Altair Engineering (ALTR) 23 Feb 232022 Q4 Earnings call transcript

Good afternoon, welcome and thank you for attending Altair’s Earnings Conference Call for the Fourth Quarter and Full-Year 2022 ended December 31, 2022. I’m Dave Simon, After the speaker’s presentation, there will be a question-and-answer session. To ask a question [Operator Instructions] Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Dave Simon, Altair’s SVP for Investor Relations. And with me on the call are Jim Scapa, Founder, Chairman and CEO; and Matt Brown, Chief Financial Officer. full-year we quarter press and Relations and the quarter today, regarding with guidance section closed be first fourth can at our full-year and of market our issued the investor.altair.com. release a details for accessed website After on which Investor XXXX, XXXX performance of and the following conclusion this call. This recorded, will available website a call is on our be replay being the IR section of

under as that outlook. we of and could call, cause of to related or make securities may reflect These be obligation statements statements will forward-looking not materially any today actual be as results business today’s are uncertainties During that considered to a our We our any to risks subsequent differ expectations. our considered representative subject disclaim of statements statements federal should only update These laws. of our any from forward-looking views views and to date. variety

earlier that summarized are risks These issued in press release we today. the

For or affect our time-to-time. the a as other we could contained please the to refer annual filed factors results, in filed from with documents material other those important as reports further have SEC, risks quarterly actual may that and and file well discussion our that of

our During in A press certain call, release. reconciliation the course measures we measures. included of to non-GAAP of non-GAAP financial today’s will refer is GAAP to

this metrics in may advised dynamics or our greater in detail or Finally, are provide we of Please offer we times our to to at not that results. continue be business questions, future. our responses prepared quarterly our or the provide may presentation may your additional incremental comments into the insight to that usual to

call over Jim? for me let prepared to remarks. Jim that, With turn his the

the outstanding Thank you, for everyone software showing revenue, had Dave, and welcome the quarter exceptional an on momentum to full-year. record Altair achieving fourth high call. and

full-year contributing constant on in more Software software of on a than by year-over-year basis, product the revenue growth currency XX% product constant basis to fourth a revenue currency grew quarter XX.X%

led was software technology, and automotive, strength The particular strength aerospace verticals. in all geographies by across quarter in billings our fourth and

as in license and revenue for positive XX% material for on our of revenue XXXX recurring XXXX, to trend rates product in continued remains cash strong flow. exchange profitability, continued Altair and significantly XX%, the a margins at a high at effect compared had a software Software expand in a Even rate year. year our negative revenue and XX% which to total percentage

versus in EBITDA in Adjusted revenue the XX% XX% Adjusted of margin was or million year. XXXX $XXX.X to the EBITDA versus grew prior fourth XX% of of than XX% in XX% or more quarter $XX.X revenue million trend above Altair's results This of XXXX revenue increasing towards continuing global I clearly software The and performance of expectations is team am demonstrate achievements. exceptional margins. shift full-year mix higher and proud gross their for well extremely

about increasing science areas leader other its speak drive focusing and Altair to the we are will and this Matt in evolve to margin to profile. product as computational intelligence. continues artificial position on our

last XX the in distributed AI convergence and data technologies years computing, integrated over a and into analytics, we for maturing brought high the vision simulation, Our powerful together offering. and performance, are

user interactive One using digital traction innovation activity applications support our browser, the XXX,XXX gaining signed thread, cloud the One, rapidly and will up marketplace on-demand in and capabilities with include Altair documentation. over is data and a anywhere, users Altair gateway through self-service already compute. and application tracking

multi-language support, analytics all Minor, code science, preparation, to on-demand is code [pane multi-cloud AI and to efficiently glass] lock monitoring, SaaS data hardware. data architectures leverage and use capabilities, [ph] for and units allows platform, software including elastic our The single approach free, and Altair integrating in the Rapid vendor deployment, avoid and language. customers both data friendly of including development, Altair

also around and HyperWorks, built [indiscernible], user Altair shareable build platform for unity our We single to model natively a and experience is framework design multi to Inspire instances in or to the moving data simulation premises. run products, all cloud and our SimLab three on and common specific tenant installation solutions with components and ultimately support tailored components cloud. of markets

Our solver physics-based excited releasing optimization simulation multi-disciplinary well teams implementation we is integrating and of are as focused shortly. which are our and AI, and on about

focused including electric HPC costs, and cloud dependency our quarter notable vehicles. platform wins, management, some exceptional and workflow software management. to management, solutions works, The similarly market automotive allocation and performance HPC efficiently, componentized is being had cost vertical Altair fourth including and deliver license to more storage specific

systems [one led chassis to the applications, development. This now company doubled users revenue. than in [ph] XXXX. Altair's manufacturer, of of vehicle number an tools vibration, design, more the through are many and of electric] and design At energy including expansion using manufacturing systems, Hundreds cell for noise structures, XX% users vehicle

