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Factors You Must Note Ahead of ANSYS' (ANSS) Q3 Earnings

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Zacks Equity Research
·3 min read
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ANSYS, Inc. ANSS is scheduled to release third-quarter 2020 results on Nov 4.

The company expects non-GAAP earnings to be $1.10-$1.34 per share for third-quarter 2020. The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.26 per share, unchanged in the past 30 days. The figure indicates a decline of 11.3% from the year-ago reported figure.

Non-GAAP revenues are anticipated between $347 million and $377 million. The consensus mark for revenues stands at $366.6 million, which suggests growth of 6.1% from the prior-year quarter.

Notably, the company has a trailing four-quarter earnings surprise of 16.55%, on average.

ANSYS, Inc. Price and EPS Surprise

ANSYS, Inc. Price and EPS Surprise
ANSYS, Inc. Price and EPS Surprise

ANSYS, Inc. price-eps-surprise | ANSYS, Inc. Quote

Factors Likely To Have Influenced Q3 Performance

ANSYS’ third quarter results are likely to reflect gains from uptick in chip design activity. Strength across the semiconductor, defense, and communication end-markets, driven by increasing use of cloud computing and solid adoption of 5G infrastructure services, might get reflected in the to-be-reported quarter’s results.

Further, the company’s simulation solutions have been witnessing robust traction in the recovering high-tech and automotive market, courtesy of gradual reopening of economies and ease in shelter-in-place guidelines. This might have favored the third-quarter performance.

Also, growing clout of digital twins and process optimization solutions is likely to have acted as a tailwind. However, coronavirus crisis-induced weakness in the industrial equipment industry and the oil and gas industry may have weighed on the to-be-reported quarter’s performance.

Notably, the Zacks Consensus Estimate for Maintenance and service revenues is pegged at $223 million, which indicates growth of 7.9% from the year-ago reported figure.

Meanwhile, the consensus mark for Software licenses revenues is pegged at $138 million, which suggests an improvement of 0.7% from the prior-year quarter.

Besides robust synergies from its partnerships with Autodesk ADSK, Microsoft MSFT and Rockwell Automation ROK are likely to have aided the company acquire more customers. This, in turn, is expected to have benefited third-quarter performance.

Markedly, the company has collaborated with Microsoft, Dell and Lendlease to accelerate and simplify development and implementation of digital twin technologies across multiple industries.

The company also partnered with Electro Magnetic Applications, Inc. (EMA), in a bid to develop design-to-validation workflow, designed to certify cable harness models used in automobiles and aircraft.

Growing clientele is expected to have contributed to ACV in the quarter under review. Notably, the Zacks Consensus Estimate for ACV is pegged at $320 million, which indicates growth of 10% from the year-ago reported figure. In the second quarter, ACV was $344.4 million.

Nevertheless, increased expenditure on product enhancements and Research and Development (R&D) is likely to have put pressure on margins in the third quarter.

ANSYS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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