Advertisement
U.S. markets closed
  • S&P 500

    5,088.80
    +1.77 (+0.03%)
     
  • Dow 30

    39,131.53
    +62.42 (+0.16%)
     
  • Nasdaq

    15,996.82
    -44.80 (-0.28%)
     
  • Russell 2000

    2,016.69
    +2.85 (+0.14%)
     
  • Crude Oil

    76.57
    -2.04 (-2.60%)
     
  • Gold

    2,045.80
    +15.10 (+0.74%)
     
  • Silver

    22.98
    +0.19 (+0.84%)
     
  • EUR/USD

    1.0823
    -0.0005 (-0.04%)
     
  • 10-Yr Bond

    4.2600
    -0.0670 (-1.55%)
     
  • GBP/USD

    1.2673
    +0.0015 (+0.12%)
     
  • USD/JPY

    150.4400
    -0.0600 (-0.04%)
     
  • Bitcoin USD

    50,830.93
    -449.41 (-0.88%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,706.28
    +21.79 (+0.28%)
     
  • Nikkei 225

    39,098.68
    +836.48 (+2.19%)
     

Altair Announces Third Quarter 2022 Financial Results

Altair Engineering Inc.
Altair Engineering Inc.

Altair Beats Third Quarter Expectations, Raises Full Year Guidance in Constant Currency

TROY, Mich., Nov. 03, 2022 (GLOBE NEWSWIRE) -- Altair (Nasdaq: ALTR), a global leader in computational science and artificial intelligence (AI), today released its financial results for the third quarter ended September 30, 2022.

“Altair had a solid third quarter, showing exceptional momentum despite significant macro-economic uncertainty, led by double digit growth in billings on a constant currency basis and strong demand across all geographies,” said James Scapa, founder, chairman and chief executive officer of Altair. “Our dedicated global teams continue to push forward with outstanding technology developments and applications.”

“We're very pleased with the third quarter, continuing the success we had in the first half of the year,” said Matt Brown, chief financial officer of Altair. “Our third quarter revenue was at the high end of our guidance range, despite significant currency headwinds, while our profitability exceeded our expectations. These strong results give us the confidence to raise our full year 2022 guidance in constant currency.”

Third Quarter 2022 Financial Highlights

  • Software product revenue was $103.8 million compared to $102.3 million for the third quarter of 2021, an increase of 1.4% in reported currency and 10.1% in constant currency

  • Total revenue was $119.4 million compared to $121.3 million for the third quarter of 2021, a decrease of 1.6% in reported currency and an increase of 6.3% in constant currency

  • Net loss was $(33.2) million compared to $(8.1) million for the third quarter of 2021. Diluted net loss per share was $(0.42) based on 79.2 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.11) for the third quarter of 2021, based on 75.8 million diluted weighted average common shares outstanding. Net loss margin was -27.9% compared to -6.7% for the third quarter of 2021

  • Non-GAAP net income was $4.3 million, compared to non-GAAP net income of $9.6 million for the third quarter of 2021, a decrease of 55.7%. Non-GAAP diluted net income per share was $0.05 based on 88.1 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net income per share of $0.12 for the third quarter of 2021, based on 81.1 million non-GAAP diluted common shares outstanding

  • Adjusted EBITDA was $6.8 million compared to $14.8 million for the third quarter of 2021, a decrease of 54.0%. Adjusted EBITDA margin was 5.7% compared to 12.2% for the third quarter of 2021

  • Cash provided by operating activities was $8.5 million, compared to $0.9 million for the third quarter of 2021

  • Free cash flow was $5.2 million, compared to $(0.5) million for the third quarter of 2021.

Business Outlook

Based on information available as of today, Altair is issuing the following guidance for the fourth quarter and full year 2022:

(in millions)

Fourth Quarter 2022

 

Full Year 2022

 

Software Product Revenue

 

$

126.0

 

to

$

131.0

 

 

$

488.0

 

to

$

493.0

 

Total Revenue

 

$

143.0

 

 

$

148.0

 

 

$

555.0

 

 

$

560.0

 

Net Loss

 

$

(15.0

)

 

$

(12.1

)

 

$

(70.3

)

 

$

(67.4

)

Non-GAAP Net Income

 

$

15.5

 

 

$

17.8

 

 

$

63.8

 

 

$

66.0

 

