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Altair Announces Fourth Quarter and Full Year 2021 Financial Results

·18 min read
Altair Engineering Inc.
Altair Engineering Inc.

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

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

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

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

Fourth Quarter 2021 Financial Highlights

  • Software product revenue was $122.4 million compared to $113.6 million for the fourth quarter of 2020.

  • Total revenue was $140.8 million compared to $133.4 million for the fourth quarter of 2020.

  • Net loss was $(1.4) million compared to net income of $2.2 million for the fourth quarter of 2020. Diluted net loss per share was $(0.02) based on 79.0 million diluted weighted average common shares outstanding, compared to diluted net income per share of $0.03 for the fourth quarter of 2020, based on 78.5 million diluted weighted average common shares outstanding.

  • Adjusted EBITDA was $24.0 million, compared to $21.7 million for the fourth quarter of 2020.

  • Non-GAAP net income was $16.4 million, compared to non-GAAP net income of $14.5 million for the fourth quarter of 2020. Non-GAAP diluted net income per share was $0.19 based on 87.3 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.17 for the fourth quarter of 2020, based on 83.0 million non-GAAP diluted common shares outstanding.

  • Free cash flow was $5.0 million, compared to $3.4 million for the fourth quarter of 2020.

Full Year 2021 Financial Highlights

  • Software product revenue was $453.7 million compared to $391.7 million for the full year of 2020.

  • Total revenue was $532.2 million compared to $469.9 million for the full year of 2020.

  • Net loss was $(8.8) million compared to net loss of $(10.5) million for the full year of 2020. Diluted net loss per share was $(0.12) based on 76.2 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.14) for the full year of 2020, based on 73.2 million diluted weighted average common shares outstanding.

  • Adjusted EBITDA was $85.3 million, compared to $57.3 million for the full year of 2020.

  • Non-GAAP net income was $57.6 million, compared to non-GAAP net income of $37.2 million for the full year of 2020. Non-GAAP diluted net income per share was $0.66 based on 87.3 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.45 for the full year of 2020, based on 83.0 million non-GAAP diluted common shares outstanding.

  • Free cash flow was $53.8 million, compared to $26.8 million for the full year of 2020.

Business Outlook

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

(in millions)

First Quarter 2022

Full Year 2022

Software Product Revenue

$

134.0

to

$

137.0

$

496.0

to

$

508.0

Total Revenue

$

152.0

$

155.0

$

568.0

$

582.0

Net Income (Loss)

$

5.6

$

7.5

$

(23.1

)

$

(13.4

)

Non-GAAP Net Income

$

25.2

$

26.6

$

65.3

$

72.7

Adjusted EBITDA

$

36.0

$

38.0

$

96.0

$

106.0

Net Cash Provided by Operating Activities

$

12.2

$

19.2

Free Cash Flow (1)

$

5.0

$

12.0

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

Conference Call Information

What:

Altair’s Fourth Quarter and Full Year 2021 Financial Results Conference Call

When:

Thursday, February 24, 2022

Time:

5 p.m. ET

Live Call:

(866) 754-5204, Domestic

(636) 812-6621, International

Replay:

(855) 859-2056, Conference ID 8892192, Domestic
(404) 537-3406, Conference ID 8892192, International

Webcast:

http://investor.altair.com (live & replay)

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Net Income Per Share and Free Cash Flow.

Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.

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

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

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

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

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

About Altair

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

Cautionary Language Concerning Forward-Looking Statements

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

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

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

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


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

December 31,

(in thousands)

2021

2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

413,743

$

241,221

Accounts receivable, net

137,561

117,878

Income tax receivable

9,388

6,736

Prepaid expenses and other current assets

27,529

21,100

Total current assets

588,221

386,935

Property and equipment, net

40,478

36,332

Operating lease right of use assets

28,494

33,526

Goodwill

370,178

264,481

Other intangible assets, net

99,057

76,114

Deferred tax assets

8,495

7,125

Other long-term assets

28,352

25,389

TOTAL ASSETS

$

1,163,275

$

829,902

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Current portion of long-term debt

$

$

29,962

Accounts payable

6,647

8,594

Accrued compensation and benefits

42,307

34,772

Current portion of operating lease liabilities

9,933

10,331

Other accrued expenses and current liabilities

122,226

31,404

Deferred revenue

93,160

85,691

Convertible senior notes, net

199,705

Total current liabilities

473,978

200,754

Convertible senior notes, net

188,300

Operating lease liabilities, net of current portion

19,550

24,323

Deferred revenue, non-current

12,872

9,388

Other long-term liabilities

42,894

27,767

TOTAL LIABILITIES

549,294

450,532

Commitments and contingencies

MEZZANINE EQUITY

784

784

STOCKHOLDERS’ EQUITY

Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued or outstanding

Common stock ($0.0001 par value)