X-figure And commitment the we representing XX% sector, areas Focus for technology. electric by we a high software include a Altair’s for vehicle racing range data and our automotive a manufacturer, combustion driven tools. and development. expansion, at analytics growth, electric received In second saw computing, drivetrain broad the simulation, a of team both year-on-year performance X-figure

vehicle aerospace very be forward. and carryover space Altair. defense including to move help The efforts the for to had from fourth We vertical, are strong of will aircraft as commercial effects electric quarter especially performance pleased racing systems electrification broader core driving a

without European CAD to for best major engineers a comp analysis SimSolid fully for and evaluation selected CAD the by time solution company, cleanup meshing. evaluation, of as stress aerospace need structural accelerate its the designs performing consuming greatly featured extensive assemblies After on

this solution it driven major simulation is speed, and other to and organizations types enable why expanding engineering was rapidly incredible selected design. SimSolid's accuracy, by

a a aerospace X-figure growth Some included that and of in account. representing quarter analytics, agreement our data XX% Altair the wins other in the following: for awarded company simulation major year-on-year

increase. and company committed space subsystems, contractor million signed its An Altair's to billings defense revenue euros. A help a quarter committed to to represent government that aerospace a develop the deal brings which aerospace agency analytics a EMEA to more tools an Altair in than increase, X-figure an XX% annual data avionic

supplier awarded finally, and Altair of significant on satellites, appliance a transportation range using with systems including production broad on systems, space entered Altair And base X-figure contract, the unlimited heavy of expansion representing simulation. activities, electromagnetic development for a a defensive system and a focus

a East] growth universities, research aerospace and business [DAC] opportunities. in Aerospace relationships, objective that was one [Middle XXXX important we companies industry and our [ph] Furthering District, most the in Campania recently become Altair has District. announced established centers, collaboration Campania of of Europe's and Aerospace between with the create [ph] stimulating of to partner

bring In reliable edge solutions in continues and cutting digital path empower BFSI aims our the growth to partnership rapidly. industry the Altair world. and analytics aerospace technology and to twin progress around vertical, the Campania The the in data to support

leverage We platform. signed purchase a modern effectively order a to new logo, to significant one multinationals EMEA Top existing language X of effective Altair's tools in insurance with SaaS its the RapidMiner cost and

strategies efficiencies and data users data reduction an which to parallel platforms provider key of increased Cost analytics cloud and of business increased cloud transition delivering analytics providing a migrating and – democratization value on-premise business and to and third-party included to in to with self-service. accommodate the capability

significant customer a standardization existing BFSI direction an financial Another broadening user Altair portfolio an Altair's services tools. licensing X-figure named enterprise-wide analytics and data converted of from for deal allowed to units. structure in applications for This

analytics converting units of we expansion as user will that continue believe based based We a see to data application common we and customers licensing, growth. theme

semiconductor excited a scientific two we HPC supercomputing major material on the Altair quarter, deals, were U.S. wins fourth Argon in had including Lab, some announce Our X-figure track one its discoveries to HPC business systems. notable with another Department EMEA company And Energy, with fast National the a of major the in and deployed works supplier.

next Altair utilizing innovations and drive generation is into been ahead often generation consistently energy, when the ways computer technology to through market gas hardware been next has greenhouse trends. scientists slash more emissions find safer, nuclear efficient reactors. HPC technology well computational This Argon biofuels, true to software. has fusion of better help science research reliable

by Xscape innovative Columbia technology ultra-high in computing in leading The last HPC of field Photonics performance. high focused emphasis the years University over announced startup semiconductor commercializing Photonics, increasing led bandwidth is the a We investment compute photonic performance in XX $XX of recently for advanced systems. and the in million has connections on design. a on three Xscape researchers been

data and data produces space significantly science and increasing performance method moving scale applications is and We speed AI. The challenges. and data significant transmission amounts now vast as power believe electronic leading of essential requires especially to heat substantial in throughput of traditional exponentially,

chip uses reduce Xscape’s to while Photonics heat, technology speed. novel increasing and consumption power drastically approach

agreement agreement. announce we TU that effort and As strengthen to part XX,XXX education quality educational pleased a our to scientists, campus-wide with technical TU is signed Delft of new high to engineers, license success. future TU public students. our and developers Netherlands' ongoing were data the and largest for Delft prepare Altair to oldest with university level institutions, underscores commitment ties Delft and our with research This top

a Altair's family to Club team, leverage Yacht science with New partnership that competition excited are recently the Magic AI. York Americas major We American computational announced and technology Altair for

understand data selling predictive control custom and them enable and and to of sailboat to made analytics AI includes bot with simulations. analyze vessel work Our monitoring performance system a the a

chain. we consumption of substantial material mitigate through honors water, reuse recycling carbon greatest use exemplary automotive leverage that Award the This sustainability data benefits AI footprint, sustainability the and award recognize year, and and value advancements Responsible for a analytics established new category AI Enlighten XXXX light-weighting efforts. The that energy reduce and and to delivers

navigated helps and XXXX with be We for for rate was continued work everyone. we and optimism a sincere and the that belief a continued entered foreign year Altair uncertainty of exchange progress for world as our significant healthier global achievement extraordinary currency sustainable XXXX more headwinds.