Adjusted EBITDA

 

$

22.0

 

 

$

25.0

 

 

$

92.0

 

 

$

95.0

 

Net Cash Provided by Operating Activities

 

 

 

 

 

 

 

$

23.0

 

 

$

27.0

 

Free Cash Flow

 

 

 

 

 

 

 

$

14.0

 

 

$

18.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table provides a reconciliation of 2022 Full Year guidance to the last guidance provided in August:

 

 

(Unaudited)

 

 

 

Full Year 2022

 

(in millions)

 

Midpoint of
Guidance in
August

 

 

Increase/
(Decrease)

 

 

Currency
Fluctuations
from Prior
Guidance

 

 

Midpoint of
Guidance in
November

 

Software Product Revenue

 

$

492.5

 

 

$

4.2

 

 

$

(6.2

)

 

$

490.5

 

Total Revenue

 

$

560.5

 

 

$

3.7

 

 

$

(6.7

)

 

$

557.5

 

Adjusted EBITDA

 

$

94.0

 

 

$

1.0

 

 

$

(1.5

)

 

$

93.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conference Call Information

What:

 

Altair’s Third Quarter 2022 Financial Results Conference Call

When:

 

Thursday, November 3, 2022

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, 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 as defined starting with Q1 2022, includes the diluted weighted average shares outstanding per GAAP regardless of whether the Company is in a loss position. All periods presented will be adjusted to align with this new definition.

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 2022, our statements regarding our expectations 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
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, 2022

 

 

December 31, 2021

 

(In thousands)

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

311,853

 

 

$

413,743

 

Accounts receivable, net

 

 

119,921

 

 

 

137,561

 

Income tax receivable

 

 

10,465

 

 

 

9,388

 

Prepaid expenses and other current assets

 

 

23,492

 

 

 

27,529

 

Total current assets

 

 

465,731

 

 

 

588,221

 

Property and equipment, net

 

 

38,938

 

 

 

40,478

 

Operating lease right of use assets

 

 

32,627

 

 

 

28,494

 

Goodwill

 

 

455,211

 

 

 

370,178

 

Other intangible assets, net

 

 

86,080

 

 

 

99,057

 

Deferred tax assets

 

 

7,605

 

 

 

8,495

 

Other long-term assets

 

 

38,736

 

 

 

28,352

 

TOTAL ASSETS

 

$

1,124,928

 

 

$

1,163,275

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

6,235

 

 

$

6,647

 

Accrued compensation and benefits

 

 

37,036

 

 

 

42,307

 

Current portion of operating lease liabilities

 

 

9,996

 

 

 

9,933

 

Other accrued expenses and current liabilities

 

 

50,686

 

 

 

122,226

 

Deferred revenue

 

 

94,523

 

 

 

93,160

 

Convertible senior notes, net

 

 

 

 

 

199,705

 

Total current liabilities

 

 

198,476

 

 

 

473,978

 

Operating lease liabilities, net of current portion

 

 

23,466

 

 

 

19,550

 

Deferred revenue, non-current

 

 

22,017

 

 

 

12,872

 

Convertible senior notes, net

 

 

305,158

 

 

 

 

Other long-term liabilities

 

 

40,282

 

 

 

42,894

 

TOTAL LIABILITIES

 

 

589,399

 

 

 

549,294

 

Commitments and contingencies

 

 

 

 

 

 

MEZZANINE EQUITY

 

 

 

 

 

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 52,377 and 51,524 shares as of September 30, 2022, and December 31, 2021, respectively

 

 

5

 

 

 

5

 

Class B common stock, authorized 41,203 shares, issued and outstanding 27,745 shares as of September 30, 2022, and December 31, 2021

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

715,736

 

 

 

724,226

 

Accumulated deficit

 

 

(133,642

)

 

 

(102,087

)

Accumulated other comprehensive loss

 

 

(46,573

)

 

 

(8,950

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

535,529

 

 

 

613,197

 

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

$

1,124,928

 

 

$

1,163,275

 


 

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)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

License

 

$

67,245

 

 

$

67,603

 

 

$

256,102

 

 

$

230,630

 

Maintenance and other services

 

 

36,520

 

 

 

34,686

 

 

 

105,453

 

 

 

100,758

 

Total software

 

 

103,765

 

 

 

102,289

 

 

 

