ANSYS (ANSS) Up 2.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Ansys (ANSS). Shares have added about 2.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ANSYS due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Ansys Q4 Earnings Beat Estimates
Ansys reported fourth-quarter 2023 earnings of $3.94 per share, beating the Zacks Consensus Estimate by 6.5%. The bottom line improved 27.5% year over year.
Non-GAAP revenues of $805.1 million topped the Zacks Consensus Estimate by 1.7%. The top line rose 16% (up 15% at constant currency or cc) year over year.
For 2023, the company reported revenues of $2.27 billion, up 9.5% year over year. Non-GAAP earnings came in at $8.80 compared with $7.99 in 2022.
Given the pending acquisition by Synopsys, the company will no longer provide financial outlook. However, it expects ACV for 2024 to grow in double digits. Management expects ACV and revenue growth for first-quarter 2024 to be the lowest among the four quarters.
Quarter in Detail
Subscription lease revenues (49.6% of non-GAAP revenues) were up 22.4% at cc to $399.6 million. Perpetual licenses revenues (12.8%) rose 14.8% year over year at cc to $102.7 million.
Maintenance revenues (35.2%) climbed 7% at cc to $283.1 million. Service revenues (2.4%) were up 3.7% at cc year over year to $19.7 million.
Direct and indirect channels contributed 74.5% and 25.5%, respectively, to non-GAAP revenues.
ACV grew 16.8% year over year (up 16% at cc) to $955.2 million.
On a geographic basis, the Americas, EMEA (comprising Germany, the U.K. and other EMEA) and the Asia-Pacific (Japan and Other Asia-Pacific) contributed 51%, 29.4% and 19.6% to non-GAAP revenues, respectively.
Non-GAAP revenues from the Americas were up 14.3% at cc to $410.7 million. EMEA revenues were up 14.4% at cc to $236.9 million. Revenues from the Asia-Pacific increased 18.4% at cc to $157.6 million.
Deferred revenues and backlogs were $1,472.6 million, up 3.9% year over year.
Operating Details
Non-GAAP gross margin was up 30 basis points (bps) on a year-over-year basis to 94.3%.
Total operating expenses gained 7.9% year over year to $402.1 million due to higher research and development, and selling, general and administrative expenses.
Non-GAAP operating margin expanded 500 bps on a year-over-year basis to 53%.
Balance Sheet & Cash Flow
As of Dec 31, 2023, cash and short-term investments amounted to $860.4 million compared with $639.5 million as of Sep 30, 2023.
As of Dec 31, 2023, the company’s long-term debt was $753.9 million compared with $753.8 million as of Sep 30, 2023.
In the quarter under review, cash from operations came in at $232.7 million compared with $174 million in the prior-year quarter.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
Currently, ANSYS has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
ANSYS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
ANSYS is part of the Zacks Computer - Software industry. Over the past month, Cadence Design Systems (CDNS), a stock from the same industry, has gained 5.6%. The company reported its results for the quarter ended December 2023 more than a month ago.
Cadence reported revenues of $1.07 billion in the last reported quarter, representing a year-over-year change of +18.8%. EPS of $1.38 for the same period compares with $0.96 a year ago.
For the current quarter, Cadence is expected to post earnings of $1.13 per share, indicating a change of -12.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.2% over the last 30 days.
Cadence has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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