for quarter will full-year details Matt? I to turn call first provide the financial XXXX. Matt more to guidance our on the performance over Now, and our and

Hello thank joining call Jim. you, for you to us. the everyone and on Thank

fourth our XXXX currency we long despite strong record high and We products continued of are ended results, the our with adjusted history. our and for to with in Demand revenue years very one successful with annual be capped which quarter most pleased off significant headwinds, EBITDA. strong

both Since and in reported other rates reference currency. exchange transacted results rates. currency in throughout be remarks, than make by I significantly changes and expenses reported foreign growth impacted dollar, to are constant in U.S. revenues may our the my will Therefore, our

was numbers, XXX.X and reported calculated Starting strength in XX.X% billings QX currency. were XX.X% of total constant million, The for software in the increase billings a with year-over-year by range and geographies in revenue led of currency with leading our above fourth high-end in technology, software product, all the the across significant all guidance automotive, verticals, to our and quarter. aerospace wins for and customer total quarter

XXXX. QX was QX reported year-over-year XX.X% of million, XXX.X in constant XXXX compared revenue and a increase in currency product to in Software currency, XX.X%

growth and by simulation revenue strong and high renewals product while performance led product expansion to was customer Software computing, all lines. in continue acquisitions be new across

Total currency QX was XXXX. of year-over-year increase revenue a in revenue, XX.X% in to XXXX, XXX.X which constant and and in currency, QX services includes compared XX.X% million, reported other

recurring approximately software billings strong be Our rate, to continues of recurring, the software license for percentage year. that is product the which are at XX%

gross an points. increase of based was restructuring which to and quarter, fourth compensation the Non-GAAP compared excludes XXX in expense basis margin, year, XX.X% stock in XX.X% the prior

Software increase gross total product our mix higher which drive as helped software a increased percentage margin, carries as of revenue, this revenue.

prior revenue in QX XX.X% XX.X% to XXXX, in was revenue the of total compared Software year.

which other continue revenue. the intangible charges XX.X were growth million, and a expect software we as stock general restructuring year Non-GAAP product million mix there and the ago amortization expenses, revenue Over period. shift towards outpace will in based XX.X compensation, to operating compared of assets long-term, services excludes to

was the compared XX.X% the XX.X XXXX approach in revenue, quarter, as quarter, Adjusted year to relative revenue an software increase disciplined of million in in XX.X% with XXXX, to combined This or or a increase in by well our QX XX.X compared expectation to to was XX.X%. as million spending. of EBITDA increase QX the prior total driven

Calculated year made Now, goal XX.X% adjusted years were billings our constant reported year-over-year towards we XXXX. for one EBITDA a currency looking currency. million, in of our of at the full-year, in increase considerable was the XX% the history successful progress and of or XX.X% most in XXXX XXX.X exiting

increase year for total Software increase reported XXX.X product of year of year-over-year currency, revenue for million, currency. the X.X% in year-over-year in reported constant constant XX.X% impressive currency and And the and an was in million, was XX.X% revenue a a in XX.X% currency. XXX.X

reached helped drive fiscal revenue time compared in marking XX% the The strength for have software to basis any in in point margins non-GAAP a non-GAAP XX%, XXXX, XX.X% gross our to increase margins our XXX the year. year gross and first

areas product in through invested we both expenses, organically more for operating growth, acquisitions. strategic than to focusing year-over-year, development sales driving Turning our and by capacity XX% on and expanding

select This out XXX.X a XX.X% vision XXX to EBITDA we're or helped increase time, by EBITDA costs At in adjusted adjusted compared each I'm almost proud basis set of margin year-over-year our two to other margin in to continuing we're years exiting drive on well million XX% adding XX.X year. to revenue the million reduce the to XXXX, ago growth revenue, beyond. driving or a to same to of We year XX.X% that achieving for achieving software points areas. XX.X%. XXX and of say, basis and points path goal XXXX of

the equivalents, of balance year and a we XX.X from decrease prior sheet, million year. the XXX.X cash to ended approximately Turning cash with in million the