361,555

 

 

 

331,388

 

Software related services

 

 

6,706

 

 

 

7,650

 

 

 

23,143

 

 

 

23,229

 

Total software and related services

 

 

110,471

 

 

 

109,939

 

 

 

384,698

 

 

 

354,617

 

Client engineering services

 

 

7,355

 

 

 

10,060

 

 

 

22,414

 

 

 

31,005

 

Other

 

 

1,525

 

 

 

1,308

 

 

 

4,676

 

 

 

5,760

 

Total revenue

 

 

119,351

 

 

 

121,307

 

 

 

411,788

 

 

 

391,382

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

License

 

 

2,579

 

 

 

4,694

 

 

 

11,386

 

 

 

13,706

 

Maintenance and other services

 

 

13,025

 

 

 

11,770

 

 

 

38,628

 

 

 

35,368

 

Total software *

 

 

15,604

 

 

 

16,464

 

 

 

50,014

 

 

 

49,074

 

Software related services

 

 

5,240

 

 

 

5,707

 

 

 

16,739

 

 

 

17,560

 

Total software and related services

 

 

20,844

 

 

 

22,171

 

 

 

66,753

 

 

 

66,634

 

Client engineering services

 

 

5,835

 

 

 

7,982

 

 

 

18,390

 

 

 

25,163

 

Other

 

 

1,230

 

 

 

1,348

 

 

 

3,892

 

 

 

5,072

 

Total cost of revenue

 

 

27,909

 

 

 

31,501

 

 

 

89,035

 

 

 

96,869

 

Gross profit

 

 

91,442

 

 

 

89,806

 

 

 

322,753

 

 

 

294,513

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development *

 

 

48,781

 

 

 

35,839

 

 

 

138,352

 

 

 

112,872

 

Sales and marketing *

 

 

39,244

 

 

 

30,589

 

 

 

114,042

 

 

 

94,568

 

General and administrative *

 

 

24,677

 

 

 

22,196

 

 

 

72,613

 

 

 

67,983

 

Amortization of intangible assets

 

 

6,571

 

 

 

4,432

 

 

 

18,682

 

 

 

13,924

 

Other operating income, net

 

 

(2,835

)

 

 

(1,324

)

 

 

(9,383

)

 

 

(2,526

)

Total operating expenses

 

 

116,438

 

 

 

91,732

 

 

 

334,306

 

 

 

286,821

 

Operating (loss) income

 

 

(24,996

)

 

 

(1,926

)

 

 

(11,553

)

 

 

7,692

 

Interest expense

 

 

1,566

 

 

 

3,037

 

 

 

2,851

 

 

 

8,998

 

Other expense, net

 

 

2,107

 

 

 

124

 

 

 

26,082

 

 

 

1,667

 

Loss before income taxes

 

 

(28,669

)

 

 

(5,087

)

 

 

(40,486

)

 

 

(2,973

)

Income tax expense

 

 

4,579

 

 

 

3,022

 

 

 

15,008

 

 

 

4,424

 

Net loss

 

$

(33,248

)

 

$

(8,109

)

 

$

(55,494

)

 

$

(7,397

)

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders, basic

 

$

(0.42

)

 

$

(0.11

)

 

$

(0.70

)

 

$

(0.10

)

Net loss per share attributable to common stockholders, diluted

 

$

(0.42

)

 

$

(0.11

)

 

$

(0.70

)

 

$

(0.10

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

79,207

 

 

 

75,750

 

 

 

79,205

 

 

 

75,226

 

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

 

 

79,207

 

 

 

75,750

 

 

 

79,205

 

 

 

75,226

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Cost of revenue – software

 

$

2,332

 

 

$

1,411

 

 

$

6,265

 

 

$

3,791

 

Research and development

 

 

10,243

 

 

 

3,894

 

 

 

26,580

 

 

 

11,223

 

Sales and marketing

 

 

7,806

 

 

 

3,673

 

 

 

22,505

 

 

 

10,800

 

General and administrative

 

 

2,329

 

 

 

1,955

 

 

 

7,174

 

 

 

5,415

 

Total stock-based compensation expense

 

$

22,710

 

 

$

10,933

 

 

$

62,524

 

 

$

31,229

 


 

 

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Employee stock-based compensation plans

 

$

15,490

 

 

$

10,194

 

