Ansys Announces Financial Results With Record Q3 Revenue and ACV

Details related to our financial guidance, including assumptions and economic impacts of COVID-19, are detailed in our prepared remarks document.Key Highlights – Q3 2020GAAP revenue of $367.0 million and non-GAAP revenue of $369.1 millionGAAP diluted earnings per share of $0.87 and non-GAAP diluted earnings per share of $1.36GAAP operating profit margin of 24.5% and non-GAAP operating profit margin of 39.8%Operating cash flows of $94.5 millionDeferred revenue and backlog of $879.9 million at September 30, 2020PITTSBURGH, Nov. 04, 2020 (GLOBE NEWSWIRE) — ANSYS, Inc. (NASDAQ: ANSS), today reported third quarter 2020 GAAP and non-GAAP revenue growth of 7% in reported currency, or 5% in constant currency, when compared to the third quarter of 2019. For the third quarter of 2020, the Company reported earnings per share of $0.87 and $1.36 on a GAAP and non-GAAP basis, respectively, compared to $1.04 and $1.42 on a GAAP and non-GAAP basis, respectively, for the third quarter of 2019.“Ansys delivered a strong third quarter in which we overachieved on both earnings and operating margin. While all of our major geographies showed growth, Asia-Pacific was particularly strong, with Japan and South Korea growing by double digits. We also saw double-digit growth in revenue coming from our indirect channel. With corporate initiatives around eco-friendly aircraft engines, Space 2.0 and national defense, we saw robust spending in the aerospace and defense sector during the quarter. We also recently signed a definitive agreement to acquire Analytical Graphics, Inc. (AGI), a leader in mission simulation and analysis, which will strengthen our simulation leadership within the key aerospace and defense sector. Finally, during Q3, our ESG initiatives focused on environmental sustainability, including our own carbon footprint as well as the efficiencies that our solutions are enabling for our customers,” said Ajei Gopal, Ansys president and CEO.Maria Shields, Ansys CFO, stated, “Our solid Q3 financial performance reflects the strength of our core business and the continued dedication and focused execution of the Ansys employees and our partner ecosystem. Despite the challenging circumstances created by the prolonged pandemic, we delivered strong revenue performance, which drove earnings and operating margins. We reported a record third quarter balance of deferred revenue and backlog of $880 million, an increase of 35% over the third quarter of 2019. Additional financial highlights reflecting the resiliency of our business model included ACV growth, which continues to be comprised of a high level of recurring sources at 78% for the quarter and 81% for the first nine months of the year. The combination of our high level of recurring revenue sources, strong financial position and operating discipline positions us well to continue to prudently invest in the business for the long-term. This includes the pending acquisition of AGI, which demonstrates the continued execution of our growth strategy.”On October 23, 2020, the Company entered into a definitive agreement to acquire 100% of the shares of AGI, a premier provider of mission-simulation, modeling, testing and analysis software for aerospace, defense and intelligence applications. Once closed, the acquisition will expand the scope of the Company’s offerings, empowering users to solve challenges by simulating from the chip level all the way to a customer’s entire mission. The transaction is expected to close with a purchase price of $700.0 million, of which the AGI shareholders will receive 67% in cash and 33% in Ansys common stock. The Company anticipates obtaining new debt financing to fund a significant portion of the cash component of the purchase price.Financial ResultsAnsys’ third quarter and year-to-date (YTD) 2020 and 2019 financial results are presented below. The 2020 and 2019 non-GAAP results exclude the income statement effects of the acquisition accounting adjustments to deferred revenue, stock-based compensation, amortization of acquired intangible assets, transaction expenses related to business combinations, and adjustments related to the transition tax associated with the Tax Cuts and Jobs Act.GAAP and non-GAAP results are as follows:
The non-GAAP financial results highlighted above, and the non-GAAP financial outlook for 2020 discussed below, represent non-GAAP financial measures. Reconciliations of these measures to the appropriate GAAP measures, for the three and nine months ended September 30, 2020 and 2019, and for the 2020 financial outlook, can be found in the condensed financial information included in this release.Other Financial Metrics
ACV is a metric the Company uses to better understand the business. There is no GAAP measure comparable to ACV. ACV is composed of the following:the annualized value of maintenance and lease contracts with start dates or anniversary dates during the period, plusthe value of perpetual license contracts with start dates during the period, plusthe annualized value of fixed-term services contracts with start dates or anniversary dates during the period, plusthe value of work performed during the period on fixed-deliverable services contracts.Management’s 2020 Financial OutlookThe Company’s fourth quarter and fiscal year 2020 revenue and diluted earnings per share guidance is provided below. The Company is also providing its fiscal year 2020 guidance for ACV and operating cash flows. The revenue and diluted earnings per share guidance is provided on both a GAAP and non-GAAP basis. Non-GAAP financial measures exclude the income statement effects of acquisition adjustments to deferred revenue, stock-based compensation, amortization of acquired intangible assets and acquisition-related transaction expenses.The financial guidance below reflects the Company’s current estimates of the adverse impacts of the global pandemic. This guidance is based on certain assumptions made by the Company and the Company’s evaluation of factual information it has determined to be relevant. Additional details related to the Company’s financial guidance, including assumptions and economic impacts of COVID-19, are detailed in its prepared remarks document.The financial guidance below is not adjusted for the impacts of the Company’s recently announced agreement to acquire AGI. The acquisition closing date is unknown as it is subject to the receipt of regulatory clearance and the satisfaction of customary closing conditions. The transaction is not expected to have a meaningful impact on the Company’s 2020 results.Fourth Quarter 2020 GuidanceThe Company currently expects the following for the quarter ending December 31, 2020:Fiscal Year 2020 GuidanceThe Company currently expects the following for the fiscal year ending December 31, 2020:The difference between the GAAP and non-GAAP revenue guidance presented above is a result of the expected impact of the application of the fair value provisions applicable to the accounting for business combinations in the amount of $1.2 million for the fourth quarter and $11.3 million for fiscal year 2020.Conference Call InformationAnsys will hold a conference call at 8:30 a.m. Eastern Time on November 5, 2020 to discuss third quarter results. The Company will provide its prepared remarks on the Company’s investor relations homepage and as an exhibit in its Form 8-K in advance of the call to provide stockholders and analysts with additional time and detail for analyzing its results in preparation for the conference call. The prepared remarks will not be read on the call, and only brief remarks will be made prior to the Q&A session. The Company will also post a complementary investor presentation titled “Q3 2020 Investor Presentation” that can be accessed by clicking Events & Presentations, then Presentations at https://investors.ansys.com. To participate in the live conference call, dial 855-239-2942 (US) or 412-542-4124 (Canada & Int’l). The call will be recorded and a replay will be available within two hours after the call. The replay will be available by dialing (877) 344-7529 (US), (855) 669-9658 (Canada) or (412) 317-0088 (Int’l) and entering the passcode 10149085. The archived webcast can be accessed, along with other financial information, on Ansys’ website at https://investors.ansys.com/events-and-presentations/events-calendar. 
GAAP Financial Statements