and XX converts, offset which in of million a strong a million repurchases, for the balance XXXX our cash existing we judgment litigation and assumed new and a during to impacts notes net of our share against acquisitions, include acquisition by flow million world the partially XXX paid of as XX of old retirements result were for partial payment approximately larger the year. programming as of cash part convertible that Some million increase XX in

cash Free XX our free pleased judgment, for almost included the year-over-year. XX% cash million, million, flow the acquired very with and ability cash XX significant was year our of was We're XX.X profitability XXXX. excluding in in When generate World judgment. to Programming flow which increase increase an this flow free million

amounts. XXXX. guidance in detailed tables the to We've tables. clarity our FX GAAP change we've to our an exchange press impact continuing reconciliations release, impact guidance XXXX on growth and as in rates foreign currency in provided QX rates currency guidance throughout including reported our expectations, earnings year. constant comparable full-year to turn more and last provide to We're for relative To see both to FX Let's provided

range X.X% million, to For million in of QX, X.X% expect we of negative software currency of currency. XXX an XXX in positive to product and X.X% change the year-over-year to reported revenue in increase X.X% a constant

we in year-over-year For XXX currency product to XX.X% reported range currency. expect X.X% revenue of to million of full-year X.X% increase XX.X% in XXXX, million, XXX software in constant the a and to

product approximately in in we discontinuance Beginning slightly million by impacts X January percentage resulting a more of a point. X product from and rate growth XXXX, non-strategic which XXXX, lower line reselling margin the discontinued acquisition, software than contributed prior revenue therefore XXXX

expect sharp revenue half to We and in services still XXXX. stabilize in the year. in to of particularly other Though down compared XXXX, the declines we first the year-over-year, saw slightly

in result, revenue million the XXX XXX to X.X% and an X.X% QX of range million, a to for As of XXXX decrease we currency, a increase reported of in X.X% expect currency. total year-over-year X.X% constant to in

From constant that to X.X% cost to a XXXX, to X.X% full-year the X.X% and to of a in in we approach of XXX XXX total X.X% the spending been currency. successful to disciplined expect XXXX. reported into For our in increase and year-over-year carry approach we've currency expect revenue million range in million, perspective,

EBITDA For or XX to of QX XXXX, of in expect we the or million XX.X XX.X% million revenue, XX.X% of revenue total million XX.X% adjusted to total to in compared QX XXXX. range XX

XXX.X to full-year revenue, XX.X% million XXXX, the in XXX to million of total of total the range XXXX. XX% XX.X% million compared expect EBITDA XXX in For or revenue adjusted to of we or

the the finally, XXX million, to full-year a cash represents for flow increase And year-over-year. free which in substantial XXX expect of million range XXXX, we

sensitive our cash fluctuate flow billings which patterns, to reminder, collection are a and As seasonally. expectations

year. on half of free billings in free QX smaller historical year. first year, the a our the expecting QX to from shown half from in and a pattern pattern second and primarily this inflow that cash particular, of the larger cash has inflow collections In We're the continue

With that, your questions. Operator? we'd be to happy take

you. question the Thank of from our And Oppenheimer. [Operator with comes first Instructions] Wong line Ken

Your line now is open.

fantastic. Great,

just print on check abnormal if to anything wanted one check first just strong QX, you you, any QX, lighter be Matt, the whether for and into maybe saw given such pull aware or forward we Solid wanted the maybe of? quarter I not guys. to should a

see where Thanks forward, pull about the right? we we for question. the look for the due our didn't at ended seasonal isolation, Yes. our to can we amount were a try get sometimes to the at quarters, [key XX.X% one step full-year quarter room] we're revenue we looking So, when time super software can [ph] last year, of significant a to not your where can in a Ken – constant No, we one quarter of but back in a look situation up currency. year-over-year thinking growth guide when to bit relative in full-year, little strange. nature happy look year, with you we But at coming at

full-year And we strong. feeling very we're very yes, look So also XXXX, when at confident.

guide XX.X% to the hence there So, at X.X% in constant of currency growth.

can sort in a year-over-year We year, again I again, a was we get, really saw strange a – saw growth. last So of actually really, results where within bit on quarter. QX particular mean, little nice that year under but that some you

So, I one next, to always but we would – and our XXXX about we or both results can't just are when say, going predict feel in we deals for the good close our really really, guide perfectly quarter always don't XXXX.

it. Got Appreciate it.

add? Could I

please. ahead go Oh,

go Hi, but Jim, into a have coming a momentum just and to habit, up trying No This it. a of I along closing this year. that we giving And about question with just a very mean discounts, with quarter. Ken. because deals of out if the ended strong Sorry. are clearing lot deals really bit, forward pipeline very, We to pull is as habit bigger obviously. don't a we tends is

we've nothing unusual that [found here] So, [ph].