 

$

43,622

 

 

$

29,009

 

Equity issued in connection with acquisitions

 

 

7,220

 

 

 

739

 

 

 

18,902

 

 

 

2,220

 

Total stock-based compensation expense

 

$

22,710

 

 

$

10,933

 

 

$

62,524

 

 

$

31,229

 


 

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

 

 

 

Nine Months Ended September 30,

 

(In thousands)

 

2022

 

 

2021

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(55,494

)

 

$

(7,397

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

24,092

 

 

 

19,355

 

Provision for credit loss

 

 

183

 

 

 

330

 

Amortization of debt discount and issuance costs

 

 

1,330

 

 

 

8,513

 

Stock-based compensation expense

 

 

62,524

 

 

 

31,229

 

Deferred income taxes

 

 

4

 

 

 

(510

)

Gain on mark-to-market adjustment of contingent consideration

 

 

(7,482

)

 

 

 

Expense on repurchase of convertible senior notes

 

 

16,621

 

 

 

 

Other, net

 

 

153

 

 

 

40

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

13,859

 

 

 

26,770

 

Prepaid expenses and other current assets

 

 

1,906

 

 

 

(7,612

)

Other long-term assets

 

 

3,134

 

 

 

(5,018

)

Accounts payable

 

 

(270

)

 

 

(2,432

)

Accrued compensation and benefits

 

 

(3,639

)

 

 

481

 

Other accrued expenses and current liabilities

 

 

(48,698

)

 

 

483

 

Deferred revenue

 

 

18,311

 

 

 

(8,638

)

Net cash provided by operating activities

 

 

26,534

 

 

 

55,594

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

Payments for acquisition of businesses, net of cash acquired

 

 

(134,130

)

 

 

(5,472

)

Capital expenditures

 

 

(6,721

)

 

 

(6,811

)

Other investing activities, net

 

 

(10,322

)

 

 

(628

)

Net cash used in investing activities

 

 

(151,173

)

 

 

(12,911

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from issuance of convertible senior notes, net of discounts and commissions

 

 

224,265

 

 

 

 

Repurchase of convertible senior notes

 

 

(192,422

)

 

 

 

Proceeds from employee stock purchase plan contributions

 

 

6,549

 

 

 

2,110

 

Repurchase and retirement of common stock

 

 

(4,387

)

 

 

 

Proceeds from the exercise of common stock options

 

 

2,840

 

 

 

2,059

 

Payments of debt issuance costs

 

 

(1,523

)

 

 

 

Proceeds from private placement of common stock

 

 

 

 

 

200,000

 

Payments on revolving commitment

 

 

 

 

 

(30,000

)

Other financing activities

 

 

(170

)

 

 

(434

)

Net cash provided by financing activities

 

 

35,152

 

 

 

173,735

 

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

 

 

(12,142

)

 

 

(1,951

)

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

(101,629

)

 

 

214,467

 

Cash, cash equivalents and restricted cash at beginning of year

 

 

414,012

 

 

 

241,547

 

Cash, cash equivalents and restricted cash at end of period

 

$

312,383

 

 

$

456,014

 

Supplemental disclosure of cash flow:

 

 

 

 

 

 

Interest paid

 

$

296

 

 

$

344

 

Income taxes paid

 

$

6,818

 

 

$

8,077

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Property and equipment in accounts payable, other current liabilities and other liabilities

 

$

707

 

 

$

480

 

 

 

 

 

 

 

 

 

 

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)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(33,248

)

 

$

(8,109

)

 

$

(55,494

)

 

$

(7,397

)

Stock-based compensation expense

 

 

22,710

 

 

 

10,933

 

 

 

62,524

 

 

 

31,229

 

Amortization of intangible assets

 

 

6,571

 

 

 

4,432

 

 

 

18,682

 

 

 

13,924

 

Non-cash interest expense

 

 

501

 

 

 

2,876

 

 

 

1,339

 

 

 

8,513

 

Restructuring expense

 

 

 

 

 

(124

)

 

 

 

 

 

4,954

 

Impact of non-GAAP tax rate (1)

 

 

3,079

 

 

 

(366

)

 

 

(1,878

)

 

 

(10,044

)

Special adjustments and other (2)

 

 

4,657

 

 

 

 

 

 

22,886

 

 

 

 

Non-GAAP net income

 