Class A common stock, authorized 513,797 shares, issued and outstanding 51,524 and 44,216 shares as of December 31, 2021 and 2020, respectively

5

4

Class B common stock, authorized 41,203 shares, issued and outstanding 27,745 and 30,111 shares as of December 31, 2021 and 2020, respectively

3

3

Additional paid-in capital

724,226

474,669

Accumulated deficit

(102,087

)

(93,293

)

Accumulated other comprehensive loss

(8,950

)

(2,797

)

TOTAL STOCKHOLDERS’ EQUITY

613,197

378,586

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

$

1,163,275

$

829,902


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

For the Three Months Ended
December 31,

For the Year Ended
December 31,

(in thousands, except per share data)

2021

2020

2021

2020

Revenue

License

$

94,178

$

76,381

$

324,808

$

259,965

Maintenance and other services

28,180

37,244

128,938

131,746

Total software

122,358

113,625

453,746

391,711

Software related services

8,594

7,906

31,823

26,454

Total software and related services

130,952

121,531

485,569

418,165

Client engineering services

8,277

9,934

39,282

44,320

Other

1,568

1,976

7,328

7,436

Total revenue

140,797

133,441

532,179

469,921

Cost of revenue

License

6,223

6,786

19,929

19,637

Maintenance and other services

12,494

10,105

47,862

38,688

Total software *

18,717

16,891

67,791

58,325

Software related services

5,645

6,102

23,205

21,243

Total software and related services

24,362

22,993

90,996

79,568

Client engineering services

6,547

8,067

31,710

35,684

Other

1,888

1,631

6,960

6,053

Total cost of revenue

32,797

32,691

129,666

121,305

Gross profit

108,000

100,750

402,513

348,616

Operating expenses:

Research and development *

38,177

34,966

151,049

126,081

Sales and marketing *

38,182

30,537

132,750

111,440

General and administrative *

23,517

22,933

91,500

86,432

Amortization of intangible assets

4,433

4,986

18,357

16,376

Other operating (income) loss, net

(956

)

5

(3,482

)

(3,426

)

Total operating expenses

103,353

93,427

390,174

336,903

Operating income

4,647

7,323

12,339

11,713

Interest expense

3,067

3,008

12,065

11,598

Other (income) loss, net

(1,105

)

(65

)

562

(1,917

)

Income (loss) before income taxes

2,685

4,380

(288

)

2,032

Income tax expense

4,082

2,182

8,506

12,532

Net (loss) income

$

(1,397

)

$

2,198

$

(8,794

)

$

(10,500

)

(Loss) income per share:

Net (loss) income per share attributable to common stockholders, basic

$

(0.02

)

$

0.03

$

(0.12

)

$

(0.14

)

Net (loss) income per share attributable to common stockholders, diluted

$

(0.02

)

$

0.03

$

(0.12

)

$

(0.14

)

Weighted average shares outstanding:

Weighted average number of shares used in computing net (loss) income per share, basic

79,008

74,020

76,179

73,241

Weighted average number of shares used in computing net (loss) income per share, diluted

79,008

78,484

76,179

73,241

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

(Unaudited)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2021

2020

2021

2020

Cost of revenue-software

$

1,828

$

871

$

5,619

$

2,473

Research and development

5,338

2,686

16,561

8,372

Sales and marketing

4,244

2,474

15,044

6,423

General and administrative

1,910

1,385

7,325

4,087

Total stock-based compensation expense

$

13,320

$

7,416

$

44,549

$

21,355


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

Year Ended December 31,

(in thousands)

2021

2020

OPERATING ACTIVITIES:

Net loss

$

(8,794

)

$

(10,500

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

25,644

23,806

Provision for credit loss

514

1,259

Amortization of debt discount and issuance costs

11,428

10,829

Stock-based compensation expense

44,549

21,355

Deferred income taxes

(1,502

)

(10,350

)

Other, net

757

118

Changes in assets and liabilities:

Accounts receivable

(15,645

)

(11,032

)

Prepaid expenses and other current assets

(9,026

)

(2,131

)

Other long-term assets

(6,682

)

(4,527

)

Accounts payable

(3,857

)

(1,839

)