a hear traction the to Good then Jim, color solid Really your And just in perfect. No, data business some appreciate there. follow-up. the on it. Got customer remarks.

units of just you One Would equal there. kind highlighted sort of that base? making pricing far guys of kind along you update with, installed know I to drive things as model, drive to you converting an you kind were of in utilization get lower. that would on the love say are get push that expect of the we to, people was how you more growth, more

under customers, the Yes, the really more – with customers, among good making probably it's I down we're over progress smaller something. XX%, some or we're think but pretty of significant XX%

entire So, bought it's units a we're but they're of very completely feeling seeing took into force the model, which mix, sales we're positive. is a now us just years, it. all-in couple and The completely

Every harvesting. new we're see deal deal, potential units. every going certainly can And the is with as now we

We really of say product, the a have really XXX,XXX really one XX,XXX you of as running. portfolio products that us and customers thousands has which with let's know spend companies have of move expanded customers data our I are the of lot technology as name on units and mean, of many substantial. big SaaS to a lot into SaaS, we SLC

There's of interest system the opportunities exploring it and the as integrators working are. coming in to interest a they what from forward. start how seeing more move well there There's a lot lot can with us

a of lot just So, [Technical Difficulty].

Great. guys. it. Thanks Got

our you. next moment One Thank for question.

Matt comes question Hedberg Markets. the next Capital line from Our RBC of with

open. is line Your

seen integrators, start channel for little Thank about to are and mentioned Yes. efforts my Swanson strategy bit ramp XXXX of that of and Appreciate you about on This that Matt. congratulations kind to business? on couple Matt of last there out the line I'll the system maybe more talk concerted you the strong a any in could we've add just build Jim, quarter. you. as it. is years,

sure. Yes, for

step business. as have fundamental I really to sort they taken and particularly System resellers have think scale that to major we business, next in to integrators whole drive now. the They expertise, of the the really implementations. domain are data analytics

we are very, And focused. so, very

some We number system of system have we've signed of integrators. larger a smaller integrators, now but the

what's and ongoing good Out of India, names. we a have I fairly lot don't important really announced. example, remember of discussions for some with been

SmartWorks technology the absolute we're a from an the we is the ML that seeing us. of focus that's that RapidMiner very technology and a and interest is solutions – position new very gives it combination us SLC system have, So, inside that really think RapidMiner integrators we're Ops seeing really evolving level now. just whole and bringing very, appealing the the how on a technology now, for We all differentiated to

Thank So, it's important. you.

the think go or Yes, helpful. about system success market I the verticals, And this out had more hand and advancements more hand more is that product about to customers? then, analytics, is it goes that's data really we educating integrators, expanding all think in with but maybe to when about you've like

it's with mean, actually I both, to I you. but to market, is most honest be go think important the

have really Our good we mantra to this is to and achieve, things to happen. well portfolio about execute now year product feel make execute pretty the and we

very, very situated that. think we're to do I well

Alright, appreciate time. the

Sure.

Becker Blair. Thank And William you. from line with the comes question Dylan next our of

is line open. now Your

Hey, commentary. the gentlemen. are hear based to maybe was so the demand a etcetera core, about maybe users Congrats less expansion new think your guys here of addressing in and on a them core tools, of mix technical about, terrific of simulation introducing that's incremental year wondering strength broad area of that to the net pool how more of and seeing you that we and versus should of interest tools? maybe design pipeline Jim, SimSolid, kind great adoption targeting kind like and base Inspire, kind I from

estimation. one making of see who are very, potential what a lot traditionally, really upper can mean, the design/simulation my everything. especially a we're I guy where actually It's mid-market, Yes, the there And of position doing beginning been is unique there. finally they've product that of mid-market. to in think progress and core good lot the does displace that they sort a is a in customers really I very product SimSolid The

also coming The course simulation this product, to capabilities. investment important. is and that it the on manufacturing geometry And of that's more think built-in. pouring surprise new think side stuff and add we've to very, more all I I year been people. capability, going into simulation Inspire a So, of There's very lot

get tremendous along I to So that think, product, SimSolid. traction with continues

entire that's very, And that And fundamental our is point by because have solutions, includes, happening. to there's the And a data the very selling may sales little been way, but been historically a learning products. they the sell team us really really portfolio more transformation for

happening were who has I solutions anymore selling our is are analytics I coming traditionally where came data guys is for along – engineering think talking sales selling into that us. and don't really fold an team – think the impact with a and And the that meeting RapidMiner the products. has really made

So, it's an interesting transformation.

