes $6.8 million currency losses on acquisition-related intercompany loans, a $2.2 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $1.7 million of interest income. The nine months ended September 30, 2023, includes $11.7 million of interest income, a $4.5 million loss from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $0.3 million currency gains on acquisition-related intercompany loans. The nine months ended September 30, 2022, includes $16.6 million expense on repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans, a $7.5 million gain from the mark-to-market adjustment of contingent consideration associated with the World Programming acquisition, and $2.0 million of interest income.



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
September 30,
  Nine Months Ended
September 30,
 
(in thousands)2023  2022  2023  2022 
Net cash provided by operating activities(1)$16,427  $8,493  $105,656  $26,534 
Capital expenditures (1,698)  (3,264)  (7,882)  (6,721)
Free cash flow(1)$14,729  $5,229  $97,774  $19,813 


(1)The nine months ended September 30, 2022, includes a $65.9 million payment in January 2022 for a damages judgement assumed as part of an acquisition in December 2021.


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
September 30,
  Nine Months Ended
September 30,
 
(in thousands)2023  2022  2023  2022 
Gross profit$104,917  $91,442  $348,580  $322,753 
Stock-based compensation expense 2,468   2,332   7,792   6,265 
Non-GAAP gross profit$107,385  $93,774  $356,372  $329,018 
            
Gross profit margin 78.3%  76.6%  79.0%  78.4%
Non-GAAP gross margin 80.1%  78.6%  80.8%  79.9%


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
September 30,
  Nine Months Ended
September 30,
 
(in thousands)2023  2022  2023  2022 
Total operating expense$116,181  $116,438  $370,927  $334,306 
Stock-based compensation expense (18,058)  (20,378)  (58,631)  (56,259)
Amortization (7,704)  (6,571)  (23,143)  (18,682)
Gain (loss) on mark-to-market adjustment of contingent consideration 3,493   2,178   (4,494)  7,482 
Non-GAAP operating expense$93,912  $91,667  $284,659  $266,847 


The following table provides a reconciliation of Billings to revenue, the most comparable GAAP financial measure:

 (Unaudited) 
 Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
(in thousands)2023  2022  2023  2022 
Revenue$134,003  $119,351  $441,198  $411,788 
Ending deferred revenue 138,933   116,540   138,933   116,540 
Beginning deferred revenue (148,547)  (112,926)  (144,460)  (106,032)
Deferred revenue acquired    (26)     (2,598)
Billings$124,389  $122,939  $435,671  $419,698 


The following table provides revenue, Billings and Adjusted EBITDA on a constant currency basis:

 (Unaudited) 
 Three Months Ended
September 30, 2023
  Three Months Ended September 30, 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$119.1  $(0.3) $118.8  $103.8   14.8%  14.5%
Total revenue$134.0  $(0.4) $133.6  $119.4   12.3%  11.9%
Billings$124.4  $(1.3) $123.1  $122.9   1.2%  0.1%
Adjusted EBITDA$15.5  $1.0  $16.5  $6.8   126.3%  142.1%
                  
                  
 (Unaudited) 
 Nine Months Ended
September 30, 2023
  Nine Months Ended September 30, 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$394.0  $7.7  $401.7  $361.6   9.0%  11.1%
Total revenue$441.2  $8.0  $449.2  $411.8   7.1%  9.1%
Billings$435.7  $6.5  $442.2  $419.7   3.8%  5.4%
Adjusted EBITDA$75.6  $4.9  $80.5  $69.9   8.2%  15.2%


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 (loss), the most comparable GAAP financial measure:

 (Unaudited) 
 Three Months Ending
December 31, 2023
  Year Ending
December 31, 2023
 
(in thousands)Low  High  Low  High 
Net income (loss)$15,500  $21,300  $(12,600) $(6,800)
Stock-based compensation expense 17,100   17,100   83,500   83,500 
Amortization of intangible assets 7,400   7,400   30,500   30,500 
Non-cash interest expense 500   500   1,900   1,900 
Impact of non-GAAP tax rate(1) (6,900)  (8,300)  (15,900)  (17,200)
Special adjustments and other(2)       4,200   4,200 
Non-GAAP net income$33,600  $38,000  $91,600  $96,100 


(1)The Company uses a non-GAAP effective tax rate of 26%.
(2)The year ending December 31, 2023, includes $4.5 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $0.3 million currency gains on acquisition-related intercompany loans.


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

 (Unaudited) 
 Three Months Ending
December 31, 2023
  Year Ending
December 31, 2023
 
(in thousands)Low  High  Low  High 
Net income (loss)$15,500  $21,300  $(12,600) $(6,800)
Income tax expense 4,900   5,100   16,300   16,500 
Stock-based compensation expense 17,100   17,100   83,500   83,500 
Interest (income) expense (3,000)  (3,000)  (10,100)  (10,100)
Depreciation and amortization 9,500   9,500   38,700   38,700 
Special adjustments and other(1)       4,200   4,200 
Adjusted EBITDA$44,000  $50,000  $120,000  $126,000 


(1)The year ending December 31, 2023, includes $4.5 million loss from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition and $0.3 million currency gains on acquisition-related intercompany loans.


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, 2023
 
(in thousands)Low  High 
Net cash provided by operating activities$118,400  $126,400 
Capital expenditures (10,400)  (10,400)
Free cash flow$108,000  $116,000 


FAQ

What is Altair's stock symbol?

Altair's stock symbol is ALTR.

Who is Altair's CEO?

Altair's CEO is James Scapa.

What was Altair's net loss in Q3 2022?

Altair's net loss in Q3 2022 was $(33.2) million.

What is Altair's guidance for Q4 2023 software product revenue?

Altair expects software product revenue of $153-159 million in Q4 2023.

What is Altair's guidance for Q4 2023 total revenue?

Altair expects total revenue of $169 million in Q4 2023.

Altair Engineering Inc.

NASDAQ:ALTR

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9.21B
58.39M
2.27%
109.77%
3.7%
Software - Infrastructure
Services-prepackaged Software
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United States of America
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