$

4,270

 

 

$

9,642

 

 

$

48,059

 

 

$

41,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, diluted

 

$

(0.42

)

 

$

(0.11

)

 

$

(0.70

)

 

$

(0.10

)

Non-GAAP net income per share, diluted

 

$

0.05

 

 

$

0.12

 

 

$

0.55

 

 

$

0.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted shares outstanding

 

 

79,207

 

 

 

75,750

 

 

 

79,205

 

 

 

75,226

 

Non-GAAP diluted shares outstanding (3)

 

 

88,100

 

 

 

81,063

 

 

 

86,708

 

 

 

80,345

 

(1)  The Company uses a non-GAAP effective tax rate of 26%.

(2)  The three months ended September 30, 2022, includes $6.8 million currency losses on acquisition-related intercompany loans and a $2.2 million gain from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2022, includes $16.6 million expense on the 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.

(3)  The Non-GAAP diluted shares outstanding for the three and nine months ended September 30, 2021, has been changed to align with the current definition.

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)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(33,248

)

 

$

(8,109

)

 

$

(55,494

)

 

$

(7,397

)

Income tax expense

 

 

4,579

 

 

 

3,022

 

 

 

15,008

 

 

 

4,424

 

Stock-based compensation expense

 

 

22,710

 

 

 

10,933

 

 

 

62,524

 

 

 

31,229

 

Interest expense

 

 

1,566

 

 

 

3,037

 

 

 

2,851

 

 

 

8,998

 

Depreciation and amortization

 

 

8,273

 

 

 

6,175

 

 

 

24,092

 

 

 

19,355

 

Restructuring expense

 

 

 

 

 

(124

)

 

 

 

 

 

4,954

 

Special adjustments, interest income and other (1)

 

 

2,949

 

 

 

(102

)

 

 

20,878

 

 

 

(275

)

Adjusted EBITDA

 

$

6,829

 

 

$

14,832

 

 

$

69,859

 

 

$

61,288

 

(1)  The three months ended September 30, 2022, includes $6.8 million currency losses on acquisition-related intercompany loans and a $2.2 million gain from a mark-to-market adjustment of contingent consideration associated with the World Programming acquisition. The nine months ended September 30, 2022, includes $16.6 million expense on the 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 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)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net cash provided by operating activities (1)

 

$

8,493

 

 

$

872

 

 

$

26,534

 

 

$

55,594

 

Capital expenditures

 

 

(3,264

)

 

 

(1,420

)

 

 

(6,721

)

 

 

(6,811

)

Free cash flow (1)

 

$

5,229

 

 

$

(548

)

 

$

19,813

 

 

$

48,783

 

(1)   The nine months ended September 30, 2022, includes a $65.9 million payment in January 2022 for a legal judgement acquired in December 2021.

The following table provides a reconciliation of Non-GAAP gross profit to gross profit, the most comparable GAAP financial measure:

 

 

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Gross profit

 

$

91,442

 

 

$

89,806

 

 

$

322,753

 

 

$

294,513

 

Stock-based compensation expense

 

 

2,332

 

 

 

1,411

 

 

 

6,265

 

 

 

3,791

 

Restructuring expense

 

 

 

 

 

(10

)

 

 

 

 

 

926

 

Non-GAAP gross profit

 

$

93,774

 

 

$

91,207

 

 

$

329,018

 

 

$

299,230

 

Non-GAAP gross margin

 

 

78.6

%

 

 

75.2

%

 

 

79.9

%

 

 

76.5

%

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)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Total operating expense

 

$

116,438

 

 

$

91,732

 

 

$

334,306

 

 

$

286,821

 

Stock-based compensation expense

 

 

(20,378

)

 

 

(9,522

)

 

 

(56,259

)

 

 

(27,438

)

Amortization

 

 

(6,571

)

 

 

(4,432

)

 

 

(18,682

)

 

 

(13,924

)

Gain on mark-to-market adjustment of contingent consideration

 

 

2,178

 

 

 

 

 

 

7,482

 

 

 

 

Restructuring expense

 

 

 

 

 

114

 

 

 

 

 

 

(4,028

)

Non-GAAP operating expense

 

$

91,667

 

 

$

77,892

 

 

$

266,847

 

 

$

241,431

 

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

 

 

(Unaudited)

 

 

 

