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AI

ANSYS INC (ANSS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $504.9M (+8% YoY; +10% cc) with GAAP EPS $0.59 and non-GAAP EPS $1.64; gross margin 85.6% and operating margin 11.7% as mix skewed to maintenance and services .
  • ACV grew 1% YoY to $410.1M (+2% cc); operating cash flow surged to $398.9M (unlevered OCF $407.1M), a notable seasonal inflow despite softer ACV growth .
  • Guidance remains suspended due to the pending Synopsys acquisition, though management reiterated expectation of double-digit FY 2025 ACV growth; regulators in the U.K., Turkey, Japan, Korea, and Taiwan have cleared the deal, with H1 2025 closing targeted .
  • Product-cycle catalysts during the quarter: 2025 R1 AI/cloud release, NVIDIA Blackwell GPU acceleration with Volvo, Omniverse integration, and semiconductor design tool certifications with TSMC, Intel, and GlobalFoundries—supporting medium-term growth narrative in AI/HPC and semis .

What Went Well and What Went Wrong

What Went Well

  • Maintenance and service revenue strength (+12% YoY maintenance; services +21% YoY) drove total revenue growth; Americas +10% YoY and Japan +18.5% YoY buoyed geographic performance .
  • Cash generation was strong: operating cash flow $398.9M (+41% YoY) and unlevered OCF $407.1M (+39% YoY) despite seasonally lower license volumes .
  • Strategic momentum: 2025 R1 enhanced AI/cloud/HPC capabilities (“more integration capabilities than ever… accelerates time-to-market”), plus NVIDIA/Volvo acceleration (2.5x solver speed), and Omniverse visualization integrations, reinforcing product differentiation in CAE and digital engineering .
    • “The close collaboration between Ansys and NVIDIA is accelerating innovation at an unprecedented pace…” — Ajei Gopal, CEO .

What Went Wrong

  • ACV growth was modest at +0.7% YoY (+2.3% cc), reflecting a softer start to the year versus the strong Q4 seasonality (Q4 2024 ACV was $1.095B, 43% of FY ACV) .
  • Mix headwind: subscription lease revenue grew only +2.2% YoY while maintenance carried growth; Germany declined (-3.3% YoY) amid FX and macro pressures .
  • FX was a drag on Q1 revenue (-$7.7M) and operating income (-$2.8M GAAP), while ACV saw a -$6.6M FX impact; deferred revenue/backlog declined sequentially from Q4 ($1,718.3M to $1,627.7M) due to billing cycle seasonality and FX .

Financial Results

Key Financials vs Prior Quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$601.9 $882.2 $504.9
GAAP Diluted EPS ($USD)$1.46 $3.21 $0.59
Non-GAAP Diluted EPS ($USD)$2.58 $4.44 $1.64
Gross Margin (%)88.5% 91.8% 85.6%
Operating Profit Margin (%)26.8% 40.3% 11.7%
ACV ($USD Millions)$540.5 $1,094.6 $410.1
Operating Cash Flows ($USD Millions)$174.2 $258.0 $398.9
Unlevered Operating Cash Flows ($USD Millions)$184.5 $266.8 $407.1

Revenue by License Type

License TypeQ3 2024 ($M, % of total)Q4 2024 ($M, % of total)Q1 2025 ($M, % of total)
Subscription Lease$194.3, 32.3% $441.1, 50.0% $96.9, 19.2%
Perpetual$82.6, 13.7% $102.3, 11.6% $63.0, 12.5%
Maintenance$306.7, 51.0% $319.4, 36.2% $324.4, 64.2%
Service$18.3, 3.0% $19.4, 2.2% $20.5, 4.1%
Total$601.9 $882.2 $504.9

Revenue by Geography

GeographyQ3 2024 ($M, % of total)Q4 2024 ($M, % of total)Q1 2025 ($M, % of total)
Americas$306.5, 50.9% $457.8, 51.9% $230.4, 45.6%
Germany$38.7, 6.4% $98.5, 11.2% $35.0, 6.9%
Other EMEA$98.3, 16.3% $170.5, 19.3% $83.8, 16.6%
EMEA Total$137.0, 22.8% $269.1, 30.5% $118.9, 23.5%
Japan$46.7, 7.8% $52.3, 5.9% $43.3, 8.6%
Other Asia-Pacific$111.6, 18.5% $103.1, 11.7% $112.4, 22.3%
Asia-Pacific Total$158.4, 26.3% $155.4, 17.6% $155.7, 30.8%
Total$601.9 $882.2 $504.9

Channel Mix

Channel Mix (%)Q3 2024Q4 2024Q1 2025
Direct revenue %74.6% 79.7% 69.1%
Indirect revenue %25.4% 20.3% 30.9%

KPIs

KPIQ3 2024Q4 2024Q1 2025
Deferred revenue & backlog total ($USD Millions)$1,463.8 $1,718.3 $1,627.7
Current deferred revenue ($USD Millions)$427.2 $504.5 $490.3
Current backlog ($USD Millions)$475.6 $524.6 $511.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
ACV GrowthFY 2025“Expects double-digit FY 2025 ACV growth” (Feb 19, 2025) “Continues to expect double-digit FY 2025 ACV growth” (Apr 30, 2025) Maintained
Formal quarterly/annual guidanceAll periodsN/A“Suspended quarterly earnings calls and no longer provides quarterly or annual guidance” Suspended

