ANSYS INC (ANSS)·Q3 2024 Earnings Summary

Executive Summary

• Revenue of $601.9 million rose 31% year over year, driven by strong multi‑year lease growth, including a single $88 million high‑tech deal in the Americas; non‑GAAP diluted EPS of $2.58 increased 83% YoY, and ACV reached $540.5 million (+18% YoY) .
• Sequentially, revenue grew modestly versus Q2 ($601.9M vs. $594.1M), with GAAP operating margin expanding slightly to 26.8% (from 26.5% in Q2); backlog and deferred revenue increased to $1.464B, supporting near‑term visibility .
• The company suspended earnings calls and quarterly/annual guidance due to the pending Synopsys acquisition, though it reiterated expectations for FY 2024 double‑digit ACV growth; regulatory approvals have progressed, including unconditional clearance from Israel’s Competition Authority .
• Mix and geographic strength were notable: Subscription lease revenue grew 88% YoY; Americas revenue grew 40% YoY; Asia‑Pacific rose 33% YoY, while Germany and Japan were mixed on a YTD basis .

What Went Well and What Went Wrong

What Went Well

• Strong multi‑year lease momentum, punctuated by an $88M high‑tech contract in the Americas, contributed to 31% YoY revenue growth and 18% YoY ACV growth .
• Broad non‑GAAP margin expansion: non‑GAAP operating margin reached 45.8% (vs. 34.1% last year), reflecting operating leverage and normalization of tax rate; non‑GAAP EPS rose to $2.58 from $1.41 .
• Technology leadership highlighted in Q4 calendar press releases: integration of NVIDIA Modulus into SeaScape to accelerate semiconductor design optimization, and 110x acceleration in large‑scale Fluent CFD on NVIDIA GH200, reinforcing AI/HPC differentiation. “Ansys’ advancements… have demonstrated a speed‑up of thermal simulation by over 100x” and “accelerated simulation by 110x… reducing run time from four weeks to six hours” .

What Went Wrong

• No earnings call and no quantitative guidance, limiting near‑term management color; only qualitative reiteration of double‑digit FY24 ACV growth was provided .
• Currency impacts pressured YTD results (revenue –$13.6M; GAAP operating income –$10.5M) and continue to be a headwind, particularly vs. Euro and Yen exposures .
• Mixed regional trends: Germany and Japan were down YTD; service revenue was flat YoY in Q3 and down YTD, highlighting uneven demand across offerings and geographies .

Financial Results

Core Metrics vs. Prior Year and Prior Quarters

Segment Mix (License Type)

Geography Mix

Channel Mix

KPIs and Balance Sheet Indicators

Non-GAAP adjustments impacting margins and EPS include stock-based compensation, amortization of intangible assets, business combination expenses, and a normalized non‑GAAP tax rate; reconciliations detail these effects and bridge GAAP to non‑GAAP performance .

Guidance Changes

Note: In light of the pending transaction with Synopsys, Ansys has suspended quarterly earnings calls and no longer provides quarterly or annual guidance .

Earnings Call Themes & Trends

No earnings call or transcript this quarter; Ansys has suspended earnings calls pending the Synopsys transaction .

Management Commentary

• “NVIDIA Modulus… integrated into Ansys semiconductor simulation products… deliver AI functionality that significantly speeds up design optimization… demonstrated over 100x speed‑up for thermal simulations.” — John Lee, VP & GM, Semiconductor, Electronics, and Optics .
• “Upgrading to the latest GPU technology can enable our customers to save hours… energy consumption is much lower… saves our customers significant costs and resources.” — Shane Emswiler, SVP of Products, on 110x acceleration in Fluent CFD with NVIDIA GH200 .
• “We are excited to work with IonQ to create a new generation of quantum‑based solvers… increase predictive accuracy and expedite simulation run time.” — Prith Banerjee, CTO .

Q&A Highlights

• There was no earnings call and therefore no Q&A; management reiterated suspension of calls and guidance pending the Synopsys transaction, with closing anticipated in H1 2025 and recent regulatory approval progress (unconditional clearance in Israel) .

Estimates Context

• Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable due to a Capital IQ mapping issue for ANSS. As a result, we cannot quantify the magnitude of beat/miss vs consensus from S&P Global for this quarter. Management provided no formal guidance due to the pending acquisition .

Key Takeaways for Investors

• Large‑deal execution and subscription mix shift are accelerating growth: $88M high‑tech Americas deal and +88% YoY subscription lease revenue underpinned a 31% YoY revenue increase and strong margin expansion .
• Sequential performance is steady despite the absence of an earnings call: revenue edged higher vs. Q2; GAAP operating margin improved; backlog/deferred revenue increased to $1.464B, bolstering visibility .
• Non‑GAAP profitability is structurally higher due to operating leverage and the normalized tax rate; non‑GAAP OPM of 45.8% and EPS of $2.58 reflect strong core execution and standardized adjustments .
• Geographic breadth is solid: Americas and APAC led growth; EMEA modest; watch Germany/Japan trends and service revenue, which remain mixed on a YTD basis .
• Currency remains an overhang on YTD results; monitor Euro/Yen volatility and associated impacts on revenue and operating income .
• Strategic technology momentum (AI/HPC/3D‑IC) continues: NVIDIA Modulus integration, 110x CFD acceleration on GH200, and TSMC OIP awards highlight competitive moats likely to support enterprise demand and ACV .
• M&A remains the primary stock narrative: with calls/guidance suspended, focus on regulatory milestones and closing timeline (H1 2025) for Synopsys/Ansys; interim execution and backlog growth are key signals of business durability .