Appreciate kind if the Yes, around springboard color wondering analytics There's used maybe, lot on for that's about and the broader as cases there. super kind prevalence twins, of convergence that those due simulation of a that well? emphasis can kind twin seeing of as needs what helpful. talked and those and you [indiscernible] Maybe kind adoption serving and been of can data a bit elaborate a solutions of digital look some opportunity thinking digital And of of that areas early on, you've about the of comment a to of like. efforts, here you're data streaming how kind you're types the of HPC.

into with, sort perfect basically of technology. data models integrate twin every starting we've system in system these portfolio actually models digital from of interested the is levels very learning think and machine where the one with of detailed as I built fence the Yes, can the of mix. deploying you modeling And together home sort of different brings customers it of fidelity then out part do the side that

surprise an The moves electronics most have going an every of or people machine for in around around other equipment complex technology very, really way. is, we which harnesses warehouse, filled whether aircraft and that with a think electronics that automobile the wire because just place a interesting products I very may digital boxes it's some they're twin or or

explore may a essentially and you for it lets problems design the all have digital it's test drawings twin of you in and you also And auto where and lets then actually use have we example, that in technology then that service. and there approaches different electronics builds once really service generate,

have just kind base. really So, of we is starting multi-physics a traction across to and get interest that customer from domains going that's, basically solution these all the gain

got not question hope sure answered perfectly. I'm your you out something that. So, I I of

Yes. Appreciate again it and success] helpful, Jim. No, the guys no, [ph]. very all congrats [on

thank you. Okay,

And Berenberg. moment next Andrew with our DeGasperi question Thank from comes you. question. One next for our

open. line Your is

then Yes. in I last taking Thanks more terms the quarter expansion first these had expansion of calls. and guess And earnings it my clearly just having just a right to you that you've mentioning that in I generally with able in for I opportunity more that of maybe the more people and now? in of lot mean, is a function AI driving RapidMiner also that use one existing what's the their Is analytics, it wins product now? question. of just of units? really are had terms customers, finally your you terms a you're the success think the and said data

unit big like driver that's Just wondering the a if usage for right going forward? now

this together. sort stuff of all So, comes

the five learning last and have HyperWorks our and into years years and here start we'll some models machine solutions is lot experimenting over HyperMesh last effort been technology – had to AI. physics we've in using later year, essentially think significantly So a really the built of we there five based that we've this unique releasing we over that do

of of going run. now it the It's the going all see very Not coming capable sort doing if to I you're of answer way that see these as to better off engineering wanted of natural if solutions. similar to let completely and to well standalone to we we put integrated else part give sort what simulation thing tools engineer me really you into a and the the tell inside me together. I design sure here. side – a So, and I'm me there explorer of view of is not be our tightly you this what can an is,

only you there's guess, of given inflection the adding you've question [ph] it the lot comes mentioning which RapidMiner, a sales tells driving No, of with you're a example, I that you're And me market. of point, the [provided] when that just to kind that fact up an – more is, into quickly months very ago. already for product been,

So, think because extremely very it's team I the is but This uses is came with also product cases. experience. manufacturing it strong product the in the strong,

nicely over well. And historical had just the so that really that crossed they business of our as manufacturing base and experience with

the have and we our historical And together our now. is so, well at technical it's with level been go sophisticated market team to teams, coming doing also more I'll also work a really it's all say connected but

and the interested and an technology are and what kind leverage doing. for try so, kind of of and make And excited this to they're customers really impact

sure the So, great projects. on studies customer cases, one the learning And to we product used as use these next. from well we're deployment really case because can for that experienced, is challenging

it. already call the deployment a that I major had deploying. challenge able maybe built ago, – – the with they're pretty models RapidMiner two think to is And learning customer machine HPC minor technology going in they're I and like to months being is X,XXX significantly. already get is they their major they X,XXX they've company. something have I to pretty expertise rapid all This play want X,XXX and see And can actually very or to of our installation. every a department and

as that market. so, we And people convergence, I talk about see some think when it

we're Altair in stuff I uniquely converging. now These thread And doing actually positioned it's with you coming. truly all really that it One technology technologies are I think with And see our of is strength think because of our that's but real. Altair them. digital the

Jim. Thanks, helpful. Very

& from moment One question. for you. Comes Shi Thank our Needham Charles with next Company.

open. is line Your

in first get and a the to have Hi. second revenue if stronger software taking million the second the you be a how we for digit like I for – to QX, but looks the since question single-digit more software and the than just the seems double historical from at look wonder half the XXX-ish decline that my we like like here. have revenues like first decline modeling will quarter, your half. If given numbers to first first for imply I second lot half tend lower number guidance your to your than your full-year, quarter guidance a [ph]? question. half, It double-digit for I you [XXX] quarter tend get be Q-on-Q Thank

your seasonality. deviation seems historical that to be a So from

for So, through of about down you. the of break your revenues progression it can should think software Thank us? we kind How year? you this

Yes. Hey, Charles. Thanks the for question.