Accrued compensation and benefits

7,761

1,985

Other accrued expenses and current liabilities

6,365

5,629

Deferred revenue

10,111

8,280

Net cash provided by operating activities

61,623

32,882

INVESTING ACTIVITIES:

Payments for acquisition of businesses, net of cash acquired

(53,983

)

(41,028

)

Capital expenditures

(7,849

)

(6,093

)

Payments for acquisition of developed technology

(344

)

(2,133

)

Other investing activities, net

(306

)

162

Net cash used in investing activities

(62,482

)

(49,092

)

FINANCING ACTIVITIES:

Proceeds from private placement of common stock

200,000

Payments on revolving commitment

(30,000

)

Proceeds from employee stock purchase plan contributions

4,222

Proceeds from the exercise of common stock options

2,262

1,710

Borrowings under revolving commitment

30,000

Other financing activities

(537

)

(460

)

Net cash provided by financing activities

175,947

31,250

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(2,623

)

3,010

Net increase in cash, cash equivalents and restricted cash

172,465

18,050

Cash, cash equivalents and restricted cash at beginning of year

241,547

223,497

Cash, cash equivalents and restricted cash at end of period

$

414,012

$

241,547

Supplemental disclosures of cash flow:

Interest paid

$

633

$

731

Income taxes paid

$

9,168

$

12,666

Supplemental disclosure of non-cash investing and financing activities:

Issuance of common stock in connection with acquisitions

$

3,690

$

3,504

Promissory notes issued and deferred payment obligations for acquisitions

$

86,936

$

1,266

Finance leases

$

9

$

118

Property and equipment in accounts payable and other current liabilities

$

1,056

$

1,671

Financial Results

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

(Unaudited)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

(in thousands, except per share amounts)

2021

2020

2021

2020

Net (loss) income

$

(1,397

)

$

2,198

$

(8,794

)

$

(10,500

)

Stock-based compensation expense

13,320

7,416

44,549

21,355

Amortization of intangible assets

4,433

4,986

18,357

16,376

Non-cash interest expense

2,915

2,762

11,428

10,824

Restructuring expense

99

5,053

Impact of non-GAAP tax rate

(1,696

)

(2,900

)

(11,740

)

(525

)

Special adjustments and other (1)

(1,229

)

(1,229

)

(372

)

Non-GAAP net income

16,445

14,462

57,624

37,158

Depreciation expense

1,856

1,904

7,287

7,430

Cash interest (income) expense

(114

)

244

96

(357

)

Income tax expense, net of non-GAAP impact

5,778

5,082

20,246

13,057

Adjusted EBITDA

$

23,965

$

21,692

$

85,253

$

57,288

Net (loss) income per share, diluted

$

(0.02

)

$

0.03

$

(0.12

)

$

(0.14

)

Non-GAAP net income per share, diluted

$

0.19

$

0.17

$

0.66

$

0.45

GAAP diluted shares outstanding:

79,008

78,484

76,179

73,241

Non-GAAP diluted shares outstanding:

87,300

83,000

87,300

83,000

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

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

(Unaudited)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

(in thousands)

2021

2020

2021

2020

Net cash provided by operating activities

$

6,029

$

5,503

$

61,623

$

32,882

Capital expenditures

(1,038

)

(2,087

)

(7,849

)

(6,093

)

Free Cash Flow

$

4,991

$

3,416

$

53,774

$

26,789


Business Outlook

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

(Unaudited)

Three Months Ending
March 31, 2022

Year Ending
December 31, 2022

(in thousands)

Low

High

Low

High

Net income (loss)

$

5,600

$

7,500

$

(23,100

)

$

(13,400

)

Stock-based compensation expense

18,000

18,000

71,600

71,600

Amortization of intangible assets

5,900

5,900

23,000

23,000

Non-cash interest expense

300

300

1,300

1,300

Impact of non-GAAP tax rate

(4,600

)

(5,100

)

(7,500

)

(9,800

)

Non-GAAP net income

25,200

26,600

65,300

72,700

Depreciation expense

1,900

1,900

7,400

7,400

Cash interest expense, net

100

100

300

300

Income tax expense, net of non-GAAP impact

8,800

9,400

23,000

25,600

Adjusted EBITDA

$

36,000

$

38,000

$

96,000

$

106,000

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

(Unaudited)

Year Ending
December 31, 2022

(in thousands)

Low

High

Net cash provided by operating activities (1)

$

12,200

$

19,200

Capital expenditures

(7,200

)

(7,200

)

Free Cash Flow (1)

$

5,000

$

12,000

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