Ansys (ANSS) Up 4.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Ansys (ANSS). Shares have added about 4.4% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
ANSYS Q2 Earnings Beat Estimates
ANSYS reported second-quarter 2023 earnings of $1.60 per share, beating the Zacks Consensus Estimate by 7.4%. The bottom line declined 9.6% year over year.
Non-GAAP revenues of $496.6 million surpassed the Zacks Consensus Estimate by 1.1%. The top line increased 4% (up 5% at constant currency or cc) from the year-ago quarter.
The company’s solutions continue to witness strong demand in the high-tech, aerospace and automotive sectors. Deferred revenues and backlogs were $1.296 billion, up 9.9% year over year.
Quarter in Detail
Subscription lease revenues (27.2% of non-GAAP revenues) rose 1.1% at cc to $135 million. Perpetual licenses revenues (14.1%) fell 4.9% year over year at cc to $69.9 million.
Maintenance revenues (55.1%) climbed 10.2% at cc to $273.7 million. Service revenues (3.6%) were up 4.3% year over year to $18 million.
Direct and indirect channels contributed 71.2% and 28.8%, respectively, to non-GAAP revenues.
Annual contract value or ACV grew 6% year over year (up 7% at cc) to $488.3 million. Our model estimate for ACV for the second quarter was pegged at $487 million.
On a geographic basis, non-GAAP revenues from the Americas, EMEA (comprising Germany, the U.K. and other EMEA) and the Asia-Pacific (Japan and Other Asia-Pacific) contributed 44.4%, 25.4% and 30.2% to non-GAAP revenues, respectively.
Non-GAAP revenues from the Americas were up 12% to $220.4 million at cc. EMEA revenues inched up 0.6% to $126.3 million at cc. Revenues from the Asia-Pacific decreased 0.1% to $150 million at cc.
Operating Details
Non-GAAP gross margin was unchanged on a year-over-year basis at 91%.
Total operating expenses gained 17.4% year over year to $332.6 million due to higher research and development, and selling, general and administrative expenses.
Non-GAAP operating margin contracted 430 bps on a year-over-year basis to 36.4%.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash and short-term investments amounted to $478 million compared with $507.8 million as of Mar 31, 2023.
As of Jun 30, 2023, the company’s long-term debt was $753.7 million compared with $753.6 million as of Mar 31, 2023.
In the quarter under review, cash from operations came in at $62.9 million compared with $118.9 million reported in the prior-year quarter.
In the quarter under discussion, the company did not repurchase shares. As of Jun 30, 2023, ANSS had 1.1 million shares remaining under its share buyback program.
Guidance
For third-quarter 2023, ANSYS expects non-GAAP earnings in the range of $1.18-$1.31 per share.
Non-GAAP revenues are anticipated to be between $453.7 million and $473.7 million. Management projects non-GAAP operating margin in the 29.6-31.3% band.
For 2023, ANSYS projects non-GAAP revenues in the range of $2,257-$2,327 million. Management suggests non-GAAP operating margin to be between 41% and 42%.
Non-GAAP earnings are envisioned in the range of $8.39-$8.88 per share compared with the previous guidance of $8.39-$8.91.
ACV is estimated to be between $2,275 million and $2,340 million. Operating cash flow is projected in the $699-$749 million band for 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -45.42% due to these changes.
VGM Scores
Currently, Ansys has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, 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 belongs to the Zacks Computer - Software industry. Another stock from the same industry, Blackbaud (BLKB), has gained 2.8% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Blackbaud reported revenues of $271.04 million in the last reported quarter, representing a year-over-year change of +2.3%. EPS of $0.98 for the same period compares with $0.75 a year ago.
For the current quarter, Blackbaud is expected to post earnings of $0.97 per share, indicating a change of +40.6% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Blackbaud has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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