Quarterly Report (10-q)
05 May 2023 - 6:26AM
Edgar (US Regulatory)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2023
OR
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-38263
ALTAIR ENGINEERING INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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38-2591828 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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1820 East Big Beaver Road, Troy, Michigan |
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48083 |
(Address of principal executive offices) |
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(Zip Code) |
(248) 614-2400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol |
Name of each exchange on which registered |
Class A Common Stock $0.0001 par value per share |
ALTR |
The NASDAQ Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
☒ |
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Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
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Smaller reporting company |
☐ |
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Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
On April 17, 2023, there were 53,414,224 shares of the registrant’s Class A common stock outstanding and 27,294,574 shares of the registrant’s Class B common stock outstanding.
ALTAIR ENGINEERING INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED March 31, 2023
INDEX
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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March 31, 2023 |
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December 31, 2022 |
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(In thousands) |
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(Unaudited) |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
378,377 |
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$ |
316,146 |
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Accounts receivable, net |
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130,636 |
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170,279 |
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Income tax receivable |
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11,226 |
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11,259 |
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Prepaid expenses and other current assets |
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28,363 |
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29,142 |
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Total current assets |
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548,602 |
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526,826 |
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Property and equipment, net |
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38,260 |
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37,517 |
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Operating lease right of use assets |
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33,297 |
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33,601 |
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Goodwill |
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451,170 |
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449,048 |
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Other intangible assets, net |
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101,586 |
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|
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107,609 |
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Deferred tax assets |
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9,675 |
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9,727 |
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Other long-term assets |
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43,582 |
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|
|
40,410 |
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TOTAL ASSETS |
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$ |
1,226,172 |
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$ |
1,204,738 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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|
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Accounts payable |
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$ |
6,014 |
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$ |
10,434 |
|
Accrued compensation and benefits |
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30,341 |
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|
42,456 |
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Current portion of operating lease liabilities |
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9,939 |
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|
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10,396 |
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Other accrued expenses and current liabilities |
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58,673 |
|
|
|
56,371 |
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Deferred revenue |
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|
114,423 |
|
|
|
113,081 |
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2024 Convertible senior notes, net |
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81,004 |
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|
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— |
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Total current liabilities |
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300,394 |
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232,738 |
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2027 Convertible senior notes, net |
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225,039 |
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305,604 |
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Operating lease liabilities, net of current portion |
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23,989 |
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24,065 |
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Deferred revenue, non-current |
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27,520 |
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31,379 |
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Other long-term liabilities |
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42,325 |
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41,216 |
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TOTAL LIABILITIES |
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619,267 |
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635,002 |
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Commitments and contingencies |
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STOCKHOLDERS’ EQUITY: |
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Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding |
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— |
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— |
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Common stock ($0.0001 par value) |
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Class A common stock, authorized 513,797 shares, issued and outstanding 53,153
and 52,277 shares as of March 31, 2023, and December 31, 2022, respectively |
|
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5 |
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5 |
|
Class B common stock, authorized 41,203 shares, issued and outstanding 27,505
and 27,745 shares as of March 31, 2023, and December 31, 2022 |
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3 |
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|
3 |
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Additional paid-in capital |
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753,184 |
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721,307 |
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Accumulated deficit |
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(123,536 |
) |
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(121,577 |
) |
Accumulated other comprehensive loss |
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(22,751 |
) |
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(30,002 |
) |
TOTAL STOCKHOLDERS’ EQUITY |
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606,905 |
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|
|
569,736 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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$ |
1,226,172 |
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|
$ |
1,204,738 |
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See accompanying notes to consolidated financial statements.
3
ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended
March 31, |
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(in thousands, except per share data) |
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2023 |
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2022 |
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Revenue |
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License |
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$ |
112,409 |
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$ |
106,169 |
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Maintenance and other services |
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37,234 |
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34,728 |
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Total software |
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149,643 |
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140,897 |
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Software related services |
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7,100 |
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|
9,061 |
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Total software and related services |
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156,743 |
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|
|
149,958 |
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Client engineering services |
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|
7,776 |
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|
|
8,012 |
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Other |
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|
1,515 |
|
|
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1,811 |
|
Total revenue |
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|
166,034 |
|
|
|
159,781 |
|
Cost of revenue |
|
|
|
|
|
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License |
|
|
4,824 |
|
|
|
4,687 |
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Maintenance and other services |
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14,426 |
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|
|
12,719 |
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Total software |
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|
19,250 |
|
|
|
17,406 |
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Software related services |
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|
5,616 |
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|
|
6,035 |
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Total software and related services |
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24,866 |
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|
23,441 |
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Client engineering services |
|
|
6,624 |
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|
|
6,641 |
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Other |
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1,245 |
|
|
|
1,521 |
|
Total cost of revenue |
|
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32,735 |
|
|
|
31,603 |
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Gross profit |
|
|
133,299 |
|
|
|
128,178 |
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Operating expenses: |
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|
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Research and development |
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53,251 |
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47,079 |
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Sales and marketing |
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43,492 |
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|
|
37,840 |
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General and administrative |
|
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17,951 |
|
|
|
17,426 |
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Amortization of intangible assets |
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7,814 |
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|
|
5,903 |
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Other operating expense (income), net |
|
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5,605 |
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|
(781 |
) |
Total operating expenses |
|
|
128,113 |
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|
|
107,467 |
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Operating income |
|
|
5,186 |
|
|
|
20,711 |
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Interest expense |
|
|
1,526 |
|
|
|
585 |
|
Other (income) expense, net |
|
|
(3,613 |
) |
|
|
2,068 |
|
Income before income taxes |
|
|
7,273 |
|
|
|
18,058 |
|
Income tax expense |
|
|
9,232 |
|
|
|
6,530 |
|
Net (loss) income |
|
$ |
(1,959 |
) |
|
$ |
11,528 |
|
(Loss) income per share: |
|
|
|
|
|
|
Net (loss) income per share attributable to common
stockholders, basic |
|
$ |
(0.02 |
) |
|
$ |
0.15 |
|
Net (loss) income per share attributable to common
stockholders, diluted |
|
$ |
(0.02 |
) |
|
$ |
0.13 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
Weighted average number of shares used in computing
net (loss) income per share, basic |
|
|
80,191 |
|
|
|
79,462 |
|
Weighted average number of shares used in computing
net (loss) income per share, diluted |
|
|
80,191 |
|
|
|
87,261 |
|
See accompanying notes to consolidated financial statements.