So, you're right.

more full-year, year trough So, steady expecting seasonality we're and significant be QX that to the this actually is pretty seen to in guidance year. relative a what what in QX, given we where had last a that bit will due is QX

and be going least in is couple seasonal quarters down of for And guide our in that so, will to that's to as at QX not but so. We're be the QX of that our have continue quarters QX, expectation QX last drop the QX, the will full-year. as it years. still nature been in And and has our pronounced relative it accounts to biggest what

that in steady? their behavior, things changing is why Why timing a contract bit there little a it provide bit terms little color is or years? customers there or particular less you Can vertical year? more from is kind those of more of prior renewal this of of those The it – any Is some are? seasonal why kind

there a a geo. isn't particular particular or Yes, vertical

think seeing sub if think delay I at I we're not any what important or say, in pushout that some as elongation it's – what of not we're and seeing really sales I is QX looking deals can or cycles. is

the pipeline strong demand robust and a We're throughout year. really actually is seeing

So from again, we growth, XXXX, made was QX more good relatively of in a quarter little but example relative saw down year. seasonality I to changes quarter QX for saw then to we think up last to slower year, one a than it to example, where it just bit QX. year comes for

a again, really, feeling successful quarter and momentum year. at a really So not looks focus on like great what try and good of we're try the particular got on coming feeling we one time. We we've year to off quarter, focus to one really like

it's a think I obviously question. very good very,

we're need of the ourselves think mix it Charles. we up I of looking I business we them, how – a very is it lot even. things conservative I about spend But do probably time really of simply our more mean, some and it's roll actually changing. think we But

in a of the business bit. simulation of a it highest a basically terms the with that technology of versus just business seems starting just us And spreading is business are lot analytics to sector, data lot and in for business. HPC end how year a of only way things through lot the traditional shift much the is lot In of financial customers banking a services

it. Got

year-on-year the year Tech] is a math, give expected grow the General you kind which be corporate may total this relative either roughly underperforming us XXXX a verticals, maybe software topic, outperforming brief you. this your year-on-year one or guidance, follow-up. of what's off-market? automotive, bit the year, this that Thank a as at aerospace on [IFS revenue to bit, especially key [ph], your to be major guidance XX% a can sense, in So ones which or revenue may guidance, the the X%

Right.

the it the banking don't usually vertical as number largest And believe although still it and percentage vertical slowest. also the every sorry is is about technology us four and a the year so And We percentages, grows is growth percentage. shrinks total number So, the of aerospace. tell or automotive, then three it slowest a The two as slightly. is The actually you for now not. percentage that.

this going growing strongly so tech this sort of think and been All the substantial continue or point. bit last faster have are relatively in them I I year. year banking would that's and at to And of say a pretty

aerospace is going well. XXXX think as have I a to year strong very in

much. Thank you very

Sure.

for next moment One question. you. Thank our

Blair Abernethy from comes Rosenblatt. with question next Our

open. is line Your

and of give program. Thanks we on update Jim, harmonization the you're world RapidMiner just at you to integration, great one product Can sort if us just Datawatch guys. – a, with hear more on with very could. other of status much, where the on GUI and

a we sort expect can to to are we XXXX? in today expect see can we of – what what and where of sense Just

trying things bring together. these mean, we're all obviously think during I Yes, to I XXXX,

we that have technology and to the in the Similarly, investment Ops So, that SmartWorks a in RapidMiner. trying we've bring there knowledge inside we're into RapidMiner. ML built integrating studio, we're that for technology pouring example,

a Studio, technology and decision-tree really customers the had at [ph]. think and we best-in-class [score-carding] of Knowledge agree example, we for most So,

on Our stuff. guy that wrote the of some literally book

that And [ph] Very you ability in. RapidMiner you so, as can to that that's be be mixed think to technology connectivity will, completely in to [Monarch the the going environment. so very important nice well, we to important. Technology] the we mode, is use needs integrated have bring if that And SLC the

going do all Even Studio, being completely way market model, to you integrated get it tree decision customers run know technology. to units the done. the think without throughout that's I our So, can XXXX to all go we of because with Knowledge still

to it when Our and are months it's model [ph]. and done of whatever the way is along talk way [leasing] XX powerful some stuff we is that about things get the

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to So, going a opportunity we said, and not is analytics feel to what's was, have about like We back, close. And and were We're customer bid? pleased the are going data really but us product to hold good what this super they product. Altair recently. a they in pleased come you feeling were even not Altair is they involved, had that RFQ

together bid we're that really science our perceive RapidMiner RapidMiner just he And guys technology people really guy a data as you're said, to no, because excited with combination we the for so said, he sales best-in-class oh, and sales and the with working is said, here and happy was company customers and fantastic. own Altair, the what RapidMiner basically going trust of

so, is, of numbers in mode we're the growth numbers – a I big [ph] business] if RapidMiner a and now look market, the strong. really And kind is revenue cresting bigger standalone [tough think

I and to business You really that have think to have Altair data some does. analytics scale in And be play seriously.