Three Months Ended
September 30, 2022

 

 

Three Months
Ended
September 30, 2021

 

 

Increase/
(Decrease) %

 

(in thousands)

 

As reported

 

 

Currency
changes

 

 

As adjusted for
constant currency

 

 

As reported

 

 

As reported

 

 

As adjusted for
constant
currency

 

Software revenue

 

$

103.8

 

 

$

8.8

 

 

$

112.6

 

 

$

102.3

 

 

 

1.4

%

 

 

10.1

%

Total revenue

 

$

119.4

 

 

$

9.6

 

 

$

129.0

 

 

$

121.3

 

 

 

-1.6

%

 

 

6.3

%

Adjusted EBITDA

 

$

6.8

 

 

$

2.0

 

 

$

8.8

 

 

$

14.8

 

 

 

-53.9

%

 

 

-40.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

Nine Months Ended
September 30, 2022

 

 

Nine Months
Ended
September 30, 2021

 

 

Increase/
(Decrease) %

 

(in thousands)

 

As reported

 

 

Currency
changes

 

 

As adjusted for
constant currency

 

 

As reported

 

 

As reported

 

 

As adjusted for
constant
currency

 

Software revenue

 

$

361.6

 

 

$

18.3

 

 

$

379.9

 

 

$

331.4

 

 

 

9.1

%

 

 

14.7

%

Total revenue

 

$

411.8

 

 

$

20.2

 

 

$

432.0

 

 

$

391.4

 

 

 

5.2

%

 

 

10.4

%

Adjusted EBITDA

 

$

69.9

 

 

$

4.2

 

 

$

74.1

 

 

$

61.3

 

 

 

14.0

%

 

 

20.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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
December 31, 2022

 

 

Year Ending
December 31, 2022

 

(in thousands)

 

Low

 

 

High

 

 

Low

 

 

High

 

Net loss

 

$

(15,000

)

 

$

(12,100

)

 

$

(70,300

)

 

$

(67,400

)

Stock-based compensation expense

 

 

21,600

 

 

 

21,600

 

 

 

84,100

 

 

 

84,100

 

Amortization of intangible assets

 

 

10,100

 

 

 

10,100

 

 

 

28,800

 

 

 

28,800

 

Non-cash interest expense

 

 

400

 

 

 

400

 

 

 

1,800

 

 

 

1,800

 

Impact of non-GAAP tax rate

 

 

(1,600

)

 

 

(2,200

)

 

 

(3,500

)

 

 

(4,200

)

Special adjustments and other(1)

 

 

 

 

 

 

 

 

22,900

 

 

 

22,900

 

Non-GAAP net income

 

$

15,500

 

 

$

17,800

 

 

$

63,800

 

 

$

66,000

 

(1)   Year ending December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and $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 projected Adjusted EBITDA to projected net loss, the most comparable GAAP financial measure:

 

 

(Unaudited)

 

 

 

Three Months Ending
December 31, 2022

 

 

Year Ending
December 31, 2022

 

(in thousands)

 

Low

 

 

High

 

 

Low

 

 

High

 

Net loss

 

$

(15,000

)

 

$

(12,100

)

 

$

(70,300

)

 

$

(67,400

)

Income tax expense

 

 

3,900

 

 

 

4,000

 

 

 

18,900

 

 

 

19,000

 

Stock-based compensation expense

 

 

21,600

 

 

 

21,600

 

 

 

84,100

 

 

 

84,100

 

Interest (income) expense

 

 

(300

)

 

 

(300

)

 

 

500

 

 

 

500

 

Depreciation and amortization

 

 

11,800

 

 

 

11,800

 

 

 

35,900

 

 

 

35,900

 

Special adjustments and other(1)

 

 

 

 

 

 

 

 

22,900

 

 

 

22,900

 

Adjusted EBITDA

 

$

22,000

 

 

$

25,000

 

 

$

92,000

 

 

$

95,000

 

(1)   Year ending December 31, 2022, includes $16.6 million expense on the repurchase of convertible senior notes, $13.7 million currency losses on acquisition-related intercompany loans and $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 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)

 

$

23,000

 

 

$

27,000

 

Capital expenditures

 

 

(9,000

)

 

 

(9,000

)

Free cash flow (1)

 

$

14,000

 

 

$

18,000

 

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


Advertisement