4
ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
(in thousands) |
|
2023 |
|
|
2022 |
|
Net (loss) income |
|
$ |
(1,959 |
) |
|
$ |
11,528 |
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
Foreign currency translation (net of tax effect of $0 for
all periods) |
|
|
7,232 |
|
|
|
(4,163 |
) |
Retirement related benefit plans (net of tax effect of $0 for
all periods) |
|
|
19 |
|
|
|
105 |
|
Total other comprehensive income (loss) |
|
|
7,251 |
|
|
|
(4,058 |
) |
Comprehensive income |
|
$ |
5,292 |
|
|
$ |
7,470 |
|
See accompanying notes to consolidated financial statements.
5
ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Common stock |
|
|
Additional |
|
|
|
|
|
other |
|
|
Total |
|
|
|
Class A |
|
|
Class B |
|
|
paid-in |
|
|
Accumulated |
|
|
comprehensive |
|
|
stockholders’ |
|
(in thousands) |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
deficit |
|
|
loss |
|
|
equity |
|
Balance as of December 31, 2022 |
|
|
52,277 |
|
|
$ |
5 |
|
|
|
27,745 |
|
|
$ |
3 |
|
|
$ |
721,307 |
|
|
$ |
(121,577 |
) |
|
$ |
(30,002 |
) |
|
$ |
569,736 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,959 |
) |
|
|
— |
|
|
|
(1,959 |
) |
Issuance of common stock for acquisitions |
|
|
34 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Repurchase and retirement of common stock |
|
|
(91 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,256 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4,256 |
) |
Issuance of common stock for employee stock
purchase program |
|
|
92 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,648 |
|
|
|
— |
|
|
|
— |
|
|
|
3,648 |
|
Exercise of stock options |
|
|
265 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,324 |
|
|
|
— |
|
|
|
— |
|
|
|
10,324 |
|
Vesting of restricted stock |
|
|
336 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Conversion of Class B to Class A
common stock |
|
|
240 |
|
|
|
— |
|
|
|
(240 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
22,161 |
|
|
|
— |
|
|
|
— |
|
|
|
22,161 |
|
Foreign currency translation, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,232 |
|
|
|
7,232 |
|
Retirement related benefit plans, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19 |
|
|
|
19 |
|
Balance as of March 31, 2023 |
|
|
53,153 |
|
|
$ |
5 |
|
|
|
27,505 |
|
|
$ |
3 |
|
|
$ |
753,184 |
|
|
$ |
(123,536 |
) |
|
$ |
(22,751 |
) |
|
$ |
606,905 |
|
See accompanying notes to consolidated financial statements.
6
ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Common stock |
|
|
Additional |
|
|
|
|
|
other |
|
|
Total |
|
|
|
Class A |
|
|
Class B |
|
|
paid-in |
|
|
Accumulated |
|
|
comprehensive |
|
|
stockholders’ |
|
(in thousands) |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
deficit |
|
|
loss |
|
|
equity |
|
Balance as of December 31, 2021 |
|
|
51,524 |
|
|
$ |
5 |
|
|
|
27,745 |
|
|
$ |
3 |
|
|
$ |
724,226 |
|
|
$ |
(102,087 |
) |
|
$ |
(8,950 |
) |
|
$ |
613,197 |
|
Cumulative effect of an accounting change |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(50,009 |
) |
|
|
23,939 |
|
|
|
— |
|
|
|
(26,070 |
) |
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,528 |
|
|
|
— |
|
|
|
11,528 |
|
Issuance of common stock for employee stock
purchase program |
|
|
77 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,187 |
|
|
|
— |
|
|
|
— |
|
|
|
4,187 |
|
Exercise of stock options |
|
|
86 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
238 |
|
|
|
— |
|
|
|
— |
|
|
|
238 |
|
Vesting of restricted stock |
|
|
324 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,403 |
|
|
|
— |
|
|
|
— |
|
|
|
19,403 |
|
Foreign currency translation, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,163 |
) |
|
|
(4,163 |
) |
Retirement related benefit plans, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
105 |
|
|
|
105 |
|
Balance as of March 31, 2022 |
|
|
52,011 |
|
|
$ |
5 |
|
|
|
27,745 |
|
|
$ |
3 |
|
|
$ |
698,045 |
|
|
$ |
(66,620 |
) |
|
$ |
(13,008 |
) |
|
$ |
618,425 |
|
See accompanying notes to consolidated financial statements.
7
ALTAIR ENGINEERING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
(In thousands) |
|
2023 |
|
|
2022 |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net (loss) income |
|
$ |
(1,959 |
) |
|
$ |
11,528 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
9,750 |
|
|