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
AI/technology initiativesQ3/Q4 materials highlight strong multi-year lease growth; limited product specifics in earnings releases 2025 R1 launched (AI, cloud, GPUs, HPC), Omniverse integration, NVIDIA Blackwell acceleration with Volvo; photonics certifications; Intel 18A multiphysics signoff Strengthening product narrative in AI/HPC; ecosystem integrations expanding
Supply chainNot a focal point in Q3/Q4No specific supply chain issues; continued roll-outs of certifications and releases Neutral
Tariffs/macroRisks disclosed: tariffs/export controls, macro volatility Similar risk disclosures; FX headwinds affected revenue and operating income Macro risks persist; FX a near-term headwind
Product performance/mixQ3: $88M multi-year lease deal; mix favored licenses/maintenance Q1: maintenance +12% YoY and services +21% YoY drove growth; subscription lease +2% YoY Mix more maintenance-heavy; subscription softness
Regional trendsQ3: Americas +40% YoY; APAC/EMEA varied Q1: Americas +10.4% YoY; Japan +18.5% YoY; Germany -3.3% YoY Americas/Japan solid; Germany softness
Regulatory/legal (Synopsys)Q4: EU conditional clearance; U.K. CMA provisional acceptance; China filing accepted Q1: U.K. CMA formal Phase 1 clearance; Turkey, Japan, Korea, Taiwan clearances; H1’25 close targeted Progressing toward closing

Management Commentary

  • “The results for the first quarter met the Company’s expectations and it continues to expect double-digit FY 2025 ACV growth.” — ANSYS press release (Apr 30, 2025) .
  • “The close collaboration between Ansys and NVIDIA is accelerating innovation at an unprecedented pace…” — Ajei S. Gopal, President & CEO .
  • “Ansys 2025 R1 offers more integration capabilities than ever… significantly cuts costs, [and] accelerates time-to-market.” — Shane Emswiler, SVP Products .
  • “The capability of Ansys Fluent… supercharges the computation, so we can consider a greater number of design possibilities and reach an optimal car design faster.” — Volvo Cars (technical leader CFD) via Ansys release .
  • “Integrating NVIDIA Omniverse… will enable customers to render immersive, photorealistic models… improving communication of results.” — Ansys release .

Q&A Highlights

  • No Q1 2025 earnings call or Q&A; ANSYS has suspended quarterly earnings conference calls given the pending Synopsys transaction and does not provide quarterly or annual guidance .
  • Management reiterated H1 2025 closing target and noted multiple regulatory clearances (U.K. CMA Phase 1, Turkey, Japan, Korea, Taiwan) .
  • Currency impacts and ACV methodology were detailed in the press release (constant currency and ACV definitions/reconciliations) .

Estimates Context

  • S&P Global consensus estimates were unavailable at the time of this analysis due to a CIQ mapping issue; therefore, we cannot provide a “vs. consensus” comparison for Q1 2025 results or forward periods. We will update when S&P Global data becomes accessible.

Key Takeaways for Investors

  • Revenue and EPS tracked in line with management expectations; mix was maintenance-heavy, pressuring GAAP margins sequentially vs Q4’s seasonal peak, but cash flow was very strong in Q1 .
  • ACV growth was soft (+1% YoY), yet management maintained the view of double-digit ACV growth for FY 2025; watch Q2/Q3 ACV cadence to validate trajectory post-seasonal Q1 .
  • FX is a tangible headwind to revenue and operating income; exposure is most meaningful vs EUR and JPY—monitor FX trends as a near-term variable .
  • Strategic moat continues to widen: AI/cloud/HPC upgrades (2025 R1), NVIDIA partnerships (Blackwell, Omniverse), and foundry certifications (TSMC A16/N3, Intel 18A, GF Fotonix) support sustained share in semis/automotive/aerospace workflows .
  • Deal catalyst: advancing regulatory clearances for the Synopsys acquisition and H1’25 close timeline remain key stock drivers; any update on closing conditions or divestitures (e.g., PowerArtist RTL sale) could move the shares .
  • Trading implication (near term): with estimates unavailable, focus on qualitative beats—cash flow strength and ecosystem wins—versus ACV softness; event-driven positioning around deal closure milestones is plausible .
  • Medium-term thesis: increasing GPU-enabled simulation, AI-augmented workflows, and deep foundry/toolchain certifications should underpin durable growth, with pricing power and wallet share in mission-critical engineering workloads .

Appendix: Non-GAAP Adjustments and FX

  • Non-GAAP excludes stock-based compensation, excess payroll taxes, amortization of acquired intangibles, and business combination expenses; GAAP-to-non-GAAP reconciliations provided (Q1 non-GAAP operating margin 33.5% vs GAAP 11.7%) .
  • Q1 FX impact: revenue (-$7.7M), GAAP operating income (-$2.8M), non-GAAP operating income (-$3.0M), ACV (-$6.6M); deferred revenue/backlog +$19.2M FX effect .