TROY, Mich., Nov. 30, 2017 — Altair Engineering Inc. (NASDAQ:ALTR) today announced its financial results for the third quarter ended September 30, 2017.“We delivered a strong performance in the third quarter with software product revenue increasing 13% from a year ago to $63.2 million and total revenue increasing 9% to $84.9 million,” said James Scapa, Founder, Chairman, and CEO. “Equally important, we continue to shift our revenue mix toward software products where we achieve our highest gross margins, ultimately driving higher operating margins for the overall enterprise.“During the third quarter we expanded our relationships with existing customers and broadened our reach with enhanced and new technology, including technologies from our acquisition of Runtime on September 28, which expands our market opportunity in the dynamic high-performance computing market. “We reached another milestone for the company with the completion of our initial public offering. By further strengthening our balance sheet and providing additional resources to pursue our growth strategy, we believe we are well positioned to capture share and enhance our leadership in simulation-driven design, while further driving new opportunities in high-performance computing, as well as IoT and analytics. We believe this combination positions us to continue executing on our long-term goal of further scaling our software revenue while leveraging our business model to increase profitability in the years ahead.”Third Quarter 2017 Financial HighlightsSoftware product revenue was $63.2 million, an increase of 13% from $55.8 million for the third quarter of 2016.Total revenue was $84.9 million, an increase of 9% compared to $78.1 million for the third quarter of 2016.Including the impact of $25.3 million in non-cash stock-based compensation expenses in the third quarter of 2017, GAAP net loss was $29.6 million, compared to GAAP net income of $0.3 million for the third quarter of 2016. GAAP net loss per share was $(0.59), based on 50.6 million basic and diluted weighted average common shares outstanding, compared to $0.01 for the third quarter of 2016, based on 59.3 million diluted weighted average common shares outstanding.Adjusted EBITDA was $7.0 million, compared to $7.3 million for the third quarter of 2016. Adjusted EBITDA represents net income (loss) adjusted for income tax expense (benefit), interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as determined by management.Cash flow from operations was an outflow of $(8.7) million, compared to an outflow of $(0.6) million for the third quarter of 2016. For the first nine months of 2017, cash flow from operations was $17.5 million, compared to $21.4 million for the same period in 2016. This change in cash flow for the quarter relates to the recognition of tax expense for income generated outside of the U.S. without a corresponding benefit for the losses in the U.S. resulting from stock compensation charges in the quarter.Free cash flow, which consists of cash flow from operations less capital expenditures, was $(10.7) million compared to $(1.7) million for the third quarter of 2016. For the first nine months of 2017, free cash flow was $11.1 million, compared to $16.7 million for the first nine months of 2016 with the difference reflecting changes in operating cash flow and $2.0 million in cash used to acquire MODELiiS in the second quarter. Business OutlookBased on information available as of today, Altair is issuing forward-looking statements on guidance for the fourth quarter and full year 2017 as indicated below.(All figures in millions) Webcast (live & replay): https://ir.Altair.comNon-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: Adjusted EBITDA and Free Cash Flow. Altair believes that providing a reconciliation of Adjusted EBITDA guidance to the comparable GAAP measure of Net Income would require unreasonable efforts as the Company cannot reasonably estimate income tax expense in the fourth quarter. Fourth quarter income tax expense will be significantly impacted by the expected valuation allowance and by the year-end results of our global organization. Altair expects fourth quarter stock-based compensation to be approximately $7.6 million and depreciation and amortization to be $2.8 million to $3.0 million.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.Management of the Company 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 focused on the development and broad application of simulation technology to synthesize and optimize designs, processes and decisions for improved business performance. With more than 2,000 employees, Altair is headquartered in Troy, Michigan, USA and operates 69 offices throughout 24 countries. Today, Altair serves approximately 5,000 customers across broad industry segments.Cautionary Language Concerning Forward-Looking StatementsThis 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, statements regarding our financial outlook, market positioning and future investments. 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 forward-looking statements due to a number of factors, including but not limited to, risks detailed in Altair’s prospectus 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.Investor Relations
Garo Toomajanian
ICR
248-614-2400 ext. 346
[email protected]Media Relations
Dave Simon
Altair
248-614-2400 ext. 332
[email protected]
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