– the And the across sell. the technology system that right channels technology challenges indirect to do with to selling the the the positioned get really get to team well integration is super that. to issue. the to of the how and knowing not And and is with I get on enterprise, board, So, product The – everybody all we're even exciting. sales AI engineering entire on integrators think the physics we're

So a great just it's we think. moment

color, That's Jim. great. the Thanks for

on seeing Altair? get a much talked of is about performance Is from opportunity just, Just the for markets? for we of kind that part haven't just of of give sense a of how computing I workloads? that was high computing cloud us this creating increasing, sort performance trends and sense question there you're you're of that seeing call. want are high more use the Enterprise the in you, Second your how HPC an of to what kind

more challenge the going ask I'm is customers, spend. more And us we budget do it with. he's And is it and that because for cloud think know cloud Matt is a right, every create get for I to you the what control that? on challenged number over going to big Altair. challenge, is because like his opportunity is a customer how that's

every run I'm scheduling really technology let bring they to customers try trying the want is or big to to to, the is this going market the to when you technology help go month, get spend and of we're or decide to let your how much to thing sort turn on willing figure some is running to out really this need scientists engineers data nuts, where that and bills and all I to If technology just to and going that and of so you're that jobs. establish money and when you're where be performance the

is And it to system, soon expensive put it's super your also, in back you data challenging to really storage the that. bring but want can because as do your the you as part up cloud, to

very and of money customers optimizes and they basically to Altair to a is they these need. their part different figuring it technology they their how natural pieces all how so use that in that maximizes that So, all can they get out sort trying very, way of deliver that so what is spend of of results

had. I technology. here. technology coming innovation of bring generation some had all a We've to think with do. that think the is now. along in able positioned pieces some we're of real I several So, And There to overlap that completely stuff that's considerably to that componentized We we're more we're together. technology we lot starting some performance of uniquely have next And coming be then that we was

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we're what doing but we is doing super doing. are uniquely companies things, guys are positioned. about are so, guys these really several think what similar those excited And There

that I big it's the to goes We'll experience. as So, technology a computational central find the one think out for how learning is well. for science. very technology But HPC

wanted. We going have with of as what's well. to really in be on be, middle the order right elements to with in you hardware software leading More sort than of the edge

Sorry.

Of sector. question, to product, could that perfect. your one analytics, I relative I three and simulation, the growth. if really insight last That's appreciate I No. Thanks. slide data look No. at you of if constant rates kind your of growth the your this X.X% into areas were expectations sort guess you HPC, year, to sort this is, rank year expectations? the product of in would how currency XX.X%

scale and Well, grow you of fastest the simulation. second, like The the to kind and at slower I of of these auto going to but mean, as also well. HPC have the look fastest that, with piece data, businesses with It's technology. we're

pretty still simulation. in So, growth the absolute is substantial

Yes.

Great great. Okay, very quarter. Thanks much guys.

Thank you.

next our Thank question. you. for moment One

Our next Mark comes Capital. with Loop from question Schappel

line open. is Your

and my for the year. quarter question the and you on taking Thank job Hi. nice

restructuring Jim. sales force to specific some could for year? just changes wondering there's was I you around planned If I the force. any just this sales I maybe products. wondering was or movement any organization that sales talk front? was you, the question industries, the about there respect reorganizing one if if random talk recall been about on Just With

that lot into in focused of are verticals, that stimulated We and energy with of and have specific on actually regional doing accounts really surprisingly integrated tremendous a that, amount really And well. There's on like me, we very, seems challenges for it very have globally. way. to but largest a so positive focused bit it's verticals the a going four very something reorganized very teams but on go these that team have our particularly in it's

see. In the what arrow the technology of data we cross kind or is vertical or example, fire, example, just the were pollination to selling auto of hoping for into, is the on for which really

have we yes, of sort direction. in made So, step that forward dramatic, some They're changes. a we, not overly took but

natural over very market. think a to for more I it's go time to vertically oriented evolve to us more and more

Great. Thank from you. That's all me.

Sure.

back Thank like you. at to time, over And I'd conference hand this Jim to the Mr. for Scapa remarks. closing

fantastic in Closing this really and the of excited thank coming year my you very, a to for remarks and everybody very about thank team you front call or just on to us. year

thank So, you all.

you and call. this for your participation. concludes Thank Ladies today's gentlemen, conference

disconnect. a wonderful day. now Everyone, may have You