Quickie: ANSYS beats expectations in Q3
I’m battling the flu/plague/chest infection/dunno so this has to be written between sneezes and coughs. I’ll be more thorough after I’ve listened to the earnings call.
ANSYS reported Q3 revenue and earnings ahead of their own forecasts, with non-GAAP revenue of $346 million, up 18% as reported and up 19% in constant currencies (cc).
A few details:
- Software revenue in Q3 was $137 million, up 26%
- Lease revenue was up 64% in Q3 to $71 million while perpetual revenue was $66 million, basically flat
- Maintenance revenue was $195 million, up 11%
- Services revenue was $14 million, up 54%, “strongly influenced by projects to assist our customers with broader adoption of ANSYS simulation tools, as well as the contributions from recent acquisitions”
- The channel mix was stable compared to prior quarters, with direct sales and indirect accounting for 77% and 23%, respectively, of Q3 revenue. That compares to76% / 24% for the year to date
ANSYS’ prepared materials also included this about the LSTC acquisition, completed on 1 November:
The acquisition will empower ANSYS customers to solve a new class of engineering challenges, including developing safer automobiles, aircraft and trains while reducing or even eliminating the need for costly physical testing. The transaction closed with a purchase price of $779.9 million, which included $472.7 million in cash and the issuance of 1.4 million shares of ANSYS common stock in an unregistered offering to the prior owners of LSTC. In conjunction with the transaction, ANSYS obtained $500.0 million of term debt financing to fund the cash component of the purchase price.
Lots of stuff about regions and industries: Americas led growth, trade restrictions affected revenue in China; semiconductor R&D and defense spend supported growth; automotive companies continue to invest in autonomous and electrification.
ANSYS got specific about China, pointing out that in all of 2018, non-GAAP revenue from China was just $58 million, or less than 5% of total, and that 2019 wasn’t doing too badly: through the first nine months of 2019, total non-GAAP revenue from China was $44 million, or 4.3% of total non-GAAP revenue. Why do this? Without hearing the call, I guess at two reasons; 1. to calm investors who fear that trade tensions will cause ANSYS revenue in the region to tumble and 2. to point out that even if tensions increase, the total effect on ANSYS won’t be material.
And that plays into Q4 guidance: ANSYS now believes that Q4 revenue will be between $450 million and $475 million on a GAAP basis, leading to a 2019 forecast of total revenue of $1,479 million to $1,505 million. The midpoint of that annual guidance is up about $20 million from prior guidance.
Back to bed. Later.